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College Towns Fear Covid Will Leave Them as Ghost Towns

Bloomberg logo Bloomberg 6/15/2020 Janet Lorin and Reade Pickert

(Bloomberg) -- Colleges bring a certain indefinable something to college towns. They also bring at least two definable somethings: students and sports. Without those, many college towns would become ghost towns.

If students don’t return to campuses in the fall because of Covid-19, families won’t visit and patronize hotels, restaurants and shops. If the fall football season is canceled or played with curtailed seating, fans won’t be arriving by the thousands and spending by the millions.

Small businesses in towns like Easton, Pennsylvania, the home of Lafayette College, rely not only on a steady revenue stream from students and college employees, but also on frequent floods of visitors attending games and events.

That all dried up in March, when Lafayette and most other U.S. colleges sent students home and canceled sports for the remainder of the school year to limit contagion of the novel coronavirus.

“We're really in a fragile place,” said Jonathan Davis, a Lafayette alumnus and co-owner of Pearly Baker's Alehouse and other local businesses. “There are so many instances where things can go awry.”

With all but 200 of Lafayette’s roughly 2,650 students gone, Easton’s restaurants and shops never saw the influx they usually expect at Mother’s Day and graduation, nor from other visitors. High school juniors toured the liberal arts college by video instead of walking through the hilly campus nestled in the Lehigh Valley.

The pain kept spreading this spring: A shortfall in sales tax revenue for government, and then local businesses and the city of Easton began laying off and furloughing employees, hurting sales further and cutting into income tax revenue. Lafayette announced its own furloughs of about 40 employees for June and July, in addition to some salary reductions.

Businesses that have survived aren’t sure how much more they can take, even though as of June 5 restaurants are allowed to resume limited outdoor service. Davis said he is not sure whether the finances of his restaurant will work if limited to half-capacity to maintain social distance. Of course, he points out, if people can’t afford to go out to eat because they have lost jobs, it won’t be the capacity limit that breaks his business.

“We're hoping there aren't significant and lasting impacts on the city,” said Mark Eyerly, a college spokesman whose office is downtown. “Easton's renaissance has become a key advantage for us in recruiting students and faculty to the college in ways that it probably wasn't 20 years ago.”

The school announced Monday that it intends to open for in-person classes from August through Thanksgiving, beginning and ending its fall semester early. However, for health reasons Lafayette will encourage students to stay on campus — which would hurt that downtown comeback.

High Stakes

Colleges are among the largest employers in their towns. They helped drive economic growth for decades and were seen as stable sources of jobs. Easton was making a comeback until the pandemic, on track to hit a population of more than 30,000 in this year's census for the first time since the 1960s. A cluster of new restaurants, shops and housing — led by the Alehouse about 25 years ago — had revived the downtown after decades of decline.

“Easton’s recent redevelopment means it has only a thin cushion to sustain its economic base against the shock of this crisis,” said John Kincaid, a professor of government at the school since 1994 and director of the Meyner Center for the Study of State and Local Government.

College towns with larger and more established business districts might be less fragile, but they also have more to lose.

Students make up only about 10% of Easton’s population. In Chapel Hill, North Carolina, home to a big state school, students are estimated to make up a far larger share — roughly a fourth. Economies like that are almost unimaginable without the colleges at their heart. The losses from even the current pause have been steep.

Total small business revenue in Easton’s Northampton County was down about a quarter as of early June compared with January, according to the Opportunity Insights Economic Tracker, a platform that pulls together data on indicators like consumer spending and small business revenue from private companies to offer a real-time picture of economic activity. In Orange County, North Carolina, home to Chapel Hill, small business revenue is down more than 20% as of early June compared with early 2020, far worse than the state of North Carolina's roughly 5% decline.

The University of North Carolina at Chapel Hill has said it plans to hold in-person classes this fall, with social distancing precautions. However, the uncertainty of a pandemic — already resurging in some areas — puts full campus reopenings and the all-important football seasons in jeopardy.

The University of Nebraska-Lincoln also has said it plans to welcome students back this fall and resume football. The Cornhuskers hold the record from the National Collegiate Athletic Association for consecutive sold-out Saturday football games, a streak that began in 1962 and has run for 375 games so far. The Huskers’ venue, Memorial Stadium, swells with about 90,000 fans each time.

The athletics department said it is planning for the 2020 football season to be played as scheduled, while also preparing for possible contingencies and alterations to game-day procedures.

Each game, about half a dozen per season, brings in an economic impact of $5.2 million to the Lincoln metropolitan area, according to Eric Thompson, a professor of economics at the University of Nebraska-Lincoln. Forgoing more than $31 million from a skipped season would be devastating.

Crucial Revenue

Chapel Hill businesses also count on spending that spikes during home games.

About 10 yards from campus sits Top of the Hill Restaurant & Brewery, which would typically be bustling each evening. Owner Scott Maitland furloughed the entire staff of more than 100 in mid-March when the state closed restaurants to dine-in customers.

“Our economy downtown is driven by visitors coming to the university,” he said. “Our whole economy downtown has been gutted.”

Maitland has brought back only half a dozen or so employees and expects to not rehire en masse until July, when he plans to reopen.  

Even a best-case scenario, with a return to normal operations in the fall, looks disastrous to many businesses hurting from lost revenue from spring and summer. As Julie Jennings, owner of the clothing boutique Uniquities, put it: “It’s tons of people and tons of money that is gone that we'll never get back.”

(Updates 10th paragraph of article published June 14 to reflect Lafayette College’s intention to reopen campus in the fall.)

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