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Image courtesy of Olezzo via Adobe Stock
For some cities, the shift to remote work represents the best of times… For others, less so. In Tulsa, Oklahoma, the city has utilized a private-sector incentive program to attract remote workers and incubate small businesses to become a red-hot landing spot for location-independent workers.
Across the country in Washington, D.C., a different story is being written as remote work has challenged public officials hoping to rebuild a dwindling downtown population. However, in the face of those challenges, D.C. and other large metropolitan areas are rethinking how they draw people to their urban corridors.
Overall, it’s clear that remote or hybrid work is here to stay, and cities that embrace this change will reap the benefits.
The rise in remote work creates new opportunities for cities with a low cost of living to attract well-paid workers from larger cities looking to increase their spending potential and quality of life. Even before the pandemic, some cities and states implemented programs that offered financial incentives to remote workers to encourage them to relocate. The trend only grew after the onset of COVID-19.
In Tulsa, Oklahoma, the Tulsa Remote program, funded by billionaire resident George Kaiser, partners with the local government to offer remote workers $10,000 if they relocate to the city for at least a year. In addition to the financial incentives, Tulsa Remote members get access to free coworking space and coaching services for aspiring entrepreneurs. Additionally, the program works to connect members to foster a community of new Tulsa residents.
So far, Tulsa Remote has been a success. The program was founded in 2019 but took off after the COVID-19 pandemic. Data released by the organization found that between 2019 and December 2022, 2,165 remote workers moved to Tulsa through the program, contributing $306.7 million in direct employment income. Of the more than 2,000 workers who joined since the program’s inception, 76 percent remain in the city.
In 2022, program members generated an average of $151,000 per person in labor income, which the program defines as the worker’s salary added on top of the money resulting from their spending in the Tulsa community. There were 1,852 Tulsa Remote members in 2022 alone, generating $203 million in new labor income.
It’s also estimated that for every two new remote workers that move to the city through the program, the city gains three new residents due to family members moving or new job creation. The influx of remote workers is also a significant boom for the local and state tax base. Remote Tulsa estimates that, in 2022, employees who took advantage of the program generated $2.5 million in sales tax revenue for Tulsa County and an additional $3.1 million for the state.
While speaking at The National League of Cities conference, Tulsa Mayor G.T. Bynum praised the Remote Tulsa program.
“Tulsans have invested in our city for decades to make it a great place for people with (a) low cost of living, and the innovative Tulsa Remote program from the George Kaiser Family Foundation broadcasting to remote workers around the world that our city was a place of tremendous opportunity for them. Cities that invest in themselves to build vibrant communities will do very well in the remote work era ahead of us,” Bynum said.
Tulsa is fortunate, as the program is fully funded by the Kaiser Foundation, meaning no public money is involved. Other similar initiatives, such as a statewide program in West Virginia, are also financed by wealthy local business community members. However, some cities have decided to fund their programs using tax dollars. One such program is Choose Topeka, which is out of Topeka, Kansas. The funding for that program comes from a half-cent sales tax increase in Shawnee County, the county in which Topeka lies.
Washington, D.C.’s downtown is unique compared to other urban cores in America. The city’s self-imposed 130-foot height limit means that the downtown has no skyscrapers, which gives the nation’s capital somewhat of a European feel. Historically, the downtown has been a vibrant center of activity — though somewhat less vibrant in recent years. Research from the University of Toronto found that pedestrian traffic is now only 70 percent of what it was before the onset of the pandemic.
Local government officials in the District of Columbia blame the decline in downtown pedestrian traffic on remote work, which is more prominent now than just four years ago. Data from the U.S. Census found that 15 percent of U.S. workers worked from home most days in 2022, an increase from only six percent in 2019. However, some metropolitan areas have a much higher concentration of remote workers than the national average. In Washington, DC, and the surrounding communities, 25 percent of workers work remotely most days. That number also stood at six percent before the pandemic.
This substantial increase in remote work is particularly damaging for Washington, D.C.’s downtown core, where three out of every four structures are office buildings. The office vacancy rate is now a record-high 18.9 percent, compared to roughly 12 percent in 2018. High downtown office vacancy has several consequences for the city, including fewer pedestrians, fewer customers for retail businesses, and less tax revenue. To tackle these challenges, the nation’s capital identified ways to adapt to this new normal and create new opportunities moving forward.
Washington, D.C. Mayor Muriel Bowser has a bold plan to increase downtown’s residential population, largely by converting many of the neighborhood’s office buildings into apartments. After being sworn in for her third term as mayor in January, Bowser announced her plans to increase downtown’s population from 25,000 to 40,000 residents over the next five years. The mayor eventually foresees 100,000 total residents downtown.
“Anyone who goes downtown during the week knows that we don’t have the vibrancy we had before the pandemic,” Mayor Bowser told the D.C. Council. “We also know that we cannot rely on the strategy of bringing back workers. Our downtown is forever changed, and the strategy we put in place has to focus on how we mix uses and people downtown.”
Since the city has a 130-foot height limit and few underbuilt lots in the downtown area, the only way to bring in thousands of new residents is by converting office buildings to residential use.
However, not all office buildings can feasibly go through that conversion process due to their current layout and design. Buildings eligible for conversion can only be transformed into residential use through a costly process that’s not financially feasible for some developers. Because of this, D.C. has an existing program that allocates $2.5 million in tax abatements a year through 2026 for developers who convert office buildings into apartments. In 2027, funding for the program will increase to $6.8 million. Funding applies to projects across the city, but there is a major emphasis on downtown conversions.
In a sense, this program already has worked. Two office-to-residential projects will deliver 383 residential units, already under construction in downtown. However, it may not be enough. Another eight downtown office-to-residential conversions that were previously announced are now on hold because the developers deemed the conversions to not be financially feasible.
As a result, Mayor Bowser proposed that program funding increase to $41 million a year in 2028. The city council later approved the funding measure but increased the affordable housing requirement from 15 to 18 percent of the total converted units. Ultimately, the mayor believes that spending more taxpayer money to improve downtown’s vibrancy is a worthwhile investment.
“We must, and we will win back our downtown because it is the economic engine that allows us to invest in our schools, our safety net, and our public works,” said Bowser after her most recent inauguration in January. “Converting office space into housing is the key to unlocking the potential of a reimagined, more vibrant downtown.”
The rise in a remote workforce has created unique challenges and opportunities for cities of all sizes. Local governments are searching for and implementing innovative, forward-thinking solutions to adapt to the new normal of increased remote and hybrid work. Those who succeed are creating a far better future for residents looking for work-life balance in an ever-changing twenty-first-century world.
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