Erin Klem  | June 5, 2015

Running a Startup City

As part of our Silicon Cities series, we recently wrote about why people should move to Sioux Falls, South Dakota, a city with a booming job market, a very low cost of living, and a high quality of life.

Yet we wanted to take a deeper dive into the city to discover what, exactly, it has done to become one of the hottest economies and most livable cities in the U.S. To gain a little more clarity, we sat down with Mike Huether, a native South Dakotan who was recently reelected  mayor of Sioux Falls.

Huether, who worked in corporate America after graduating from South Dakota State University in 1984, moved back to his home state to fulfill a childhood dream of holding public office. Since 2010, when he was first elected, Huether has helped reimagine how the city’s government functions and works with the business community, which has led to unprecedented cooperation between the public and private sectors.

But the mayor hasn’t stopped there, leading initiatives that have upgraded and replaced infrastructure, as well as inking deals to build a number of recreational facilities aimed at boosting the city’s quality of life. All told, these kinds of efforts have had a major impact on Sioux Falls, fueling economic growth and generating thousands of jobs.

During a recent interview with Free Enterprise, Huether discussed the city’s success and talked about its plans for the future. As you can imagine, he’s bullish on Sioux Falls. “We’re going to find the cure for Type I diabetes and breast cancer in Sioux Falls,” he says. “And that’s just something that was unheard of five to 10 years ago.”

When you were figuring out how to improve Sioux Falls, were there certain cities you looked toward as models?

If there’s one thing that Sioux Falls has learned it’s that it if you want to be successful, then you have to start competing against the big players. And that truly is the Austins and the Chicagos—those larger cities that by and large have taken all the jobs and economic opportunities away from the rest of the country. That’s exactly what we’ve done, and it’s proven to be quite successful for us.

What’s the structure of the Sioux Falls government?

We have a “strong mayor” form of government. I am basically the C.E.O. or the president of a large company, and that company is the City of Sioux Falls. We have roughly 1,200 city employees and 12 department heads, and a substantial budget. We’re responsible of running the day-to-day activities of a city with 170,000 people, and a metropolitan area with about 250,000.

How have you changed the way business was done in Sioux Falls?

Economic development is probably one of the biggest challenges that I wanted to tackle when I was first elected. In corporate America, I was a growth and development guy, so I wanted to make sure that, wherever possible, the City of Sioux Falls could really help stimulate economic development opportunities in partnership with the state’s economic development team, Sioux Falls Development, and other business entities like the Chamber of Commerce and Forward Sioux Falls.

One of the very first things we did was try to gather all those entities together, and we talked about how we could really collaborate to compete against those other cities because, at the time, it really was a recessionary period. We had to do whatever we could do to get peoples’ attention across the U.S. And ultimately, we’ve been quite successful at it.

You’ve said that Sioux Falls weathered the recession better than most cities. Why?

I think we had some advantages. In the Midwest, and in South Dakota, and in Sioux Falls, we’re not going to be as aggressive with the highs. And, ultimately, that kind of protects us from the deepest darkest lows. We are more methodical, more prudent, and more cautious in our approach, which has served us well over the generations. And I know it served us well during the recession.

But also, I think there was a real advantage that we had over other communities: When it comes to our economic development stool, we’ve got multiple legs on it. We just don’t focus on just one industry here. We’ve got multiple legs such as agriculture, financial services, health care, retail/tourism, construction, etc., so when one is doing poorly, we’ve got four to five others that can kind of keep the whole thing strong. That really served us well during the recession.

Give an example of a less flashy initiative you’ve implemented as mayor that has had a profound impact on Sioux Falls.

One of the things I was very committed to when I was elected was to rebuild, repair, and replace the infrastructure of our town. And I know that’s boring to a lot of people, and it doesn’t get as many headlines. But repairing roads, sanitary sewer lines, public buildings, bike trails, parks—those things are a big, big deal. If your foundation isn’t strong, there’s no way in the world that you’re going to be able to build upon it.

Why has the city’s healthcare sector seen such impressive growth over the past decade?

Well, there are a number of reasons. For example, we’ve got a gentleman, Denny Sanford, who invested significantly in Sanford Health. So, he’s helped infuse millions of dollars into finding a cure for juvenile diabetes or breast cancer at that health center, and he wants to build one of the best and most respected research institutions in the Midwest. Then, at the same time, we have another organization in town called Avera McKennan, which is also investing millions into their research, infrastructure and vision.

This all ties into what happened during the recession: Though financial services, construction, and manufacturing were slowing down, other industries like agriculture, research, and healthcare were just kicking tail. These sectors really provided that balance that we needed to keep our head above water during the recession, and they also enabled us to get out of that water faster than anybody once the recession came to an end. We have recently been called “America’s Next Boomtown.”

What’s your pitch to businesses mulling a move to Sioux Falls?

On a large scale, we have no corporate tax or state income tax here. You also have an environment where it’s definitely pro-business. The word is out that if you want to expand your business or improve your margins, then this is the place to be. Profit is not a dirty word here.

We do things differently here. We cut through red tape—or we don’t have red tape at all. We have one of America’s strongest work ethics, so we just have an incredible environment when it comes to being business friendly. We also have a ready supply of land, water, rail, and a hard-working employment team. So, when you throw all that together, you win more than you lose when doing business in Sioux Falls.

Have public-private partnerships played a role in your city’s success?

It’s one of our greatest success stories. We have the Forward Sioux Falls program, which is a public-private partnership that raises millions of dollars every five years for the purposes of creating economic development, workforce development, and other development opportunities for the city of Sioux Falls. It’s been a great success, and we’re kicking off another program now to further ignite economic growth.

What’s your secret to success?

There wasn’t much confidence in this area back in late 2009, early 2010. Now, we have a confidence level that is off the charts. When you go in confident, there are amazing things you can accomplish. We also tackled some quality of life obstacles that had been eluding us for generations. We built a $117 million event center we had been talking about forever that opened last fall. We just recently passed a $24 million indoor aquatics center we’ve been debating since 1951!

Additionally, through a public-private partnership, we just opened an indoor ice complex, and in March is the ribbon cutting of an indoor tennis facility. We’re making critical quality of life investments because nowadays, young people decide where they want to live first, and then they go and find a job.  Your community must have a good quality of life if you want to recruit great workers and businesses, so that’s what we’ve been focusing on. We’re very happy with the results. By the way, if you know any good workers, Sioux Falls has 2,400 good jobs available right now!