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Indiana sees $1.6 billion impact from Regional Cities Initiative

Last Updated 1 week by Amnon J. Jobi | Amnon Front Page

(INDIANA CAPITAL CHRONICLE) — A state regional development initiative had high payoffs for 18 Indiana counties, according to a new Ball State University report

Researchers for the university’s Center for Business and Economic Research found that the Indiana Regional Cities Initiative (RCI) — a one-time $126 million funding program created by former Gov. Mike Pence in 2015 — generated population, employment and real GDP growth. The economic activity associated with RCI reaches nearly $1.6 billion.

The RCI program aimed to encourage neighboring communities in Indiana to work together to develop plans focused on “quality of life” that would make Indiana a more attractive place to live, attract and retain skilled workers. In 2015, three regions — the Southwest, North Central and Northeast regions of Indiana — received $42 million each to develop these plans. 

Michael Hicks, a BSU Professor of Economics and co-author of the study, said in a press release the results “can be interpreted as casual.” 

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“Funding provided through the Regional Cities Initiative likely accredited some existing projects and provided key funding for projects not yet started,” Hicks said in the release. 

Employment growth

In their study, authors Hicks, Dagney Faulk and David Terrell estimated the counties that received RCI funding would see an additional $37 million in additional GDP per year and add around 1,088 jobs. 

“The implications of these results are that well-targeted, place-based programs with substantial input from local communities can positively influence economic outcomes of a region,” the researchers wrote in the report.

Many of the counties that received RCI funding also saw employment growth in the construction sector. The Indiana Construction Roundtable Foundation estimates that Indiana’s construction industry will need 1,100 new workers by 2026 to combat workforce shortages

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The counties also saw employment increases in the food service sector. Additionally, the study found that the RCI funding did not lead to higher earnings or significant wage effects in these counties.

Researchers also noted that the counties did not experience employment growth in the arts, entertainment and recreation, even though several of RCI’s main goals were to enhance communities’ arts and culture

In 2021, Gov. Eric Holcomb launched the Regional Economic Acceleration and Development Initiative (READI), a grant program that builds off the RCI’s framework. The program has allocated around $1.25 billion to communities across all of Indiana’s 92 counties to tackle issues including housing, small business development, child care options and employment opportunities. In 2024, the state announced $500 million in new grants and a $250 million donation from the Lilly Endowment for READI 2.0.

What projects did RCI fund? 

In the North Central region, which included South Bend and Elkhart, RCI funded 39 different projects that had a combined total capital investment of $703.4 million. The projects included improving the South Shore train line that connects to Chicago, building an aquatic center, creating housing developments and expanding broadband internet access. 

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The Northeast region, encompassing Fort Wayne, used the funding to start several riverfront and downtown improvement projects, improve performing arts spaces and expand broadband access. These 38 projects totaled $400 million. Fort Wayne also used part of the funding to construct its downtown “Skyline Tower” development, a 12-story office and living space. 

The Southwest region, which covers Evansville, received RCI funding to improve its downtown YMCA facility and the Evansville Regional Airport, expand STEM offerings at a local charter school, and build a new conference and housing facility.

The BSU researchers found that RCI funding helped accelerate progress for existing projects in these three regions.