No. 2 Albuquerque, New Mexico

Renewable-energy and film industries fuel growth in our number-two pick.

Population: 819,576

Income Growth: 7.8%

Cost of Living Index: 98

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Median Household Income: $45,634

Percentage of Workforce in Creative Class: 30%

What Albuquerque wants, Albuquerque gets -- and the city and state crave high-tech jobs, especially in the renewable-energy industry. So when Schott North America made overtures to many cities about hosting its flagship solar-panel plant, Albuquerque and New Mexico pounced. "We were overwhelmed with collaboration and enthusiasm," says Schott chief executive Gerald Fine.

Officials enlisted two of the city's crown jewels to help entice Schott. The first, Sandia National Laboratories, is the government-owned, Lockheed Martin-run research-and-development engine for national defense. Sandia's gaggle of PhDs routinely collaborate with local businesses to develop technology. The second, the University of New Mexico, comes with its own R&D chops, plus tailor-made programs to educate workers in key Albuquerque industries.

The city and state also cut red tape and loaded up on incentives to attract Schott. Gov. Bill Richardson gave Fine his personal cell-phone number, just in case Fine needed help untangling any snags. Schott began looking for a site in July 2007, and it was ramping up production at its spanking-new plant in April of this year. "That's an astounding feat," says Fine. The plant's 350 employees will soak up some of the 2,000 workers laid off from chip maker Intel, a major local employer.

Albuquerque is developing its film industry with the same zeal. No Country for Old Men was made here, as was the latest in the Terminator series, Terminator Salvation, filmed at Albuquerque Studios. The industry has grown from 100 people eight years ago to 3,000 today, many of whom are locals trained for the new jobs. "We had one guy go from hauling wood to Hollywood," says Lisa Strout, of the New Mexico Film Office. It doesn't hurt that New Mexico pays 25% of the cost of films made locally. Strout says the city's vibrant arts community makes Hollywood types feel at home.

The city is a mélange of cultures. Native American and Hispanic influences flavor the architecture and food (when natives ask "Green or red?" they're talking about which chile sauce you prefer). A stretch of the old Route 66 has evolved into a funky, neon-charged neighborhood of shops and restaurants called Nob Hill.

Albuquerque bills itself as a green city and, figuratively speaking, it is. The city requires everything from homes to commercial buildings to be energy-efficient. And an impressive grid of bike paths makes it possible to commute from any point A to point B. A bike-only trail also runs along the Rio Grande, which bisects the city. But it's only along this corridor that the city is literally green. Elsewhere, you'll have to appreciate the many shades of reds and browns that color the Southwest.

NEXT: No. 3 Washington D.C.

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Bob Frick
Senior Editor, Kiplinger's Personal Finance