San Antonio in the Internet Century

Harvard economist Edward Glaeser said: “The most successful economic development policy is to attract and retain smart people and then get out of their way.” We absolutely agree. If San Antonio is to continue its impressive growth and expand the quality of life for its citizens, it has to compete for the jobs of the Internet Century. Making this happen will require a comprehensive urban plan to attract and retain educated young people who will start technology oriented companies and drive innovative growth in existing industries (often called the “smart creatives”). The facts suggest that a 1% increase in this demographic drives a 2.3% increase in GDP. We need to focus on making SA a place where our educated young stay to build their lives – and even attract the talented being crowded (and priced) out of the bigger metro areas.

San Antonio has a chance to lead in several emerging high growth industries including Internet infrastructure, cyber security, and biotech, and be a strong player in the Internet software and services space. The only limitation to our potential is access to talent. And in this arena, despite great gains over the last decade, San Antonio is barely keeping pace with dozens of other cities that are pouring real resources and leadership into making themselves more competitive to young educated talent. In fact, we would argue we are falling behind.

The data supports this assertion. While San Antonio is making progress from a low base, our absolute gains are not enough for us to catch many other cities our size.

On the positive side, over the last 10 years, the absolute change in the population of 25-to-34-year-olds with four years of college in San Antonio has actually been pretty impressive, growing almost 50%. We have made good progress.

However there are real signs of concern that suggest we need to be deliberate and continue to work to appeal to this demographic that drives economic opportunity for the community as a whole.

1. Even with our gains, we rank 35th in the country in terms of metro areas with 4 year college graduates in the 25-34 year age group. Metro areas like Kansas City, Charlotte, St Louis and others are well ahead of us and showing strong growth. Our growth is good, but the base it builds off of is very small.

2. The data suggests that core urban growth (within 3 miles of city center) of this demographic is critical to high wage job growth. Here SA is falling way behind. In fact, we showed a growth of only 870 total over that time, ranking 49th in the country. This is a leading indicator of us falling behind.

(Source: City Observatory - YNR Report)

We have made progress, but also missed opportunities that other cities are taking. Left unaddressed, we see a looming crisis that could reverse San Antonio’s forward trajectory. In order to address the challenge, we encourage the development of a detailed, practical plan to attract and retain the educated young, and to develop multiple economic opportunities to retain them.

A few basic beliefs are at the core of our view for the future of San Antonio.

One, we have to make our urban cores a more attractive place to live, work, and play. The educated young have made it clear, in surveys and by voting with their feet, that they will not move to, or remain in cities that don’t have vibrant urban areas. Notice cores, plural. While downtown should have a strong focus, there are other areas where deliberate planning could drive increased livability (e.g. the medical center and UTSA). However, focus will matter and we need to pick our spots. Put bluntly, we fear that never-ending annexation and suburbanization will keep San Antonio from achieving the urban density necessary to attract talent, foster ideas and capital and ultimately compete in the Internet century.

Two, we propose not to compete with Austin so much as leverage our proximity and different strengths. Austin’s boom is a great thing for San Antonio and we should proactively seek to collaborate. We should work to make “Central Texas” the next great super region. It is okay if Austin is Seattle. We can be Portland, the up and coming, more live-able alternative. And, honestly, we are not competing with Austin. Austin is over the hump. We are competing with dozens of emerging cities that are moving rapidly and aggressively to get there – Oklahoma City, Kansas City, Nashville, Omaha, New Orleans, Reno, and many, many more. We should use the critical mass of the Austin-SA corridor to make the case of central Texas as the next great place to move post-college.

Three, we need to build off our strengths. SA has incredible advantages and we should build off them to drive our own unique appeal. While we compete with other cities, we will win by harnessing our differences. While work should be done to explore other ideas, we believe our historical legacy and the cultural heritage it has created are core strengths we should really build on. By embracing and expanding the authentic elements of our city we can create a story and appeal that is instantly understood and can drive many of our priorities. A strategy built around being the “historical city” would lead to more incentives for restorations, preferences for local businesses and entrepreneurs and drive a story of SA as possessing an authenticity so hard to find in larger cities like Phoenix or Dallas.

Four, we can accomplish a lot with a series of small wins. Too often we have strived to skip steps and cheat time by seeking big, major wins. Good intentions are behind the pursuit of an NFL or MLB team, but we should play at our level. Let’s find a string of victories and wins that can create a theme of progress and excitement in the city. Whether it is winning Google Fiber or moving the Missions downtown, a set of smaller and achievable wins can add up very fast and have a big impact.

Now to some specifics. The core of this agenda involves building a robust, modern and dynamic environment to attract the talent of the 21st century. We urge the next mayor to make this his or her number one priority. We hope that the mayor will appoint a leader of this effort to undertake a planning process engaging leading urban experts and community stakeholders. We must also include engaged millennials in the process with a seat at the table. Once the plan is approved, that leader should have real authority to implement the required activities. We ask for a commitment to several key areas:

1. Urban core development.

a. Developing property downtown (or other thriving economic zones) is more time-consuming and expensive than at the edges of the city, despite the availability of built-out infrastructure. We need to make it easier to develop and grow our urban cores and ensure that the high infrastructure costs of building on the city edges are factored into our city plan. One possibility is to specifically incent for historical renovations to preserve our deep history and add to our authentic culture.

b. We must explore devoting real resources to innovation zone incentives for jobs brought into the urban core, modeled after some of the successful initiatives in cities like Pittsburgh, Kansas City and New Orleans. Jobs are at the center of everything, and making our core urban areas a place where we work will kick off residential and other commercial investment. c. Getting education downtown would kickstart many of these efforts. The UTSA campus and/or Foxtech could be great locations for focused programs for STEM skills at existing universities or even development projects for new education options that are emerging nationwide.

d. We should look for one or two catalytic events that could spark interest and investment. The Tobin Center is one such spark. There are others that could be considered and worked on including moving the Missions to downtown or working with the Scorpions to win a MLS team. We should seek to concentrate some of our assets vs. continue to spread them across the city on their own islands. Again, it is cheaper to develop islands but the isolation fails to drive additional investment as we have seen with AT&T Center.

e. All this must be done with full recognition and planning of its impacts on the communities where progress is seen. The city needs a strong plan to deal with displacement issues and other tough circumstances. We are hopeful the Mayor’s gentrification committee will find tactics to ease some of the human costs of progress.

2. Transportation.

a. The streetcar plan must be replaced with an ambitious vision to connect the core arteries of the city and make it possible to get around, conveniently and affordably, without driving a car and searching for parking. This is a key demand of the educated young, who avoid cities that don’t have urban rail transit or Uber or some other way to get out of their cars. We must connect:

i. Downtown with itself, by connecting the pools of major development, especially Southtown and Pearl, without requiring the driving and parking of a car. Rail might be the answer but other creative options should be explored including partnerships with rideshare companies as well as futuristic options like self-driving cars. ii. The other urban cores and economic centers to downtown and each other including including UTSA, the Medical Center and the airport.

3. Green spaces, walk/bike investments, entertainment

a. While we proceed with the redevelopment of Hemisfair Park, let's look to an even larger expanse of potential green space on both banks of the San Antonio River, building upon the very attractive assets that we have in the Museum Reach and Mission Reach extensions.

i. San Antonio needs an ambitious and city-defining park space that is central and that helps connect core elements of the city. There are many locations ripe for public/private partnership that could create a real draw to the city center as well as tie many of the developing areas of the city together.

ii. We should work to emulate the success of Klyde Warren Park, atop a major freeway in downtown Dallas, which has created a magnetic green space while also tying together two critical pieces of the urban core. The Howard Peak trail system is one such idea – how do increase the progress and ambition of this system and make it one of the truly great parks in America. b. We must make the urban core more livable through:

i. Major investments in sidewalks and bike paths and shade trees to line them.

ii. Walkable connections across barriers that limit movement, including Broadway, I-37 and I-35

iii. As already mentioned expanded investment in urban core entertainment, including the development of at least one attainable sporting venue in the urban core that fits our stage of growth (e.g. MLS soccer or minor league baseball) 4. Economic Development for the Internet Century

4. Economic Development

a. San Antonio needs a new approach to economic development that makes the city a first choice city. We should form a blue ribbon panel of public and private sector leaders to study best practices in other cities. That panel should include new faces from the tech, cybersecurity, biotech, and entrepreneurial sectors.

b. We need to re-prioritize our economic development agenda with a focus on: i. Small and emerging companies vs. mature but declining players and industries (i.e., jobs in the future vs. jobs now)

i. Strategic focus on repeatable event tourism, built on our strengths in ways that increase our national appeal, vs. transactional tourism that simply brings in dollars (South by Southwest and Austin City Limits vs. cardiologists conventions.)

ii. Cool and emerging sports and recreation that is achievable vs. moonshot attempts that will distract us and drain our resources (MLS soccer vs. Oakland Raiders). c. We should earmark real dollars to proven concepts that will attract and retain high growth company creation. A fund should be set up to grant dollars to ideas proven to drive seeds of growth to San Antonio and to blossom over time. This kind of organic economic development will look very different from that of the “big RFP” type proposals that brought Toyota and other large, established companies. It also requires real private sector leadership and co-investment and will not work without it. But, the dollars and interest are here and can be assembled for things like:

d. We also must work aggressively to encourage base level infrastructure and foundational development elements to the whole city. These include such things as: i. Low cost GB broadband. We need to pursue competition (e.g. Google Fiber) in our market and even consider city wide subsidized access. ii. Low cost technical education. The quickest path to opportunity today comes from technical jobs that can be taught via self-study (more resources in our emerging and national leading Bibliotechs) as well as scholarships to quick start programs like CodeUp and Cloud Academy.

i. Startup incubators

ii. Funded internships and jobs

iii. Development resources to get small, growing companies to move

e. We need to embrace leading-edge services and work more aggressively to bring them to our city. Otherwise, given our second-tier status, we will be last to receive many of the newer services now expected by the urban young and many others. We must develop plans to encourage and attract these services, including:

i. Uber and Lyft ii. Driverless cars iii. Postmates and Favor iv. Luxe Valet v. DinnerLab

We need active government engagement to help ease introduction of these services while protecting public safety and ensuring broad competition to promote consumer choice and decreasing costs. You can see how few we actually attract here: https://www.whttl.com/ The simple fact is our sprawling nature and lack of urban density make San Antonio super low on the priority list of any of these companies. But, at the same time not having them sends a signal that we are not modern – making it harder to get people to come here.

5. Telling our Story

a. While painful to admit, to the educations 20 and 30 year olds San Antonio is top of mind as a great tourist attraction but not known as a great place to live and build your life. We need to pull together a story that talk about the vibrancy emerging here that can be an incredible alternative to those tiring of the too expensive, too crowded cities like New York and San Francisco (and in all honesty, Austin).

b. San Antonio has enormous assets that can be turned into an incredible marketing story to build immediate increase in perception from the smart creatives we must attract. Our tremendous history, our Hispanic culture, our arts scene, our neighborhoods, our growing culinary scene…we need to work aggressively to tell a different story about San Antonio, one that speaks to authenticity and history all while showing we are moving ahead and a place that welcomes those that want to build a big future. We then need to tell this story. While the returns will not be as instant as tourist marketing, the long term gains will be enormous.

San Antonio is at a critical juncture. Cities will define the next century and the next great cities are emerging. We are in the race, but falling behind. We cannot just be a cheap place to retire. We need to develop the great resources inherent in our city, not just in our expansive geography, if we want to build a truly dynamic economy – one with net immigration, frequent new company creation, broad innovation and rising economic tides. The elements to thrive are in place, but without real conviction, ambition and resources, we will not reach our potential.

Suggested Reading:

City Observatory - Talent and Prosperity

Martin Prosperity - Startup City

How To Kickstart Your Communities Startup Scene

Does Tech Create Jobs Around The US?

Do We Really Want Development?

America's Best Performing Cities in 2014 (success here, but Eagle Ford was our driver – not sustainable)

How Much Sprawl Costs America