Austin’s Weird Festival-Based Economy

How does the home of SXSW deal with the challenges of loud music venues and constantly exploding tourist populations? By recognizing these are good problems to have.

Talib Kweli performs at The Samsung Galaxy Sound Stage at SXSW on March 11, 2013 in Austin, Texas.
National Journal
Elahe Izad
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Elahe Izad
Oct. 2, 2013, 7:08 a.m.

AUS­TIN, TEXAS”“Aus­tin isn’t a city short on mot­tos. Aus­tin of­fi­cially calls it­self the “Live Mu­sic Cap­it­al of the World,” while bump­er stick­ers de­mand to “Keep Aus­tin Weird,” an homage to the ec­lect­ic char­ac­ter of the city. Both say­ings speak to Aus­tin’s un­ortho­dox eco­nom­ic base: cul­tur­al and tech­no­lo­gic­al fest­ivals.

The cre­at­ive sec­tor, and by ex­ten­sion, mu­sic tour­ism, are huge drivers in the loc­al eco­nomy. In 2010, more than half of the tax rev­en­ue gen­er­ated by Aus­tin’s cre­at­ive sec­tor came from tour­ism, ac­cord­ing to a study con­duc­ted by Aus­tin’s city eco­nom­ist. One-in-five cre­at­ive-sec­tor jobs were in mu­sic tour­ism. South by South­w­est — or SX­SW, as its pop­ularly known — per­haps the city’s most fam­ous fest­iv­al, in­jec­ted more than $190 mil­lion in­to the loc­al eco­nomy in 2012, ac­cord­ing to an eco­nom­ic im­pact ana­lys­is. Even dur­ing a re­ces­sion, the cre­at­ive sec­tor grew; between 2005 and 2010, the cre­at­ive sec­tor grew by 25 per­cent, com­pared with 10 per­cent growth for the en­tire loc­al eco­nomy.

That growth doesn’t come without chal­lenges. Aus­tin’s biggest fest­ivals mean mass move­ments of people in and out of the city. Try­ing to run a func­tion­ing city that con­tracts and ex­pands dur­ing fest­iv­al week­ends can be a tall or­der. On top of all that are the large num­ber of new res­id­ents mov­ing to Aus­tin, the fifth fast­est-grow­ing large city in the coun­try, ac­cord­ing to 2012 U.S. Census Bur­eau data. Na­tion­al Journ­al re­cently sat down with Aus­tin May­or Lee Leff­ing­well to talk about how the city juggles the de­mands of all these fest­ivals — and how to keep Aus­tin weird.

What role do large-scale fest­ivals and events play in Aus­tin’s eco­nomy?

They play a big role. You may have no­ticed an art­icle in today’s pa­per about hotel re­ser­va­tions for For­mu­la1, which is one of our three ma­jor events. They’re talk­ing about some of these be­ing five-di­git per-night room costs, suite costs. That kind of blows my mind to even think about. I’m kind of a Motel 6 kind of guy. All those rooms are go­ing to be ren­ted for the dur­a­tion of For­mu­la1, and it brings a huge im­pact. Last year we were es­tim­at­ing an eco­nom­ic im­pact of about $300 mil­lion to the Cent­ral Texas re­gion just from that event alone.

SX­SW is a 26-year-old event that began as a mu­sic fest­iv­al, but now it’s morph­ed to not only that but film and in­ter­act­ive me­dia fest­iv­al as well. It con­tin­ues to grow and at­tract people from all over the world. And of course, Aus­tin City Lim­its is still the pure mu­sic fest­iv­al that’s here. In 2010 alone, mu­sic tour­ism was re­spons­ible for $28 mil­lion in tax rev­en­ue and 10,000 jobs. So that’s a big part of our eco­nomy.

What chal­lenges does Aus­tin face in ac­com­mod­at­ing such large in­fluxes of people and one-time yearly events?

People who live here are of­ten­times not too in­ter­ested in hav­ing their nor­mal routine dis­turbed a little bit, with ad­di­tion­al traffic prob­lems and so forth. Some­times it be­comes dif­fi­cult to com­mu­nic­ate the total be­ne­fit of events like this. We can sit down and quanti­fy how much sales tax did we get, how much hotel tax, and how much car rent­al-tax. But the ac­tu­al im­pacts are ac­tu­ally far great­er than that. As these people come to town, they go out to a res­taur­ant and eat, go to some kind of live mu­sic ven­ue and pay an ad­mis­sion charge, go to a hard­ware store and buy a souven­ir. It per­meates throughout the eco­nomy. It’s the total eco­nom­ic ef­fect, and that’s some­times hard to ex­plain.

You men­tioned traffic, for in­stance, be­ing one chal­lenge. How do you man­age something like that when you have ma­jor events?

With For­mu­la1 last year, there were more gloom and doom scen­ari­os than you could count. Frankly, we were wor­ried. I was wor­ried. People were talk­ing about be­ing stuck in traffic for 12 hours. So we de­veloped a good plan, we en­lis­ted the county, we en­lis­ted some mil­it­ary folks from the [Na­tion­al] Guard, brought in buses from all over the state. But I don’t think any­body ex­per­i­enced a delay. Most of them were in the 30- to 40-minute range, or at the most an hour.

What about something like your po­lice force? Is there a mass mo­bil­iz­a­tion of all the city re­sources to handle the biggest events?

Pretty much. It’s kind of a no-va­ca­tion time for most of the po­lice of­ficers. [We ac­tiv­ate] the emer­gency-op­er­a­tions cen­ter that we have for dis­asters, to try and co­ordin­ate all their ef­forts and make sure we man­age traffic right. So it isn’t just something you let hap­pen. It has to be or­gan­ized.

Are there any con­cerns that the types of jobs cre­ated by the tour­ism in­dustry are not well-pay­ing enough or long-last­ing enough to sus­tain Aus­tin’s eco­nomy in the long-term?

There’s al­ways been that con­cern — par­tic­u­larly, that there are so many mu­si­cians in and around Aus­tin. But there are a lot of private-sec­tor groups that have sprung up to help, like the Health Al­li­ance for Aus­tin Mu­si­cians, provid­ing health  care for folks in that in­dustry who need it. That’s sup­por­ted by the private sec­tor. The city has a very minor role in that, but we try to make it easy for them to do busi­ness here.

Usu­ally people think of the cre­at­ive sec­tor as one that suf­fers the most dur­ing an eco­nom­ic down­turn. How has it been able to thrive in Aus­tin, and is there a con­cern that it could be af­fected in the fu­ture?

It’s in­tu­it­ive to me that a lot of en­ter­tain­ment ven­ues will do well. In hard times, people are look­ing for di­ver­sions. Mu­si­cians kind of roll with the punches. They’re used to hard times. In many in­stances, they’re ded­ic­ated to find­ing a ca­reer in that busi­ness and they will en­dure hard­ship. But it con­tin­ues to flour­ish here in Aus­tin, and as I said, we try to do everything we can to help that.

Does some of that have to do with reg­u­lat­ory en­vir­on­ment? What can a may­or do to al­low and en­cour­age the cre­at­ive sec­tor to blos­som?

We take a lot of grief for noise, frankly, from mu­sic ven­ues. So we’ve tried to plan and lay out an en­ter­tain­ment dis­trict in Aus­tin — which is mainly Sixth Street and Red River Street — and to try to en­cour­age people to [real­ize] this is not the place to build an apart­ment build­ing, this is not the place to build a high-rise condo. We also just es­tab­lished a fund for loans to mu­sic ven­ues so they could in­su­late their per­form­ance areas and hire ex­perts so that they won’t gen­er­ate noise. It has to do with what dir­ec­tion is the wind blow­ing and what dir­ec­tion is your stage fa­cing and all those kinds of things. The rollover loan pro­gram will help mit­ig­ate those, be­cause we have to be re­spons­ive to people who live here already and very up­set about the noise. Mu­si­cians have a tend­ency to stay up really late at night and play their stuff.

We do have a mu­sic of­fice that is part of our eco­nom­ic growth de­part­ment, with a ded­ic­ated em­ploy­ee to work with mu­sic pro­fes­sion­als and mu­sic groups all around the city.

As cit­ies be­come more pop­u­lar and at­tract­ive, there is some­times a con­cern that the cost of liv­ing in­creases and it be­comes too ex­pens­ive for cre­at­ives to live and work in those cit­ies. What can Aus­tin do, and what can you do as may­or, to en­sure that the unique char­ac­ter of Aus­tin is in­tact, since that’s what at­tracts so many people to this city?

That’s a tough ques­tion, be­cause when you look at strong eco­nom­ies any­where in the coun­try, the cost of liv­ing is go­ing to be high­er. It’s just a nat­ur­al phe­nomen­on. But we do have pro­grams for city bond money to be spent on af­ford­able-hous­ing com­plexes. We do a good bit of that, and we have an­oth­er bal­lot ini­ti­at­ive. Our one last year failed, voters didn’t ap­prove it, so it’s go­ing to be on the bal­lot again this year: $65 mil­lion, ba­sic­ally for hous­ing for low-in­come people.

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