(FORTUNE Magazine) – When FORTUNE set out to find America's best cities for business this year, a trend was unmistakable: Cost has become far more important than it was in the Eighties. What companies want in a city hasn't changed much in the three years since this survey began; the twist is that in this stagnant economy business is getting much tougher about demanding it all at the right price. Thus, the best cities for business in 1991 are those offering the best value. By that criterion the winner is clear: It's Atlanta, followed by its Sunbelt rival Dallas and a couple of towns where snow actually falls, Pittsburgh and Kansas City. The loser for value: almost anyplace in California. Reasons include expensive environmental regulations, water shortages, the $14 billion state budget shortfall, pollution, the cost of living, and congestion. Corporate flight from the Golden State is approaching a stampede (for more on California's plight, see page 89). An increasingly competitive global environment has made ''cost containment with an emphasis on quality an imperative,'' says Karen Gerard, senior vice president of relocation consultants Moran Stahl & Boyer, which surveyed more than 600 executives for FORTUNE. With MS&B, we determined value on a sort of balance sheet that weighs a city's assets, as measured in the survey, against the price of doing business there, as reflected in the costs of labor, facilities, utilities, construction, and taxes. In fine-tuning the top ten, FORTUNE editors also drew on interviews with dozens of business leaders in many of the cities and with experts, including MS&B consultants and other authorities. What's on Atlanta's balance sheet? The main liabilities are a high crime rate and notably poor public schools -- yet the city was a blowout winner in the survey of executives. MS&B's Gerard says the survey muffled hometown boosterism -- and struck a balance between perception and reality -- by separating respondents' satisfaction with their own cities from their opinions of other cities. Atlanta stood out in both measures. It was by far the most popular choice among outsiders, and its executives had a more favorable opinion of their town than did those of any other place in the top ten except Kansas City. As for costs, Atlanta is the 15th-least-expensive city among America's 50 largest. That combination of quality and moderate cost was the best of the bunch, leading to Atlanta's No. 1 ranking.

The attributes executives most demand in a city are simple and sensible. They are, in order: -- A flexible, high-quality work force. -- Proximity to markets. -- A strong local pro-business attitude. -- A good public education system. -- Convenient air service to key cities. -- Costs -- housing, labor, facilities, and taxes. -- An efficient highway system. -- A whole host of intangibles amounting to ''quality of life.'' While companies are looking harder for savings these days, they are not willing to sacrifice these attributes to lower their costs. So the top ten for value is not just a bargain basement honor roll. The five least expensive cities in the top 50 -- Birmingham, San Antonio, Jacksonville, Memphis, and Norfolk -- all missed the top ten for value because executives didn't rate them highly enough on quality. The two top-ranked cities are once-booming, now-surviving service economy capitals that have always ranked high on FORTUNE's list. Like Atlanta, Dallas/ Fort Worth is a moderate cost area (16th least expensive) with high crime and poor schools. (Bear in mind that while the MS&B survey encompasses metropolitan areas rather than core cities, problems of those core cities tend to taint the image of an entire area.) One advantage these two share over many cities is familiarity; if you haven't been to a convention in Dallas or Atlanta, you've no doubt passed through their mega-airports. Another favorable factor: Both places are a little more eager for your business these days, Atlanta having finally been hit by an economic slowdown and Dallas still trying to shake off the Texas crash of the Eighties. ''Dallas has been through a gut-wrenching experience, financially and socioeconomically,'' says Joseph Musolino, vice chairman of NCNB Texas, formerly First Republic. ''But now that we're coming out of it we're healthier because we're more linked to the national economy.'' Vacant office space and stagnant job growth may spell bad news for businesses dependent on the Atlanta or Dallas economies, but to the prospective outsider they spell better value today than in the heady days gone by. ALREADY headquarters to 19 FORTUNE 500 and Service 500 companies, Atlanta has quieted the competing crowd with several recent monster home runs in the game of economic development. The snaring of the 1996 Summer Olympics has powered a quantum boost in overseas image and should eventually stop Japanese visitors from asking for directions to the casinos (they think they're in Atlantic City). Several recent corporate headquarters relocations mean cash on the barrelhead today. Holiday Inn's North American operation is shifting to Atlanta from Memphis; Saab is transplanting its U.S. base to Atlanta from Connecticut. Some of the city's most visible existing headquarters companies -- Coca-Cola, Turner Broadcasting, Home Depot -- have forged ahead or at least held their own in a troubled national economy. Dallas/Fort Worth -- home to 31 FORTUNE 500 or Service 500 companies -- has in recent years lured J.C. Penney and Exxon headquarters to town, and the city hopes to become the center of Mexican-U.S. trade should a North American free- trade pact become reality. Kent Foster, president of GTE's telephone operations, moved his outfit to the Dallas area in 1989. ''A central geographic location was critical to us,'' he says, ''and the local government leaders here treat you like customers and make sure your needs are met.'' BUSINESS MAY love Atlanta and Dallas, but lots of other people don't. For FORTUNE's two top cities, some critics reserve the kind of scorn that New York filmmaker Woody Allen heaps on Los Angeles (''a city where the only cultural advantage is that you can make a right turn on a red light''). To them, such new cities -- with all their glass and concrete and sprawl -- are formless blobs of synthetic culture, trying but failing to achieve the cultural cohesion of Boston or San Francisco. The Economist has called Dallas the ugliest city in North America, while the Wall Street Journal characterized Atlanta as ''an archipelago of shopping malls and condominiums with an atrophied downtown, snarled traffic, and a fading sense of community.'' To which the objects of this spirited derision have responded with even more vigorous boosterism. Atlanta and Dallas are probably the two best image marketers in America. If Atlanta could suck as hard as it can blow, say folks down in the snooty coastal Georgia city of Savannah, it would be a port city. In ultra-smug Austin, true Texans would rather listen to the price of oil drop than sit through a presentation by a Dallas booster. Fort Worth says it is where the West begins, and Dallas is where the East peters out. Maybe it's the newness of these cities. Their society can be nouveau, pretentious, and tacky, which somehow makes people of old means in genteel, paint-chipped places like Little Rock and the Mississippi Delta feel as though they can look down on them. All these high-minded knocks on Atlanta and Dallas are fair enough -- if you don't have to work for a living. But if you do, few places are more opportune over the long haul. What they lack in refinement, they overcompensate for with energy, mostly directed toward turning a buck. ''It's hard to define why a person or a city or a company has charisma,'' says George Berry, a former Georgia commissioner of industry, trade, and tourism. ''But with Atlanta I think it's because folks know this is where you can come and make money. That's what Atlanta represents: success, newness, energy, and the profit motive.'' Yes, Atlanta and Dallas are synthetic cities, but that is what suits them for the 21st century, in which the economy is certain to be driven by synthetic services supported by such synthetic industries as telecommunications and information technology. Unlike most major, shall we say organic, cities, which grew up on natural harbors or at intersections of rivers or atop piles of coal and oil, neither Atlanta nor Dallas has the faintest natural raison d'etre. Both sprang up as residue from the currents of commerce. They started as railroad towns: Atlanta was called Terminus because it was where the tracks ended, and local leaders in Dallas paid the railroad to come 40 miles out of its way. Ever since these synthetic beginnings, both cities have been trying to talk the rest of the world into joining them, primarily for the purpose of doing business. As early as 1895 -- only 30 years after Sherman burned it to the ground -- Atlanta attracted 1.9 million people to its own version of a World's Fair, the Cotton States and International Exposition, a far more impressive feat for its day than whatever the 1996 Olympics turns out to be. TO FEED THE RAILROADS in both cities, highways had to be built, and they were; when interstates came along, Atlanta and Dallas were natural places for them to intersect, and they did, bringing over-the-road trucks with them. Both cities foresaw the future of air travel and built airports that expanded until they redefined the whole concept, becoming -- along with Chicago -- hubs to which you flew regardless of your final destination. Atlanta is home to Delta, Dallas to American. Southern native son Jimmy Carter deregulated international gateways, and now jumbo jets from Lufthansa, Swissair, KLM, British Airways, JAL, and others swoop down over the piney woods and mesquite prairies onto the runways outside Atlanta and Dallas. When package delivery giant United Parcel Service set out looking for a new home -- driven from Connecticut by housing prices -- its choice soon narrowed to three cities: Atlanta, Dallas, and Baltimore. With more than 18,000 commercial air trips a year out of headquarters and expansion designs on the European market, the company calculated that it could save two man-years of travel time annually by picking Atlanta over Dallas/Fort Worth. In a thorough selection process, 12 top UPS executives took an anonymous tour by chartered plane of the three finalist cities. Then CEO Kent Nelson asked each to give him a written recommendation of his first choice. All 12 chose Atlanta, says Nelson, who admits that his own first choice going into the exercise was Dallas. In the end, he says, ''I think it was the trees and the rolling hills. They reminded everybody of Connecticut.'' TRAINS AND TRUCKS and planes helped make Atlanta, but as 20th-century industrial evolution softened -- and telecommunications links took on the status of railroads in the 19th century -- both cities knew instinctively what to do. Atlanta and Dallas have become significant centers for the telecommunications industry, Atlanta in particular. When British Telecom announced it would open a North American unit to serve multinational corporations, it said Atlanta was the logical choice because it has 29 fiber- optic telephone paths, vs. only eight in New York. No problem if they need more; Atlanta is always eager to dig up its streets for progress. It is AT&T's third-largest employment center, with over 19,000 jobs, and is headquarters for Bell South, with more than 11,000. GTE, Sprint, Northern Telecom, and MCI account for another 6,000. Many of the same companies provide thousands of jobs in Dallas as well. For all its success, Atlanta is annoyed to look over its shoulder and see a smaller, hungrier boomtown springing up in its own image and in its own backyard: Charlotte, N.C. If the MS&B survey turned up any little city that might, this is the one. The fourth-cheapest city in the top ten, Charlotte drew favorable scores from residents and outsiders and beat Atlanta for pro- business attitude. Once a sleepy stock-car-racing town whose main contribution to American culture was Jim and Tammy Bakker, Charlotte owes much of its current credibility with American business to one man: Hugh McColl, the take-no- prisoners chairman of what will likely become, through Pattonesque takeovers, the nation's fourth-largest bank, NCNB (soon to be NationsBank). ''McColl's attitude is Charlotte's attitude,'' says Ray Shaw, the former president of Dow Jones, who moved to Charlotte to run American City Business Journals, a chain of regional business newspapers. ''He's tough. He's optimistic. And he knows how to get a job done.'' Whether by jingoistic design or divine irony, the diminutive, brash Charlottean now controls -- and has renamed after his company -- two of the banks that were most associated with Atlanta and Dallas in their earlier go-go years: C&S in Atlanta and Republic Bank in Dallas. In both cities it has been a bitter pill to swallow, this financial colonization by upstart Charlotte. As a lifelong capital colony, Atlanta probably handles the invasion of North Carolina banks with a little more grace than the Texans do. NCNB, Wachovia, and First Union have bought three Atlanta banks, leaving only one locally controlled name-brand bank (SunTrust) and making it tougher for Atlanta to call itself the South's financial capital with a straight face. But at least Atlantans sold their banks more out of greed than desperation. Dallas bankers not long ago were more arrogant than Los Angeles junk bond dealers, and they fell just as hard. Today, incredible as it seems, the Dallas skyline boasts not a single indigenous major bank. Dallasites try to be polite about it, but many still spit sand when they try to say NCNB -- much less NationsBank. No such Johnny-come-lately jealousy has afflicted the banking scene in Pittsburgh, where the name Mellon may not be as catchy as NationsBank but still has quite a bit of what the marketers call trademark equity. Home to two of the nation's top 25 banks and 15 other FORTUNE 500 or Service 500 companies, Pittsburgh has more than its share of weighty corporate cachet: Westinghouse, PPG, H.J. Heinz, Alcoa, Sony. Sony? Yes. After searching the U.S. for a place to build its picture-tube plant, Sony chose Pittsburgh, a city that ranked near the top in nearly every category of the MS&B survey -- availability of high-quality labor, pro-business attitude, education, affordable housing, overall satisfaction of its residents. The category where it ranked poorly was effect of a city on a company's image. AND FOR THOSE who remember the smoky, carbon-black, shot-and-beer steel town of just a little more than a decade ago -- the one Frank Lloyd Wright recommended abandoning -- no image could be more out of date. For starters, today's Pittsburgh is actually beautiful. Its sturdy old skyline is nicely complemented by a restrained new one. Framed as it is by Mount Washington and the watery conflux where the Monongahela and the Allegheny form the Ohio, the downtown is one of America's most European in appearance. When the city was in danger of going to its grave with the steel industry in the early Eighties, the town's venerable old-money crowd dug into its deep foundation pockets and made sure that Pittsburgh emerged as an American city with a first-rate quality of life. ''I think the Nineties are going to be the era of the big little city,'' says Frank Cahouet, chairman and CEO of Mellon Bank and a transplanted California banker from Security Pacific and Crocker. ''Pittsburgh is an appealing place to live because it has the amenities of a small city but the cultural benefits and business environment of a lot of large cities.'' Cahouet and others stress that, for all its old money, the reborn Pittsburgh (pop. two million) is focused on economic development and the hospitality to outsiders that game requires. ''We lost 60% of our industrial base and more than 100,000 heavy manufacturing jobs,'' recalls Wesley von Schack, chairman and CEO of Duquesne Light Co., Pittsburgh's electric utility. He moved there from Vermont in 1984. ''With those kinds of numbers it wasn't hard to get people focused on economic development.'' Drawing heavily on the technical resources of Carnegie Mellon University and the University of Pittsburgh, the city has rebuilt employment around high-tech manufacturing, medical, and biotechnology jobs. The city is happy with modest growth. Von Schack says, ''If you don't boom, you don't bust.'' Similarly conservative views prevail in Kansas City. Another more traditional burg, its survey results reveal an extraordinary gap between the way resident executives feel about it (they love it) and the opinions of outsiders (it doesn't come up much). ''Kansas City doesn't brag. It's a quiet town, gentle, not pushy,'' says Betsey Solberg, executive vice president of Fleishman-Hillard, a public relations firm. If that sounds a little like a Hallmark greeting card, well, Hallmark is the town's biggest privately owned employer and one of the companies that call the shots. Another is Marion Merrell Dow laboratories, the pharmaceutical giant partly created by self-made billionaire Ewing Kauffman, or ''Mr. K.,'' who owns the Royals baseball team and heads a foundation that supports drug prevention programs, stay-in-school projects, self-esteem courses, and more than 1,000 disadvantaged students in college. ''All kinds of businesses are welcome here,'' says Kauffman, ''as long as they learn the principles of social responsibility under which we operate. A corporation owes more to the community than just jobs. To be specific, 3% of their profits should go to charity. Things come up that need attention. Social problems, floods. Business has to do its part, and here we do. We've got the Hall Family Foundation ((started by the owners of Hallmark)), the H&R Block Foundation, and the Greater Kansas City Community Foundation.'' Kauffman says he's ''especially proud of the voters of Kansas City ((70% white)) for electing a black mayor'' and helping bring the community together. That mayor, Emanuel Cleaver, says, ''We're the only major city that's really out front struggling to do something about public education.'' The claim may be hyperbole, but K.C. is certainly the only city in the country investing some $600 million in capital improvements to its inner-city school system. And even though the expenditures were ordered by a federal court in a desegregation suit brought by Cleaver and others before he became mayor, the initial results are eye-popping. The brand-new $32 million Central High School, built in an inner-city black neighborhood, attracts a student body that is 25% white. The magnet school offers a computer for every student, robotics training, the largest indoor swimming pool in Missouri, and a Jesuit- inspired curriculum that includes Greek, Latin, and Olympic sports training. With the school just opened, it's too early to judge results. Transplants to Kansas City love to talk about the work ethic. ''I've worked on both coasts and in Atlanta,'' says Tom Sprott, a general manager for IBM, ''and I've never seen the values toward getting the job done that I see here. There's really no comparison.'' Kansas City has suffered labor problems in the past, but Bob Dineen, president of Marley Co., which has plants in Louisville, Memphis, Houston, and other cities, says, ''That labor reputation is 15 years out of date. We have fewer problems here than anywhere else. You get a full day's work in Kansas City.'' ! Each of FORTUNE's remaining top ten brings to the table a different combination of attributes that add up to value: -- Phoenix is strategically located near the dense Southern California market and offers a high-quality work force at much lower costs than California. -- Orlando is relatively inexpensive, right in the center of one of the country's fastest-growing markets. -- Austin is the least expensive of the top ten and has the most relaxed lifestyle. Though somewhat isolated, its high-tech orientation and the University of Texas make it attractive for a variety of technology operations. -- Salt Lake City continues to enjoy an excellent reputation for its labor force along with low costs and a notably low crime rate. -- Nashville is perhaps the sleeper on the list, a newcomer to the top ten and a city likely to take off in years to come. Why? ''Location, location, location,'' says MS&B's Karen Gerard. ''It is well positioned to serve markets in the South, Midwest, and East, three interstate highways intersect there, and it is developing into a major hub for American Airlines.'' The new emphasis on value should not suggest that American business is on the verge of abandoning all its traditional capitals. New York, through a combination of size, culture, and concentration of power, remains America's one true international city and a bargain compared with Tokyo, Paris, and several others. Los Angeles is the world's entertainment capital and retains important ties to Mexico and the Pacific Rim. San Francisco, if you can afford it, offers an alluring blend of charm and metropolitan sophistication. Like England, there will always be a Boston. For a true metropolis with a central location, Chicago is top dog. For Latin America, fly Miami. But in the cost- conscious Nineties, the top ten for value will continue to give all of these cities, and each other, a good run for their money.

BOX: THE TOP TEN CITIES

1. Atlanta 2. Dallas/Fort Worth 3. Pittsburgh 4. Kansas City 5. Nashville 6. Salt Lake City 7. Charlotte 8. Orlando 9. Austin 10. Phoenix