Is Sioux Falls, S.D., the Next Boom Town?

Forget about man camps. Mayor Mike Huether wants you to know that North Dakota isn't the only state boasting low unemployment and a growing population.

National Journal

This article is part of a weeklong America 360 series on Sioux Falls.

Most U.S. mayors would give their right arms for Mike Huether's problems. The 50-year-old Democratic mayor of Sioux Falls runs a city blessed with consistently low unemployment — the current rate is 3.5 percent — multiple thriving industries, and few of the woes that plague larger urban areas. A former executive who spent 15 years with Citibank, one of South Dakota's largest employers, Huether oversees city coffers that keep growing, thanks to economic prosperity in the region and a population boom. The downside? Managing the city's growth to provide for all those new residents, and making sure that low unemployment rates don't scare away employers who worry they can't fill positions.

Huether recently sat down to talk with National Journal's Amy Sullivan in his downtown office. Edited excerpts follow.

This is my first time back in Sioux Falls in more than a decade. The last time I was here, Citibank was really the only game in town. What's happened to the city's economic base since then?

You're right. I graduated in 1984 from South Dakota State University, and at that time, the opportunities were limited, except for this new business in town. That was one of the biggest wins for the city. This town was built on agriculture, and it's still a big part of why we're successful. But then we got into banking — with Citibank, First Premier, Wells Bank, Capital One. We also became a retail and, yes, even tourism, mecca for this region; that includes things like conventions and conferences. Then you add the other leg that really had a strong role during the recession, and that was health care.

We're going to find the cure for breast cancer in Sioux Falls, and for Type 1 diabetes. We are setting up labs and testing environments and other innovations in health care. They're not screwing around. Companies like Sanford and Avera are sincerely passionate about doing that work in Sioux Falls instead of at Mayo or on the East Coast. That fourth leg really helped catapult us during the recession, because they were investing in research, investing in facilities and people during that time. Even though banking was struggling and retail was down, ag and health care were going gangbusters.

It sounds boring, but it's very effective to create more legs on your economic development stool. We do it extremely well here.

How important was it to have Citi's presence and the reputation as a financial-services sector to bring other companies here?

Citibank taught us how to think big. It was an incredible training ground for so many young executives and future leaders, including myself. I started there in 1984 and worked there until 1999, spending five years in South Dakota, five in New York, five in Texas. Then I went to Europe and then came back to South Dakota to work at Premier Bank with Denny Sanford. I quit in 2009 to pursue my dream to be in public service.

Citibank taught us we could play with the big boys, and to be proud in South Dakota instead of being looked on as second-class citizens in the Midwest. I'll never forget being at Citibank and having these East Coast people from elite colleges who were reporting to this South Dakota boy from South Dakota State. We had folks from the East Coast who "had" to move to Sioux Falls, and once they got here, they were going, "why in the world didn't we come earlier?"

Looking at your unemployment numbers, with the exception of a brief spike in 2010 when the rate went up to 6 percent, it's surprising that more people don't move here.

I was just in Wisconsin, where some friends were talking about 9 percent unemployment, and I can't fathom that. Here in Sioux Falls, if we're over 5, 5.5 percent, we're wondering what we're doing wrong. Right now we're at 3.5, and actually struggling with that. It's a good thing if you need a job, but something to look out for if you're trying to hire people.

We do have between 3,000 and 4,000 people moving here each year, looking for a great place to raise their families and find jobs. This year, we will blow away the record for construction in a single year. We're already 150 percent of where we were last year, and last year was the second-highest construction year in our city's history.

What are the challenges in absorbing thousands of new people every year?

It's the one thing that keeps me up at night as mayor. You do have this responsibility to manage growth, to plan it and zone it right. Because if you mess it up, it'll impact this city for generations. Fifty years ago, whoever the leaders were decided to put two private country clubs side by side in what is now the heart of our city. Now we have a challenge driving from the east side of town to the west side of town because of that decision.

When people move to your town, you have to build more sanitary sewer lines and strengthen your roadways, you have demand for commercial development, demand for city services — fire, police, libraries, parks. You have to prioritize to do it well, and occasionally you have to make special-interest groups mad at you. But I'd rather have my problem than problems that other mayors across the country are facing right now.

It's true that many of the other towns we've visited are struggling with blighted neighborhoods or high poverty rates. It's harder to identify the challenges here. But the issue of workforce availability and readiness is definitely real. 

It's a challenge the whole state is facing. The governor just went to the Mall of America and set up a booth to let all of Minnesota know that if you need a good job and quality of life, we've got it in South Dakota. We need 500 welders in Mitchell, S.D. We've got 1,000 job openings in Aberdeen. You name the town, we're trying to find people to work. There's no oil, no fracking anywhere. You've just got a strong ag economy, high optimism and confidence.

Here's another thing: Our city council insists we have at least 25 percent of our operating expenses in a reserve fund every year. Right now we're at about 36 percent. Name another town in America that is repairing streets, rebuilding infrastructure, tackling growth needs for a community, and adding to their city's piggy bank. We have added to our city's reserve every year for the last three years.

We had 30 businesses in downtown Sioux Falls that either opened or expanded last year. There is no vacancy right now for people who want to live in downtown Sioux Falls. That was one of my dreams when I moved back here from San Antonio — I wanted to create a downtown where people would want to live.

Agriculture can still be a risky business. How was the area affected by last year's drought?

Like business, ag has evolved. There are still family farms, but they're huge now. Technology has changed as well. No-till farming has been so important in terms of saving money and protecting the environment. And there are some measures that have been implemented by the federal government that have allowed farmers to take some risks. For example, last year was the driest year since the '50s, if not the '30s, in South Dakota. We really worried about it, but there were some stop-gap measures that kicked in that allowed farmers to invest in equipment for this year, hoping that it was going to rain. And guess what? It's raining. It allowed us to keep the oldest leg on the stool rock-solid.