City Studies

Entrepreneurship in San Antonio:
Much to Celebrate, Much to Fight For

By Donna G. Matias [Economic Liberty]

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Executive Summary

Introduction

Think of San Antonio and you think of the battle at the Alamo. Greatly outnumbered, 188 heroes chose to stay and fight tyranny to the death. Today that spirit of the most significant event in Texas history remains alive and well in the Alamo City. But too often, entrepreneurs in San Antonio need that Alamo spirit and perseverance to surmount obstacles placed in their way by state and local laws.

In more modern days, San Antonio is also known as the Fiesta City. San Antonio's rich history and cultural flair attract hundreds of thousands of tourists annually. Thanks to the nice weather, there is always a celebration going on, beginning with the Livestock Show and Rodeo in February and continuing through to the Holiday River Parade and Fiestas Navideñas during the Christmas season. The Fiesta City presents seemingly unlimited opportunities for entry-level entrepreneurial activities such as vending curios, regional foods, and crafts or providing a variety of transportation services to tourists. However, it is not always easy or legal for would-be entrepreneurs to seize those opportunities, as they are sometimes kept out of the economic realm by barriers created by the City.

This report reviews regulations imposed on various businesses, summarizes current regulations and provides specific recommendations to improve the status quo. It considers a variety of entry-level occupational opportunities and what it takes to realize an entrepreneurial dream in San Antonio.

All of the businesses considered here share something in common: barring onerous government requirements, they should not require much financial capital or education to enter. This makes them perfect gateway occupations that can lead entrepreneurs down the path of economic success and self-reliance. In addition, as they become more established, they can provide employment to others in their community. These issues are especially important in the context of recent welfare reform. Among the occupations discussed are:

Vehicles for Hire

(such as taxicabs, limousines, charter and tour services) When regulating this industry, San Antonio goes well beyond addressing legitimate public health and safety concerns, such as requiring insurance and inspection. Government-imposed barriers include excessive filing requirements are burdensome documentation and information requirements. Even after overcoming all these obstacles, applicants are not guaranteed a permit because the Transportation Manager has virtually unlimited discretion to grant or deny applications. Rather than granting applications based on the applicant's ability to satisfy objective criteria, the Transportation Manager relies on an amorphous and anti-competitive "public convenience and necessity" standard-a standard that gives existing companies virtual veto power over new entrants.

Vending

(requirements vary depending on geographic locations throughout the greater San Antonio area) Some areas of San Antonio are better than others at allowing venders to hawk their goods. But in the most dynamic area (namely the downtown central business district), the City heavily restricts the type of items sold or the manner in which peddlers can solicit business. Once a vendor steps into the city's downtown region, market forces give way to much tighter restrictions. Such regulations are designed to prevent competition with other vendors and stores and to preserve the aesthetics of the city.

Cosmetology and Hairbraiding

(any person engaging in the arrangement or beautifying of hair, skin, or nails) Within control of the State's jurisdiction, a cosmetology license requires the completion of 1,500 hours of training at a beauty culture school approved by the Texas Cosmetology Commission. Such regulations have a particularly burdensome effect on individuals who engage in the art of African hairbraiding--a form of natural haircare increasingly popular in the United States with many black women. An applicant who wants to practice hairbraiding must spend at least nine months completing these requirements, none of which relate to the trade they seek to practice. The licensing requirements are primarily used not to protect the public, but to restrict competition.

Likewise, a barber in San Antonio (and throughout Texas for that matter) can only work in a Board of Barber Examiners-approved establishment. Like cosmetologists, barbers must complete 1,500 hours of course work to obtain a license. Typically, barber school takes up to nine months, with the primary curriculum focused on practical training in barbering. Much of this could be accomplished in an apprenticeship program.

Child Care

(day-care centers, family home care) With more and more single working parents and homes where both parents work, child-care services are an ever-growing area of entrepreneurial possibility. Yet the State, through the Texas Department of Regulatory Services, exceeds its primary concern for child safety. It imposes excessive educational requirements on child-care providers (giving little credence to practical experience) and micro-manages everything from playtime activities to snacks. In a troubling picture of the State slowly creeping into a formerly private realm, these regulations can be imposed regardless of whether such care is for compensation. With so many working parents these days, and so many who seek to spend time at home while earning a living, DPRS regulations for family-home care impede the creation of enterprise for individuals with little formal education but excellent care-taking skills.

In-Home businesses

A close look at San Antonio's home occupation regulations reveals the City's inclination to treat in-home businesses as a "dirty little secret"-they are tolerated, but not spoken of. Numerous conditions on these businesses appear more to protect the aesthetics of the neighborhood than for any reason relating to public safety or practical problems, such as traffic and parking. Examples include: prohibiting home alterations that would detract from a dwelling's "residential character"; limiting to 25 percent of the home's floor space the amount that can be used for a business; and banning volunteer non-residents from conducting business in the home. Such restrictions threaten both private property rights and privacy. Why shouldn't a homeowner be able to conduct his business on his own property as he sees fit, so long as he does not violate nuisance or criminal laws?

Even more troubling, individuals who want to run an in-home hair salon or provide in-home child care must obtain a zoning change from the City. In considering the change, the City defers to the recommendations of neighbors and neighborhood associations, regardless of whether the proposed business will actually affect them.

As late as this year, small business owners in San Antonio declared that the biggest obstacles they faced in running their businesses were "too many government regulations" and "too much paperwork." Excessive regulation and excessive paperwork impose unnecessary costs on entrepreneurs, sometimes making-or-breaking the business. In San Antonio, free enterprise often takes a back seat to protecting existing companies, particularly in the taxi industry. The application process is mired in red tape, requiring potential business owners to expend a great deal of time and expense just to apply for the right to earn an honest living.

Nonetheless, the news in San Antonio is, for the most part, good-certainly better than for other cities recently studied by the Institute for Justice. As suggested in the subtitle of this report, San Antonio is commonly known by two nicknames: the Fiesta City and the Alamo City. It is fitting then that while the city's budding entrepreneurs have much to celebrate, they still have a lot they should continue to fight for.

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