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Coeur d’Alene, Walla Walla, Lewiston and other ‘metropolitan areas’ could lose that status under federal proposal

The weather brought folks out to enjoy McEuen Park in Coeur d’Alene on April 6. Officials in Washington and Idaho cities said they’ve been told a change to a statistical determination won’t affect their eligibility for federal funding, but questions remain.  (Kathy Plonka/The Spokesman-Review)

WASHINGTON – Coeur d’Alene, Lewiston, Walla Walla and Wenatchee could lose their status as metropolitan statistical areas under a federal government proposal that has drawn criticism from local officials who fear they could lose important funding, data and business incentives along with the designation.

On Jan. 19, the day before President Joe Biden’s inauguration, the Office of Management and Budget announced its intention to double the minimum population of an metropolitan statistical area’s core city from 50,000 to 100,000. Under that new definition, 144 cities could be downgraded to “micropolitan,” including six of the seven MSAs in Idaho and four more in Washington.

“It’s a seemingly small, statistical thing that could have large repercussions, both for local communities and even for the way in which the federal government thinks about spending its money,” said Tony Pipa, a senior fellow at the Brookings Institution, a nonpartisan think tank in Washington, D.C.

OMB, which is part of the Executive Office of the President, made the proposal after it was recommended by a committee of statistical experts from across the federal government following a two-year review conducted along with the census. It is the first time a change to the minimum population has been proposed since the category was established after the 1950 census.

The proposal says the new definition should not affect funding from federal programs, but Pipa said that doesn’t mean small cities are in the clear.

“The fact is, as a practical matter, lots of different agencies and programs do implicate the MSA in their eligibility requirements (and) their scoring criteria,” he said. “And it’s not fully known just how far and wide those implications are.”

One important source of funding tied to MSA status is the Department of Housing and Urban Development’s Community Development Block Grant program. Being the principal city of an MSA confers a yearly entitlement of CDBG funds, which can be used for projects including improving housing, building sidewalks and fixing broken streetlights in low-income areas.

“There’s a whole host of CDBG programs that have been very successful,” said Nabiel Shawa, city manager of Walla Walla. “They have improved the engagement of our low-income neighborhoods, as well as really improving their quality of life.”

“For our budget, this is a significant source of funds that go a long way. I think the citizens of Walla Walla are just as deserving as the other (metropolitan areas), and we would hope that they don’t eliminate it. We want to make our valley and our city as good as we can.”

A spokesman for the Department of Housing and Urban Development said even if an area loses its “metropolitan” status under the OMB proposal, it will remain an “entitlement” for the purposes of CDBG funding. Entitlement status can come one of three ways: a city with a population of at least 50,000, a county with at least 200,000 residents, or being the principal city of an MSA.

“Essentially, once a community receives an entitlement designation, they keep it,” HUD spokesman Lee Jones wrote in an email. “Even if your city’s population drops below 50,000, your county’s population drops below 200,000 or … even when as a principal city OMB adopts a rule that, effectively, changes a Metropolitan Statistical Area into a Micropolitan Area.”

After seeing the response from HUD, Shawa said he wanted to see official guidance from the agency before he would be completely at ease.

“It’s reassuring that HUD currently does not rescind the (MSA) status,” Shawa wrote in an email. “However, once an agency initiates the rule changing process, one never knows how exactly it will end. Additionally, the purpose or objective of the proposed rule change has not been explained, which leaves us wondering what the underlying intent may be.”

Coeur d’Alene City Administrator Troy Tymesen said a HUD representative told city officials Coeur d’Alene would be “grandfathered in” and would not lose its CDBG entitlement status even if it loses MSA status.

Other local officials share Shawa’s concern, along with worries about a range of other potential effects of the OMB proposal. Feedback kept pouring in from across the country after the public comment period officially closed March 19 – a total of 872 letters.

Shannon Grow, director of the Lewis Clark Valley Metropolitan Planning Organization in Lewiston, wrote that the change could impact the way the Census Bureau – a separate agency – designates “urbanized areas,” or UZAs, which in turn lets a community form a “metropolitan planning organization,” or MPO. The population threshold for a UZA is 50,000, the same as the current definition of a metropolitan statistical area.

“As a very small UZA, we are concerned that raising the MSA threshold to 100,000 will affect how small urbanized areas are classified in the future,” Grow wrote. “The current alignment between UZAs and MSAs solidifies and identifies an area as one of economic growth and regional significance. If the MSA threshold were changed, there would be conflicting terms, definitions, and identities for smaller areas such as ours.”

Christine Frei, executive director of the Clearwater Economic Development Association, expressed concerns that losing MSA status could hurt her organization’s ability to attract businesses and jobs to their area, which includes five North Idaho counties.

“It is our experience that businesses seeking to locate or re-locate to areas do use the MSA as a measurement for consideration,” Frei wrote. “If this designation is taken away, we are concerned that it initially could have a detrimental impact to business attraction.”

Tom Kealey, director of the Idaho Department of Commerce, pointed out in a letter that Idaho would be more affected by the change than most states, losing six of its seven MSAs: Coeur d’Alene, Idaho Falls, Lewiston, Pocatello, Twin Falls and Logan, Utah, which includes Franklin County in Idaho.

“As a result,” Kealey wrote, “Idaho labor market data for several Bureau of Labor Statistics programs will be arbitrarily combined into several geographic areas that quite simply do not make sense. … The impact on Idaho businesses, communities, policymakers, and others will be severe.”

The decision to adopt or reject the proposal will ultimately be made by acting OMB Director Shalanda Young. An OMB spokesman wrote in an email, “The proposal and public comments are currently under review per standard practice, and no decision has been made on the proposal.”

Gundars Rudzitis, emeritus professor of geography at the University of Idaho, said the OMB proposal is fundamentally about drawing a line between urban and rural America, a distinction that has gotten fuzzier as the nation has grown.

“We’ve historically had these breaks – we say ‘this is urban, this is rural’ – but we’re really becoming more of a continuum,” Rudzitis said.

The change could potentially force smaller rural communities to compete with the newly designated “nonmetro” areas for federal programs, he said.

“Rural funding and programs for rural areas are relatively scarce, so now you’re going to increase the competition for funding,” he said.

The big question that remains unanswered is why the committee recommended the change to how an MSA is defined. Despite the OMB publishing the proposal on the last day of the Trump administration, Pipa said he has seen no indication that the move was politically motivated.

“From a statistical point of view, or a scientific point of view, it’s oddly missing detail,” he said.

Shawa said he has heard speculation that the push to redefine “metropolitan” may have come from the southeastern United States, especially Florida, which may benefit from a larger share of federal programs. More likely, Pipa said, it was just the result of statistical experts not considering the potential impact of such a seemingly small change.

“You read it and it’s just clear as mud,” Shawa said. “What are you trying to achieve with this rule change? What is the purpose? That’s not spelled out clearly.”