Earlier this month while on a sales trip to Southern California a feeling of nostalgia hit me as I drove past a few of the areas where I had spent a good part of my adult life. From the beaches of Venice to the glitter of Los Angeles, California always seems to have a lot to offer. But the nostalgia quickly dissipated as I merged onto the I-405. It was then that the realities of living in southern California quickly came back to the forefront of my memories over the next two hours as I inched my way up from Irvine to Santa Monica.
During this time, while listening to the radio, I heard a new report ranked California as having the lowest “quality-of-life” in the United States. As an economic developer, I am aware that the phrase “quality of life” gets referenced quite frequently by many as a determinant for company site relocations, so I was eager to find and review this report. As I later discovered, the ranking was produced by US News and World Report’s “Best States”, which compares states across several categories ranging from health care, education, crime rates, the economy, quality-of-life and much more. The data was compiled by McKinsey and Company which is known to be a reputable source. Although I had always hated the heavy traffic during my days living in California, personally I felt there was a great quality-of-life… if you could afford to live there. A major reason for the state’s low quality-of-life ranking was, of course, home affordability.
Although qualify-of-life is always important to us, as individuals and families, let’s discuss it in in terms of how it actually impacts a business’ decision to move or expand its operations from one part of the country or the world to another. From an anecdotal standpoint with my experience of working in economic development over the last 15 years, has quality-of-life factored into their decisions? Yes. Is it the only factor? Of course not. But to understand how it impacts their final decision, it is first important to differentiate how we as individuals define quality-of-life vs how a company defines quality-of-life during its site selection analysis.
Now I have now been in Las Cruces for nine years and there are so many things that I love about the area. The great weather! Spoiled that I can cross town, even during a high traffic time of day, in less than 12 minutes. The fact that I can jog from the Rio Grande to A-Mountain almost unimpeded by streets to cross is a personal plus. The great, friendly people found here is unmatched. And the food? Well that goes without saying.
But quality-of-life is often in the eye of the beholder. And each viewpoint is very subjective. As an example, early in my economic development career in New Mexico, I hosted a site visit with a client representing a multi-million dollar, several hundred-employee, project and she commented to me during the tour that “there wasn’t too much green out here.” That stuck with me and since then, when I tour clients around the region, I pay close attention to those subtle comments which might be influencing their personal decision process. But the reality is the site selection decision process is never based off of one or two tours to a community and subjectivity. In fact, because most clients only spend a day or two in any particular geographic region before either narrowing down their search to a couple of communities, or actually making a decision, they really never get a chance to explore all that a community has to offer. Instead, their analysis is primarily based off data collection surrounding workforce populations, operational costs, and a community’s business friendliness.
So how does quality-of-life impact a company’s site selection decision? To help answer this, l turn to Area Development Magazine’s “Annual Corporate Survey” for that answer. The Corporate Survey ranks the top 30 site selection factors based on actual responses from companies around the country that are involved in site selection decisions. The survey, now in its 31st year, has become a reputable illustration of all that goes into a company’s decision making.
Over the years, there is no doubt that the quality-of-life category has steadily moved up in the Corporate Survey rankings. In fact, from 2015 to 2016, quality-of-life leaped into the Top 10, coming in at number 3 overall, only to drop down to number 10 in the more recent 2017 survey results. When you dive into the factors surrounding this ranking, and in order to move it from a subjective to an objective analysis, quality-of-life is ranked primarily by low crime rates and the ratings of local public schools. Not far behind is the availability and access to healthcare, and you guessed it, housing costs; the reason why California hit rock bottom in this category.
Now does this mean that California companies are packing their bags and getting out? Not necessarily. Let’s revert back to US News’ Best States rankings. Although California came in last in quality-of-life (due to extremely high housing costs), they also happened to rank high in other categories, such as “Business Environment” where they came in 1st in the country. They also ranked high in healthcare. In terms of crime and education, they came in middle of the pack. In comparison, New Mexico’s quality-of-life ranking came in at 8th best in the country. Unfortunately crime came in at 49th, while Education came in at #50th. These low rankings in turn negatively impacted New Mexico’s overall Business Environment ranking which came in at 39th.
So what does this all mean? Quality-of-life is definitely one important consideration for companies when making their site selection decision. But the measurable aspects of quality-of-life in this process lean heavily on access to good public education and low crime rates. New Mexico’s rankings in these categories are therefore not helping and this is where we need to make realistic efforts to improve.
But let’s also not forget to pay attention to the other factors that are relevant in the site selection process. When we review the remaining top nine decision factors from Area Development’s Corporate Survey, it becomes very clear that access to high value labor and quality skill sets, combined with good business policy, both from a tax and incentive standpoint, become the primary reasons why a company will choose one location over another for their next project.
Let’s finally take this analysis one step further and focus on the Las Cruces region specifically. Locally, we are making very positive strides across many of the critical decision making categories. If you read my last article then you are already aware that, Las Cruces is leading the state in high school graduation rates, community safety, and good governance. What you may not know is that we are also making measurable strides in our overall business friendliness. As an example, the City of Las Cruces’ Community Development Department recently introduced a “One Stop Shop” permitting counter, a 1-Day plan review process and expedited review process for commercial projects called CPR, and soon will institute “Open Counter”, an online interface to the city’s permitting process. These features combined will help expedite permitting and construction timelines, allowing businesses to not only open their doors sooner, but to get employees hired and earning sooner as well. Additionally, Dona Ana County has invested significantly in road and water infrastructure improvements, which has set the stage for business and employment growth at our port-of-entry, which has led us to the number one rank in export growth. Both an expedited permitting process and infrastructure are frequently cited in Area Development’s Corporate Survey as Top Ten critical site selection criteria.
These combined efforts, improving both the business friendliness and quality-of-life of our community are critical to our region’s future economic development success and an overall quality-of-place for both individuals and businesses; a message which was at the heart of the Mayor’s recent State of the City Address. Perhaps our growing success in both these areas is one reason why WalletHub recently ranked Las Cruces as one of the Top 100 Happiest Cities in the U.S.
As I wrap-up this article I am pondering my own quality-of-life this weekend. A run up A-Mountain followed-up by a green chile cheeseburger and a craft beer sound pretty good. And I predict it will be a bright, sunny day!
Davin Lopez is the President/CEO of the Mesilla Valley Economic Development Alliance (MVEDA), one of the leading economic development agencies in New Mexico. MVEDA provides local businesses and those considering relocating and expanding in the New Mexico Borderplex area with the information, tools and resources they need to succeed.
