Monday, December 10, 2018

Bush and Houston, #1 take-home pay, Europe's rail fail, increasing access to jobs, zoning as crony capitalism, transit's decline, Houston beats Austin and Dallas for affordable housing, and more

Apologies for the long gap between posts due to travel.  Catching up on many smaller items:
"So Dallas has decided to legalize the granny flat — subject to enough rules and regulations to ensure that this has approximately zero impact on the housing market. The political mind at work again: Dallas studied Austin’s granny-flat liberalization program, which over the course of several years saw 200 units come onto the market, some of them new construction but mostly the rental of properties that hadn’t been rented before. Austin has almost 1 million people. Dallas copied the Austin model — on purpose, knowing that it would produce negligible results
Let’s summarize: The city, having prohibited a common form of affordable housing, decided to reverse that prohibition in the hopes of bringing back some of that affordable housing by following the example of another city whose efforts produced basically no affordable housing. Ingenious! 
Down the road a bit in Houston, they’ve had some success with a radically different approach: building houses."
"For decades transit planning agencies and public officials (including when I served on the Los Angeles County Transportation Commission) have claimed that new transit rail systems can materially reduce traffic congestion. The development of access metrics should put an end to such misconceptions (Note 3). 
Regional planning agencies, transportation agencies and public officials should use the access metrics to direct funding to strategies that improve 30 minute access throughout cities. That principally means attention to improving the highway system. It’s time to develop a metric for urban transportation investments to address the fundamental goal of improving access, specifically the cost per new percentage point of job access. Getting people more access is critical to strong economies and reducing poverty, and deserves an assessment based on facts, not wishful thinking or mythology."
"Five cities—New York, Chicago, Dallas, Houston, San Francisco—accounted for a third of all Fortune 500 headquarters and half of Fortune 500 firms’ profits last year"
Finally, a moment of remembrance for a great Houstonian, George H.W. Bush, whose statue I was admiring at the airport just hours before his death hit the news.  And a quote I love from the NYT piece talking about his relationship with Houston:
"Mr. Bush and Houston — both a little quirky, a little square, a little misunderstood — were a natural fit. "

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Sunday, November 18, 2018

Iconic urbanist Jane Jacobs would have loved Houston

I've been meaning to comment for a while on this excellent piece reinterpreting Jane Jacobs by Nolan Gray at the Market Urbanism Report site.  I *love* this, as she implicitly endorses much of the Houston model. FWIW, my own thoughts on Jane's model can be found at The Market Urbanism Report here (or on this blog here).  Here are some of the key excerpts/points:
"I argue that we should interpret Jane Jacobs as a spontaneous order theorist in the tradition of Adam Smith, Michael Polanyi, and F.A. Hayek. Built into her work is a profound appreciation of the importance of local knowledge, decentralized planning, and the spontaneous orders that structure urban life. Needless to say, this is not the prevailing interpretation of the importance and meaning of Jacobs’ work. Two very different alternative interpretations prevail. In this post, I argue that both interpretations are mistaken."
She did NOT support a form-based code, nor was she a NIMBY:
"Between the publication of Death and Life and 1961 and her passing in 2006, Jacobs regularly advocated for performance zoning, a form of zoning that focuses exclusively on the negative externalities of new development. At the 1970 event, Jacobs even articulated the key issues that such a performance zoning code should focus, including noise, pollution, scale, signs, traffic generation, and demolitions (VMT p. 216). “Under performance zoning, far greater freedom of land use could be permitted than is now the case, with superior results for the environment.” Given that her theory of urban growth and change militates against stricter top-down land-use controls, and her advocacy of performance zoning suggests a viable alternative to the status quo, there is little reason that Jacobs’ observations about urban design should be taken as a blueprint for any kind of form-based code or transect zoning."
I highly recommend reading the whole thing.

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Wednesday, November 14, 2018

Amazon HQ2 winners vs. Houston

Today's guest post is from Oscar Slotboom:

Observations on Amazon's HQ2 Announcement

Regular blog readers may recall my October 2017 post where I assessed Houston's chances for winning HQ2 and concluded that Houston and Amazon were a poor match, and Houston had no chance of winning. Of course, Houston was not among the finalists, which in my view was a good result since it avoided the expenditure of local time and resources in a futile effort, although the Greater Houston Partnership may have gladly incurred the cost for the "prestige" of being a finalist.

Tory subsequently added his views (1, 2) on Houston's lack of finalist status
  1. Amazon did not want to compete with the oil industry for talent, since periodic booms make the industry flush with cash for raiding talent
  2. Amazon did not want to be seen squeezing Houston for incentives after Hurricane Harvey
A Good Business Climate with Low Costs Was Not Amazon's Priority
Now that we know the winners, it is clear that Houston was totally incompatible with Amazon's HQ2 desires. Houston's strengths are a low cost of living, ample supply of housing, and a good business climate, providing a lower cost of doing business. Finalists Atlanta and Dallas also have these strengths. Amazon chose the cities ranked #1 and #3 for the highest cost of living in the U.S. (chart from Monday's Chronicle). The much smaller operations center in Nashville slated for 5000 workers is a lower cost location, however.

(click to enlarge)
On Sunday the Dallas Morning News reported on the higher costs of living in NYC and DC, particularly housing, including these graphics.

It appears that the deciding factors were public transit and workforce availability in both cities, and enhanced ability to influence the federal government with the Arlington location (as well as being convenient to Jeff Bezos' DC home). New York state is reported to be providing $1.5 billion in incentives plus the potential for tax credits per eligible employee, while Virginia was reported by WSJ to "grant $550 million over 12 years as long as Amazon creates 25,000 jobs with an average wage of over $150,000."

In a Twitter post after the initial leak of the winners, Tory mentioned that the selection may be designed to attract a certain workforce, mainly recent college graduates and single 20-somethings who want to live in trendy cities, while frightening away 30-something family-oriented employees who won't be able to afford housing (or face super-long commutes) and 40+ workers who won't want to pay the premium to live in a trendy area. The smaller Nashville office, in contrast, may be attractive to everyone.
"Confirms my suspicions that tech companies strongly prefer cheap young single employees willing to work long hours over older family-centered employees that cost more and work less, so they pick cities as family-unfriendly as possible to drive that turnover."
Houston's Response
Of course, Houston's exclusion from the finalist list forced some introspection on our competitive position for attracting tech jobs, and spurred local leadership to strengthen tech-oriented startup activity, as was nicely reported recently by the Dallas Morning News.

But making Houston attractive to a big tech employer like Amazon will be very difficult and may have negative effects, since a workforce realignment to Amazon-style tech skills may weaken or starve the specialized and disparate STEM skills needed by local industries. But that's another topic.

Head Scratcher
While Amazon has massive revenue and a huge market capitalization, it reported good profits for the first time only this year, and is generally a low-margin operation. It seems that Amazon will have to pay higher wages for those 50,000 workers in NYC and DC, maybe much higher, as compared to other finalist cities. The Virginia incentives appear to require an average salary of $150,000 per employee, 50% higher than the $100,000 listed in the original Amazon requirement. Also, the majority of those 50,000 jobs are likely to be routine, run-of-the-mill IT and administrative jobs, not really requiring a premium workforce in an elite location and easily handled by a lower-cost workforce in Chicago, Atlanta, Dallas, or other finalist cities.

Update 2017-11-21 
WSJ is reporting that half the jobs at both the NYC and DC  sites will be non-tech positions, and will be "administrative jobs, custodial staff, HR and [other staffers]".

Biggest Losers
Chicago and Atlanta, which are both very qualified, have excellent downtown locations available, really wanted to win and were believed to offer substantial incentives. The #3 loser Dallas, which was less qualified due to weaker higher education and no prime downtown site, offered up to $1.1 billion in incentives for the full 50K jobs (or $550 million for 25K jobs). Maryland and Newark offered massive incentive packages but were passed over for other locations in their regions.

Houston can take solace in the fact that Atlanta and Dallas, which are our closest competitive/peer cities, both were shut out.

Cities that Win By Losing
Boston, Austin, and Denver, which all would sustain substantial negatives from the large Amazon presence.

The other finalist cities were not qualified and had no chance of winning, but did get some good press from being on the finalist list.

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Monday, November 05, 2018

Contrasting Dallas and Houston

A couple of items in recent months have highlighted differences in Dallas vs. Houston to me.  The first is this Urbanophile story about a "carpetbagger" critic of Dallas that is having a big influence on the city.  It just highlights to me how much more self-conscious Dallas is of its image - it went all-in on an extremely expensive and stupid commuter rail network, and now it's drinking the urbanist anti-sprawl kool-aid. Houston is full of pragmatic engineers not-so-concerned with looking good to the coastal elites.  Thank goodness.

Next is this article which is not so interesting in itself (typical anti-sprawl), but has some insightful graphs on college-degrees and incomes by the distance from downtown for different Texas cities.  Definite 'donut' effects, except in Austin, which is a little odd.  But I found it interesting that it shows how much more successful Houston has been at urbanizing with more high-incomes and college-degreed in the core than Dallas.  I'd attribute it to our lack of zoning allowing densification to meet demand - more apartments, towers, and townhomes.

(if the formatting of these graphs gets messed up, you can find them here)

Dallas-Fort Worth

While the suburbs still account for most of Dallas-Fort Worth’s population growth, downtown neighborhoods have seen the highest increases in college-educated residents and incomes.
Change in residents with a college degree, 1990-2012
0510152025Miles from city center-5010203040%
Change in per-capita income, 1990-2012


Houston’s urban neighborhoods and suburban developments saw increases in college-educated residents and incomes. But there were declines on both fronts in neighborhoods between those two areas.
Change in residents with college degree, 1990-2012
0510152025Miles from city center-5010203040%
Change in per-capita income, 1990-2012

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Monday, October 29, 2018

Congestion improvements, global superstar city, biggest homes in America, up vs out debate, Vision Zero flaws, CA vs. TX, and more

Ok, first an apology for such a *long* gap between posts.  I have been nearly continuously traveling since early Sept (multiple trips mixing work and fun), including presenting MaX Lanes at the Strong Cities 2030 sustainable mobility symposium in Essen, Germany and debating up vs. out urban development policies at the Breakthrough Institute Ecomodernism 2018 conference in DC.  Both events went really well and I got very positive feedback.  As you might expect with such a long gap, a lot of smaller items have gotten backlogged:
"The other point that leaps out of the table is the change in rank of Dallas and Houston, both of which moved significantly lower in the league table of most-congested metro areas. Both have a growing fraction of their expressways that are tollways, and both have expanding networks of variably priced managed lanes. Also striking is that Portland, with just one-third the population of Dallas, has nearly the same average congested hours per commuter and has nearly double the percentage of peak period hours that are congested."
"Vision Zero is a failed policy from a paternalistic government that takes millions of dollars to implement and never reaches its goal of zero deaths, in part because its goal is completely unrealistic. But Vision Zero does make life harder for commuters and those delivering freight. Yet this is the policy that many U.S. cities want to implement."
"The 50 cities account for 8 percent of global population, 21 percent of world GDP, 37 percent of urban high-income households, and 45 percent of headquarters of firms with more than $1 billion in annual revenue. The average GDP per capita in these cities is 45 percent higher than that of peers in the same region and income group, and the gap has grown over the past decade."
"The only cities where housing was cheaper relative to income than in Dubai were Houston and Riyadh, Saudi Arabia."
Finally, I have to end on this hilariously awesome SMBC comic on NIMBYs ;-D

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Monday, September 10, 2018

The paradox of liberal coastal cities and the real reason for growing inequality, Austin embraces BRT, the freeway of the future is congestion-priced, and our growing density

A few small items and one big one this week:
"And last month, [Senator Kirk Watson] gave a big signal that he’s ready to get involved in bringing a full-fledged mass transit system to the area. 
And that it probably won’t be light rail. 
[Capital Metro's CEO has been promoting] a regional system of autonomous, electric-powered buses moving in platoons along dedicated transit rights of way on or next to Central Texas streets."
"In 2017, there were 168,600 households in buildings with 50 or more units — more than double the number in 2013. They are moving to recent large-scale residential additions to the city such as Camden McGowen Station and the Pearl in Midtown."
  • Excellent post on the power of congestion-priced toll lanes (i.e. MaX Lanes).  Turns out the optimum speed for maximum throughput is only 50mph, which was a bit lower than I expected.  I hope autonomous vehicles will be able to go much faster much closer together to move that speed up substantially.
Finally, a market urbanism opinion piece with some great excerpts on the disconnect between liberal aspirations and liberal housing policy is killing coastal U.S. cities (written by a fellow liberal):
"The real problem here is that housing is never just a question of “build” or “don’t build.” It’s “build here” or “build somewhere else.”And if you live in a coastal U.S. city, somewhere else is usually way worse for the environment. People don’t disappear just because they can’t move to our cities; they move to the suburbs of Texas, where housing continues to be produced in abundance and, as a result, costs have stayed reasonably low.
Some of you may remember the hub-bub in 2014 over Thomas Piketty’s book, “Capital in the Twenty-First Century,” which examined wealth inequality in Europe and the U.S. over the past few centuries. It was an absolute blockbuster (for an economics book), showing that the share of income coming from returns on capital was increasing over time, which was bad news for those of us who don’t earn most of our money on stocks, property, or other capital investments (i.e., most of us). It was a rallying cry for liberals around the developed world. 
What you may not have heard about was the critique of Piketty’s work by a 26-year-old MIT graduate student named Matthew Rognlie, who basically said that the issue isn’t so much capital in a general sense, but housing in particular. In other words, the growing value of housing relative to other assets (as well as labor income) is responsible for almost 100 percent of increasing wealth inequality in the Western world.
By doing essentially nothing but letting things happen, conservative America is kicking our ass at providing opportunities for low income and working classes to build wealth and get ahead. Cities like Dallas, Phoenix, and Atlanta have managed to stay affordable by simply allowing housing to continue to be built as their populations grow, and the result is that people keep moving there.
So, this is the paradise we’ve built across the liberal cities of the United States. Are we proud? I’m not. We’ve walled off our cities to those of lesser and greater means, making pathetic, often subtly racist or classist arguments about “character” and “culture.” We’ve destroyed any possible opportunity for low income and working class households to build wealth in the same way as their affluent neighbors, or displaced the poor households so that they’re no longer neighbors at all."

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Saturday, September 01, 2018

Flood regs burdening the poor, how Harvey made us stronger, Houston's worker flows and oil export boom, and more

Lots of items this week:
"According to Best Cities, Houston is the seventh-best metropolitan in the country, based on methodology that looks at the place, product, programming, people, prosperity, and promotion of a town. 
"Smart, skilled and soulful, Houston is the American city of the future," the Best Cities website stated in lauding Houston. 
The city landed high marks in terms of place, people, and prosperity. It cited Houston's diversity, housing affordability, and leadership in the health care, manufacturing, engineering, finance, and aerospace industries."
"When George W. Bush signed legislation in 2007 to subsidize and mandate the production of biofuels, he cited the urgent need to liberate America from “long-term” dependence on “oil from foreign lands.” Turns out there was an easier, much less expensive way: drill, baby, drill. 
The Energy Information Administration announced this month that the port district of Houston-Galveston began exporting more crude oil than it imported for the first time. Houston-Galveston exports in April surpassed imports by 15,000 barrels a day, and by May the difference had grown to 470,000 barrels a day. That port district handles more than half of all U.S. crude exports, which hit a record of two million barrels a day in May. 
The export boom is testament to U.S. ingenuity that has driven rapid advances in hydraulic fracturing and horizontal drilling, especially in shale rock. The breakthroughs have lowered drilling costs and put Texas’s Permian Basin at the center of an oil-and-gas drilling revolution that will next year see the state producing more oil than either Iraq or Iran. 
Washington also gets credit for removing regulatory hurdles like the oil export ban. Republican leaders in Congress took flak in 2015 for agreeing to extend green-energy subsidies for a few years in return for Barack Obama’s signature on a statutory end to the 40-year-old export ban. 
Some conservative pressure groups derided the policy trade as a sellout while liberals complained that ending the ban would serve Big Oil. The real beneficiaries are workers, investors and the overall economy, as well as greater flexibility in foreign policy as the U.S. is less vulnerable to authoritarian oil exporters. 
The U.S. is unlikely to be a net oil exporter soon, since American refineries require heavy crude from abroad. Shale drillers produce lighter grades. But the gap between imports and exports shrank in 2017 to a 24-year low of 6.8 million barrels a day from more than nine million in 2012. The lesson is that American invention and entrepreneurship remain indomitable—when government gets out of the way."

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Sunday, August 26, 2018

GQ: Houston Is the New Capital Of Southern Cool, plus Houston's freeways+employment advantage and oil cluster domination

This week's lead item is GQ's long feature on Houston, which is really well done and has some great excerpts.  It's very cool for Houston to get some good national attention, especially vs. Austin.  Paper City discusses the coverage, as does CultureMap: 5 reasons every Houstonian should read GQ's love letter to our city.  Hat tip to Oscar. Excerpts:
Houston Is the New Capital Of Southern Cool
We’ve been hearing the buzz for a few years now: Houston may, sneakily, be America’s best food city. But when we sent GQ food critic Brett Martin to dive into the scene, we realized that was selling the city way short.
“At the time, having grown up in Houston in kind of a bubble, I was pretty skeptical about the city,” Odam says. So Odam asked the kid in the black T-shirt why he'd be moving there from someplace as verifiably and undeniably hip as Austin. The kid shrugged. Austin, he said, was a white monoculture of hipsters, yuppies, and techies. (Odam was telling me this story in a Japanese-fusion spot in East Austin, which made it easy to visualize said culture.) In Houston, the kid said, things were happening.
He gripped the wheel and considered the unspeakable: “Was Houston cooler than Austin? Really?
But a good deal of what's happening in Houston feels more organic and idiosyncratic than what an urban-studies expert might devise in a PowerPoint presentation—an energy that feels born of two major factors: one, the growth that has turned the city's diverse but discrete bubbles into a series of unavoidable Venn overlaps, allowing cultures to clash, cohabitate, and collaborate; the other, a pervading sense of independent frontier wildness. 
That trait may not ride in wearing the cowboy costume it does farther west, but it nevertheless feels distinctly Texan. “There are no zoning laws here” is the sentence you will hear more than any other in Houston. This is a key point of identity: the theoretical ability for anyone to build anything anywhere (never mind that it is in part responsible for the kind of development that makes the city so susceptible to damage from natural disaster). People chatter about commercial real estate in Houston with the same mix of envy, romance, and fascination that they do residential real estate in New York or San Francisco: who's developing what project and where; which buildings are sitting empty, waiting for the price of oil to rise; who's erecting what glass tower as revenge for which other guy's glass tower. “No zoning” turns out to be the urban equivalent of the great western myth of “no fences.”
“Austin is like your young, hip millennial brother who always knows the latest cool thing. Dallas is the metrosexual middle brother that nobody really wants to spend time with. But Houston is the older, cooler sibling—he's got some miles on him, he's been through some stuff, but he totally knows what's cool and what's not. You love all your siblings, but you know which one you want to hang out with.”
We drove mile after flat mile filled with parking lots and strip malls, fast-food restaurants and box stores, new undistinguished construction cheek by jowl with older undistinguished construction. It is empirically ugly and totally intoxicating. The point isn't that there are beautiful places hidden amid the ugliness; it's that the ugliness itself becomes imbued with a kind of beauty, thanks to the thrum of human energy that takes root there.
Maybe it's that sense of defiance that ultimately defines Houston's cool—the sense that a city where cool isn't the primary commodity can afford to lie back and let the world come to it, whenever the world catches on. As Matthew Odam's passenger put it, before closing the car door and taking off toward the Menil's lawn and into legend: “Houston is cool because Houston doesn't give a f**k about being cool.”
Just awesome.

On to a few other items this week:
Proximity Counts: How Houston Dominates the Oil Industry 
..."Once formed, these clusters set up a virtuous cycle that eventually draws in a major piece of their industry: the bigger the cluster, the greater the cost savings; the greater the savings, the more firms are drawn into the cluster; more firms mean more savings … and the industry concentration continues on. These cost advantages are powerful enough to (1) explain why only one large headquarters/technical center typically dominates each industry, and (2) why it is so hard for other cities to challenge these centers for a share of their work. 
Proximity generates the cost savings that accrue to companies operating inside Houston’s oil cluster, and these savings arise in three ways: access to many local companies specializing in oil; large numbers of skilled and specialized employees; and by generating company-specific intelligence on oil markets through its local knowledge loop."
"The South holds some lessons. Dallas and Houston both built out major freeway networks with multiple rings and connectors. Atlanta stuck with a simple hub and spoke plus beltway system typical of smaller metros and has paid a big price for it. "
  • Building on that, it leads to this *huge* tax base and vibrancy advantage for our city and region.  It's a testament to the amazing freeway and commuter lane network we've built that employers have chosen to stay in the core because suburban employees can reach those employers within a reasonable commute, unlike many metros.
"Also, the city of Houston is home to 60.2 percent of the region's jobs. In Miami, Detroit and Atlanta, for example, the city is home to 11.7 percent, 13.1 percent and 17.7 percent of the region's jobs, respectively."

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