A new national report lists San Antonio among seven cities singled out as “Enterprising Cities,” citing the city’s strong civic leadership and fiscal management and its pro-business and jobs economic development strategies.
The report, “Enterprising Cities — A Force for American Prosperity,” was commissioned by the Washington, D.C.-based U.S. Chamber of Commerce and released Friday morning here by the Greater San Antonio Chamber of Commerce.
Download the full report here [3 MB PDF].
At the heart of the report is the underlying premise that cities with sound fiscal management are best positioned to make strategic investments that drive private sector growth. Cities burdened with legacy public sector costs are less nimble, unable to adapt to changes in the economy or support entrepreneurial innovation.
The report cites the strong business climate throughout Texas, yet San Antonio is the state’s only major city to make the list.
“Businesses aren’t looking to make short term investments in a city,” said San Antonio Economic Development Foundation (SAEDF) President Mario Hernandez after this morning’s press conference. “They’re looking for cities that are prepared for growth, have reasonable costs and reasonable regulations … that’s why they’re coming to (and) expanding in San Antonio.”
The other cities profiled in the report include Dayton, Ohio; Irving, Texas; Memphis; Minneapolis, Salt Lake City, and Sioux Falls, S.D.
A key measure in the study is a given city’s ability to manage public sector costs in a manner that enables it to invest in ways that support private sector job growth. The report singled out California and New York as states where legacy unions, high public sector salaries and benefits — especially pensions and health care costs — siphon off disproportionately large percentages of public revenues. That leaves cities in a position where the only way to finance other investments is through tax increases.
San Antonio City Manager Sheryl Sculley, the architect of San Antonio’s current fiscal practices praised in the report, noted in recent budget discussions that continue to increase public benefits and pensions could undermine the city’s AAA bond rating and its ability to make major community investments — most evident in recent voter approval of the nearly $600 million, 2012-17 bond.
“San Antonio has been fiscally responsible in terms of making the tough cuts that we’ve had to make,” said Mayor Julián Castro. “It’s not about low or high in terms of (the amount of) regulation, it’s about smart regulation and we always aim for smart regulation that doesn’t impede business, (rather) helps it grow.”
The U.S. Chamber report lists the 15 “fastest-shrinking metro areas” and the 15 “fastest-growing metro areas” and compares overall employment growth rates and local government employment rates from 2008, the start of the Great Recession, to 2013.
Three California cities make the “shrinking” list, which is led by Las Vegas, and also includes several Rust Belt cities. Memphis, one of the seven cities cited for its enterprising culture, also makes the list. Cities on this list show negative overall job growth ranging from -3% in Detroit to -7.4% in Las Vegas and negative public sector employment ranging from -1.5% in Virginia Beach to -16.9% in Detroit.
In contrast, four of the top five “growing” cities are in Texas: Austin, Houston, San Antonio and Dallas, in that order. However, only San Antonio among the four experienced overall job growth (4.4.%) while holding down public sector employment (-1%). Other Texas cities saw strong overall job growth, but increased public payrolls at the same time.
San Antonio: A City on the Rise
San Antonio’s fiscal discipline and the fact that it’s the only major city in the country with a AAA bond rating by all three major rating agencies, were among the factors in the city’s selection as a model city.
Beyond the numbers, the U.S. Chamber report cited San Antonio’s “culture of business” and a unified approach to economic development, like the City of San Antonio-Bexar County relationship, the work of the SAEDF and the ability of local government to work closely with private sector interests.
“Economic development is a team sport,” said Steve Waters, vice chairman of the SAEDF. “Its the collaborative spirit between business, education, and government.”
Waters, as well as Bexar County Judge Nelson Wolff, cited successful partnerships between the City, County, SAWS, CPS Energy, SA2020, educational institutions, and business leaders at the key to prosperity.
“Unchallenged by many of the budgetary strains facing cities around the nation, San Antonio is able to hold the line on taxes, maintain services and focus on investments needed to maintain continued economic growth,” the report states.
Castro attributes this growth to “the decision to aggregate (the City’s) economic development efforts with the county and the Economic Development Foundation (SAEDF), the focus on business retention – not just recruiting from outside – SA2020, and Pre-K 4 SA, which will be an asset not just for San Antonians, but for companies that are looking at (moving to) San Antonio.”
Castro’s SA2020 initiative, now an independent non-profit, was praised in a report that lauded cities that have adopted longer-term strategic initiatives extending beyond the terms of elected officials currently in office. Castro’s “Brainpower Initiative” and subsequent Pre-K 4 SA program is also highlighted. “By increasing access to early childhood education, the city plans to enhance local educational achievement and improve college attainment later in life – providing the skilled workforce that regional industry needs to thrive,” states the report.
“A well-educated workforce means future generations will have the skills to ensure long term economic growth,” Castro said.
Most surprising in the report is what it doesn’t note about San Antonio. There is no mention of the city’s fast-growing startup economy, the impact locally of Toyota to the city’ manufacturing sector or Rackspace to its growing tech sector. There is no mention of how a few individuals have used their wealth and community commitment to single-handedly help transform the city: Charles Butt, chairman and CEO of HEB in the realm of improving public education; Graham Weston, co-founder and chairman of Rackspace, who founded Geekdom, the startup incubator and hi tech co-working space and the 80/20 Foundation; or Kit Goldsbury, founder and chairman of Silver Ventures, whose Pearl Brewery redevelopment project brought the Culinary Institute of America to San Antonio and sparked a still-growing Broadway/Midtown revival.
The report also misses Mayor Castro’s ‘Decade of Downtown’ focus that has helped knit together these initiatives to make the urban core a more attractive destination for young professionals to live, work and recreate, an essential strategy for San Antonio as its competes with other cities for creative class talent.
One interesting feather in the city’s cap cited in the report that too often goes unnoticed locally is San Antonio’s booming export economy.
“Beginning over 25 years ago with an intensive globalization campaign, San Antonio has made building export activity a strong part of its economic development activities,” the report states. “The city boasts a network of groups and agencies, involving both the public and private sectors, focused on enhancing regional industry’s ability to access foreign markets.”
Those long-term efforts paid off not only in cross-border trade with Mexico after passage of NAFTA in 1994, but have surged more than ever in the most recent decade.
“The city’s drive to support manufacturing, increase trade and build ties with international markets has paid off,” the report continues. “International exports from the San Antonio metro area soared by 33% between 2011 and 2012, hitting a record of $14 billion. Since 2008, exports by San Antonio businesses have increased nearly 180%, supporting economic growth in the region and placing the city in the top 10 metros for export growth.”
Enterprising Cities
What exactly is an enterprising city? According to the report, “Enterprise-friendly leadership and policies at the city level can facilitate local economic growth by supporting entrepreneurs and mobilizing effective partnerships for improving the conditions for business and job growth. Working together with businesses, city leaders can bolster expansion into national markets and exports into global markets.”
“We are on the cutting edge of innovation, on the edge of job creation, and economic development,” said Richard Perez, president and CEO of the Greater San Antonio Chamber of Commerce. “This has lifted our city to (be) an ‘Enterprising City.’”
The report cites data that demonstrates cities, not the federal government or states, are the real engines of private sector job growth, and certain policies and practices are common to those cities that are prospering.
“City policies and practices that help strengthen our free enterprise system—the system that has served as the foundation of America’s prosperity and the only system capable of creating the jobs we need for the long haul—are those that do the following:
- Allow businesses to grow and thrive.
- Free businesses from excessive taxes, unnecessary regulations and onerous local government processes.
- Focus government on the critical tasks that are the foundation of economic opportunity, such as infrastructure and protective services.
- Help educate, cultivate and equip the next generation of young entrepreneurs and the workforce of the future.
“Enterprising cities use policy inputs, well-designed community programs and economic development best practices to create an environment where free enterprise creates jobs and prosperity. Economic prosperity creates fiscally sustainable local governments capable of supporting the infrastructure and workforce free enterprise needs,” states the report.
The Other Six Cities
Each city profiled in the report made the list for different reasons.
Memphis, for example, listed as a “city on the mend,” uses a program called the “Mayor’s Innovation Delivery Team” to attack crime rates and address inner city neighborhood revitalization.
With the Mississippi River helping sustain the city’s economy, Dayton was cited for its “Welcome Dayton” program, designed to attract immigrant entrepreneurs and workers to a city and region with a declining population base.
Irving has leveraged its location as a Dallas suburb with a strong pro-business local government to lure five Fortune 500 companies to base there. The presence of DFW International Airport and Las Colinas are two other major drivers.
Minneapolis is cited for adopting a more business-friendly, “regulatory reform” climate. One example cited were regulations that hindered beer brewers. Once those regulations were relaxed the city saw a “craft beer renaissance” take root.
Salt Lake City launched a “Prosperity 2020” initiative. Sound familiar?
The city is building on more than two decades of sustained success to make sure it maintains momentum, principally by improving already-high education outcomes.
SLC aims by 2020 to increase its current rate of adults with postsecondary certificates or degrees from 43% to 66%. It is doing so by starting early, hoping to increase the percentage of third through eighth graders proficient in reading and mathematics from 80% today to 90% by 2020.
SLC is twinning its education initiatives with “livability” goals that focus on neighborhoods, bike lanes and paths, streetcars and tougher energy-saving construction codes and water usage policies.
Sioux Falls is small in size with a metro population of 237,000, but at the top of many national lists for both population and job growth as a regional economic power. Health care and research enterprise are driving that growth. It, too, is cited for sound fiscal management.
The value of making the report’s list of seven ‘Enterprising Cities’ can be debated, but local officials undoubtedly will embrace the report’s value and cite it as evidence of San Antonio’s continuing progress and recognition of that progress at the national level. Another way of valuing such lists is remembering how it feels not to make the cut, or the days when San Antonio’s name only seemed to appear on surveys assessing negative measures.
“For the first time (reports and studies) are looking at growth at a city level” rather than state, Castro said. Recognizing that “cities and regions determine economic destiny of communities.”
“We are a city on the rise,” Castro said in closing.
Follow Robert Rivard on Twitter @rivardreport or on Facebook.
Rivard Report Managing Editor Iris Dimmick attended Friday morning’s press conference and contributed to this article.
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