City Studies

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

By Donna G. Matias [Economic Liberty]

Read Executive Summary


Introduction

You can't think of San Antonio without thinking of the famous battle at the Alamo. One hundred and eighty eight Tejanos and Anglos-hopelessly outnumbered- chose to stay and fight tyranny to the death. Today, more than 160 years later, the spirit of the most significant event in Texas history remains alive and well in the Alamo City.

San Antonio is a place steeped in centuries of history. Its founding in 1691 pre-dates the establishment of this country, before Texas broke free of Mexico and Mexico broke free of Spain. Although today a thriving metropolis, San Antonio at one time treaded the line between wild frontier and civilization. In the eighteenth century, the Spanish built several missions there, along with a military garrison to protect the religious from Apache attack. Some of the first immigrants soon followed with the arrival of several Canary Islands families who were sent by Philip V to settle this part of the New World-and to establish the village now called San Antonio.

Anglos from United States followed in the nineteenth century, until Mexico, now free of Spain, prohibited further Anglo immigration. Mexican General Santa Anna replaced the Mexican constitution with his own form of dictatorship. The result, ultimately, was the fated siege at the Alamo and the Battle of San Jacinto, which won for Tejanos and Anglos an independent Republic of Texas.

After the fall of the Alamo in 1836, Texas enjoyed nine years of independence before joining the United States. During this brief period of the republic's independence, German settlers flooded the region, ultimately outnumbering Mexican and Anglo settlers. Another wave of immigration followed the Civil War, triggered by the coming of the railroads. These new immigrants opened factories and shops, set up Southern-style plantations, or took to the cattle drives as a way to earn their keep. As the city expanded to its modern size, its economic base-then as now-relied in significant part on individual innovation and drive to keep the city healthy and growing. San Antonio remains home to immigrants and children of immigrants, many of whom come here to work and establish a better life.

Today the nation's tenth largest city in population and geographic size, San Antonio is home to nearly one million people. It is a diverse city comprised of immigrants and natives alike, with almost half of the population speaking a language other than English at home. Ethnically, 65 percent of San Antonians are Hispanic (mostly Mexican); 27 percent are Anglo; and 8 percent are African American. The city's unemployment rate is approximately 7 percent; and although just over 20 percent of families live below the poverty level,1 only about 9.6 percent of the families receive public assistance.

San Antonio's rich history and cultural flair attract hundreds of thousands of tourists annually. The average temperature ranges from the low-50s in the winter to summer highs in the 80s, making it a generally pleasant place to visit any time of the year. In addition to nice weather, it seems there is always a party-a fiesta-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 holidays.

This city of fiestas 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: San Antonio entrepreneurs may look out at the horde of government-imposed regulations, fees and obstacles much like Davey Crockett viewed Santa Anna's troops: outnumbered on all sides. But that doesn't mean they're going to give up. Too often, entrepreneurs in San Antonio need that Alamo spirit to persevere.

This report examines what it takes to realize an entrepreneurial dream in San Antonio. It considers a variety of entry-level occupational opportunities, from driving a cab to operating a home business, and the impact of local and state regulations on those opportunities. Earlier this year, participants at a conference on small business held in San Antonio complained that the biggest problems they faced were "too many government regulations" and "too much paperwork."2 Excessive regulation and excessive paperwork impose unnecessary costs on entrepreneurs, sometimes making or breaking the business.

Nonetheless, for the most part the news in San Antonio is good. In private and public life, San Antonio has been supportive of entrepreneurship. Micro-lending organizations such as Acción Texas are devoted to providing entrepreneurs access to capital otherwise unavailable to them through traditional commercial sources. Although still in its infancy, Acción is responsible for helping at least two hundred entrepreneurs realize their dreams. Similarly, the University of Texas-San Antonio Small Business Development Centers were created specifically to aid start-ups and small businesses in navigating the morass of regulations and requirements to run a business.

The city government also has demonstrated its commitment to small business development, a commitment many attribute to former mayor Henry Cisneros. In 1987, under Cisneros' leadership, the City Council created a Committee on Small Business Development to focus exclusively on creating economic opportunity for this vital economic segment, alleviating obstacles preventing their growth, and nurturing entrepreneurs. Among the resulting recommendations were the streamlining of licensing and permitting processes through a One Stop Business Center and loosening zoning restrictions on small businesses.3 Today, the city's Economic Development Department continues to focus on ways to "grow" entrepreneurs.

And wisely so. With the forthcoming privatization of the region's Kelly Air Force Base, the city's largest employer, the prospect of soaring unemployment looms. Private and public efforts have already begun to help ease the transition, including special workshops and programs geared toward the novice entrepreneur. The city's second largest employer, the tourism industry, in turn relies on two areas of entry-level activity that present the biggest regulatory challenge for a budding entrepreneur-ground transportation and downtown vending-where extensive informational requirements and red tape threaten to engulf an applicant.

Nonetheless, in general, San Antonio's treatment of budding entrepreneurs fares well compared to those in other cities studied by the Institute for Justice. At the very least, entrepreneurs in San Antonio stand a fighting chance.

Vehicles For Hire

Compared to the other entrepreneurial opportunities discussed in this report, San Antonio's ground transportation industry promises to test a budding entrepreneur's wherewithal. In its statement of policy, the vehicles-for-hire ordinance purports to "respect the concept of free enterprise" as it "protects the public health and safety [and] promotes the public convenience and necessity." In fact, however, free enterprise takes a back seat to protecting existing transportation providers, particularly in the taxi industry. Worse for the budding entrepreneur, the application process is mired in red tape, requiring potential drivers to expend a great deal of time and money just to apply for the right to earn a living in this industry. Even then, there are no guarantees: the Transportation Manager may deny the application on the grounds that "public necessity and convenience" dictate doing so.

The City's vehicles-for-hire ordinances cover both general rules and regulations applicable to all ground transportation services, and specific restrictions and requirements for various categories of transportation: taxis, limousines, charters, and tour vans/buses.

The Ground Transportation Unit, which maintains responsibility for oversight of the transportation services, is affiliated with the City's Police Department, meaning that both entities may enforce the transportation ordinances.

Before beginning the transportation application process, an individual must first file a "fictitious name" or "doing business as" (DBA) form with each county in San Antonio where he or she intends to operate. The filing fee is $9. Next comes an application with the City's Transportation Manager, including a $100 application fee. With the actual application form come burdensome documentation and informational requirements: for example, applicants must submit all documentation proving the existence of a legitimate ground transportation business; the applicant's own U.S. citizenship or legal residence as well as that of everyone with a direct interest in the business;4 detailed financial information about the business; information on all of the applicant's past business experience, particularly in the area of ground transportation; a projection of actual or expected income for the preceding year; and a credit record and two credit references.

And yet this information will not suffice: All applicants must authorize the City to gather all information about the applicant from "any organization" that may have information about him or her. In turn, the applicant must release all such organizations from any liability resulting from furnishing the information to the City. While we did not uncover any reports that city officials actually have abused this extremely broad power, this permit requirement raises questions about the constitutionality of conditioning a license on surrendering virtually all privacy rights.

But information about the applicant's past is still not enough. An applicant must specify the number of vehicles to be used in the service, with documentation of each vehicle's ownership, identification, registration, year, make, model, and seating capacity. Further, she or he must: describe the operations of the proposed service and the location of the fixed facilities required as part of the transportation operation; submit a management plan demonstrating the upkeep and replacement of vehicles; and submit a procedure to handle complaints.

Finally, the City regulates down to the very aesthetics of the vehicles. An applicant must detail the proposed insignia and color scheme for all vehicles and describe the distinctive item of apparel to be worn by drivers. As in all other decisions relating to transportation permits, approval of taxi insignia and color proposals rests upon the discretion of the Transportation Manager.

Of course, all providers of ground transportation must be insured, and the applicant must submit proof by the insurance company that it will be insured.5 The applicant must have paid all city, state and federal taxes, fees, assessments levied on the business and/or property used in connection with the service.

In addition to a general business license, all drivers must have a valid Texas driver's license from the Department of Motor Vehicles as well as a city driver's permit, which costs $10. The City will issue a driver's permit to applicants over 17 if they: speak English; submit to fingerprinting; appear hygienically clean; pass eye and medical exams; pass a defensive driving course, written exam, and any other training the Transportation Manager deems to be in the public interest. And, in order to get a permit to drive, the applicant must prove that she has been approved for employment by someone who already holds a permit to provide ground transportation services. City permit holders must renew every two years for $10.6

Even after completing this burdensome application process, an applicant has no right to a permit. The applicant's competitors in the industry, among others, are entitled to voice their input. The Transportation Manager makes the ultimate decision based on virtually unlimited discretion. Sometimes she will defer to recommendations by the city's Transportation Advisory Board, which is comprised of ten members from the various transportation industries. Either way, the Transportation Manager must determine that granting a permit is supported by "public convenience and necessity."

This seemingly benign term, commonly applicable in cities nationwide, often acts to mask a deeper motive: protection of existing transportation providers from competition. The mask, however, is transparent. The applicant, having complied with the onerous application requirements, awaits a determination by the Transportation Manager of public convenience and necessity, a decision based on input from anyone and everyone interested. This, of course, means that existing transportation providers can-and will-fight to the death to protect themselves from competition.

To demonstrate the applicant's vulnerable position and the role of competitors in determining an applicant's fate, consider the following. By city ordinance, an inquiry into public convenience and necessity focuses on information entirely within the knowledge (or belief) of competitors or the Transportation Unit, such as: the number and type of existing transportation vehicles; the adequacy of existing services and the ability of existing providers to meet the city's needs more efficiently than the applicant; and the effect of proposed additional service on existing drivers' working conditions and wages, on traffic conditions, and on existing ground transportation services of the type proposed. Put cynically, the Department asks, "How will this new applicant mess up the current distribution of the pieces of the pie?" There are no objective criteria in the law or regulations that inform an applicant of the amount or quality of information that will demonstrate public convenience and necessity.

If one is lucky enough to make it to the licensing stage, he or she must file a license/permit bond as security for compliance with all relevant regulations in amounts ranging from $1,500 to $15,000, depending on how many vehicles will be in operation.

And, above and beyond ensuring convenience, necessity, and safety for the public, the City dictates driver appearance with an enumerated list of required clothing (e.g., women must wear blouses; men must wear long pants and shirts with a collar). As with any business, however, the neater and more suitably dressed one is, the more likely an enterprise will lure customers. This is common business sense. By dictating driver appearance through municipal fiat, the City has overstepped legitimate bounds in protecting the public and ensuring they arrive at their destinations safely.

Taxis

Of all the areas where entrepreneurial entry proves difficult, the city's taxi industry is by far the most forbidding. San Antonio taxi drivers are subject to tough restrictions on entry and operation.

San Antonio has fashioned a "rubber ceiling" on the number of taxi permits it issues in a given year, so called because it uses a formula based on the city population to determine whether more permits are appropriate. This new method lifted a prior freeze on permits in 1985 (when 400 permits had been issued), which lasted until 1993. In 1995, the City authorized and issued approximately 600 permits,7 including renewals, based on an assessment of one cab per 1,700 people.

Applicants can obtain a citywide permit, which allows them to operate everywhere without restriction except at the San Antonio International Airport. Citywide holders may still drop off clients at the airport but can only pick up on an appointment basis. For unrestricted airport service, the city's Airport Authority issues a special permit, which holders must purchase annually for $150. Notably, one must have a citywide permit in order to obtain an airport permit. Any driver providing airport service becomes subject to the jurisdiction and regulations of the Airport Authority, which several drivers insist favors airport shuttle services. For all airport service, drivers must pay 50 cents per airport pickup, a seemingly petty amount that benefits the city to the tune of hundreds of thousands of dollars annually.

In addition to the high costs required under the general operation of ground transportation, permit holders must pay a $100 taxi application fee, a citywide taxicab fee of $2,100 per year for three to seven cabs ($300 for each additional cab); an annual $100 dispatch license fee; $65 to become a member of a dispatch service; a bi-annual $40 inspection fee per car (with re-inspections at $40 each); and public liability and property damage insurance on all cabs.

The City restricts permits to a minimum fleet of seven for all taxi providers, and requires sole ownership of at least 50 percent of the fleet. Notably, these restrictions do not apply to other transportation services. Originally this meant that one had to set up a business complete with at least seven cabs (and pay the insurance and operating fees on each) in order to provide taxi service in San Antonio. However, individual owner-drivers went on strike in 1993 and eventually convinced the city to allow them to form taxi cooperatives as a way to satisfy the seven-fleet minimum. This made it slightly easier for individuals who own cabs to operate as long as they belong to a cooperative. However, strictly individual owner-drivers still face an impossible barrier to entry: they are prohibited from operating. Now, these "gypsy" drivers either must affiliate themselves with an existing company or co-op that holds a permit or find another way to earn a legal living.

The co-ops allow individual drivers to join forces, each with sole ownership of at least one vehicle, to satisfy the seven-cab minimum. (The drivers bargained the city down from its proposed 25-cab minimum.) Currently the city has approved eleven active co-ops, amounting to about 100 cars.

Even after a driver makes it into a co-op, he must watch his every move. Many drivers (particularly those not driving for the big cab companies) complain of harassment by the police and the Transportation Manager's abuse of her unbridled discretion. As noted, the individual drivers' battle to form co-ops became a hotly controversial matter. Although ultimately those drivers prevailed, several co-op drivers now report harassment in the form of "stacking tickets"8 for petty (and sometimes nonexistent) violations. Nowhere was this more obvious than in enforcement of the "driver appearance standard." Although the city ordinance requires that drivers be neat in appearance, the Transportation Manager has interpreted that provision to mean that all drivers must wear a uniform, even though City Council and the police admit that no such regulation appears in the vehicles-for-hire ordinance. In 1995, violation of the "driver appearance standard" was the most common transgression.9

Drivers also complained about the Airport Authority's prohibition on any form of solicitation of business at the airport. Airport shuttle services have been given prominent space and are readily available to receive incoming passengers. Meanwhile, taxis are relegated to a much less obvious position. Yet the taxi drivers cannot call attention to themselves or their services; if they do, they face an $80 fine.

The harassing citations can add up. A "violator" has two choices: pay the ticket or appeal. An appeal costs $50 per ticket and requires much more time and money than most drivers are willing to expend. In the end, most simply pay and shut up rather than hassle with the appeal.

The taxi co-ops recently unionized. Out of approximately 800 cab drivers, about 300 have joined the union. Drivers expressed hope that the City will take them and their concerns more seriously now.

Limousines, Charters and Tour Services

Compared to its treatment of taxi businesses, the transportation department bears down a little less hard on permitting the operation of limousines, charters and tour services. The City licenses drivers of limousines and luxury vehicles to take pre-arranged calls on irregular routes and schedules for an hourly fee. They are prohibited from picking up street hails.

Each limousine permit holder must solely own, operate, and maintain at least one stretch limousine. Charter services must be pre-arranged at least one hour in advance and must pick up and drop off at the same place. Tour service providers include any vans, buses, or motor coaches used to provide regularly scheduled and routed sight-seeing tours on a "per passenger" or "per hour" basis, and must drop off passengers at the same place they were picked up. As with taxi services, limousines, tours, and charter-service permit holders must carry public liability and property damage insurance at a minimum of $500,000 for a 15-passenger or fewer vehicle and $1 million for each vehicle with capacity for more than 15 passengers.

In addition to the general fees to provide ground-transportation services, limousine, tour, and charter service providers must pay a $100 application fee; fees for bi-annual inspection of all vehicles ($40 for seating capacity of 15 or fewer; $80 for more than 15-passenger capacity); a $25-per-vehicle operating permit; a $150 annual airport fee; and an annual vehicle fee of $300 for each 15-or-fewer passenger capacity vehicle ($400 each for vehicles with greater seating capacity).

In determining the "public convenience and necessity" of a proposed limousine, tour bus, or charter-van service, the Transportation Manager does not limit the number of permits in these areas. By contrast, taxi permits are limited. When asked why this is so, a Ground Transportation Unit official replied, "We issued over 600 permits for taxis last year!"10 Her response implies that 600 was very high. However, in a city as large as San Antonio, which sees as much tourist traffic as it does, there is nothing inherently excessive about 600 permits. Rather than limit the number of taxi permits, the City should allow market forces to determine the appropriate number, just as it does with the other transportation providers. Supply and demand, not bureaucrats, should determine the appropriate number.

Vending

As early as 1805, San Antonio established its first public market, intended as a place for the slaughter and sale of livestock. Over time, the city housed numerous bustling marketplaces, many located in the central downtown area. There, entrepreneurs could make a living selling a wide variety of goods. Public life centered around the downtown market, and merchants, craftsman, promoters, musicians, and buyers all gathered at what became the town square.

After the fall of the Alamo, the central marketplace survived, changing forms over the years. Often the local government established the markets by edict and strictly regulated them. For example, during the period of the newly independent Texas, an established meat market was the central place for citizens to purchase beef, mutton, cabrito, and hog. All meat had to be "certified," i.e., the hide had to be branded and displayed, to ensure that it had not been obtained by rustling.

Today, the vendor can still make a living selling unique goods in various San Antonio marketplaces. In addition to numerous opportunities to sell at flea markets, which are private and virtually unregulated, vendors can apply for a permit to sell almost anywhere in San Antonio. Relative to many other cities, San Antonio's vending regulations seem rather lenient. However, closer scrutiny reveals this observation is a half-truth: Some areas are better than others, but in the most dynamic areas, the City heavily restricts the type of items sold or the manner in which peddlers can solicit business.

Authority to issue vending permits lies with different municipal entities, depending on the items sold and the vendor's location. Essentially, the City has divided up vending permits and authority by regions: vending in non-downtown, non-parks or governmental areas must obtain a permit from the city's Treasury Division; the downtown central business district and parks is the responsibility of the city's Parks Department; vendors in the Market Square go through a separate process, as do those wishing to sell at the Alamodome. Further, if a vendor wants to sell food, she or he must obtain an additional permit from the city's Metropolitan Health District. Before filing an application, vendors must register the business at the county courthouse.

Non-Municipal, Non-Downtown Areas

An entrepreneur who wants to sell her or his wares in the non-municipal, non-downtown areas of San Antonio is likely to find it relatively easy and inexpensive to start up. The city's Treasury Division issues three types of merchandise permits in these areas, ranging from a mere $5 to $15 for a minimum four-month period or from $15 to $45 for a year: a foot-peddler's permit; a truck-peddler's permit (pushcarts); or a canvasser's permit (door-to-door or mail-order sales). Upon payment of the fee and submission of a one-page application--asking only for applicant's name, address, phone, birthdate, driver's license, description of car (if applicable), a description of the goods applicant wishes to sell, and a signed oath that the applicant has not committed a felony within the last year--the applicant has completed the process! The Treasury Division then routes the application to the chief of police for investigation into the truth of the application and, once approved, an entrepreneur is in business in any non-municipal, non-downtown property.

This application process makes it easy for vendors to sell in the non-downtown, non-government areas, as does the fact that restrictions are few and far between.11 Moreover, the City does not limit the number of permits it issues in these areas. As a result, the entrepreneurial spirit flourishes. One Treasury official reported that it is the common practice in Southwestern culture-and in San Antonio in particular-for peddlers to pull their cars over to the side of the road and set up shop on the sidewalk near the car.

Downtown Central Business District

Once a vendor steps into the City's downtown region, market forces give way to much tighter restrictions. Compared to the overall size of San Antonio, the immediate downtown area is relatively small but packed with tourist attractions. This area draws hundreds of thousands of tourists and locals annually, who come to pay homage to the men who died at the Alamo, to relax and enjoy the beautiful view and excellent restaurants along the Riverwalk, or to get a taste of the many flavors and cultures that give San Antonio its unique flair.

Although the flavor and style of the Southwest pervades the downtown environs, city officials have stifled the cultural practice of selling goods from one's car. Vendors who wish to sell downtown must obtain a special $250 license, which is valid for one year. The City does not limit the number of vending permits it issues. And the application process, set by the city's Parks Department, entails much more time and effort than the non-downtown process.

For example, applicants for a downtown central business permit must submit three proposed designs each for the pushcart, carrying case, and umbrella they intend to use at the proposed location. At least one of each must be approved; it must conform to size and design specifications and pass muster based on the "originality of design and harmony of pushcart materials and colors." In addition, applicants must submit two photos of the pushcart or carrying case, a state sales tax permit (issued by the state comptroller's office), a driver's license, and a city business permit. They must then make an appointment to appear for inspection of the proposed pushcart/carrying case designs. At that inspection, they must have all of the actual equipment and uniform intended for use if the application is approved. Food vendors undergo a similar process, only they must also obtain and submit a license from the Metropolitan Health Department for the sale of food.

Beyond establishing a more burdensome permitting process, the Parks Department sets tight restrictions on the type of items sold (only novelty/souvenirs and food) and the manner in which they are sold. For example, in the immediate area in front of the historic Alamo, only six vendors are permitted to operate-and they may sell only snowcones ("raspas"). These vendors are spaced evenly apart and may not do anything to attract the attention of potential customers. Instead, they must wait until a customer approaches and asks for a snowcone. This restriction apparently is intended to protect tourists from an onslaught of solicitors yelling at them, and may seem reasonable enough. At the same time, it is antithetical to the very idea of a free market: advertise goods to potential customers to induce them to buy. Similarly, restrictions on the type of goods, presumably to prevent competition with storefront owners who sell T-shirts, souvenirs, and refreshments, cut against the notion of the market as a cornucopia of diverse goods and services available for the right price.

One downtown vendor, who also sells during the year in non-downtown areas, bemoaned the relative difficulty in obtaining a downtown permit. Yet she continues to re-apply because she enjoys her interaction with all the tourists. When asked to state the hardest part of pushcart vending, she replied quickly, "Too many rules, too many regulations."

Market Square

Market Square dates back more than 100 years, when citizens of San Antonio petitioned the city to design the old Spanish presidio as an open marketplace. Since 1894, Market Square has been the central public marketplace for San Antonio. Today it comprises two shopping areas housing individuals selling their wares: at El Mercado ("The Market") one can find an endless array of crafts, clothing, blankets and trinkets from Mexico. The Farmer's Market, located across the street from El Mercado, offers more modern specialized goods such as T-shirts and plaques with Texas wildflowers, statues of flamenco dancers, and a chic line of homemade Barbie clothes. Originally a produce market in the 1930s and '40s that fell on hard times when many produce farmers and merchants moved south, the Farmer's Market was renovated several years ago and opened up for the sale of curios and other products from around the world.

Although Market Square is located downtown, Market Square vendors are subject to a different permitting process, run by a City authority separate from those regulating downtown or non-downtown vendors. Here, the application process could not be more simple. Apparently, an applicant need only walk into the Market Square administrative offices and fill out an application stating what intends to sell. If Market Square officials approve an item as unique and "not otherwise available in the area,"12 a vendor is likely to be in business. Applications are approved on a first-come, first-served basis. Approved vendors rent space from Market Square-which is City property-on a month-to-month basis for $250 per month. Unlike some leases for vending space on private property, the Market Square lease does not require vendors to pay a percentage of sales to the city.

Vendors who wish to expand the range of products for sale must obtain approval in advance, and all such approvals will be made on the "not otherwise available" standard. According to one administrator, the purpose of the rule is to ensure a diversity of goods available. According to one vendor, however, the purpose of the rule is to ensure that vendors are protected from competition; certain specialty items simply don't sell well, and it is hard enough to eke out a living for the sole supplier of such goods. Notably, however, this standard can be as flexible or stringent as officials want to make it. One administrator provided the example of a vendor approved to sell key chains with the Dallas Cowboys logo on them; if another vendor comes along wishing to sell key chains with puppies or chili peppers on them, he may or may not be approved. In any event, whatever the real purpose of the rule, it seems somewhat at odds with the very idea of "el mercado."

Alamodome

Home to the San Antonio Spurs, this nearly $2 million dollar athletic arena has instituted its own permitting process. The City owns the property, but a private venture owns the concession rights. According to a spokesperson for Aramark, which leases space to subcontractors, the City has "given instructions" to Aramark to hire a certain percentage of subcontractors that are certified as Minority Business Enterprises (MBEs) or Women Business Enterprises (WBEs). Aramark has complied well over its required percentage, with only one non-MBE, non-WBE subcontractor.

Aramark subcontracts to vendors in stationary locations and portable kiosks, typically for a three-year period. While portable kiosk vendors must have their own food handler's license, vendors at stationary locations on Aramark can bootstrap themselves onto Aramark's food and beverage permits. There have been whispers lately of changing that arrangement so that each subcontractor must get individual permits, an arrangement that would bring in more money to the City and raise the cost to vendors of engaging in a legitimate business.

Like other vendors, Alamodome vendors are subject to scrutiny by a variety of different inspectors. Aramark's subcontractors, especially the portable kiosk vendors, face numerous different inspections, prompting one anonymous source to say that "every ten minutes an inspector is looking for a handout." If a food vendor's portable kiosk does not meet the requirements for mobile food vending (discussed below), it must be inspected and approved on a per-event basis. For example, Aramark has two vendor kiosks that don't have sinks but that are located ten feet from a sink. Nonetheless, before each event the vendors must pay $45 for an inspector to come out to do a full inspection. This means additional costs for the vendor, who pays an inspector to inspect the same kiosk over and over.

Food Vending

As noted previously, mobile food vendors must obtain an additional permit from the city's Metropolitan Health Department.13 Approval of an application requires an inspection by the health director of all food, any equipment used in preparation or carrying of the food, and all vehicles that will be used to transport the food. These rules apply regardless of whether the food is prepackaged.

In addition to any general vendors fees and expenses, a food vendor must pay annual fees according to what she or he sells. Typically, fees range from $25 for prepackaged, nonperishable food and fresh fruits and vegetables to $175 for perishable, potentially hazardous (i.e., perishable) food or food prepared in a mobile unit. Additionally, mobile vendors carrying perishable food must pay a fee ($100 to $1,000) and report daily to a commissary licensed and regularly inspected by the Health Department; here, they must clean, service, supply, and store their mobile units. This requirement, while intended to ensure that the food and equipment are not contaminated or soiled, can add significant costs, particularly in the time necessary to pick up and drop off a food vending unit.

The city has enumerated reasonable sanitation and safety precautions that licensed vendors must take, but does not require them to take a food handler's course. As with other vendors, inspectors may come around at any time to check compliance with all city standards.

Finally, beyond legitimate concerns for public health and safety, the Health Department restricts food vendors from operating in certain locations. For example, vendors cannot set up within 300 feet of any public or private elementary, middle or high school at any time during school hours or one hour before or after school hours. Further, vendors outside of the downtown area cannot operate within 300 feet of any licensed retail food store or food establishment unless they have express written permission from the owner of the establishment. And pushcart food vendors may only operate downtown if licensed by the City Parks Department. While this latter restriction is consistent with the general regulations on downtown vendors, it and the other location restrictions do not relate to what would seem to be the Health Department's legitimate concerns. Rather, they appear to be directed at preventing competition.

Cosmetology and Hairbraiding

The cosmetology industry in Texas is huge, with more than 6,000 licensed cosmetologists in San Antonio alone.

Any person engaging in the arrangement or beautifying of hair, skin or nails must be licensed or certified, whether by the Texas Cosmetology Commission (TCC) or the Board of Barber Examiners (BBE). Both boards are comprised of six members, appointed by the governor and confirmed by the state senate for six-year terms. On each board, four members must have been licensed by the relevant board and two must be members of the general public. The principal difference between cosmetology and barbering is that cosmetologists cannot shave customers. For practical purposes, licensing by the TCC or the BBE will determine the type of establishment one can work in. For instance, a cosmetologist cannot cut hair in a barber shop unless the shop has also been approved by the TCC.

A cosmetology license requires the completion of 1,500 hours (600 of which are cutting and styling) at a licensed beauty culture school or 1,000 hours in such a school and 500 hours in related high school courses approved by the TCC. An applicant must spend at least nine months completing these requirements. Upon completing school, an applicant pays a $25 fee to take the examination in Austin.14 If an applicant completes the application, passes the exam and pays the $35 license fee, she is entitled to a cosmetology license.

The most costly part of becoming a cosmetologist is the completion of the educational requirements. As in other states, they have had a particularly burdensome effect on individuals who engage in the art of African hairbraiding. African hairbraiding is a form of "natural haircare"-it does not require the use of chemicals on the hair- popular in the United States with many black women, among others. African hairbraiding is, by and large, a cultural practice, and many braiders learn the art at a young age. It is labor-intensive work for the braider, who will sometimes spend up to a full day working on one client's hair. Braiders can earn up to $125 per client, depending on the style.

Until the spring of 1996, hairbraiding in Texas was flatly illegal unless an individual obtained a cosmetology license. Yet among the 1,500 curriculum hours required for a cosmetology license, not one minute is devoted to the practice of hairbraiding or natural haircare. Instead, required courses include instruction on permanent waves and other styles for non-African hair.

Thus, hairbraiders found themselves operating in an impractical situation: to operate legally, they needed to obtain a cosmetology license. This often meant stopping work (particularly if the main source of income was from illegal braiding), paying for and attending at least nine months of school, and passing the exam. During this period, the braider would not learn anything whatever relating to hairbraiding or natural haircare! And, although the TCC has provisions for a $35 specialty license in hairweaving, which requires 300 hours of an approved curriculum, this license failed to cover the art of braiding. Indeed, the regulations specifically enumerated acceptable hairweaving techniques and prohibited any other arrangement of the hair. Braiding was not among the approved techniques.

Recently, after numerous hairbraiders around the state complained (and the state prosecuted a braider for operating without a license), the TCC agreed to create a hairbraider specialty license within a hairweaver specialty license. Currently, the Commission is designing a new curriculum and requirements for this license, which should be in place by January 1997.15 Until that time, the TCC has declared a moratorium on prosecuting unlicensed braiders. However, after the new rules are enacted, all hairbraiders must be licensed, regardless of how long they have been plying their trade or any other braiding experience they have.

Interestingly, one of the main arguments in favor of licensing braiders is that they, like cosmetologists, should be subject to sanitation and hygiene requirements. Yet under the current hairweaver curriculum, a mere ten of the requisite 300 hours shall be devoted to "sanitation and safety measures." The curriculum also requires ten hours of "general salon procedures," which includes hygiene and grooming, but hygiene and grooming are covered in an overall ten-hour requirement that also includes "professional attitudes and salesmanship" and "public relations." Given both the long cultural history as well as the popularity of hairbraiding and the unlikelihood that the practice threatens to wreak havoc on the public weal, the TCC should instead have permitted braiders to operate without imposing the licensing requirements, even if "only" 300 hours.

Moreover, the State should eliminate its licensing requirements and move to a system of optional certification. Many of the currently mandatory hours in practical training can be satisfied through an apprenticeship program.

Barbering

Texas retains separate barbering and cosmetology boards even though practitioners engage in virtually identical activities. The division of the professions dates back to a time when barbering was the only hair- and skin-care profession until cosmetologists (catering to the newly enfranchised woman in search of self-improvement) came along and took over the field. The barbers fought to protect their domain and the cosmetologists fought for a separate profession. Today, a barber can only work in a BBE-approved establishment, even though most TCC licensing and inspection requirements are virtually identical.

Barbers in San Antonio are governed by the state rules, and the City does not have special rules for this occupation. Like cosmetologists, barbers must complete 1,500 hours of course work in order to obtain a license. Typically, barber school takes up to nine months, with the primary curriculum focused on practical training in barbering. Upon completion of the course work, applicants must pay $10 fee to sit for the barber exam, which is offered once a month in Austin.

Just as the TCC provides for specialty licenses, the BBE also has created several paraprofessional or specialist licenses. For example, barber technicians and manicurists licenses are relatively easy to obtain, with a 300-hour course work requirement in sanitation, histology, massaging and manipulating muscles, structure of the head and neck, etc. Barber specialty licenses do not comprise a large percentage of those performing barbering services. Indeed, the barbering profession itself pales in comparison to the much more lucrative cosmetology profession.

One spokesperson at the TCC stated that the legislature has been considering the possibility of merging the cosmetology and barbering boards. This would certainly be a step in the right direction and would eliminate duplication at the state level. Clearly, TCC and BBE perform virtually identical functions over the same basic activity. As the legislature continues to assess this issue, it should also consider easing the burdensome requirements for licensing, perhaps moving to an optional certification system instead and allowing individuals to satisfy their practical requirements through work experience or an apprenticeship program.

Child Care

The provision of child-care services in Texas is regulated by the Texas Department of Protective and Regulatory Services (DPRS). Although DPRS has a San Antonio office, the regulations are statewide and there are no local regulations for San Antonio providers. The state currently allows for two main types of child care: day-care centers and family home care. In an era when there are many more single working parents and homes where both parents work, the provision of child-care services is an ever-growing area of entrepreneurial possibility. In this vein, the state's primary concern should be the safety of the children. Efforts to micro-manage playtime activities and the provision of snacks threaten to impose costs on would-be providers who would otherwise pursue this livelihood.

Day-care Centers

Day-care centers provide care for more than twelve children under age 14 for less than 24 hours a day. The operator of a day-care center must obtain a state business license and register the business at the municipal courthouse. The initial application fee to DPRS is only $35. Annual renewal fee is $35 plus one dollar for each child the center is licensed to serve. Once DPRS has received an application, it inspects the facility and the provider's plan for day care. License holders must have a liability insurance policy for $300,000 for each occurrence of negligence; however, if the caregiver cannot obtain insurance and the parents of the child consent, this provision can be waived.

The state requires directors of any day-care facility to have one of the following: an associate's degree including six credits of child development courses; six credits of child-care business practices, and two years of experience; 60 college credits including six credits of child development and nine credits of child-care business practice and two years of experience; a day-care administrator's credential from an approved professional school or business; three years of experience plus nine credits of child development and nine credits of child-care business practice; a B.A. with 12 credits of child development and six credits of child-care business practices plus one year of experience. Staff non-directors must be 18 with either a high school diploma or GED.

In addition to setting minimum education and training requirements for all day-care employees, state regulations dictate: the physical environment and furniture; staff-to-child ratios; appropriate child groupings; on- and off-site activities; safety and sanitation; discipline; and nutrition.

To ensure compliance with reasonable health, safety, and sanitation requirements, each day-care facility remains subject to various inspections. For instance, all centers must be inspected at least once a year and may be inspected more frequently. At least one annual inspection must be unannounced. Additionally, day-care facilities must receive an annual sanitation inspection by a local or state official that is separate from the state's DPRS inspection.

Family Home Care

Although state regulations for day-care facilities seem reasonable enough, DPRS also has the authority to regulate families providing care to children of their friends and neighbors, a fact that seems to cut into old-fashioned ideas of community and neighborliness. State family home care licensing regulations apply to all those regularly providing care in their own home to no more than six children under age 14 (excluding the caretaker's own), regardless of whether such care is for compensation.16

As with day-care centers, the license fee for family home care is $35. Anyone providing family home care to four or more children (excluding the caretaker's) must register with the department and pay $35, a process distinct from licensing. Registered homes need not necessarily meet all licensing requirements, nor does DPRS subject the registered home to regular inspections. Caregivers watching three or fewer children (not the caretaker's own) may register, although it is unclear why one would want to do so. Perhaps there is a benefit in advertising family home care services as registered with DPRS, but any such advertisement must be accompanied in bold type by the phrase "This home is registered with the Department of Protective and Regulatory Services but is not licensed or inspected." Thus, attempting to promote one's home as a "registered home" only draws attention to the fact that it lacks DPRS' full seal of approval.

The days of the teen-age baby sitter trying to earn extra money may be long gone. Under state law, DPRS is required to set standards for registered family home care relating to minimum age, qualifications, education, and training of providers. All caregivers requesting registration must be at least 21; if a provider is between 18 and 20, she must have an associate's degree or certificate in child development. If she is 21, however, she need only have a high school degree or GED. Once registered, providers must take 20 additional hours of training.

All persons in the home over 14 years must have a TB test and background check. Additionally, all providers must attend a free one-day orientation class in Austin, or, if residing in an outlying area, DPRS will make a video available. Health and fire inspections must be separately arranged and conducted by those departments.

Although these family home regulations don't rise to the level of oppressive, they nonetheless present a troubling picture of the state slowly creeping into a formerly private realm. Beyond that, they simply don't relate to the issues DPRS should be concerned about. So what if a couple leaves their brood with the neighborhood teen every Friday in order to spend some time together? Are these children any better off if the babysitter has a degree in child development? Given that the main responsibility of child-care providers would be, effectively, to babysit, not to educate, the state's minimum age and educational requirements go well beyond its legitimate concerns for the safety of children.

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 enterprising individuals with little formal education but excellent care-taking skills. Moreover, the regulations ultimately may have perverse effects: for example, failure to comply with any one of them may provide a disincentive for reporting important violations of the law, such as suspicions or instances of child abuse. The State should ease its educational requirements and other arbitrary regulations in order to encourage the growth of this entrepreneurial opportunity.

In-home Business

Modern day America has brought workers back into the home. With the technology revolution facilitating communication from just about anywhere, and the desire of many to be self-employed and closer to home, cities like San Antonio ought to encourage individuals to set up home businesses. But like other cities struggling with how to deal with home businesses, San Antonio tries to at once embrace the future and hang on to the past.

That is, at first glance, San Antonio home-occupation regulations appear generous in permitting individuals to operate business out of their home. Individuals operating a business from home need not apply for a permit; instead, such operations are designated--in what one official described as an "informal process"--as "home occupations."17 San Antonio's home-occupation ordinance begins with a presumption that home occupations are permissible, subject only to certain conditions. A closer look at the conditions, however, reveals the City's inclination to treat home businesses as a "dirty little secret."

Some of the home business restrictions are intended to prevent traffic and parking problems that arise with numerous visitors, such as prohibitions on receiving clients or making direct on-site sales. These prohibitions, although not a per se ban on home businesses, serve to limit the type of business that can legally operate. For example, one can make, but not sell, crafts at home.18

More notably, numerous conditions appear designed more to protect the aesthetics of the neighborhood than for any reason relating to public safety or to practical problems such as parking. For instance, home business operators may not alter their home in any way that detracts from its "residential character" whether by the use of colors, lighting, signs, etc. The only form of permissible on-site advertising for a home occupation is a flat nameplate attached to the home or visible through a window listing the individual's name and telephone number.

Moreover, all activities relating to the home occupation must be entirely within the home, and no more than 25 percent of the floor space may be so used. Only residents of the dwelling can conduct the home business; even volunteer non-residents are prohibited. And the City forbids the use of commercial vehicles to deliver materials to or from the premises. In areas where a home association operates, an entrepreneur must also obtain approval from the association to operate a home business. These restrictions in particular threaten property rights and privacy. For instance, 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? What difference does it make to the City that, for example, 26 percent of the homeowner's property is used for his business, or that his next-door neighbor is also his business partner and comes over to help out now and then? Lacking any rational justification for these regulations, the City ought to remove them. Indeed, because enforcement of many of these restrictions can only be accomplished by the City's intrusion into private homes, the City should be ever-mindful about the limits of its own authority.

Finally, the City prohibits altogether the following as home occupations: vehicle painting, service, or repair; barber shops;19 animal hospitals, kennels or obedience training schools; restaurants, catering, or the preparation of food for resale; furniture repair or upholstering; and teaching music, art, dance or exercise to more than two students simultaneously.

In-Home Beauty Salons

Oddly, although the City prohibits in-home barbering businesses, it permits the operation of in-home beauty salons. As with any beauty salon, it remains subject to the requirements of the Texas Cosmetology Commission. Moreover, home salons require a zoning change different from the standard home-occupation designation. Owners must submit an application to the City Zoning Commission and the City Council. The cost of the application, which is divided evenly between the two municipal bodies, is $610 for areas less than a half-acre and $1,270 for between a half-acre and five acres.

Upon submission of the application, owners must also notify homeowners within a 200-foot area, who have the right to object the proposed change. This makes sense where the neighbors would be affected by the zoning change. However, the Planning Department doesn't stop there.

The City notifies all neighborhood associations of all proposed zoning changes and will consider any opposition to the change, even if it comes from an association outside the immediate vicinity of the property in question. If the area for proposed change has a neighborhood association, according to an official in the city's Planning Department, the Department defers to the association's judgment on whether the zoning change accurately "preserves the character of the neighborhood" and will follow its recommendations for the proposed change. Given the tightly controlled restrictions on advertising or calling attention to the existence of a home business, "preservation of the character of the neighborhood" would not seem to be an issue.

In fact, allowing neighborhood associations to oppose an owner's zoning proposal seems instead an invitation into the homeowner's home to decide whether she or he can conduct certain legitimate activity. Faced with tension between an individual's property and privacy rights and an unidentified interest by a group, the City routinely defers to the latter. In addition to the invasion of a homeowner's privacy rights, this raises other troubling issues. First, the Zoning Commission appears to have unconstitutionally delegated its power to private associations. Second, it has overreached the proper limits of its authority. Its only concerns should be the negative impact of a zoning change on surrounding property directly affected by the change, where that impact cannot be addressed through local nuisance laws.

In-Home Child Care

The city's Zoning Commission requires a change in zoning designation for family child-care businesses with more than seven children. No zoning change is necessary for fewer than seven children. Like in-home beauty salons, the application process for family in-home child care requires application to the Commission and the City Council, with abutting neighbor notification and the right of any neighborhood association or neighbors to object. As with home salons, the city defers to the neighborhood association's judgment. Thus, the same issues regarding property rights and privacy that arise in the case of in-home salons arise with in-home day-care proposals.

Conclusion

In few places can one find the special blend of people, history, and cultures that led Mark Twain to dub San Antonio "one of America's four unique cities."20 It is unique, also, in its generally favorable posture toward entrepreneurs and small businesses. But it is not perfect.

The rich history, welcoming climate, and warm people help make tourism one of the city's biggest sources of economic prosperity. In turn, tourism holds promise of so many entrepreneurial opportunities for individuals to seize, particularly in transportation services and downtown vending. Rather than stifle such opportunities, which often serve to help immigrants make their way up the economic ladder, the city should nurture them as it does other entrepreneurial activities. And it should be ever mindful of the growing economic potential of home-based businesses by eliminating many of its antiquated and arbitrary zoning restrictions, particularly when those restrictions trample on a homeowner's property and privacy rights. That is, it should presume that individuals should have the right to engage in home-based businesses.

In an era when the federal government scales back on welfare, leaving states and localities to provide for those in need, the City must anticipate and re-think many of its current restrictions on entrepreneurship. The City should repeal all restrictions and regulations that cannot be justified by public health or safety. In so doing, it could unleash unlimited potential for economic growth, empowering not only individual entrepreneurs, but entire communities where they live.

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 have much they should continue to fight for.

Endnotes

1 This 1995 figure was provided by the Texas Department of Human Services.

2 "Texans shape agenda on easing small-business regulation," The Courier-Journal, June 3, 1996, p. 8B.

3 "Small Business Development: Towards a Stronger San Antonio Economy," City of San Antonio Report on Small Business Development, Summer 1988.

4 Non-U.S. citizens must provide proof of their right to work in the U.S.

5 Required insurance amounts depend on type of ground transportation services provided.

6 Upon renewal, applicants must be fingerprinted again.

7 In the early 1990s, the City took away approximately 80 permits from one of the companies, and the company sued for return of the permits. They succeeded, resulting in a court ordering re-issuance of the 80 permits. These 80 are not included in the 600 number cited above.

8 For example, because both the transportation department and the police have the authority to enforce the City's ground transportation ordinances, both would issue numerous citations to the same driver in a short time span.

9 According to documents obtained from the City's Ground Transportation Unit.

10 Telephone conversation with Mary Ann Contreras, Ground Transportation Unit.

11 For example, it is illegal to sell live animals from pushcarts, despite many requests for a permit to do so, and flower peddlers near a cemetery cannot make sales within 150 feet from the property line of an existing flower shop. Additionally, peddling is restricted to the hours of 8 a.m. to 11 p.m.

12 From an interview with Bob Tagle, Market Square Manager.

13 Food vending afoot of any "potentially hazardous," perishable food is prohibited entirely within city limits.

14 Individuals in San Antonio have only an hour drive north to Austin; however, for examinees coming from Dallas, for example, this can be quite inconvenient and time consuming.

15 Telephone conversation with Catherine Nahay, Texas Cosmetology Commission.

16 Caretakers can provide care to six additional children under 14 during after-school hours only, but the maximum number of children cannot exceed 12 at any time.

17 Telephone conversation with Pete Gomez, Planning Department.

18 The preparation of food for resale or catering are prohibited in the home altogether. Nonetheless, it is apparently a quite common practice in San Antonio for many women, often Mexican immigrants, to bake tamales and sell them either at home or off-site. Anecdotes indicate that the City has been lax about cracking down on this practice.

19 The City provides a special exception for beauty shops (licensed by the Texas Cosmetology Commission), which are discussed under "In-home Salons" and require a different zoning designation.

20 The other three he spoke fondly of are San Francisco, New Orleans and Boston.



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