Abstract:

Home to just under 8,000 hard-working

residents spread across acres of farm and

grazing lands, Kit Carson County is located on

the I-70 corridor near the Kansas-Colorado

border. Eastern Colorado offers a more

isolated lifestyle compared to the density

found in the Front Range. With over half the

population in the city of Burlington, Kit

Carson County exemplifies the rural

landscape of the mountain plains.

Agriculture is the hub of employment and is

in a state of constant change and growth.

This analysis will show the ability to create a

bridge between the agriculture industry in

Eastern Colorado and Western Kansas. The

opportunity for agriculture to grow as an

industry in Kit Carson is massive, especially in

the ethanol and agricultural business

industries. The analysis will provide a look

into the different factors and avenues that

can further assist the job market, as well as

raise wages throughout the agricultural

industry within Kit Carson County (KC).

Kit Carson: Economic Development Opportunities in Rural Colorado Caden Macleod, Haley Fackler, Joeseph Kroymann

11/3/2020, Colorado State University, ECON 492

1

Table of Contents Cover Page and Abstract ……………………………………………………………………………………………………………….

Table of Contents………………………………………………………………………………………………………………. 1

Background ....................................................................................................................................... 2

Economic Base Analysis ...................................................................................................................... 3

Main Base Industries………………………………………………………………………………………………………………3

Multiplier (1.51) ……………………………………………………………………………………………………………….4

Impact of Kit Carson Correctional Facility Closure……………………………………………………..4

Socioeconomic Factors ....................................................................................................................... 5

Connecting the Regions ...................................................................................................................... 7

Expansion of the Regional Center ........................................................................................... 7

Ethanol Plant Fundamentals ....................................................................................................... 8

Implications……………………………………………………………………………………………………………….9

Potential Concerns……………………………………………………………………………………………………………….9

Potential Benefits……………………………………………………………………………………………………………….11

Hopes for the Future……………………………………………………………………………………………………………….12

All Things Considered……………………………………………………………………………………………………………….14

Appendix/Graphs……………………………………………………………………………………………………………….15

Works Cited……………………………………………………………………………………………………………….19

2

Background

Named after the notorious Kit Carson, American frontiersman, trapper, and soldier who

made a meaningful impact on the expansion of the west in the United States (Britannica, 2020).

The county itself consists of just under 8,000 people, which about half live in Burlington, the

largest town in Kit Carson. Many of the other towns are all located along the I-70 freeway, the

largest being Stratton (population 658), Flagler (561), Bethune (237), Seibert (181), and Vona

(106) (Colorado Encyclopedia, 2020).

KC is barren like much of Eastern Colorado, but encompasses multiple valuable water

sources, including the South Forks of the Arikaree and Republican Rivers and their different

branches. It was originally inhabited by many Native American groups such as the Arapaho,

Cheyenne, Comanche, Kiowa, and Pawnee. When the Anglo-Saxons and Germans were looking

to make settlements, the rivers and opportunity drew them to the area. And, when Kit Carson

County was established in 1889 it began its development into what we know today (Colorado

Encyclopedia, 2020).

The main industries in KC are Agribusiness and Households. Accounting for more than

70% of the employment, these two industries drive Kit Carson’s economy. Due to the loss of the

prison, local businesses, and the effects of COVID there have been some difficulties because of

the loss of employment. There is also a lack of access to broadband, health services, and state

funding for rural communities like Kit Carson. Colorado is part of a coalition of states that is

committed to the continued investment and development of these counties.

In the analysis, we will show why furthering the Agriculture Business industry,

particularly in the production of ethanol, is favorable. And as a result, it will create steady

3

employment, raise wages, and allow prosperity to thrive throughout the county. Not only will

this allow Kit Carson to grow, but it will also generate a regional center between Colorado and

Kansas. Creating this bridge will allow job growth between state lines, which can further the

economic development of KC and allow for optimistic opportunities in the future.

Base Analysis

Main Base Industries

The two largest components of the basic portion of the KC economy are Agribusiness and

Households, which is mostly made up of Local Resident Services in the area. In 2019,

Agribusiness and Local Resident Services accounted for more than 70% of total employment in

KC. Given the isolated nature of KC, this makes sense. Within KC, agribusiness is mostly made

up of grain production, the raising of cattle and hogs, and farm management services to

support these processes. Two of the largest businesses in KC are Midwest Farms, a large-scale

hog raising operation, and Burlington Livestock Exchange - a livestock auction house that

specializes in a variety of cattle. When it comes to Local Resident Services, the employment in

this industry is made up of jobs that are necessary in any county, such as teachers, police

officers, or those who work at gas stations. Currently, KC has done well to maximize its

comparative advantage of being located on an isolated portion of I-70 and having a large

amount of land to conduct agricultural activities on. Looking elsewhere, the next largest

industry is retirees. As we will see further on, relying on retirees to drive the local economy in

the next 10-20 years is not going to be sustainable. The rest of KC’s economy consists mostly of

hotels along Interstate 70, and a variety of regional center industries, such as education and

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health services. As figure 1 shows us, the Agribusiness and Households industries dominate in

KC, but there is also potential for industries that fall under the regional center umbrella.

Multiplier

The multiplier for Kit Carson County is 1.51. Compared to similar counties in Colorado, Kit

Carson’s multiplier is above average (Cheyenne (1.29), Lincoln (1.84), Yuma (1.46), Washington

(1.10). The multiplier is mostly driven by Local Resident Services, which makes sense, given the

isolated nature of KC and Burlington. KC is lacking in indirect basic industries, which is due to

the lack of a variety of basic industries within the county. With Agribusiness as the main base

industry in KC, the only sort of indirect base industries that can survive in KC are ones that

support agribusiness, such as farm services or truck transportation. In terms of economic

development, the size of the multiplier is a source of optimism for KC. The impact of a few

additional businesses would go far beyond the new jobs and wages they provide.

Impact of Kit Carson Correctional Facility Closure

A discussion of Kit Carson’s economic base would not be complete without mentioning

the closing of the Kit Carson Correctional Center in the summer of 2016. The closing of the

prison resulted in a loss of 142 jobs, Burlington’s biggest taxpayer, and approximately 15% of

Burlington’s population (Brown, 2017). While the loss in population was mostly the moving of

412 inmates, the remaining portion represented the movement of the majority of the former

142 employees and their families away from Burlington (Colorado Department of Corrections,

2019). Additional impacts were felt throughout the community, as the prison had an annual tax

bill of $415,700 to the local school district, and an annual utility bill of approximately $620,000

(Brown, 2017).

5

Effects from the closing still linger today within Burlington and Kit Carson as a whole. In

addition to the initial loss of jobs and population, Burlington’s population has continued to

decline since 2016, and the jobs lost due to the closing have not been replaced, as shown in

figure 2.

Over the past few years, there have been a number of situations that could have

prompted the Kit Carson Correctional Center to reopen, such as a lack of prison beds in

Colorado in 2017 and a plan from the Idaho Department of Corrections to house over 1,000

inmates in the prison in early 2020 (Herrick, 2020). Despite the prevalence of these sorts of

happenings, any sort of hope for a reopening of the prison was crushed by the passing of House

Bill 20-1019 in March 2020. This bill, backed by current Colorado Governor, Jared Polis, and his

administration, opened up the Centennial correctional facility for an additional 650 inmates,

and made it easier for the governor and their administration to block contracts between private

prison companies and out-of-state agencies (HB20-1019, 2020). This bill effectively solved any

potential lack of prison bed issues in Colorado, while also furthering the current

administration’s pursuit to end private prisons in Colorado. Looking forward, economic

development through the reopening of the Kit Carson Correctional Center is not going to be

feasible for the foreseeable future.

Socio-Economic Factors

With Kit Carson being so isolated, it would be beneficial to bring in jobs and boost the economy

for not only the county, but also the surrounding areas. In other parts of the state, big

economies within an area have a positive effect on their surroundings like Denver and Colorado

Springs. The biggest advantage Kit Carson has in becoming a potentially influential regional

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center is the fact that it is on I-70 with Burlington being the biggest city for miles. This will allow

for the transportation of resources in and out of the county as well as letting people in and out

more easily.

On top of being accessible, Kit Carson also has a much lower cost of living while keeping

a competitive minimum wage in comparison to the neighboring counties being $12 an hour

compared to $7.25 in Kansas. The housing prices are also lower when compared to other

counties around Colorado, for example the median house price in Denver is $357,300 and

$336,200 in Larimer county while Kit Carson comes in at $140,800 (Demography, 2018). On top

of lower house prices, residents also pay considerably less in sales taxes Kit Carson having a rate

of 4.9% while Denver is at 8.31% (Avalara, 2020). The cost of groceries is also lower since a lot

of what is bought at the grocery store is grown or made in or around the county. This cuts down

on transportation costs considerably and allows stores to sell these goods for a cheaper price.

This will be a big draw for people looking to move to a new area since they will have to

spend generally less money on necessities like food and housing, and will be able to do more

with the same amount of money. However, despite KC being a more economically viable place

to live, young people are moving out much more than they are moving in. From 2000 to 2010,

there was a net loss of just over 150 people aged 18 to 22, while the 28 to 32 age range saw an

increase of roughly the same amount in the same time period, as seen in figure 3. A lot of this is

likely due to the lack of job diversity and use of college degrees. Compared to the rest of

Colorado, KC has about half as many bachelor's degrees as a percentage shown in figure 4,

which means that someone who is college educated would likely move to a different area since

7

there would not be a job for them in KC. This leads to lower median incomes, as well as less

money in the community as people transfer out to find better paying jobs elsewhere.

Connecting the Regions

Expansion of Regional Center

One way in which KC can foster economic development within the county is through

further enhancement of KC’s already established role as a regional center for eastern Colorado

and western Kansas. While jobs that fall under the umbrella of regional center industries, such

as construction, trade, and insurance, only make up a small portion of jobs in KC, when

compared to other counties nearby, as shown in figure 5, KC is only second to Yuma County, in

terms of regional center based jobs. The counties that are East, West, and South of KC have

substantially less regional center industry jobs than KC. This indicates that KC is already acting

as a regional center.

In addition to the evidence supporting KC as a regional center, there is also evidence to

suggest that there is potential for growth within certain regional center industries. As figure 6

shows, several regional center industries within KC, such as truck transportation and motor

vehicle/parts dealers, have proprietor location quotient values greater than 1, or very close to

1. These location quotient values suggest that people in KC are already starting businesses

within these industries, with the potential to turn into wage-earning businesses. The values also

suggest that there is a need for these types of industries within KC and the surrounding area.

Embracing the regional center industries with proprietor location quotients greater than 1 and

encouraging investment and entrepreneurship in those less than 1 will potentially lead to

further development of KC as a regional center.

8

Given the current nature of KC’s economy, and KC’s location itself, one way in which the

county could add value to the agricultural work already being done, and further cement itself as

a regional center, is through the introduction of an ethanol plant. Kit Carson County is the

second largest producer of corn, the main input to ethanol production, in Colorado, and is

surrounded by other counties, such as Cheyenne County to the south, and Sherman County

across the border in Kansas, that produce large amounts of corn each year (Colorado

Department of Agriculture, 2017). Additionally, KC has other necessary factors, such as a strong

transportation infrastructure, that sets the county apart, in terms of potential ethanol plant

locations. While the constraints of this report don’t allow for the proper analysis to determine

the feasibility of an ethanol plant in KC, we’d like to explain why the county should be thinking

about an ethanol plant in the long-term, while also discussing specific concerns and potential

benefits.

Ethanol Plant Fundamentals

When it comes to potential ethanol plant locations, the main concern is spatial

proximity to a variety of inputs and factors, specifically corn, cattle, and transportation and

utilities infrastructure, among others (Isserman and Low, 2009). As discussed earlier, KC has

plenty of corn production in and around the county, but there is also a large amount of cattle in

the county. Cattle are important for ethanol production because one of the main byproducts of

production, distiller’s grains, can be fed to cattle (Isserman and Low, 2009). In 2017, KC had

over 173,000 cattle and calves within the county, more than enough to support demand for

distiller’s grains from an ethanol plant (Census of Agriculture, 2017). Another important feature

of KC is its strong transportation infrastructure. Interstate 70 runs right through the county,

9

along with the KYLE railroad, a class three railroad that connects to a variety of rails throughout

the region. Transportation Infrastructure is key for getting corn to the plant, and transporting

ethanol out from the plant (Isserman and Low, 2009). With Interstate 70 and the KYLE railroad,

KC has the necessary infrastructure to support the transportation operations of an ethanol

plant. One final feature that needs to be assessed is the utilities infrastructure within KC. While

access to natural gas and electricity shouldn’t be an issue, access to water could be worrisome.

Years of over pumping of wells in Eastern Colorado has drained the Ogalla aquifer, the world’s

largest underground body of freshwater, and water source for agricultural activities across the

High Plains (Finley, 2017). With an already threatened water supply, an increased demand for

water in KC could prove to be detrimental for agricultural practices in Eastern Colorado and

beyond. Further analysis would need to be done to determine if there is enough of a water

supply in KC to support an ethanol plant.

Implications

Given all the information, the multiplier, location quotients and statistics about Kit

Carson there are multiple ways that this can affect the citizens, local economy, society and

businesses. In the past 100 years, there has been a large decline in rural communities and a

large rise in urban communities. Colorado belongs to a select group of states introducing

legislation, taskforces, access to broadband, and furthering the development in rural areas

(NCSL, 2020).

Potential Concerns

In addition to water supply, other concerns including ethanol markets and ethanol

demand would need to be addressed while considering an ethanol plant. Ethanol prices

10

dropped to historic lows at the start of the COVID-19 pandemic, but have slowly risen back to

pre-pandemic levels, as shown in figure 7. Ethanol prices have been fairly consistent since 2015,

but have also been much lower than prices in the early 2010’s. Another concern lies with the

continued existence of small refinery exemptions, which allow smaller oil refineries to be

exempt from the Renewable Fuel Standard requirements (Environmental Protection Agency,

2019). Small refineries that receive these exemptions from the Environmental Protection

Agency do not have to blend biofuels, such as ethanol, into their transportation fuels, which

therefore reduces demand for ethanol. Progress has been made to reduce the number of

factories that receive exemptions, such as the EPA’s recent denial of requests for waivers for

recent years, but waiver requests are still being considered going forward (Coppess and Irwin,

2020). Overall, if ethanol prices remain at their current levels, or small refinery exemptions or

other happenings continue to stifle demand for ethanol, building an ethanol plant in KC won’t

make sense.

Broadband is considered by many to be a crucial instrument for new services and

applications—such as telemedicine, telecommuting and online education—which all demand

high-speed internet connections (NCSL, 2020). In addition, with the impacts of COVID-19 and

the associated lockdowns, reliable internet has become even more valuable as people work,

receive healthcare, and education all from home. Rural areas have 37% more residents without

access to broadband than their urban equivalents (NCSL, 2020). And, 53% percent of U.S.

school districts are in rural communities. However, rural education faces unique challenges,

such as limited resources, minimal taxes and demographic variations. The rural population of

11

KC is decreasing, aging and moving out of the area. As a result, these communities present

unique challenges in providing quality education with limited resources (NCSL, 2020).

Potential Benefits

Now that we’ve identified why KC could be home to an ethanol plant in the future, it’s

time to discuss the massive impacts than an ethanol plant could have on the county. On

average, an ethanol plant brings in around 35-40 full-time jobs, with an average wage greater

than KC’s current average wage of around $36,000 (Isserman and Low). Using the ethanol plant

built in Yuma, Colorado as a reference, where full-time wages ranged from $40,000 -$50,000,

an ethanol plant could bring in approximately 2.1 million to 3 million dollars into the local

economy (Raabe, 2007). While an ethanol plant wouldn’t come close to making up all the 142

lost jobs from the prison closing in 2016, it would come very close to making up the

approximately 2.4 million in lost wages. Additionally, the county would regain another large

taxpayer and large annual utility bill.

Despite these challenges, the impacts of outside investment and expanding the local

Agribusiness industry have many positive influences on these struggles. For example, opening

an ethanol plant can be very beneficial for a community, if the support of the community is

present. Although there are high startup costs, there are incentives for the state to provide

grants and investors to be involved in such a large project (Isserman and Low, 2009). According

to Greg Breukelman, President of POET Ethanol Industries, the lower the carbon impact the

higher the value of the ethanol. This means that the more environmentally friendly it is, the

more people will be willing to pay for the product.

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Since KC is a massive producer of crops in Colorado, specifically corn, the access to

transportation is a valuable thing to have near an ethanol plant. This will make it easier to

export to surrounding counties and states that will use the ethanol not used within KC. This will

also allow for the ethanol to be sold at cheaper prices due to the lower transportation prices

which will make it an even more competitive product on the market.

The ethanol made in this plant would not be the only thing beneficial to KC, the

byproducts would also provide necessary products for other industries namely local farms. One

of the main products created besides ethanol is distillers’ grains which are used frequently in

animal feed. Animal feed is a big seller in KC as it is the largest cattle producer in the state, as

well as the surrounding counties, much of which are occupied by farmland. Another important

byproduct is distillers corn oil which is often used as a biodiesel which again is very useful for

farmers, specifically those who use tractors or other diesel-powered machinery.

Hopes for the Future

What is clear from the above analysis is that the Kit Carson community perseveres in the

face of economic hardships, and stays focused on the opportunities ahead. This concept of a

regional center is exciting and a unique concept for KC. We are extremely confident that this is

a plausible solution to bring back significant job and population growth, as well as a steady rise

in wages. The rise in wages is an incentive for the citizens of Kansas to have an increased

interest in the job market in Kit Carson. The creation of an ethanol plant, which would bring an

average of 50 jobs to the community, is also a valuable choice for the economy. Engaging with

the local farmers coalition in Kit Carson is a great opportunity to expand prosperity for the

entire local society. Support of the community is extremely vital when building any kind of new

13

plant, and our goal is to benefit the whole county for the long term. Due to the local corn,

wheat, and livestock industries this is something that can thrive with the right backing and

investment (Neeley, 2020).

The access to I-70 is an extremely important asset to the community that allows for

ample room to grow the agriculture and entrepreneur industries. It also is extremely

convenient for telemarketing, while allowing people who are looking for new real estate

opportunities. With new job growth, brings new members of the community. Kit Carson is more

affordable than the Front Range, and the main city of Burlington is only two and a half hours

away from Denver.

Our vision is to see more people from the Front Range, Eastern Colorado and Western

Kansas taking advantage of these new positions and become working citizens of Kit Carson. This

being said, our vision for the current residents of KC is to raise wages, property values, and

bring back investment into the area. With higher property values allows more funding for

education, roads, and infrastructure. Also, higher wages allow for more disposable income to

be spent at local businesses, which allows them to prosper and hire more employees. With the

closure of the prison, there was a staggering 142 job loss for the community. This is an event

we are hopeful this analysis can help the county recover from.

Our hopes for the future are to provide long-term steady employment and rising wages

that draw people to the area. This is possible with the opening of an ethanol plant, creating a

bridge between Kansas and Colorado, and by furthering investment in Agribusiness and

Household LRS.

14

With this future investment and job growth in mind, it also allows a chance for the

education system to grow and receive more resources for students and teachers. In addition,

access to healthcare, broadband, telecommuting and other services that may have been

previously not as easily accessible in the entire county.

All Things Considered

Kit Carson is a county with a lot of untapped potential. An ethanol plant would be the

first step in allowing KC to become a regional center and not only boost the economy, but also

provide a better life for the people living there. The basic framework is already set up with

major highways and railroads already leading through the county and there is still plenty of

room to expand physically. Although this would be a long and expensive project, it would be

well worth it in the long run. This would allow all the capital invested in the project to be

regained, while also adding societal investment to the already existing community.

Investing in opportunities that will encourage economic growth and development allows

additional jobs and rising wages to materialize. By way of, adding to the existing regional center

and agribusiness industry. It's a strategic, economic and moral imperative to invest in rural

communities that have the ability to reinvent their path forward into the future.

15

Appendix and Graphs

Figure 1. Makeup of Kit Carson's Base Industries.

Figure 2. Burlington Population Change Estimates Since 2015. Based on data from the US Census Bureau: “Annual Estimates of the Resident Population for Incorporated Places in Colorado: April 1, 2010 to July 1, 2019 (SUB-IP-EST2019-ANNRES-08)”

16

Figure 3. Net Migration by Age in Kit Carson County. Reprinted from Colorado State Demography Office: "Community Profile for Kit Carson County"

Figure 4. Education Attainment within Kit Carson County. Reprinted from Colorado State Demography Office: "Community Profile for Kit Carson County".

17

Figure 5. Regional Center Jobs by County. Based on data from the Bureau of Economic Analysis.

.

Figure 6. Proprietor LQ's for key Regional Center Industries in KC.

18

Figure 7. Ethanol Prices from 2010 - 2020. Based on data from Yahoo Finance.

19

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Census Data. (2018). Retrieved November 02, 2020, from

https://demography.dola.colorado.gov/CensusAPI_Map_2018/?lat=39.342794408952365

Census of Agriculture. (2017). County Profile - Kit Carson County Colorado (Rep.). USDA.

Colorado Department of Agriculture. (2018). Colorado Corn Facts.

Colorado Department of Corrections. (2020, November 02). Departmental Reports and Statistics.

Retrieved November 03, 2020, from https://www.colorado.gov/pacific/cdoc/departmental-

reports-and-statistics

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facing-rural-communities.aspx

20

Final Rulemaking for Modifications to Fuel Regulations to Provide Flexibility for E15 and to Elements

of the Renewable Identification Number Compliance System. (2020, March 18). Retrieved

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keep irrigating "great American desert". Retrieved November 03, 2020, from

https://www.denverpost.com/2017/10/08/colorado-eastern-plains-groundwater-running-dry/

Grace, S. (2015, October 22). Water in Colorado. Colorado Encyclopedia. Retrieved from

https://coloradoencyclopedia.org/article/water-colorado

Herrick, J. (2020, February 19). Polis signals he wants private prisons like Kit Carson kept shut.

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https://www.coloradoindependent.com/2020/02/06/polis-prison-reform-private-prison-kit-

carson/

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https://www.avalara.com/taxrates/en/state-rates/colorado/cities/kit-carson.html

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21

Neeley, T. (2019, September 27). Ethanol Plants: Cost Cutting Hits a Wall for Many – DTN. Retrieved

November 03, 2020, from https://agfax.com/2019/09/27/ethanol-plants-cost-cutting-hits-a-

wall-for-many-dtn/

Prison Population Reduction And Management. (2020, February 27). Retrieved November 03, 2020,

from https://leg.colorado.gov/bills/hb20-1019

Raabe, S. (2016, May 08). Yuma aims to be alternative-fuel capital. Retrieved November 02,

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