In San Antonio, the low cost of doing business -- along with the pro-business city government -- are strong selling points as the city competes with other markets for business expansions and relocations.
Lower Taxes Mean Bottom-Line Savings
Tax savings in San Antonio begin at the state level -- Texas has no personal income tax. A California executive relocating to San Antonio at the same salary would instantly recognize up to an 11 percent increase in take-home pay. Texas does not have a corporate income tax, but does levy a franchise tax on corporations ($2.50 per $1,000 of taxable capital or 4.5 percent on earned surplus, whichever is greater.)
Local government revenue is mostly derived from property and sales taxes. However, companies that meet certain requirements may be eligible for a phase-in of property taxes and rebates of sales taxes.
To encourage capital investment and job creation, the City of San Antonio and Bexar County may grant a property tax phase-in (abatement) of up to 100 percent for 10 years, depending on the capital cost of project improvements and the number of jobs created. Some companies that have taken advantage of this incentive include Golden Aluminum, Citicorp, VLSI Technology and World Savings & Loan Association.
Companies locating within one of the city's two Enterprise Zones may qualify for tax phase-in and sales tax refunds. Furthermore, locating in Foreign Trade Zone #80 allows a company to collect domestic and foreign goods for further processing without formal Customs entry.
Work Force
San Antonio delivers an abundant force of workers with a broad range of skills in both manufacturing and non-manufacturing fields. The work force is more than 680,000 strong and has grown an average of 3.3 percent per year over the past 12 years.
In addition to a growing work force, San Antonio offers competitive wages. According to the Bureau of Labor Statistics, for example, the average weekly wage of a secretary in San Antonio is $355 compared to $431 in Los Angeles and a machinery mechanic earns an average of $11.77 per hour compared to the Los Angeles wage of $17.42.
Workers' Compensation
Workers' compensation is not mandatory in the State of Texas. Those who do carry the insurance, however, have witnessed a dramatic turnaround in the system since 1989, when the state legislature passed extensive workers' compensation reforms. The new environment has lowered the number and cost of claims and expedited the delivery of medical care to injured workers.
The total workers' compensation system payout has decreased by 55 percent, from $3.3 billion in 1990 to $1.5 billion in 1992. At the same time, the average weekly compensation paid to injured workers rose from $190 in 1990 to $251 in 1993, a 32 percent increase.
Training and Recruitment
Customized job training and applicant screening is done through the city in concert with local public and private institutions. Funds are available through the Job Training Partnership Act (JTPA) and the Smart Jobs Fund Program, a $50 million state job-training fund administered through the Texas Department of Commerce.
Local institutions, such as the Alamo Community College District and the Texas A&M University Engineering Extension Service, have extensive experience in developing programs to meet the particular needs of an employer. Over the past 15 years, San Antonio has assisted in the work force training of a number of well-known companies, including AT&T, American Airlines, Bausch & Lomb, Marriott Corporation, VLSI, QVC Network, Golden Aluminum and Fairchild Aircraft Services.
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Recently, Kraft General Foods, the nation's largest food company, selected San Antonio for its new, consolidated financial service center. According to Patrick Farrell, a Kraft spokesman, issues such as community support, site selection and state recruiting and training support were paramount in its selection of San Antonio over other closely competing cities.
Low-cost Utilities
With costs 18 percent below the national average, San Antonio offers one of the lowest gas and electric utility rate structures in the country. The city's forward-thinking electric and gas utility, City Public Service, has ensured that there is the capacity to supply the electric needs of future growth in San Antonio for years to come. The city's early reliance on natural gas has expanded to include coal and nuclear fuels, which now represent 80 percent of the power generated.
Noted Arthur Von Rosenberg, CPS general manager, "In the late 1970s, we diversified our mix of electricity sources to include coal, natural gas and nuclear energy -- we are well ahead of other cities today in our ability to supply electrical power at very competitive prices."
The San Antonio Economic Development Foundation and city agencies work hand-in-hand with CPS, coordinating services for potential new businesses.
"CPS has been very responsive to the needs of companies moving to San Antonio, keeping costs down, providing reliable service and being responsive to each company's needs," said Mario Hernandez, SAEDF president.
When Golden Aluminum, a division of Coors, was seeking a location for its $170 million rolling mill, the coordinated efforts of the SAEDF and CPS were a persuasive factor in the company's decision to select San Antonio.
REAL ESTATE
Site Prices ($/sf)
(Suburban - Improved)
5 to 10 acres .75 10.75 1.25
Over 10 acres .50 10.75 1.00
Lease Prices ($/sf)
(Suburban Industrial Space)
40,000 - 59,999 sf 2.52 6.12 2.25
60,000 - 99,999 sf 2.52 4.44 2.20
Construction Prices ($/sf)
(Industrial Space)
40,000 - 59,999 sf 20.00 21.00 30.00
60,000 - 99,999 sf 19.0 18.50 30.00
Office Space4 Rental 12.73 18.99 13.75
Rates ($/sf)
Source: 1994 SIOR/Landauer Comparative Statistics of Industrial & Office Real
Estate Markets
Clean Air and Favorable Regulatory Environment
With its favorable geographic location and climatic conditions that do not trap air pollutants, San Antonio enjoys high-quality clean air. The city is the largest attainment city in the country for all EPA air-quality standards. And the World Resources Institute in Washington, D.C., awarded the city its top environmental ranking in the nation for 1993.
Besides the obvious benefits of improved health and quality of life, clean air also has economic advantages. Without emissions-offset requirements and other regulatory limits, permitting new companies is a much smoother and faster process in San Antonio than in other cities.
Time is Money
The One Stop Business Information Center, a service of the City of San Antonio, offers the Economic Development Briefing Team. Once a company has decided on San Antonio as the site for a new facility, the Briefing Team steps in to coordinate all start-up activities. The Team is composed of the city and public utilities' staff members involved in the review of land "plats" and construction plans. The team acts to facilitate the construction permitting process, expedite zoning permits, create industrial district designations, speed up utility connections and, in one case, has eased restrictions for properties in a military overlay district. The entire process moves along at a pace much faster than that found in cities that do not coordinate such services.
Bausch & Lomb
When Bausch & Lomb decided to locate a manufacturing and assembly plant in San Antonio in late 1988, the company required an accelerated schedule so it could begin production in 1989. From licensing and permitting applications to locating in an enterprise zone, the One Stop team went into high gear, helping Bausch & Lomb get into production on schedule. The San Antonio plant has expanded to become the Rochester, N.Y.-based company's national distribution hub and now stocks a multimillion-dollar inventory of lenses from Maryland, frames from Rochester and cases from the Bausch & Lomb maquiladora facility in Nuevo Laredo, Tamaulipas, Mexico.
Factors such as these -- and more -- contribute significantly to an overall cost structure that give San Antonio a healthy advantage in the competition for new industry and corporate expansion -- a central ingredient in a city's potential for future growth.
