Mankato has major issue with potential 'micropolitan' downgrade

It's the American way to think big. And that's a key reason why Mankato is fighting back against a federal proposal to downgrade the city from a metropolitan statistical area (MSA) to a "micropolitan" one.

Nearly 150 U.S. cities would see their status changed under a proposal by the federal Office of Management and Budget (OMB). Currently, areas with an urban core of at least 50,000 people quality as MSAs.

The new plan would require an urban core of at least 100,000 residents to qualify. It would be the first time the MSA definition has been changed since 1950.

The new definition would drop the Mankato and North Mankato area, with a core population of about 61,000, into a tier of smaller Minnesota cities including Brainerd, Red Wing, Fergus Falls, Fairmont and a dozen others. And that could be a blow to Mankato's growth prospects.

"To drop out of that, you're not quite in the flow of cities anymore," said Louis Johnston, an economics professor at St. John's University and the College of St. Benedict. "People would have to look harder to discover you."

Companies often use MSA data in deciding where to locate or expand facilities, Johnston said, and the data is also commonly used in wage and price studies.

"If economists, for example, are doing research on cities around the country, Mankato won't be in their sample anymore," he said.

Mankato community leaders said the proposal took them by surprise.

"We had no indication that the change was coming," said Paul Vogel, Mankato's director of community development. Vogel said federal aid for housing, health care, transportation and other human services is often tied to a city's MSA status.

If a city is an MSA, the funding comes automatically from the federal government. If a city is a micropolitan area, then it has to apply for grants from the state, which makes decisions on how to allocate other pots of federal dollars.

As the largest micropolitan area in the state, Mankato would have an unfair advantage against other small cities, Vogel said.

"There's probably an equity issue there," he said. "We have a staff with a lot of experience putting together grant applications, compared to other cities that probably have a limited staff."

Mankato could be "the big fish in the small pond, gobbling up that allocation," Vogel said. He added that City Manager Susan Arntz has done a great deal to rally community support for reconsidering the decision.

The Grand Forks, N.D., and East Grand Forks, Minn., area is the other Minnesota MSA that could be downgraded. City officials in East Grand Forks didn't respond to requests for comment.

A group of 22 U.S. senators, including Democrats Tina Smith and Amy Klobuchar of Minnesota, have sent a letter asking the OMB to study the proposal further.

Mankato's business community has lobbied hard against the proposed change, said Jessica Beyer, president and CEO of GMG, a regional development association.

"We turned over every rock to be sure we were making people aware of the issue," Beyer said. The Mankato area is thriving, she said, with its economy having grown about 18% since 2010. Mankato's growth ranks it in the top half of the nation's MSAs, she said, outpacing many much larger cities. That makes it all the more painful to think the city could lose out on new opportunities.

"Regional centers like ours may not be considered for millions of dollars in investments," Beyer said. "It's a very concerning issue, and right now it's a waiting game. We've done all we can do."

John Reinan • 612-673-7402