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Despite COVID, economies on mend in Butte, southwest Montana
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Despite COVID, economies on mend in Butte, southwest Montana

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When the local and state economies were humming along a year ago, economic development leaders in Butte were as hopeful and confident as ever.

There were job-creating projects in the pipeline, progress was being made on the planned Praxis Center and the Southwest Montana Veterans Home, a film-production venture had purchased the old NorthWestern Energy Building and gains in retail were expected.

And as always, there were some big, promising leads that couldn’t be talked about quite yet.

“It’s going to be a banner year,” Dave Palmer, who was chief executive of Butte-Silver Bow, said last January.

Less than two months later, in mid-March 2020, the COVID-19 pandemic struck and the optimism evaporated.

“Who knew what was coming?” Joe Willauer, executive director of the Butte Local Development Corp., told The Montana Standard this week.

The impact was hardest on small businesses, Willauer said, and mandatory closures and fear of traveling really hurt hotels and motels, restaurants and bars and many smaller retail shops.

The St. Patrick’s Day parade and celebration was called off, leaving local businesses with beer, booze, food and merchandise they couldn’t sell. The Montana Folk Festival and An Ri Ra never went down either.

Many stores, restaurants and other “non-essential businesses” were forced to lay-off employees, at least temporarily, and while federal financial assistance helped, it wasn’t enough to curb all losses.

They were felt everywhere, including other counties in southwest Montana — Anaconda-Deer Lodge, Beaverhead, Granite, Jefferson, Madison and Powell.

Unemployment in that region in November 2019 was at an all-time low of 3.6%, similar to the state average, according to newly compiled statistics from NorthWestern Energy economist John Kasperick. Labor markets were tight.

In April last year, at the height of mandatory shut-downs, unemployment in southwest Montana hit an all-time high of 11.3%, Kasperick’s figures show. There were 4,627 people out of work compared to 1,819 two months prior — an increase of 154%.

The jobless rate in the region declined each month since last April and ended November at 4.1%. Still higher than November the prior year, with 200 more unemployed, but far, far better than last April.

The unemployment rate was 4.7% in Butte-Silver Bow County, which accounts for 41% of the region’s labor force. It was highest in Granite County at 5.3% but was below 4% in Anaconda-Deer Lodge, Beaverhead, Jefferson and Powell counties.

The drag on the economy is expected to continue through the first half of this year, Kasperick says, but things should improve as more people are vaccinated. Actual economic growth is expected in 2022.

Christmas was good for many retailers in Butte, Willauer said, and a shop-local campaign helped. There is also a new round of federal assistance unfolding for small businesses.

Willauer hopes retail continues to recover and there are reasons for optimism, but “we thought that a couple of times last year and were sorely mistaken.”

“The next couple of months are going to be really the most important time for our retail sector,” he said. “The next few months is always the slowest season for our retail economy and it’s even more important this year to shop local.”

A CLOSER LOOK AT BUTTE-SILVER BOW

There were some positives on the economic front despite COVID, including planned distribution centers at the Montana Connections business park in Butte and continued low inflation and interest rates. And the real estate market is hot and getting hotter.

“There is a lot of movement and a lot of purchasing of old buildings that is happening in Uptown,” said J.P. Gallagher, who became Butte-Silver Bow’s chief executive on Dec. 31. “It’s been at a fever pitch, where these investors are coming in and actually buying these buildings and moving forward (with development).”

But first, let’s take a closer look at trends and figures for Butte-Silver Bow before and during the pandemic as noted by Kasperick.

The population was 34,915 based on 2019 U.S. Census estimates, an increase of 715 people, or 2.1%, since 2010, according to Kasperick’s analysis. That makes it the eighth most populous county in Montana.

But the state’s population gained more than 79,000 people, an 8% increase since 2010, and the growth in Butte-Silver Bow ranked 28th of Montana’s 56 counties. And population growth here was highest among those 65 and older at 21.3%.

Population declined by 1.9% in Powell County and by 1.7% in Anaconda-Deer Lodge, but grew by 2.2% in Beaverhead County, 7.1% in Jefferson, 9.9% in Granite and 11.8% in Madison.

Butte remains the biggest city in the region and not everyone wants more people here, but significant population growth is usually an offshoot of more jobs.

“I would say the economy drives the population,” Kasperick said. “New businesses or a new factory, that’s going to bring in more people from outside areas for the jobs, then they bring kids and spouses. Population is kind of an outcome of your economy.”

In general, college degrees mean higher salaries in the workforce. Of people 25 or older in Butte-Silver Bow, 27.2% had bachelor’s degrees or higher compared to 32% statewide. But the per-capita income of $49,285 was only $462 below the state figure.

Before COVID hit, there was very slow but steady growth in total employment in Butte-Silver Bow, but it still hasn’t reached the peak of 16,954 workers in 2007 prior to the Great Recession.

The number of employed was 16,570 at the end of 2019, but with COVID, it was down 475 last November compared to November 2019. But the pain was not evenly distributed.

The vast majority of losses were in retail trade (mainly stores), which shed 150 jobs, a decline of 7.8%. It was even worse for accommodation and food services (mainly hotels, restaurants and bars), which lost 290 jobs, a 14.2% drop. The next biggest loss was 15 jobs in the finance and insurance sector.

There were gains in 10 sectors, with health care and social assistance topping the list with 26 added jobs. The only other category with double-digit gains was arts, entertainment and recreation, which added 16 jobs.

POSITIVES GOING FORWARD

There are plenty of positives occurring now and reasons for optimism going forward.

Butte has some major employers with stability, Kasperick notes, including NorthWestern Energy, St. James Healthcare, Town Pump, Montana Tech, Montana Resources, REC and CCCS.

The overall economy should continue to improve in the second half of this year as more people are vaccinated, Kasperick predicts, with employment growing in Butte-Silver Bow by 0.8% this year, 1.3% in 2022 and 1.5% in 2023.

And the real-estate market should remain hot. Sales prices increased 14% between 2019 and 2020 and sales volume increased 9%.

In 2019, 285 homes sold in Butte-Silver Bow with an average sales price of $177,000. Last year, 313 homes sold with an average sales price of $205,000. The average list price for homes as of December was $220,000.

Dan Fisher, the longtime assessor for Butte-Silver Bow County, says the boom is real. He used to see about 10 to 15 real-estate transfer certificates, or RTCs, come across his desk each week. They indicate land, buildings, subdivisions, etc. changing hands.

Now he’s seeing about 40 per week, sometimes higher, and they have included many old structures Uptown, including the former YMCA and Salvation Army buildings and the old Budget Motel on Montana Street.

Fisher believes there are several things behind the boom in Butte and other places in Montana, including people fleeing high taxes and big cities in California and the rest of the West Coast. But Fisher thinks the biggest driver is coming from nearby Montana cities.

“Every place got priced out of business in Bozeman and Missoula and a lot of them are just looking for some place to settle and that (Butte) is where they’re at,” he said.

Gallagher believes that could drive population up, especially among young and middle-aged professionals and their families, and that could lead to enrollment growth in schools and a higher tax base.

It might not mean huge population gains, he said, “But I think we’re going to see growth that we haven’t seen in Butte since prior to the mines shutting down in the early ‘80s.”

Another bright spot is Montana Connections, which has added several new businesses over the past few years and more roads and utility connections. A $2.9 million federal grant and $8 million in local funds will pay for additional rail capacity, with work to start and hopefully finish this year.

Two new distribution centers are going in, one for Wausau Supply Co., a major distributor of building materials, and one for Murdoch’s Ranch & Supply. Construction has been completed on a facility for Ergon Asphalt and Emissions.

Butte remains the only city in Montana where interstates intersect and it has two major railroads, the Union Pacific and Burlington Northern Santa Fe, and the business park is increasingly capitalizing on that. Willauer expects interest to grow.

“I think we’ll probably even see an expansion of some of our existing businesses out there,” Willauer said. “From the economic development side of creating good, high-paying jobs, the park is a fantastic resource.”

The Berkeley Pit and Butte’s decades-long Superfund status have long been viewed as an impediment to landing major employers, and there’s no doubt that quality of life and aesthetics play roles in site location.

But after years and years of negotiations and uncertainty over future mine-pollution cleanup, a consent-decree was finalized last year that details how work will be implemented and monitored and commits Atlantic Richfield to $150 million in cleanup actions.

The work still has to be carried out, but some big questions have been answered.

“I think that having the consent decree gives us a little bit more of a bright future of what mining will look like and what reclamation and restoration will look like, and we have a great opportunity to capitalize on that,” Gallagher said.

There are some new medical offices in town and the new military veterans home is expected to be fully operational this year. And progress continues toward the planned Praxis Center, which would be the nation’s first dedicated rural healthcare simulation training center.

It would create about 50 full-time jobs with another 25 or so hired part-time, including people to act as patients in simulation scenarios. They plan to train 5,000 healthcare workers annually through on-site and digital learning strategies.

Last year, Florida-based CAE Healthcare agreed to invest $6 million in equity toward the facility, bringing financing to about $10 million with another $25 million or so needed.

“We had a good year in 2020 raising money and identifying additional capital investment opportunities for the center,” Praxis CEO Ray Rogers said this week. “While things have moved slowly given COVID, the project remains on track.

“We remain hopeful that we can break ground in 2021,” he said. “At this point, we need to finalize our financing, and we are in discussions with a number of possible investors, including Opportunity Zone investors.

“We remain committed to making this project a reality in Uptown Butte and supporting the revitalization of the Uptown area. This project will have a significant impact on the economy of southwest Montana, and this will be a game changer for the training of rural healthcare practitioners.”

There are bright spots elsewhere in southwest Montana too, as Kasperick notes. They include a $10 million hotel and convention center being built in Anaconda and Whitehall looking at the feasibility of a meat-processing facility.

Sun Mountain Lumber in Deer Lodge is building a new planer facility, and though employment will remain about the same, it will increase efficiency.

“Like many other businesses, they are taking advantage of the COVID disruption to modernize aspects of their plant,” Kasperick said.

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