The Unique "Texas Style" of Economic Development is Alive & Well in 2019

Posted by John Karras on Mar 18, 2019 11:10:34 AM

I’ve lived in Austin since 2010 and am originally from Texas – Lubbock to be exact. I’m proud to have lived 31 of my 34 years in Texas. I’ve had the privilege of working with economic development clients from California to Rhode Island, from the Mississippi Delta region to Alaska. I’ve spent a lot of time in the Midwest, the deep South, the Northeast, and many states west of the Mississippi, but have worked in Texas far more than any other state. After you get to know different parts of the country and how they approach economic development, you starTexast to see regional differences. You gain an appreciation for the different techniques each region employs. In a few cases, certain states have a distinct style of economic development all their own. Texas is no doubt one of those states, along with perhaps California, Alaska, New York, and Florida. I had a chance to spend a few days with fellow economic development professionals from across Texas recently at the Texas Economic Development Council Legislative Conference and was reminded of our great state’s unique style of economic development.

 

Here are a few things that are different about economic development in Texas:

  1. Resource Rich: Texas stands out for its resources available for economic development, both at the state level and the local level. This is perhaps the biggest difference between Texas and California, the two largest economies. In a state where counties have no zoning authority (only cities can zone land for different land uses), city economic development agencies have the option to apply up to one cent of their local sales tax to fund economic development corporations. The Texas Type A (traditional industrial development focus) and Type B (more community development orientation) sales tax corporations are a force to be reckoned with. There are cities, especially some of the larger suburbs of Houston and Dallas-Fort Worth, that have tens of millions of dollars sitting in reserve, ready to strike at the next opportunity for business recruitment.
  2. Real Estate Driven: The real estate community (developers, brokers, investors) is an important audience for any economic development organization. If nothing happens on the ground – land development, new construction, renovation of existing structures, development of infrastructure – it’s hard to make the argument that you’ve provided a lasting economic impact on your community. Economic developers everywhere understand this reality. Private sector investments must be made, places need to be developed. But I’d wager to say that no state has stronger linkages between real estate and economic development than Texas. "Build it and they will come" may have been a one-liner about a cornfield in the Midwest, but it’s a way of doing business in Texas. That’s the story of Houston’s early development. It’s the story of how Ross Perot Jr. created the largest intermodal industrial development – Alliance TX – in the empty fields of far north Fort Worth. It’s also what local economic development organizations across Texas are directly engaged in. One of the most interesting panel sessions at the TEDC Legislative Conference was a discussion of spec buildings and three different approaches being used by Texas cities to develop spec buildings for business recruitment. The idea that a public-sector entity would develop an empty building for the sole purpose of recruiting companies into the community would be a foreign concept to economic developers in many states. Not in Texas.
  3. Bold and Aggressive: Texans are friendly, but they’ll also tell it to you straight. And they’re not afraid to brag, boast, and promote their community. The proud culture of Texas (we were our own country for nine years!) does not lend itself to passive, timid, and mild-mannered approaches to business generally, or to economic development specifically. Whereas some communities in other states shy away from any business recruitment unless it is focused on foreign direct investment, Texas communities have no qualms about luring business away from California or any other state. And in many cases – especially in the hyper-competitive Dallas-Fort Worth metro – cities provide incentives for a relocation of a company from one city to another, even if the laborshed remains essentially unchanged. The bold nature of economic development in Texas not only applies to recruitment efforts, it applies equally to creating new economic engines from scratch. The Texas Medical Center in Houston is the largest medical complex in the world. Texas Tech University (including the medical school) in Lubbock is a huge economic driver for all of West Texas. Our state has also embraced bold new industries like commercial space exploration – from SpaceX’s launch site under construction near Brownsville to Blue Origin’s rocket testing facilities out in West Texas. 

Here are a few things we discussed, debated, and pondered at TEDC:

TEDC

  • Websites. How well are economic development websites speaking to current employers? Eric Canada of Blane Canada Ltd. gave a thoughtful critique of how little attention we’ve paid to existing employers on our economic development websites and how a few easy tweaks can help us better support existing companies.
  • Geopolitics & Trade. We heard from Matthew Bey, a Senior Global Analyst with Stratfor, an Austin-based geopolitical intelligence firm, about the trade factors and geopolitics that will be affecting the Texas and U.S. economies. A few of the insights & predictions from Bey: Venezuela’s meltdown won’t have much of a global impact, Russia’s economic power will decline significantly in the coming years, and the Texas economy is comparatively well-positioned to weather a global economic downturn and mild U.S. recession in the next couple years.
  • Innovation. We heard from Colonel Patrick Seiber, Communications Director for the Army Futures Command. For those of you that don’t know, Austin was named the HQ of the Army Futures Command in 2018, which according to Colonel Seiber, is “the biggest change in the Army since 1973.” It was a site selection process not unlike Amazon’s HQ2 search. 150 cities were evaluated by the Army search committee according to a range of quantitative factors from their innovation environments, higher education assets, and quality of life. The top five cities were Austin, Boston, Philadelphia, Raleigh, and Minneapolis-St. Paul. After the Army put the Austin Chamber through the ringer with a short notice of two days before an intense site visit, they selected Austin as the location for where one-third of Army budget decisions will be made. One of the big opportunities for Austin now is to attract Army suppliers and service providers, especially tech firms, that want to be close to the action.

All in all, after spending a few days with my fellow Texas economic developers, I’d have to say that the unique “Texas style” of economic development is alive and well!

Topics: TEDC, texas economic development

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