Thursday, June 30, 2005

Rice University ranked #1 in Nanotech

Here is the blurb from the Rice Alliance for Technology and Entrepreneurship:
Rice University Ranked #1 by Small Times Magazine

Rice University was ranked as the number one university in the U.S. in the commercialization of nanotechnology in the 2005 rankings just published by Small Times magazine.

Small Times Magazine also ranked Rice University as the number one university in the U.S. in terms of the overall strength of its nanotechnology patent portfolio.

Small Times Magazine recognized Rice University for its "aggressive nanotechnology initiative, collaborative business school, and university-supported technology transfer efforts".

Small Times Magazine also pointed to the assistance provided to new start-up companies by the Rice Alliance for Technology and Entrepreneurship, and to the "network of inventors and entrepreneurs in the Houston region" the Rice Alliance provides.

Small Times Magazine is a leading source of business information about micro and nanotechnology.

More on the ranking
As an alum, I'm obviously biased, but I think this really has a shot at becoming a big part of Houston's economic base over the next couple of decades, especially biological applications of nanotech in conjunction with the Texas Medical Center. Rice is building a very large joint research center with the TMC at the corner of Main and University. I don't think it'll be at the same scale as Stanford and Silicon Valley in the 80's and 90's - the Internet makes that kind of tight geographic industry concentration not as necessary as it used to be - but it could be a substantial industry cluster nonetheless.

Energy, energy trading, the port, nanotech, TMC medical services and biotech - all of Houston's core industries are on pretty good growth trajectories. Might just be the raw ingredients for the next boomtown...

City of Houston population growth slowing

Census just released new estimates for 2004, with Houston numbers in this table. (AP Story) After pretty healthy gains of 18,000 in 2001 and 23,000 in 2002, we've dropped to +7,000 in 2003 and a mere +3,000 in 2004 (for a total of 2,012,626). Now, keep in mind, this is the city limits of Houston, not the metro area, which is still seeing very healthy gains.

Possible theories? Maybe tighter border controls after 9/11? I understand there is still plenty of illegal immigration going on, but it may have slowed down somewhat.

Another possibility: lower interest rates have created a lot of first-time home buyers the last few years, which probably means moving from an apartment inside the city to a starter home outside of it. We may actually have the same annual numbers of new people coming into the city, they're just being offset by those leaving for their new home. This theory seems more likely than the first.

We're middle of the pack vs. other cities in our top-10 "weight class": NY, Chicago, and Philly all lost population - and LA, Phoenix, and San Antonio are still packing them in. We're pretty comfortably entrenched at #4 - no near-term chances of moving up or down. Poor Detroit got displaced out of the top-10 by San Jose, CA - which most people don't realize is 20% larger than San Francisco. Only metro area I can think of where the suburb-city outweighs the core "big name" city.

Houston was outgained in Texas by Dallas, Ft. Worth, San Antonio, El Paso, and even little Austin (which is growing again after 3 stagnant years). Ft. Worth and San Antonio are in the top 5 nationally for numerical gains (along with Phoenix, LA, and Vegas).

The biggest losers in the top 25? Chicago, Detroit, Boston, San Francisco, Baltimore, Philly, and NYC - in that order. Like the headline says, everybody's headed south and west for sun, space, and nice new affordable homes.

Wednesday, June 29, 2005

So, Mr. Souter, how do you feel about eminent domain now?

So funny I had to pass it along.

More amusing details.

Tuesday, June 28, 2005

Otis White on Houston and sprawl

Otis White's Urban Notebook at has a blurb on Houston and sprawl. He's really just recapping what was in the Chronicle, but it's interesting to see the spin from an outsider's perspective.

The Bad-Investment Gambit - Lassoing Sprawl

If there’s a city where sprawl isn’t just tolerated but celebrated, it’s Houston. After all, this is a place where people love their property rights so much, they don’t allow zoning. But even in Houston, residents are having second thoughts about plunking houses and strip shopping centers ever farther out on the prairie. Still, leaders are careful how they criticize these developments. “I don’t want, nor do most people in this community want, to tell people where they can and can’t live or how long their commute should or shouldn’t be,” Mayor Bill White told the Houston Chronicle recently. “One person’s sprawl is another person’s dream house. On the other hand, as a fiscal conservative, I’ll tell you it is much more expensive for us to provide transportation services, water and sewer services and everything else if somebody lives twice as far away.” That seems to be the Texas approach to dealing with sprawl: Label it a bad investment. Also, point to the obvious: that building new highways only invites more distant development. One anti-sprawl group looked over the new regional transportation plan and was appalled by what it found: plans for building 12,900 miles of new roads over the next 20 years. “That was not a plan, it was a continuation of what we’ve always done,” the group’s president told the Chronicle. “A 75 percent increase in vehicle-miles traveled is assumed. Sprawl is written into it — it’s guaranteed, when we should be trying to rein it in.” Mayor White agrees that transportation shapes the nature and location of growth, but he’s unwilling to say no to more roads. His approach: Improve neighborhoods, be quick to turn property seized for tax delinquencies into affordable housing. and work with the school district on improving the schools. Do these things, he said, and the city’s charms will bring the people back.

12,900 lane-miles of new roads over 20 years. Sounds like a lot, huh? Well, we're also getting 2 million new people over that 20 years. That works out to 34 feet of new road per new resident, about the amount in front of their house. Doesn't seem quite so out-of-control crazy from that perspective, does it?

They say the secret to communication is repetition of the key message over and over and over. So here it is again: more freeway capacity actually reduces sprawl by keeping employers in the core, which realistically limits commutes (and therefore sprawl) to 20-30 miles. When the employers flee to the suburbs, people can then live on private estates 20-30 miles beyond that. Then you get real sprawl.

I say: Build the suburban homes. Build the new urbanist density. Whatever sells, keep building more of it, because that's what the market wants (i.e. real people spending their hard-earned money - not polls). Trying to force only one or the other will cause far more problems than it would solve.

Monday, June 27, 2005

What’s the Matter With Dallas?

Brutal but well-written article in the July Texas Monthly about Dallas' governance issues (previously discussed here with several good comments). Last month Dallas rejected going to a strong mayor form of government like Houston has. The link might require subscriber login, but the article is too long to post in its entirety here, so here are the key excerpts:

MAY 7 WAS SUPPOSED TO BE when Dallas decided what it wants to be when it grows up. That was the day Dallas voters considered replacing their city’s current organizational chart, where real power is vested in the city manager—a sort of learner’s-permit government for adolescent urbs—with the kind of strong-mayor system favored by mature metropolises like New York, Chicago, and, yes, Houston. As it turned out, Dallas decided overwhelmingly not to take off the training wheels, proving that the city that recently adopted “Live large. Think big” as its official slogan can only think small when it comes to its political culture. ...

Perennially beset by the highest crime rate of any major American city, with businesses fleeing to the suburbs and potential new corporate citizens turning up their noses, Big D has begun to think of itself in the lowercase. Last year the Dallas Morning News published a twenty-page special section, “Dallas at the Tipping Point,” which offered a particularly painful analysis: Far from being a glitzy Sunbelt growth capital, statistically Dallas was starting to resemble a Rust Belt loser like Detroit. ...

Yet none of the Blackwood [strong mayor] supporters effectively made the case that a strong mayor would remedy the biggest problem with Dallas’s democracy: Nobody votes. What Hanson calls Dallas’s “phantom public” just might show up if real issues of the city’s long-term vision and viability were raised in the quadrennial mayoral elections. In Houston wild gyrations in public policy are possible with each election: One mayor opposes mass transit, the next is in favor of it, but somehow the two-steps-forward, one-step-back approach actually gets things done at a pace Dallas can only envy. From fighting crime to revitalizing downtown, Houston’s messy public forum is producing measurably better results than Dallas’s decorous, closely held private consensus. It’s not that Houston has a genius for leadership that Dallas doesn’t; it’s that its superior civic entrepreneurship is based on public participation. In Houston’s last mayoral election, more than 30 percent of the voters turned out. In Dallas the figure was 10 percent.

Other parts of the article go into greater detail about Dallas' political history and the political factions on both sides of the referendum.

I hold no ill will towards Dallas (although maybe a little friendly competitiveness from time to time). A strong Dallas would be good for Texas and good for Houston, so I'm hoping they find a way to get their act together soon. I just think that Houston sometimes goes so overboard lamenting our weaknesses that we forget that we have some great strengths we need to protect. I think it's called the "grass is greener" (on the other side) syndrome. This article does a good job of reminding us about one of those strengths.

Sunday, June 26, 2005

Risks of the new Metro transit plan

David Crossley had his monthly Livable Houston meeting at H-GAC last Wednesday, and a lot of interesting points came out in the discussions about Metro's new transit plan.
  • David made the very good point that elevation and/or tunnels won't really solve the speed problem for transit as long as there are stops every half-mile or less (as there are on the Main St. line). Those stops, including acceleration and deceleration, eat up a lot of time. Being separated from traffic might only save a few minutes off a half-hour end-to-end time, while dramatically escalating costs. And, of course, fewer stops means longer walks and lost riders.
  • It was noted that the new plan lost BRT lines down Westheimer to Westchase and down Bellaire, both high-density residential and commercial corridors. I would suspect the city of Bellaire killed the Bellaire street line, as they've noted a crime problem around their transit center at Bellaire and South Rice.
  • The Metro rep pointed out that the east-west light rail line might change to BRT if it doesn't rate highly with the FTA.
  • The new system seems to have the potential to require a lot of transfers, and, of course, transfers kill travel times and ridership.
  • Nobody seems really sure if the "cover rails with asphalt" plan will really work with the BRT lines (will it be easy to remove without damaging the rails?)
  • Commuter rail will actually provide far worse service than exists today with HOV buses. It will be slower (probably ~30mph overall), with more stops, and require transfers at the new Intermodal hub north of downtown rather than going directly to peoples' destinations. Once people figure this out, there may be a revolt to restore the HOV service Metro takes away when the commuter rail opens.

As I've mentioned before, this is one of the biggest risks of fixed-guidway transit (rail or BRT): Metro will be sorely tempted to force as many people as possible onto the lines to pump up ridership numbers, even if this increases travel times and cuts overall transit ridership. They will do this by eliminating "redundant" HOV bus service and linking all bus routes into the rail/BRT (converting previously straight-thru trips to having 1 or 2 transfers).

The solution is this problem is pretty simple: privatize commuter bus services (with a simple per-passenger-mile Metro subsidy), leaving Metro to run fixed-guideway and local bus service. The private operators will offer express point-to-point service using HOV/HOT/MaX lanes where it is in demand - they have no vested interest in rail/BRT ridership.

On a different note, one of my larger concerns is if Metro decides to run the new east-west line along Richmond instead of Westpark, and it loses as many lanes as Main St. did, that will probably play havoc with east-west traffic flows in those neighborhoods, esp. east of Shepherd. There will be a need for alternate east-west capacity, and I think the easiest solution might be simple entrance and exit ramps on 59 at Montrose. Right now people flow down Richmond to Shepherd to get on 59, but that will become less of an option with the loss of so many lanes. If they can directly get onto 59, that would take a lot of the traffic burden off Richmond.

Thursday, June 23, 2005

Thoughts on the Supreme Court eminent domain ruling

Well, you've probably already heard about it because it's the top story on newsfeeds everywhere, but if not: the Supreme Court ruled 5-4 today that government can seize property and give it to private developers for economic development purposes, as long as there is a "public good" - which is pretty wide latitude.

This is another case where the arguments are pretty good on both sides. It's a dangerous slippery slope letting government buy out property owners for any "good" reason, but if a handful of recalcitrant - or even extortionist - property owners can hold up any large-scale private development, cities will certainly suffer.

People are screaming about the abuse potential on the government side, but there's a lot of potential for abuse on the private property owner side too. Here's my favorite scenario: you're a big-time commercial developer. You've already got the land you need for your big project. But you want a little "profit insurance", so you assess all the potential spots within a few miles where a competitor might come in (realistically in most cities, there aren't that many). You then buy small slivers of land in those spots, with absolutely no intention of ever selling. If eminent domain is not an option, voila, you've bought yourself a nice semi-monopoly on the cheap. Heck, you could even buy reasonably productive small plots of land that pay for themselves (rent on a house or small commercial center). I think that would strike most people as anti-competitive and unfair.

The Supremes didn't make the ruling I had hoped for. I was looking for something like their distinction between commercial and political speech (the latter has more protection). The solution? Make government pay a premium when eminent domain is for private development. Maybe 20% above market value? If the project still makes sense with that kind of premium, then it has a better argument for being in the "public good". That hurdle would also reduce the potential for abuse: private developers would actually have a financial incentive to negotiate private deals rather than go to the government for eminent domain.

Realistically, with a clear ruling now, I think this will be the wave of the future for larger-scale private developers. City governments will probably set up dedicated offices who do nothing but evaluate private proposals for eminent domain. If I had to predict, there will be a steady sliding down the slippery slope until enough serious abuses happen that the Supreme Court modifies their relatively broad and low-hurdle ruling today.

Houston still makes computers

A little press release from HP/Compaq:

HP reaches shipment milestone in Houston

Hewlett-Packard Corp. said Wednesday it has reached a major milestone with the shipment of its 10 millionth HP ProLiant server out of its manufacturing facility in Houston.

The server was presented to Houston-based Continental Airlines Inc. during a ceremony on Wednesday. ...

HP acquired Houston-based Compaq Computer Corp. in 2002 and maintains a large corporate campus in northwest Houston.

Good to hear all computer manufacturing hasn't moved to Taiwan or China. Unfortunately, the buzz seems to be that HP will be laying off 15,000 sometime this summer. Unknown how many of those will be in Houston, but it can't be good for northwest Harris County. One silver lining might be that, if HP starts consolidating, Houston is magnitudes more affordable for their employees than the HQ in Palo Alto or the San Diego division, so more transfers might happen to Houston rather than from Houston. Not that HQ will be leaving Palo Alto anytime soon, but it might become a leaner operation of just top execs and support staff (like Exxon in Dallas or Boeing in Chicago).

Wednesday, June 22, 2005

Houston's healthy residential core

Harvard's recently released report "The State of the Nation's Housing 2005" has this very positive comment on the health of Houston's inner core housing.
[During the 1990s] only 9 of the 91 largest metropolitan regions saw an increase in the number of [housing] units built within the dense parts of the five-mile inner ring around their CBDs, and only 7 saw gains in the five-mile infill share of metro-wide new construction. Atlanta, Buffalo, Charleston, Houston, Knoxville, and Seattle were the only places with both numerical and share gains.
Certainly a diverse set of cities in that list. I think Atlanta and Houston's relative lack of development restrictions make it much easier for the core to redevelop. They've also kept a lot of their big employers in the core by investing in good freeway access to the suburbs, which creates the demand and financial incentive to construct housing in the core.

Tuesday, June 21, 2005

Risks of rail transit

Came across this press release from the American Dream Coalition. I'm reprinting it here because I think it does a good job concisely articulating three of the big risks of rail transit.


Transit agencies that rely on buses are more likely to grow transit ridership as fast or faster than driving than those that build expensive rail lines, says a new report. The study reveals that, over the past two decades, transit ridership has declined, or at best remained stagnant, in more than two out of three urban areas with rail transit, while it grew in numerous regions with bus-only transit.

The new report, "Rail Disasters 2005," scrutinizes transit records in twenty-three urban areas with rail transit and assigns each a letter grade based on whether transit ridership has grown faster than driving, grown slower than driving, or declined. Ridership has declined or stagnated in fourteen of the twenty-three areas, earning those areas an "F."

Transit has grown faster than driving in only two regions, Boston and San Diego. However, the report shows that transit has grown faster than driving in many regions with bus transit, including Austin, Las Vegas, and Raleigh-Durham. The report also finds that transit grew faster in many rail regions before the regions began building rail transit than after the rail lines opened.

The cost of starting a rail transit line can be fifty to one hundred times greater than the cost of starting comparable bus service. "Rail's high costs present a triple threat to regions and transit riders," says the report's author, economist Randal O'Toole.

The first threat is cost overruns, which average 41 percent for rail transit projects. These often force agencies to raise bus fares or reduce bus service. In the case of Los Angeles, this led to a nearly 20-percent decline in bus ridership. Only when the NAACP sued to restore bus service to low-income neighborhoods did bus ridership recover. A similar lawsuit has recently been filed in the San Francisco Bay Area.

The second threat comes during recessions, when declining tax revenues force heavily indebted transit agencies to choose between defaulting on their rail-construction loans or cutting transit service. To avoid default in the recent recession, San Jose made such severe cuts in service that it lost a third of its transit riders.

The third threat comes when it is time to rebuild rail lines, which must be done every twenty to thirty years. Washington, DC, estimates that it will cost nearly as much to rebuild its rail lines in the next decade as it cost to build them, yet it has no funds to do so.

Usually because of one of these threats, transit ridership declined in fourteen out of twenty-three rail regions in the past two decades. In other regions, such as Portland, Dallas, and Salt Lake City, transit ridership grew faster before rail construction began than after the rail lines opened.

The report concludes that regions are better off improving their bus service than building rail transit. The report's author, Randal O'Toole, is a nationally known expert on environmental policy and is also the author of "The Vanishing Automobile and Other Urban Myths." Copies of the report can be downloaded from

If you go to page 20 of the report link, you can find the specifics on Houston. We get a grade F due to overall transit ridership declines and light rail collisions (88 in the report, but now we're up to 94). Stats show Metro graded very respectable B when it was bus-only.

The section on the new light rail line in Minneapolis also bodes badly for Houston. There, the new rail line with traffic signal priority played havoc with local light synchronization, dramatically slowing a major highway parallel to the line. They have given up on getting the lights in sync, and now have higher congestion on the highway, even though lower congestion was promised when the line was promoted.

It looks like Bus Rapid Transit (which I expect to renamed "Tire Trains" soon for marketing purposes) and heavy-rail commuter transit along existing lines addresses most of the three risks by having substantially lower capital costs than light rail, although there is still the potential of traffic signal havoc. If the new light rail line is routed along Westpark, I could definitely see problems on Kirby, Buffalo Speedway, and Weslayan between 59 and Westpark, which already have intersection blocking problems without a crossing rail line thrown into the mix. A Richmond routing with a cutover to Westpark in the rail right-of-way west of Weslayan should be less problematic for traffic signals, but then we're back to the collisions problem (Westpark has a right-of-way corridor separate from the street).

I know the normal culture of blogging is to have a strong point-of-view one way or the other, but this new Metro transit plan is a mixed bag with pros, cons, and risks on each side (that's my cop-out, and I'm sticking by it). I guess that makes it finger-crossing time: just hope whatever gets built is safe, effective, efficient, and ends up benefiting Houston.

Monday, June 20, 2005

Bus transit lessons from Curitiba

Curitiba, Brazil is often held up as a model city for how to do transit right, with an extremely efficient and fast bus system. One of my newsgroups had this post from Jim Karlock of Portland, which I thought I'd pass along since bus vs. rail is a big debate point in Houston right now.

Jamie Lerner, the former mayor of Curitiba Brazil gave a talk in Portland last night. Here are a few items that struck me from his talk:

Beware of people selling complexity.

Their bus system pays its own way (NO SUBSIDIES!!!)

Sustainability consists of using fewer cars, separating your garbage (recycling), living closer to work.

They have double articulated busses that can carry 300 people. (Also have single articulated busses.) The bus system simulates a subway at much, much, much lower cost.

Surface transportation is key (as opposed to underground)

He ran a video showing the bus stopping, multiple doors opening, ramps extending to the station and people getting on/off. The fares were done at the station. Not on the bus. Their bus system costs MUCH less than light rail would have cost. The city built the busways and stations then contracted the actual busses to private operators on a per kilo basis. Busses can run on less than one minute headways. They can transport 50,000 passengers per hour past a point (I think this was one lane - yeah, I did the math that would be a 20 sec headway)

The new mayor considered light rail, but rejected it since they have a successful system.

Q: Portland is about to spend over $200 million to put in streets, sewer, water etc to support a new high density development. Does your city do the same?

A: NO. Development pays its own way.

Q: Portland will buy a parcel of land for, say, $1 million and sell it to a developer for, say, $1/2 million in order to get the type of development that it desires. Does your city do this?


No major revelations there. Just a strong endorsement of the cost effectivess of bus over rail or subways and avoiding government subsidies.

Sunday, June 19, 2005

Wall Street Journal profiles Houston real estate

When I wrote about the similarity of Houston and Atlanta last month, one of the reasons was because I thought the Wall Street Journal might never get around to profiling Houston. Well, sure enough, they did. I will pass it on in its entirety here because WSJ is a subscriber-only site:

Oil Firms Restrain Office-Space Urge

Despite Houston's reputation as the swaggering energy capital of the world, soaring oil prices have yet to translate into a commercial real-estate boom for the city. The higher prices have helped boost job growth in the nation's fourth-largest city, a situation that's often a precursor to a real-estate rebound. In the 12 months ended March 30, hiring by the professional and business services sector that is fueled in part by oil -- as well as education and health-services companies in the increasingly diversified economy -- helped drive job growth up by 1.2% from the previous 12 months. Though that pace lags behind the nation, Houston is expected to see jobs increase at almost twice the national rate through 2009, according to Property & Portfolio Research Inc.

Tenants and developers appear to have learned some lessons from Houston's painful history of booms and busts. Following the oil price run-up in the early '80s, office vacancy rates peaked at 31.6% in 1987. Nowadays, energy companies are more prudent and new office construction is moderating. "We've sobered up a lot," says Will Penland, senior managing director in Houston for Los Angeles-based CB Richard Ellis. The market is only just beginning to recover from the unraveling of the Houston-based energy trader EnronCorp., which filed for bankruptcy in late 2001, and consolidation at other energy companies such as Williams Cos. and El Paso Corp. as well as some other big employers.

The office market was hit hard and rental rates are still declining. Among the high-profile casualties was Enron's former headquarters in downtown Houston. The 50-story glass tower at 1400 Smith St. was sold in 2003 to an investment group named Towanda Development 1 Ltd. The group, led by a Houston cardiologist, paid $55.5 million, or about $44 a square foot, according to Real Capital Analytics Inc.
Houston's real-estate market is just starting to shake off the collapse of Enron. Enron's old headquarters, right, and a newer building, left, have sold. The 1.3 million-square-foot-building -- minus Enron's now infamous crooked E sign that sat outside -- remains virtually vacant. Towanda is seeking tenants and considering converting some lower floors to parking, says Bill Donovan, Towanda's senior vice president.
More encouraging for Houston was the decision by Chevron Corp. to purchase a new 40-story chrome and glass tower originally intended for Enron. Chevron, based in San Ramon, Calif., bought the high rise at 1500 Louisiana St. for $129 million, or $112 a square foot, last year. The building sold for significantly more than the Enron headquarters because it is brand new and because of the improving market, says Dan Fasulo, of Real Capital.

There are signs of a recovery. Office vacancy rates edged slightly down in the first quarter compared with last year's fourth quarter, though they're still above year-ago levels. Another bright note was the decision by Citgo Petroleum Corp., owned by Venezuela's state oil company, to move its headquarters to Houston from Tulsa, Okla.

Houston also is struggling to digest a glut of new apartment and condominiums that have had trouble competing with relatively inexpensive single-family homes. While apartment vacancy rates have begun a modest decline, they are still nearly double the average in markets nationwide, according to PPR.

Though some higher-end projects are in the planning stage, there is a lull in retail-construction activity in comparison to a three-year boom that slowed after 2001. Wal-Mart Stores Inc. has built enough new stores in the metro's outlying areas to give Houston a Wal-Mart-to-population ratio that is nearly double its national average.

Some big-name buyers are returning. In all, $2.9 billion in office properties changed hands last year, up from $1.1 billion in 2003. New York-based TIAA-CREF purchased 4 Oaks Place, a four-building suburban complex, for $255 million, or $146 a square foot. "Houston's gone through a soft period but it's on the uptick," says Tom Garbutt, managing director and head of real estate for TIAA-CREF.

Other stats in an article table include apartment, retail, and office vacancy rates between 14 and 20%, average retail and office rents of $16-19/sq.ft, average apartment rents of $713, and a median home price of $134k.

Strong job growth, affordable housing and commercial space, and plenty of Wal-Marts to choose from. What more could you want in a city? ;-)

Saturday, June 18, 2005

Houston drops to seventh sweatiest city

You'll be happy to hear that Old Spice has ranked Houston only the seventh sweatiest city in America in their 2005 list, behind Phoenix (#1), Las Vegas, and Miami (although they fail to mention that sweat actually evaporates in those first two cities). Our ranking has steadily dropped from #2 in 2003 to #6 in 2004 to #7 this year, and given our really nice weather this last spring, I'll bet we drop even further next year. At current trends, according to renowned weather expert Old Spice, we should have San Diego weather by 2030 or so...

Friday, June 17, 2005

The next recession

The outlines of how the next U.S. recession might happen are becoming more clear. The last recession was very business-driven from the popping of the Internet bubble, but consumer spending stayed pretty high throughout, making it a relatively mild recession. I think the opposite may occur in the next one within a few years: global growth may keep business spending and growth up, but local consumers could scale back dramatically.

Why would consumer spending drop substantially? Because their adjustable mortgages are going to start kicking in, leading to higher monthly payments and less disposable income. The New York Times has a great article on the looming real estate bubble, with a neat national map of where the biggest threats are. Fortunately, Texas looks to be in pretty good shape, but the east and west coasts are set for a big hit. Unfortunately, a national recession will definitely impact Texas, even if our own real estate market is fine.

Creative ways to fund more police

Virginia Postrel, one of my favorite writers and bloggers, has an interesting column in the New York Times yesterday about studies definitely showing that increasing police presence reduces crime in a cost effective way (her blog post, study from Alex Tabarrok at the great economics blog Marginal Revolution). She points out that previous studies always ran into the cause and effect problem: higher crime cities hire more officers, so the linkage was uncertain. But these studies looked at DC during high terrorism alert situations, when there were extra officers on the street regardless of the crime rate. Not only did crime drop, but it was a big payoff:

But so far, the case for adding more police officers is strong. Using generally accepted cost estimates, Professor Tabarrok said, every $1 to add officers would reduce the costs of crime by $4. The authors did not identify a point of diminishing returns.

"We estimate that if we had a 10 percent increase in police, crime would go down by about 4 percent," he said, adding that researchers taking other approaches have come up with similar numbers. Nationally, he said, "that means about 700,000 fewer property crimes and 213,000 fewer violent crimes."

As a back-of-the-envelope calculation, Professor Klick offered an even more striking suggestion. "It wouldn't be unreasonable," he said, "based on our estimates and based on conservative estimates of the costs of crime, to say it would be cost-effective to actually double the number of people working in police forces, which is pretty amazing."

So here's the next step I'm wondering about: find out the insurance costs of those crimes (property and health insurance), and maybe there's a way private insurers might share the cost of extra police officers if it pays off for them? A voluntary program might be set up, or there might need to be a tax on insurance that goes to police - as long as the numbers show insurance rates should end up dropping more than the tax amount, so it's a net plus.

Unfortunately, I doubt it's that easy. If I had to guess, most victims of these crimes are low-income and uninsured. Alternately, there might be enough reduced costs in county emergency rooms to come up with extra funding for police. Regardless, it looks like it's well worth a study. Sounds like a great opportunity for a local economics professor to make a name for him or herself. Any volunteers?

Thursday, June 16, 2005

The Minneapolis congestion pricing experiment

As a followup to my earlier traffic congestion solution posts, this interesting blurb on congestion priced toll lanes in Minneapolis from Otis White's Urban Notebook at Governing magazine's web site. The simple point: people won't pay for HOT or MaX lanes during non-rush hours, no matter how cheap you make it. I'm not sure this would hold true in Houston - I think there are plenty of people that would pay a quarter for a high-speed left lane, even if it only got them an extra 10mph. Still, politically, it's probably just easier to do what Minneapolis eventually did: just make them free off-peak.

His posts don't have permanent links and soon roll into the archives, so here's the full text:

Choosing Congestion - Drive Free or Die

In May, the Minneapolis/St. Paul area embarked on a free-market experiment with one of its its highways, turning the carpool lanes of Interstate 394 into high-tech toll lanes, where the tolls depended on the amount of congestion and drivers paid with the aid of sensors on their windshields, which noted their presence in the toll lane and “swiped” their account as they drove by. So, how’s it working out? Well, there have been a few bumps in the road. Small problem: Some of those windshield sensors don’t work right. They’re supposed to beep when you drive under an electronic toll station, indicating you’ve been charged. About 70 of the 6,500 sensors beeped constantly, which unnerved drivers. (State transportation officials said no one was being “charged inappropriately.”) The greater problem: The toll lanes are causing a surprising amount of congestion in the free lanes. Why is this surprising? Because it isn’t happening during rush hour, when tolls can range as high as $8 for commuters in a hurry. It’s happening in the off-peak hours when it would cost only a quarter to cruise down the toll lane. The problem seems to be caused by the state DOT’s decision to charge tolls at all times. Before the toll system, carpool lanes were restricted only during morning or evening rush hours, so midday solo drivers were free to use them. But the DOT decided it would be easier to manage the toll lanes if they were always restricted to those willing to pay. Besides, who’d beef about being asked to pay a quarter to get out of gridlock? Apparently, lots of people. Drivers have confounded the experts by refusing to pay even a token amount to escape congestion, leaving transportation officials scratching their heads about what to do next. One solution may be the add another lane to compensate for the one taken by the toll traffic. All of which brings up a question: If it wasn’t to relieve congestion, why did Minnesota institute its toll lane system to begin with? Postscript: After thinking things over, state transportation officials did a U-turn, deciding it was a good idea after all for non-rush-hour commuters to use the toll lanes for free. In those hours, signs over the lanes will read “open.”

Wednesday, June 15, 2005

A tunnel for 45 North?

There have been a recent Chronicle article and Kuffner post on the I45N expansion plans and the tunnel alternative that is being proposed. I personally think the tunnel would be overwhelmingly more expensive, certainly more than the 25% premium being pitched. As somebody else commented: Boston Big Dig anyone? (which ran many billions of dollars over original estimates, and leaks like a sieve to boot)

That said, I think TxDoT is overreaching trying to cram four managed lanes down the middle of 45 (like the new Katy freeway). It is true overkill in this case, because six managed lanes are available already in the north corridor: it's called the Hardy Toll Road. They want to use congestion pricing in their 45 managed lanes. Why not just cut a deal with the county to do the same thing with the Hardy, run the buses and carpools down it, remove the 45 HOV, and, voila, create two new free lanes on 45. It seems so much cheaper and simpler. If only state and county agencies had some way to communicate and coordinate with each other...

Tuesday, June 14, 2005

The Circus Maximus Syndrome

Great New York Times column by one of my favorite columnists, John Tierney, on the edifice syndrome of a lot of cities (read it quick - it will be pay-only by this Saturday).

Older cities have made comebacks the past decade by getting back to that core function of protecting people's lives, but most still haven't figured out how to restore their commercial marketplaces.

Instead, their leaders build projects whose economic benefits go to the Circus Maximus industrial complex: real estate developers, construction workers, bond traders, owners of hotels and sports teams. Aside from the thanks of these groups, politicians also get a pleasant distraction from their mundane duties.

It's more fun to pose next to a model of a model of a new stadium than a new water main. Announcing plans for the Olympics gets better coverage than announcing plans for bridge repairs. If you want immediate gratification, there is nothing like a circus, as a moralist named Salvian observed in the fifth century.

Kind of makes you glad we lost the 2012 Olympics, huh? A tremendous amount of precious energy in this city would be totally focused on it instead of more fundamental foundational improvements - a giant 7 year distraction.

Houston certainly builds its share of edifices, but I think we're reasonably balanced overall. We work pretty hard on the fundamentals, and the stuff we do build is fairly affordable for a city of our size and economic power (stadiums, convention centers, etc.)

He also talks about the new Kotkin book:

You have to ask if the project performs a core function identified by Joel Kotkin in his new book, "The City," a global history of urbanity starting with Ur. He finds that successful cities have always done three things, two of which are straightforward: protecting the lives of inhabitants and providing a congenial home for a commercial marketplace.

The third function is the creation of "sacred space" that gives people a sense of identity with the city. In Ur, it was the shrine of the moon god, Nanna, a 70-foot-high ziggurat towering over the Mesopotamian plain. In Athens, it was the Parthenon. In Venice, it was the Basilica of San Marco.

"In New York, it's Central Park and Fifth Avenue," Mr. Kotkin said. "In Chicago, it's the lakefront. In Los Angeles, it's the Hollywood sign and the sight of the hills ringing the city. It can be a signature building or a distinctive neighborhood - something iconic that makes the city special and binds people together."

I've posted on this before, but I'll ask the question again: we do pretty good on the first two criteria, but what is Houston's sense of sacredness? I have my own ideas, but I'd like to hear people's thoughts in the comments.

Houston, sprawl, and density

As a followup to my earlier post on sprawl, I came across this interesting report that shows Houston had one of the highest density increases among cities in the 1990s (chart p.3) - the highest among what they called "unconstrained" cities - meaning we had no natural geographic or regulatory constraints to sprawl. Our density actually increased at the same rate as Portland or San Francisco: 8% (to 3,856 people/sq.mile in our case). Much more density increase than my earlier example city, DC (2%), which did not build many roads and invested heavily in transit. And if you're thinking it's all about immigration: San Antonio proportionally gets as much or more immigration as Houston, yet actually lost density.

Again, I would argue that because we invested heavily in freeways, jobs stayed in the core, which made the core more attractive and led to more dense development. If you look at the bottom of their list, a lot of those cities have lost most of their jobs to their surburban and exurban periphery, so there's no incentive for development in the core, leading to density loses in those cities - even big transit-investing cities like Boston, Chicago, and Philly.

Monday, June 13, 2005

Houston's new transit plan

The story just broke on the Chronicle's web site (updated story with graphic).
Mayor Bill White said today that Houston's congressional delegation is willing to help obtain $1 billion in federal transit funds over the next 10 years, including dollars for commuter rail, light rail, fixed-guideway bus lines and other facilities.

At first glance, this proposal seems far superior to the previous Metro plan. Several substantial improvements:
  • The North, Southeast, and Harrisburg lines are converted to bus rapid transit (BRT - possible light rail long-term) - which is far cheaper, not to mention less accident prone. Light rail only starts to be conceivably cost effective if you assume substantial real estate development along the lines, which is just not likely in those neighborhoods in the near term. This approach will keep costs low while ridership builds, and then allow conversion to light rail in the future when the capacity is truly needed.
  • A line that had been canceled - or a least postponed to the far future - is back in: a bus rapid transit line from the Northwest Transit Center through the Galleria area down to the Westpark line. This line actually goes through a fairly dense area (residential and commercial) and will probably get a lot of use. I would also predict it will probably convert to light rail fairly rapidly.
  • The Westpark line (still light rail) will now continue straight through to the UH central campus (probably down Wheeler if I had to guess). This makes far more sense than the previous plan, which would have required two seperate out-of-the-way transfers to make the same trip. It's also smart to keep this line rail for two reasons: they have a dedicated corridor (mostly), so it's out of traffic, and it's through neighborhoods where high-value, high-density new urbanist real estate development is likely to occur (and those developers will only commit to rail, not BRT that might go away).
Other additions include extending the Main St. line a little farther north to an intermodal facility just north of downtown, plus the beginnings of commuter rail out 90a/Sugar Land, 290, and towards Galveston.

This heavy commuter rail on existing tracks has the potential to be somewhat cost effective - or at least not a total waste of money like many other rail projects in this country. Still, they're a stretch. Only 7% of area jobs are downtown, maybe 4% more in the med center, and we're talking some time-consuming transfers here. The heavy rail will probably net out around 40mph with stops, and the Main St. light rail is around 20mph (30min end-to-end). Throw in transfer time, and it's a pretty long commute, especially compared to a point-to-point 60mph HOV express bus. But people like trains - it just might end up working out ok.

Financially, the whole plan is a pretty good deal for the city. We put up $676m going forward, throw in $324m already spent on the Main St. line, and that might get us $1b in federal matching funds. Whether the whole federal program makes sense in the first place is another story, but if the money pot's there, we might as well go after our share. Given that we recently put up somewhere around $1b for 3 new stadiums, it's not an unreasonable spending plan.

In my book, the Mayor's chalked up two good wins in two days.

(Update: Metro press release and detailed map)

Mayor White gets it right on sprawl

The Chronicle has an article this morning on Houston and sprawl which unfortunately repeats the same dangerous myth about sprawl that has hobbled so many other cities. The claim is that we should be "planning the transportation investments that influence where development occurs", but that's really a code phrase for the belief "if we don't build any new roads, everybody will move into nice high density developments in the city core and sprawl will stop."

The Washington DC metro area is exhibit A#1 for how this approach completely fails. They hobbled road building and built heavy rail to the core. What did they get? One of the most hyper-sprawling metro areas in the country. As soon as commuting into the city became unbearable, the employers scattered to the four winds over huge swaths Maryland and Virginia so they could be near new, affordable housing their core middle-class family employees wanted to live in. The cruel irony is that, once my employer has moved 30 miles out of the city, I can now move 30 miles beyond that, live on my own country estate, and still have a reasonable commute. DC metro now has commuters that live in West Virginia! That's 90 miles from the DC core. To put that in a local context, you could live in a beach house halfway down Galveston Island and still be closer to downtown Houston than that.

The paradox that people find hard to grasp is that large transportation investments - and especially freeways - actually reduce sprawl. By providing access to new, affordable housing and making the commute bearable into the city, employers stay here. When employers stay here, that puts a real limit on how far out you can live and keep a reasonable commute - realistically 20-30 miles.

Employers really would like to stay in the core. They have employees scattered over all points of the compass, from Clear Lake to Sugar Land to Katy to The Woodlands to Kingwood - and moving out to any one suburb is going to be seriously disruptive to a good chunk of their employees. But once they bite the bullet and make the move, there's just about nothing that can bring them back. Silicon Valley employers aren't going to San Francisco, Orange County employers aren't going to LA, and the hundreds of auto industry companies in southeast Michigan have no intention of going back into the city of Detroit.

Fortunately, Mayor White seems to have a handle on the real solutions.
Mayor Bill White, meanwhile, said he is launching initiatives to help the city — particularly areas of northeast and southeast Houston that have been "leapfrogged" by new development — capture a greater share of the single-family housing market. 
"I don't want, nor do most people in this community want, to tell people where they can and can't live or how long their commute should or shouldn't be," White said. "One person's sprawl is another person's dream house." ...
White agreed that transportation "is a critical issue in defining where and how the city grows." His strategy for directing more growth into the city, however, doesn't involve withholding transportation projects from remote areas. 
Instead, White said, he wants to make the city more attractive for development through initiatives such as Project Houston Hope, a redevelopment plan for six neighborhoods just outside Loop 610. The plan calls for making tax-delinquent property available for affordable housing, working with school districts to improve educational quality and building streets and utilities to replace crumbling infrastructure. 
With reasonably priced houses available in improved neighborhoods, White said, young families might be attracted by urban amenities such as libraries and entertainment venues that "are difficult sometimes to create in a new community." He said people who live outside the city often tell him they wish they were served by Houston police and firefighters. 
White said he wants to more than double the number of single-family housing starts inside the city within two years. He said his staff is researching the current figure for the city; builders typically release new home-construction figures on a regional basis.
It's almost enough to make me want to throw out term limits and let him become Houston's version of Mayor Daley (the father and son that have run Chicago for 50+ years).

Update: a follow-up to this post.

Sunday, June 12, 2005

The looming public pension crisis

A recent Business Week cover story discusses the looming public employee pension crisis being faced by states and municipalities. It's caused by a combination of the recent bear market, underfunding the plans, lax accounting, and overly generous politicians ("can't give you public employees a raise today, but, sure..., how about a big pension boost?... which will be some other guy's problem in 20 years..."). Here's the paragraph on Houston:
Some of these giveaways are truly spectacular. In 1998 the city of Houston instituted a deferred-retirement option plan, or DROP, that would allow workers to in effect take their retirement when they became eligible for it but continue to work at their salary. The retirement income was put in a side account where it earned an attractive rate of return, and the employee could later have his pension adjusted upward to a higher level. The DROP, along with other pension improvements, drove the city's pension plan down from 91%-funded in 2000 to just 60% two years later. Houston had gone from contributing 9.5% of payroll toward pensions to more than 32%. Joseph Esuchanko, a Michigan actuary brought in to study the problem, discovered that things would only get worse. According to his calculations, it was possible for employees to become millionaires thanks to the system. Under one scenario, a lifelong city employee retiring with a salary of $92,000 could get $420,000 a year in pension benefits. The citizens of Houston agreed with Esuchanko's conclusion that the system was a "win-win for the employee and a lose-lose for the employer." Last May they voted to end the benefits.

And another good blurb:

This tendency to dole out goodies in fat times is the core moral hazard of public-pension plans. Politicians like to reward voters when they can, and public workers vote. It wasn't only in California that benefits crept up during the end of the bull market. Public employees saw benefit enhancements in New York, Colorado, Illinois, New Jersey, and many other states. "That was the mirage of cost-free benefits," says S&P's Young. "Nobody pays, nobody gets hurt." ....

Elected officials are hesitant to ask the rest of their voters to pay for these promises through higher taxes. One primary reason: Outside of government workers, very few employees have these kinds of deals anymore. "Our people at 55 years of age can get 75% to 80% of their salary [as pension], and it's a pretty nice salary," says Illinois State Representative Robert S. Molaro, a member of a commission convened by the governor to make recommendations for fixing the pension system. "It will be hard for us to go to the taxpayers and ask them to pay for our pensions with benefits you in the private sector couldn't even dream of."

Luckly, my impression is that Texas is in reasonably good shape: weak public unions and a young, rapidly growing population to help fund a smaller group of public retirees than other states like California, New York, and Illinois. I've read elsewhere that tougher new federal accounting standards are supposed to kick in soon, which should make it harder for politicians to hide the problems under the rug. Hopefully any potential mess in Houston or Texas will be uncovered and nipped in the bud before it really blows up like those other states.

Thursday, June 09, 2005

"Houston Freeways" now online

A couple years back, a somewhat obscure book came out called "Houston Freeways: A Historical and Visual Journey". It didn't quite make the New York Times bestseller list, but it is an amazing book with a ton of great color pictures. It was a labor of love by its author, Erik Slotboom, whom I helped with a little proofreading. If you've ever wondered how the Houston freeway network developed, look no further. The bad news is that it is out-of-print now, but the good news is that it's available online for free. It's pretty beefy, so printing it or even just skimming through it online is a a nontrivial undertaking, but even if you just look at the pictures and read the captions, it's well worth it. Relative to its size, Houston probably has the most advanced and extensive freeway network of any city on the planet, and this book explains how we got it and the impact it's had on our hometown's growth.

Texas and municipal wireless internet access

Bill Gurley is a former Wall Street tech analyst and current Silicon Valley VC that I've followed for a long time via his Above the Crowd newsletter, which has recently converted into a blog. Even during the bubble, I thought he had some pretty level-headed analysis of where a lot of tech was headed.

Well, his pet topic lately is free or subsidized wireless broadband internet access like Philadelphia has done. Specifically, he's been focused on Texas, which was possibly looking at banning municipal wireless in the last legislative session (sponsored by your very good friends at SBC and Time Warner). Fortunately, the ban failed, so we may be looking at it in Houston in the near future.

Bill thinks Texas has set a powerful precident for the rest of the nation (he calls it a "landmark event"), and I highly recommend reading his analysis here.

Tuesday, June 07, 2005

Expansion plans at IAH

Chronicle had an article last weekend on the "preferred" expansion plan for Bush Intercontinental Airport over the next 20 years, if approved. There are additional details at the IAH website here. They are projecting a 70% increase in takeoffs and landings over the next 20 years, which, if applied to Continental alone, means moving from 700 flights/day to almost 1,200 flights/day. No hub in the world currently does that many. Delta in Atlanta is the largest, with 1,000 flights/day, and American at DFW is second, with 800 flights/day. Of course, both of them will grow plenty over the next 20 years too, so I doubt Continental/IAH will be largest in 2025.

The plan includes two new runways, bringing the total to seven(!). Seven runways definitely qualifies as a super-mega airport, up there with Denver and DFW. Four of them will be available for parallel approaches, meaning Continental will be able to move a lot of planes in and out very quickly, making for a more efficient hub.

The plan includes tearing down the old Marriott hotel and replacing it with new terminal space. International terminal D is also slated for expansion (probably an arm or two sticking out into the tarmac like C and E have). This seems much more prudent than one of the alternative plans under consideration, which would have demolished all the existing terminals to build an entirely new structure farther north. That seems incredibly wasteful. Obviously, they came to the same conclusion.

Airports often get a little extravagant, because, when you start talking about tens of millions of people going through your airport every year, and charging each of them a $5, 10, 15, or even $20 fee (built into the ticket price), that gives them one heck of a cash stream to build, well, pretty much anything.

As far as the local neighbors complaining, my sympathy is minimal. I know the extra noise is hard on them, but the airport has been there since 1969, and they've always said they plan to expand and reconfigure it as it grows. If you bought a house around there in the last 36 years, you had to know the risk you were taking. They should've required a signed document by all home buyers within several miles of the airport saying they understand the situation, accept the risk, and are not entitled to recourse. That would settle these protests real quick.

(Blog note: Headed to Austin for a meeting. Probably no posts for the next couple days.)

Monday, June 06, 2005

George Will on the Wright amendment

Now columnist George Will is getting in on the SWA-AA/Love Field/Wright amendment debate in a Chronicle editorial, which I have written on in previous posts here and here. He thinks it's just as nuts as I do. How American defends it with a straight face is beyond me.

The cities of Dallas and Fort Worth, and the Dallas/Forth Worth airport that opened in 1974, tried unsuccessfully to force Southwest to move its operations from close-in Love Field out to DFW, arguing that the new airport depended on this. Today, Kelleher laughingly recalls telling a judge: "If a three-aircraft airline can bankrupt an 18,000-acre, nine-miles long airport, then that airport probably should not have been built in the first place."

But in Washington, reasonableness is no match for the routine and lucrative corruption known as rent-seeking — economic interests getting government to impose handicaps on competitors. ...

Southwest, which is now using only 14 gates for 117 flights a day at Love Field, says it could use only 21 gates if the Wright restrictions were repealed. This would put some downward pressure on the fares of American, which by the end of the year may have almost 1,000 flights a day out of DFW. ...

Ronald Reagan said that Washington's approach to intervening in industries is: If it moves, tax it; if it keeps moving, regulate it; if it stops moving, subsidize it. Regarding airlines, the policy is: If they are failing, keep them flying; if they are prospering, burden them. But surely Washington, although difficult to embarrass, is embarrassed enough to repeal the Wright Amendment.

I love that Reagan quote.

Sunday, June 05, 2005

Does the future of Houston's Metro = the current reality at DC's Metro?

I'll open by saying I was a mild supporter of the Main St. light rail line, and mostly neutral on the expansion plan (it has its pluses and minuses) - but nightmare articles like the one below bring serious pause. It's all too easy to imagine Houston Metro in the same place in 15 years... - OFF THE RAILS

Efforts to Repair Aging System Compound Metro's Problems

By Lyndsey Layton and Jo Becker, Washington Post Staff Writers

Washington's world-class subway system, which for three decades has shaped the metropolitan region and delivered thousands of commuters to work on time, has fallen into a decline -- and mismanagement has been a key factor, records show. Trains break down 64 percent more often than they did three years ago, and the number of daily delays has nearly doubled since 2000. Although the vast majority of trains are on time, more than 14,400 subway riders a day are inconvenienced by a delay or a mechanical problem that forces them off broken trains.

Metro officials have spent nearly $1 billion in recent years to turn around the nation's second busiest subway system, but internal records show that the projects have created new problems. To ease chronic crowding, Metro purchased 192 rail cars at a cost of $383 million. But the agency tried to rush the cars through production and often missed mistakes made on the assembly line. And on average, the new cars need major repairs almost as often as the oldest ones in the fleet.

Metro is spending an additional $382 million to rebuild rail cars bought in the 1980s. Officials failed to closely monitor the repair work, didn't catch mistakes and ignored warnings from auditors about the lack of supervision. The refurbished cars are now breaking down far more often than those that haven't been overhauled.

And a $93 million project to renovate 178 escalators has managed to make many of them worse. More than a third have been breaking down more often than they did before, a Washington Post analysis of Metro statistics shows. The project follows a failed attempt, also costing millions, to improve the aging machinery.

The article goes on into great depth on management problems at DC Metro, and this is just the first of a four article series. Here's the summary of the future articles:

Washington's world-class subway has fallen into decline, and nearly $1 billion spent on projects to upgrade the system has not improved service.

As the number of derailments, rail breaks and other safety concerns on Metro has risen sharply, records show that many incidents could have been prevented if managers had heeded warnings from experts and employees.

MetroAccess, the transportation program for the disabled, has been plagued by poor service, rising costs and dishonest drivers and riders.

Even as Metro officials complain about tight finances, they continue to spend millions on projects that have little to do with the core mission of transporting customers.

Quite the depressing and scary litany. It's really hard to have good management at a public agency, and transit is a seriously complicated and expensive business with billions of dollars at stake, especially rail transit. Amtrak's a mess. DC's a mess. NY, Chicago, SF/San Jose, and LA all have serious problems with their transit agencies. What makes us think Houston Metro can buck this trend?

How far out will Houston grow?

The front page headline in the Sunday Houston Chronicle:

Houston's final frontier: How far out will we go?
An inexhaustible housing demand and buyers' willingness to commute push city boundaries in all directions

"Houston is growing by leaps and bounds. And it's growing in all directions," said Mike Manners, president of Houston-based Elan Development.

Though opposition to growth in some parts of the country has sparked heated battles over land-use controls, developers here faced little resistance in outer counties where rapid growth is often seen as a plus by local leaders. ...

Although many urban planners and educators focus on the rebirth of cities and their influx of empty nesters and baby boomers, that's only a small part of the story, said Joel Kotkin, a fellow at the Los Angeles-based New America Foundation. More than 75 percent of the houses sold in the greater-Houston area last year were outside Beltway 8, according to Crawford Realty Advisors.

The suburbs are going to grow much faster than cities, said Kotkin, who studies economic and social trends. ''It's the schools, the back yards, the parks. It's safety," he said.

I would argue that the Internet has also helped. More and more people find themselves in jobs that don't require going into the office every day. Work at home and travel are more and more common rather than trips to the office. A 2+hour round-trip commute is crazy five days/week, but not so bad maybe 2-3 days/week, especially if that gets you your dream home and neighborhood at an affordable price.

Answer to the original headline question: not as far as you might think. This was actually the topic of my third post on this blog way back in early March. Go there for the long-term answer.

Thursday, June 02, 2005

Why does Houston have such a great restaurant scene?

Browsing through peoples' posts of their favorite things to do in Houston, there's a recurring theme of eating out (which I noticed only after posting my own thoughts along the same lines - thanks to Anne for the link). I've also posted about it previously, where USA Today called Houston "the dining-out capital of the nation": on average, we eat out more often than any other city in the country, at the second-lowest average price (Zagat). The Chronicle claims Houstonians eat out a third more times per week at 20 percent lower cost than the national average, with 9,000 area restaurants to choose from (which also makes us one of the nation's leaders in restaurants per capita). Finally, I've talked to tons of people who have moved away from Houston, and one of the first things they mention missing is the restaurants.

So it's definitely one of the great strengths of Houston, but it's also one that raises a lot of skepticism from anybody who hasn't lived here: why would Houston have more or better restaurants than anywhere else? What's so special about Houston? Having given this a bit of thought, I think there are set of factors that have come together to create the "perfect storm" of great restaurants in Houston:

  1. Diversity. Start with Houston having a very diverse population from all over the globe, so there's plenty of people available to start restaurants in their native ethnic cuisine. Not a whole lot of cities can say that. I think a lot of that is related to being the capital of the energy industry, which is an inherently global industry. That plus being a major port city and proximity to Latin America and Cajun Louisiana.
  2. Lack of zoning. Houston's open development culture makes it real easy for anybody to start a restaurant. Plenty of inexpensive space and not a lot of regulations/permitting.
  3. The freeway network. This may seem to be an odd factor, but think about it a minute. We have a very well developed freeway network compared to a lot of cities (mainly because Houston only really grew after the widespread adoption of air conditioning in the 1950s, so the car has been an integral part of its growth vs. many older cities). Outside of rush hour, that network puts a lot of restaurants within 15-20 minutes of most people, so restaurants can easily draw customers from a large area.
  4. Sheer size. We have 5 million people in the metro area. That's a lot of potential customers to draw from, especially when combined with the accessibility of the freeway network. That means there are enough people within easy driving distance to support exotic niche restaurants and ethnic cuisines.
  5. Intense competition. Combining the first 4 factors, we have a lot of restaurants that are easily accessible, meaning that the not-so-great ones die off pretty quickly. Why go to a mediocre restaurant if a much better one is only 5 minutes farther away? In more mobility-challenged cities, many mediocre restaurants survive because they're one of a handful of convenient options within a given neighborhood or area. In essence, they have a partial monopoly. That kind of competitive barrier is almost non-existent in Houston.
  6. Low cost of living, especially housing - part 1. Houston is one of the lowest cost of living major cities in America. Lower cost of living means lower labor costs, which are a big part of the cost of running a restaurant. That lets them keep prices low, which attracts more customers.
  7. Low cost of living, especially housing - part 2. The second impact of a low cost of living is that people have lots of leftover income to spend on eating out. That discretionary income is the raw fuel that drives the restaurant scene. If people are feeling squeezed financially, one of the first things they do is eat at home or pack a lunch to work.
  8. Relatively high average incomes. Mainly because of the high-paying energy industry, Houston has higher average incomes than many similar cities . Not as high as cities like New York and San Francisco, but those cities also have much higher costs of living. Our average incomes are very high compared to our cost of living, which boosts the discretionary income available for spending at restaurants.

So that's my list of reasons for Houston's great dining scene. If you think there are other reasons to add, I'd love to hear them in the comments.

It's a substantial competitive amenity for the city. Cities like to hype amenities like museums and performing arts, but really, how often do you go to a museum or an arts performance? a few times a year? vs. how often do you eat? Hopefully more than a few times a year (although, for ideal health, hopefully less often than me ;-). Great, affordable, accessible restaurants are an amenity you can enjoy every single day. We should be proud, and work as a community to preserve all the elements of our excellent "perfect storm".

A sad day in Austin: the Oasis restaurant burns

I loved this restaurant in Austin. Even though the food was only ok, and a bit pricey, the patio views of the lake and sunset were well worth it.

I may be bad luck for landmark restaurants - I also ate at the Reatta western restaurant at the top of the Bank One skyscraper in downtown Ft. Worth a few months before a tornado completely destroyed that building.

Video link here.
Chronicle article with a picture from the air that really shows the damage.
Daily Texan article.

The good news: they're planning to rebuild.

Wednesday, June 01, 2005

May highlights

Time again for the monthly ritual. Near the first of every month, I'll be adding a post highlighting key posts from the previous month(s), with a particular focus on significant ideas I'd like to see kept alive for discussion and action. The main page will only show about a month's worth of entries, and I know most new readers won't go back into the monthly archives linked at the bottom of the right-side column. If you're just interested in the highlights, here they are:

From May:

From April:

And from March:

Thanks for your interest in Houston Strategies.