Sunday, January 17, 2021

How a Biden presidency can boost Houston, plus the cause of our growth, how LA is like us, Montrose is dead, and a graffiti artist guide to visiting HTX video

A lot of people are probably thinking about a Biden presidency as a negative for the oil industry and Houston, but there are some potential silver linings here. A big one would be a massive federal infrastructure investment bill that could dramatically improve Houston's flood resilience, including the Ike Dike and Galveston Bay Park surge barriers (great overview video). Another would be reopening international migration, which has been a big booster for Houston in the past (and has been significantly suppressed since 2016). 

But the biggest potential boost would be the oil industry giving him a viable alternative to the Green New Deal.  Instead of banning fracking or federal drilling permits - which just imports more oil from the Middle East - how about a tariff on imported oil to boost local jobs while also reducing carbon emissions? (by keeping prices up) Could the industry give him cover to get it passed and popular with the public?  How about channeling the industry into something it has the expertise, infrastructure, and capital to do very, very well: carbon sequestration? (i.e. injecting it into the ground) How about encouraging LNG exports to Europe to give them an alternative to coal and Russian natural gas? Or LNG exports to China to displace the massive coal plants they're building there? There are so many ways the oil industry could be part of the solution on carbon, if they would just engage in good faith. 

Moving on to some smaller items this week:

  • Market Urbanist Scott Beyer at the Foundation for Economic Education: What's the Cause of Houston's Growth? For decades, Houston has been the nation’s leading example of an “opportunity city.”
"If America had a more market-oriented urban approach, those aspects of Houston—the density and affordability—would be the ones most likely replicated. For this reason, “getting a bunch of Houstons” should be an urbanist goal."
  • Los Angeles: a city that outgrew its masterplan. Thank God. In the first of our regular series of dispatches from around the world, this longtime LA resident argues that his city's endless variety should be a key part any new metropolis's design. Sounds a lot like Houston. Hat tip to George.
"The very lack of defined form and cultural tradition here, the statelessness of the city itself or those who live in it, allows for a distinctive type of vitality that I've felt nowhere else."
Finally, I'll end with a fun video: Houston by a Local - Travel Tips for Houston - A Day in Houston, Texas. Discover Houston with a local: Graffiti artist Gonzo 247 shows you highlights of his home town in the U.S. state of Texas. One of them is Space Center Houston.  Hat tip to George.

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Sunday, January 10, 2021

My HBJ piece on NZ adopting TX MUDs, Techxodus, video on Houston's identity, future of offices, HTX developments in 2021, Stack City, rich zip codes, and more

The lead item this week is my short piece in the Houston Business Journal on New Zealand adopting the Texas Municipal Utility Districts (MUDs) model to encourage more homebuilding in a country with an extremely limited supply of overpriced housing. I helped host a research delegation from New Zealand in 2018 that brought our MUDs model back and successfully crafted and passed similar legislation there - a huge win for our Urban Reform Institute think tank and endorsement of the Texas model for supplying a continuous flow of new, affordable housing.

Moving on to this week's items:

"Harris, the most populous county in fast-growing Texas with 4.7 million people, went to six zip codes on this year’s list from just one last year." ... 
"Almost half of the richest zip codes, 49 of the 100, are in just seven counties: Manhattan & suburban Westchester County in NY, Connecticut’s Fairfield County, Chicago’s Cook County, California’s LA & Santa Clara counties, & Houston’s Harris County (6)."
"Travel is a part of our lives. Instead of treating it like a cost, we should embrace it, using it to enhance our economic and social well beings. To the extent that government is involved in transportation, instead of trying to limit travel it should do what it can to enable it and to extend the benefits of travel to as many people as possible."

“There are a number of examples of the Texas-style stack in and around our larger metropolitan areas, including Houston, which, because of its large number of stack interchanges, is known as “Stack City””
My first time hearing that nickname - curious to hear in the comments if others have come across it before?
  • NYT: The Future of Offices When Workers Have a Choice (archive link) - Some work spaces in central employment districts may become housing, and some housing in residential areas may become work spaces.  My prediction is that managers will try to get people back to the office, but it will be very bumpy (not everybody vaccinated, virus continues to circulate at a low level, employers sued by employees that get sick, people unhappy with returning to commute), and talent will start looking for employers that don’t require the commute, even a day or two a week. Also companies will find they can access much more affordable remote talent globally, and those companies will start winning vs. companies constraining themselves to limited, expensive local talent pools. Key excerpt:
“Even before the pandemic, there were signs of trouble with the office market in the handful of cities where the “creative class” had been flocking. In 2018, net migration to New York, Los Angeles and San Francisco was negative, while the U.S. economy grew at a healthy 2.9 percent. Creative magnets like London and Paris were experiencing similar declines. 
The explanation for the declines — mostly high housing costs because of severe limits on new construction — obscures other forces that were destabilizing the traditional office market. In the middle of the 2010s, Amazon, Facebook, Google, Apple and others started splitting their headquarters into multiple locations. Stripe, one of the world’s most valuable start-ups, went a step further. In 2019, it “opened” a remote hub, hoping to “tap the 99.74 percent of talented engineers living outside the metro areas of our first four hubs” in San Francisco, Seattle, Dublin and Singapore. 
For the fastest-growing companies, being able to tap into talent anywhere became more important than having all their teams in one place. Smaller cities were good enough. In retrospect, this shouldn’t have been a surprise, despite all the talk about the importance of giant, dense labor markets to fuel innovation. After all, Silicon Valley itself is not a city but a cluster of sprawling towns scattered along a highway. 
The defining characteristic of this new version of the creative class may not be where it lives, but its ability to live anywhere it wants. Put differently, people move to certain cities in search of better-paying jobs, but it’s now possible to earn high (if not the highest) salaries from almost anywhere. That has been true in certain smaller cities in recent years (Austin and Denver in the United States, for example, and Manchester and Leeds in Britain). To a lesser extent, it has also been true for people who chose not to live in cities at all.”
Finally I'll end on a couple of fun items: some very exciting items Houston can look forward to in 2021, including some really cool developments, and a really well-done video by the Rockets on Houston's identity where they hit on a lot of great aspects and moments from our history. Actually choked me up a bit during the disaster parts. Proud of H-Town! 

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Sunday, January 03, 2021

Bloomberg's Case for Moving to Houston (but not a city for the soft), URI-COU 2020 year in review video, HTX youth, TX #1 growth, and more

Happy new year everyone. Hope you enjoyed the holidays and the recent amazing weather (while staying safe). A lot of you probably had out-of-town family and/or friends visiting.  Next time nonlocal friends or family say Houston is too hot, floods too often, or gets too many hurricanes, here's my recommended reaction: politely agree with them that Houston is not a city for the soft or irresilient - they should probably choose somewhere like California. Texas welcomes the tough.

The big item this week is Bloomberg Businessweek's "The Case for Moving to Houston" graphic from a recent cover story on high-tech workers leaving the big expensive coastal cities. Click to enlarge, but note Houston in the upper-left pole position of the best bang for your buck, a combination of high average salaries and low cost of living, reinforcing my ongoing argument that Houston has the highest standard of living among major metros in the US and probably the world as well.

The Case for Moving to Houston graph

The article also has a couple of nice excerpts:
"Consider Phyllis Njoroge, who grew up in Massachusetts. After graduating from Tufts University in 2019 with a degree in cognitive and brain science, she started making spreadsheets of places in the U.S. that had a warm climate, were diverse, and had a reasonable cost of living. Houston won out, and she moved there in March" 
Having more remote workers means “wages in Texas are going up,” he says. So are housing prices. “You can’t have a $2 million, 2,000-square-foot house in San Francisco and a $200,000 house in Dallas that are basically the same for very long when there are airplanes and internet connections and Zoom.”
Moving on to some smaller items this week:
"I simply say, “no, please don’t be sorry. I love living in Houston. It’s a great place to live and I have a great life there. It’s actually not that place that you might imagine it to be. In fact, it’s one of the country’s most ethnically diverse and progressive cities. My children go to school with kids from all over the world. And the wine and food scene there is great, too.”
Finally, I'd like to end with a great year-end review 1m video our President Charles Blain put together on the Urban Reform Institute - Center for Opportunity Urbanism's work, events, and publications in 2020. Here's to 2021 being even better for our growth and impact!

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Sunday, December 27, 2020

2020 Highlights

Hope everyone is enjoying the holidays.  Time for our annual round-up of the best posts of 2020 - overall an uneventful, not-very-memorable year (right?! ;-) If you missed them earlier this year - or just didn't have time to read them then - hopefully the holidays are a more leisurely time for perusal. 

These posts have been chosen with a particular focus on significant ideas I'd like to see kept alive for discussion and action, and they're mainly targeted at new readers who want to get caught up with a quick overview of the Houston Strategies landscape. I also like to track what I think of as "reference posts" that sum up a particular topic or argument; and, last but not least, they've also been invaluable for me to track down some of my best thinking for meetings or when requested by others (as is the ever-helpful Google search).

Don't forget we offer an email option for the roughly once/week posts - see the Google Groups subscription signup box at the bottom of the right sidebar. An RSS feed link for newsfeed readers is also available in the right sidebar (I'm a fan of Feedly).

As always, thanks for your readership.
And don't forget the highlights from the first few years. For what it's worth, I think the best ideas are found there, often in the first year (I had a lot "stored up" before I started blogging) and most definitely in the best posts from the first 15 years and 1.5 million pageviews.


Sunday, December 20, 2020

Post-pandemic housing reality, charter amendment, alt-cities to CA-NYC, housing boom, and more

 A crazy week with a *ton* of new items I'll only be able to partially get through in this post, including some followups to last week's post about California tech companies moving to Texas:

"In terms of tech hype, Houston isn’t Austin, but it does check an awful lot of boxes for Musk. Also, if he spends much time on Twitter—and we know he does—Musk might be aware that there is a robust argument among Texans on the platform about whether Austin has “jumped the shark” and been supplanted by Houston for the title of coolest city in Texas."
"Affordable suburban living
From the 1980s to the mid-1990s, cities suffered from high crime rates and numerous quality of life issues. New York City, San Francisco, Los Angeles, and some other major cities have recreated the environment of that era, with non-scientific pandemic restrictions that devastated local businesses and a penchant for placing the mentally ill directly in family-oriented, residential neighborhoods. These cities have stopped prosecuting many property and quality of life crimes, inevitably leading to bad quality of life and apathetic enforcement of more serious crimes.

The coronavirus has reset consumer expectations back to suburban living with the mental health benefits of living in greenspace. There has been an exodus from major industry centers to their suburbs and to the alt-cities. The alt-cities of Miami, Austin, and Nashville all offer car-friendly, suburban living, relatively cheap housing, and continual housing construction. With the acceleration of sustainable building materials and clean and cheap energy, the urban planning rationale to pack people into urban cores with mass transportation was already beginning to fray, and the coronavirus has sealed its fate.
Low taxes and quality government
People are not moving solely for tax purposes. New York and California’s tax rates are only a few points higher than they were twenty years ago. However, once people decide to move, of course tax rate is a factor in choosing a destination. Florida, Texas, and Tennessee seemingly offer everything that California and New York offer: highways, streets, schools, police departments, fire departments, and such. All the government services one would expect are there, and none of the capital gains taxes that entrepreneurs and venture capitalists typically pay.

As comedian and political commentator Bill Maher recently noted, California is reminiscent of a 1970s Italy, with high taxes and terrible government services. In return for high taxes, one would expect to go to Hunter's Point, East Palo Alto, or East San Jose and see excellent schools and services for disadvantaged people. A hyperloop instead of a failed high-speed train. Fire mitigation and stable power to complement long term climate change goals. A boom in middle-class housing rather than a $700K median house price. California and New York are becoming bad versions of Singapore, with a wealthy technocratic elite, an immigrant servant class, and a collapsed middle class."
"Buyers are paying more, too: The average sale price in Houston jumped by about 15 percent to a historic high of $341,765 in November. And luxury homes—or those going for more than $775,000—saw a staggering 80-percent increase in demand, as well."
  • The Houston Charter Amendment Petition Coalition has a good video arguing for the need to spread power from our mayor to city council by allowing three city council members to put items on the agenda.
  • Unfortunate that Houston is not on this list of top ten cities gaining residents during the pandemic (Austin and Dallas are), but with the severe oil recession, it's not too surprising. I have still seen a ton of out-of-state plates around town, and do think we are getting some significant migration during the pandemic. 
  • Southwest announced new service from Houston Intergalactic to Dallas Love, Chicago Midway, Denver, Nashville, and New Orleans starting April 12th. I expect Dallas Love to be especially popular for The Woodlands and north Houston suburbs since United only goes to less convenient DFW.
Finally, our think tank the Urban Reform Institute - A Center for Opportunity Urbanism held a recent panel on the Post-Pandemic Housing Reality in conjunction with the Bush Center in Dallas.  A lot of good insights here - well worth watching.

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Sunday, December 13, 2020

Texas +3, California -3: More details on the HPE, Elon Musk, and Oracle moves to TX

The big news this week is all the different tech companies announcing their moves to Texas.

The big one for Houston is the announcement that HP Enterprise is moving its HQ from Silicon Valley to Spring just north of Houston - a long-term legacy benefit of Compaq Computer (which was acquired by HP and kept substantial operations here).

“Houston is also an attractive market for us to recruit and retain talent, and a great place to do business,” Mr. Neri said, adding that as one of the largest and most diverse cities in the country, “Houston provides the opportunity over time to draw more diverse talent into our ranks.”

  • And some more detail from their press release: (hat tip George)  
"Why Houston?
    Houston has long been our largest U.S. employment hub, and construction has been underway since the beginning of the year on a new, state-of-the-art campus in the area. Houston is also an attractive market for us to recruit and retain talent, and a great place to do business. The most diverse city in America and the fourth largest, Houston provides the opportunity over time to draw more diverse talent into our ranks – a key priority for HPE as we work to be unconditionally inclusive.
      We also anticipate long term cost savings associated with this move that we can reinvest in key areas of our business and innovation."
      • And finally a repost from Facebook that digs into what that increased affordability really means for employees:
      "Hewlett-Packard announced its leaving Palo Alto for Houston. 
      $1,100 is the average rent in Houston. 
      $3,350 is the average rent in Palo Alto. 
      Just to give a concept of how much the extra $2,250 a month that saves is. 
      $530 is the average monthly payment on a car. 
      $460 is the monthly individual cost of health insurance. 
      $400 is the average monthly cost of food. 
      $145 is the average monthly spending on gas for a car. 
      $130 is the average monthly cost of car insurance. 
      $1,665 a month total. 
      Those 5 things which are just as essential for people in Palo Alto as Houston and cost about as much in both places cost that much. 
      If an HP employee moved to Houston and cut rent cost down, but chose to save $585 more a month and put it in a 401k paying 5% for 10 years, they’d have $92,700 or 7 years average rent in Houston. 
      Those 5 things are also essential, so let’s just say an HP employee moved to Houston and saved the entire $2,250 a month for 10 years. 
      $27,000 saved a year. 
      $357,000 saved over 10 years
      27 years worth of rent in Houston. 
      9 years worth of rent in Palo Alto. 
      A lot of people have a lot of different reasons for companies leaving, but I think the rent factor and how it’s extremely hard for employees to live is the problem. 
      Hewlett-Packard was the birth of Silicon Valley and it’s leaving. 
      I don’t see it as unlikely a future where Facebook, Uber, Google and more could join."
      Then there are the other stories on Elon Musk's and Oracle's moves to Austin:
      "California, with its steep housing costs, raging wildfires and strict business regulations, has been losing residents to other states, with Texas as the most popular exodus destination. Of more than 653,000 people who left California last year, about 82,000 went to Texas, more than any other state, according to census figures. 
      Or, as The Stanford Review wrote in a nod to the native Texan George Strait, “All of California’s Exes Are Moving to Texas.” (😅) ...
      California and Texas — two economic powerhouses, one led by Democrats and the other by Republicans, with respective populations of 40 million and 29 million — are in many ways natural frenemies. It is a rivalry made up of In-N-Out versus Whataburger, of Disneyland versus the State Fair of Texas, of tacos versus, well, other tacos."
      "Taxes, a more affordable cost of living for employees, a lower cost of doing business, and less competition for talent are among the top drivers for the companies’ moves, though there is also a growing sense that culture is a factor, as well."
      All in all a very good week for Houston and Texas!  Let's hope this is just the beginning of a much larger tech exodus from California to Texas...

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      Thursday, December 03, 2020

      Reason: Toll Agency Politicized in Houston

      Reason's newest Surface Transportation Newsletter by Bob Poole talks about Harris County's dangerous raid on HCTRA's toll road money, and this is so important I'm reposting it in full here (highlights mine):

       Toll Agency Politicized in Houston

      "Back in September, the governing body in Harris County, Texas—the Commissioners Court—voted 3-2 to take over the respected Harris County Toll Road Authority (HCTRA). They created a government corporation that will divert toll revenues to things like flood control and help to pay for deepening the Houston Ship Channel. This political move undercuts the widely followed principle of most U.S. tolling: users-pay/users-benefit. Harris County will receive a $300 million lump sum from HCTRA, followed by $90 million a year indefinitely.

      Another part of the deal calls for refinancing HCTRA’s $2.7 billion worth of toll revenue bonds to take advantage of today’s historically low-interest rates, with estimated savings of $60 million per year. That’s a move HCTRA could have made on its own, in the interest of delivering better value to its toll-paying customers. And its well-managed counterpart in the Dallas/Ft. Worth metro area—the North Texas Tollway Authority—the same month announced its own debt refinancing, but without any revenue diversions.

      The Houston change was decidedly political, with the three Democratic commissioners voting in favor while the two Republicans voting against it. One of the Republicans, Steve Radack, was quoted in the Houston Chronicle saying, “This is a money grab. They are going to use it to pay for things that are normally paid for via property taxes.” Also opposing the takeover was David Hagy, executive director of the American Council of Engineering Companies, who supported the sensible refinancing but not the county’s money grab. And the Transportation Advocacy Group urged the Commissioners to at least use the diverted funds for transportation purposes.

      I wonder how the rating agencies will view this politicization. HCTRA’s current bond indenture, as well as state law, limits the use of surplus revenues to non-toll roads, streets, and highways, according to a Q&A provided by the Harris County budget office. If that’s true, there might be grounds for bondholder litigation.

      Moreover, while short-term thinking would say this is only a small amount of revenue diversion, the real danger is that it sets a precedent and provides no safeguards against future raids on HCTRA’s toll revenues. Transportation professionals know what has happened to the Pennsylvania Turnpike when that state’s legislature imposed Act 44 mandating that the Turnpike divert $450 million per year to the state DOT for transit subsidies. The Turnpike has had to significantly increase its bonded indebtedness, and enact large annual toll rate increases to meet the new debt service. That same fate could await HCTRA’s toll payers the next time Harris County faces budget shortfalls."


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      Sunday, November 22, 2020

      A better alternative to channelizing Buffalo Bayou, VC leaving CA for TX, top life science and entrepreneurship rankings, big solar, and more

      My lead item this week is my proposed alternative to channelizing Buffalo Bayou or an expensive tunnel to better drain the westside reservoirs and avoid a future Harvey flooding tragedy: a 27-mile drainage trench or pipeline(s) using power-line right-of-way, satellite mapped here. I got inspired after reading Jim Blackburn's Chronicle interview about how bad the Army Corps of Engineers study was.  And if a trench is problematic for some reason, maybe giant pipelines like these could work for a small fraction of the cost of a bored tunnel? Or the trench could be covered?  Would genuinely love to hear feedback in the comments on the feasibility of this from people more knowledgeable than I...

      On to this week's smaller items:

      "Houston is on track to be a top market for life sciences. The report factored in size and growth of life-sciences employment, venture capital and National Institutes of Health funding, and more." 
      "California’s restrictive zoning laws make it nearly impossible for many essential low- and middle-income workers to live anywhere near major cities. In Texas, permissive zoning allows every member of our staff to live close to work and spend time with friends and family instead of enduring grueling commutes."
      Finally, I wanted to end with a really cool set of pics from The Atlantic: Texas - Images of the Lone Star State. Definitely worth checking out.

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