Monday, December 15, 2008

Opportunity Houston in Fast Company

I'm short on time tonight, so just a quick pass-along. The Greater Houston Partnership's $40m Opportunity Houston program to promote economic development just got a real nice write-up in the most recent issue of Fast Company. (Hat tip to Justin)
Houston Launches Multimillion-Dollar Effort to Shield Its Economy

Flush with oil-and-gas money but wary of a bust, the Texas metropolis launches a multimillion-dollar effort to recession-proof its economy.

When Vestas, the world's largest wind-turbine manufacturer, announced plans for a new U.S. research center, 42 states lined up to make sales pitches. The winning location would be rewarded with hundreds of jobs, millions in tax revenue, and green-business cachet. Finn Strøm Madsen, president of the Danish firm's tech division, wanted a site near big-name universities, so Massachusetts (MIT) and California (Caltech, Berkeley) seemed obvious choices. Portland, Oregon, was already home to Vestas Americas' headquarters. But in June, Vestas picked Houston.

The victory was the first sign that the city's ambitious new economic-development battle plan, Opportunity Houston, was working.
...
Houston's metro area added 53,000 jobs in the 12 months through August, more than any other region in the United States, save Dallas -- Fort Worth... 900,000 new residents have been added in the past seven years.
...
Since last spring, the relocation pipeline has ballooned from fewer than 500 corporate candidates to well over 1,100. And during 2007, Opportunity Houston's pilot year, the partnership tallied $500 million in new capital investment and $15.2 billion in new foreign trade directly related to its efforts.
...
...the innovative tech tools that Opportunity Houston's hefty budget has enabled it to develop. The partnership is sinking seven figures into a geographic information system (GIS) that could be called a SimCity lover's dream. It will give companies and consultants instant online access to detailed information on any location in the 10-county region. In addition to maps, the system contains 100 layers of data, from details of nearby hazardous-waste sites to specifics about power and water lines and even graveyards. No other city in America has a system this sophisticated. In addition, Opportunity Houston tracks its leads with state-of-the-art software that's an economic-development cousin to customer-relationship-management systems.
...
While its leaders want to lure emerging industries like nanotech and renewable energy, Texas doesn't have aggressive, sector-specific tax incentives offered by states including neighboring New Mexico. And while it weathered Ike well, "the hurricane potential scares the bejeezus out of everybody," says James Renzas, a relocation consultant at Bedford International.
I think that's a big part of the reason DFW continues to match our growth even without near as much of the energy industry as us: they're the "safe" Texas megapolitan from hurricanes, with less humidity to boot.

I'm curious to hear your thoughts in the comments on sector specific tax incentives. In general, I don't like 'em. A level playing field seems the best bet to me. Be attractive to business across the board - not just niche sectors. But if we're losing good deals to other states, maybe we have to do it to be competitive. Your thoughts?

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16 Comments:

At 10:45 PM, December 15, 2008, Blogger spuck said...

http://www.weather.com/maps/news/julynonactive/hurricanestrikefrequency_large.html

As far as corporate asset building, you'd be far better off to spend your decades in a place with a highly energetic business pool than to hedge your once-a-decade bets by spending the whole time in an asset building environment where efforts just don't appreciate as fast. Kind of like poverty assistance programs *can't* spend a dollar as effectively when trying to stabilize a household's economics in stagnant cities as they could by helping the family move here and build assets far greater than the house or moribund job position they walked away from.

 
At 7:49 AM, December 16, 2008, Blogger Tory Gattis said...

I agree with your point, but DFW is about as energetic as Houston business-wise. I'd guess that unless the business needs deep ties to energy, the med center, the port, or NASA, it would tend to chose the DFW metroplex over Houston.

 
At 3:53 PM, December 16, 2008, Anonymous Mike said...

"I think that's a big part of the reason DFW continues to match our growth even without near as much of the energy industry as us: they're the "safe" Texas megapolitan from hurricanes, with less humidity to boot."

That and the widespread image problem we have due to the slovenliness of our roads and the disarray of our neighborhoods. I can't tell you how many times since living in Dallas have I heard people say, whenever the subject of Houston comes up, "Houston is dirty." One guy I know at work calls us "Phew-ston."

But of course you'll always downplay this, because improving it would mean regulations.

 
At 4:46 PM, December 16, 2008, Blogger Brian Shelley said...

While I dislike industry specific incentives, it would seem much smarter to offer incentives on niches that other cities are not covering. The competition for nano/bio seems to offer ludicrously generous packages.

 
At 7:22 PM, December 16, 2008, Blogger Michael said...

>>they're the "safe" Texas megapolitan from hurricanes, with less humidity to boot.

Hey, I don't think Dallas was the better choice today, unless you like icy roads. I also don't think they are the better choice in July when they go for their 100+ heat for 30 days in a row.
I prefer the lack of ice and snow-storms we have here. I hate the month of September here in Houston, but otherwise I'd say the weather here is not that bad, and the threat of natural disaster is not that bad unless you live in south or southeast Houston.

Also perhaps we should show any execs choosing between Dallas and Houston the "It Could Happen Tomorrow" Dallas episode, where they describe Dallas as a "city that could be destroyed in a matter of seconds" by "300 mph winds". Also, you wouldn't have much time to prepare for a killer tornado - they just kind of pop-up. Here we often will have several days notice to prepare for a hurricane. So why not locate yourself in the Houston area where you are 50-80 miles from the coast, it's hardly ever going to ice up, and the most you are ever going to have to worry about is flooding / drainage (issues that are problematic but *can* be dealt with by individuals and improved by drainage projects) and maybe 80 mph winds (perhaps 4-5 times in a century, if that).

Even if an F5 tornado never hits Dallas, I'm still guessing that Houston fares comparably to Dallas in terms of annual lost productivity due to weather - basically flooded roads and a once every 20 years hurricane in Houston's case versus annual ice / snow in Dallas's. But someone please correct me if I'm wrong...

>>I'd guess that unless the business needs deep ties to energy, the med center, the port, or NASA, it would tend to chose the DFW metroplex over Houston.

These are pretty broad areas of strength for Houston - advantages in healthcare, energy, aerospace, and global trade. Meanwhile Dallas leads us in telecom and finance (anything else?).

 
At 9:55 PM, December 16, 2008, Blogger Tory Gattis said...

All good points. But I'm not sure executives reason it out to that level of detail. They just think "Houston = Hurricanes", and remember all the crazy reporters they've ever seen reporting from them (here and elsewhere on the Gulf coast). You're right that tornadoes can be even more deadly (remember downtown Fort Worth?), but they don't get as much coverage because they're so spontaneous.

I know DFW gets hotter and colder, but I don't think snow and ice are that much of a problem - but I'd like to hear from residents.

> These are pretty broad areas of strength for Houston - advantages in healthcare, energy, aerospace, and global trade. Meanwhile Dallas leads us in telecom and finance (anything else?).

My impression is it's "everything else." They have a broader range of businesses and industries there. Very diversified (like Atlanta and Chicago). It seems to me like most companies decide they want to move to Texas for the business climate and cost of living, and unless they specifically need to be in Houston (or want Austin's tech scene), they pick DFW. Maybe part of it is they don't want to compete with high-paying energy companies for talented employees...

 
At 7:04 AM, December 17, 2008, Blogger Tory Gattis said...

Here you go. This new map shows that death risk in the Texas area from tornadoes roughly equals flooding.

http://news.yahoo.com/s/nm/20081217/sc_nm/us_death_usa

 
At 12:11 PM, December 17, 2008, Anonymous Anonymous said...

Mike said

"can't tell you how many times since living in Dallas have I heard people say, whenever the subject of Houston comes up, "Houston is dirty.""

Hey, we can't help it if he doesn't have the brains or the drive to make it in Houston. Also, if it's so great, why does Houston have a larger population? No regulations?

 
At 1:18 PM, December 17, 2008, Anonymous kjb434 said...

I really take offense that Houston is dirty.

I consider Houston a clean city. It's not Disney World, but very few places (except for Singapore) are. We're such a green city with a lot of urban forest. Far more than the metroplex.

 
At 1:18 PM, December 17, 2008, Blogger Michael said...

>>Hey, we can't help it if he doesn't have the brains or the drive to make it in Houston. Also, if it's so great, why does Houston have a larger population? No regulations?

Well, Dallas area does have about 500k or 800k more people than Houston area by the measures that make the most sense.

Estimated 2007 populations:

Combined statistical (this is a pretty large area)
DFW - 6.5 million (growth rate of 18.5%)
Houston - 5.7 million (growth rate of 18.9%)

Metropolitan statistical (this is more of what I think of when I talk about metro areas):
Dallas - 6.1 million
Houston - 5.6 million

City populations -
Houston - 2.2 million
Dallas - 1.2 million

The reason I don't trust the "city" list? Don't get me wrong - I know it is accurate based on city boundaries, but San Antonio bigger than Dallas? Austin bigger than Seattle? El Paso bigger than Washington DC? It's just based on arbitrary city boundaries - metro area is much more meaningful. This is why you have a pro sports franchise (among other things) in Washington DC and not in El Paso.

(That said, in this case I do think there is some truth to Houston having a larger, more vibrant core city than Dallas. But if you are thinking Houston / Katy / Kingwood / Pearland, then the Dallas version of this is actually bigger)

Sorry to be so picky.

 
At 2:08 PM, December 17, 2008, Anonymous kjb434 said...

Michael,

You are dead right to be picky.

I always get bothered by broad city size statements that don't figure in metro area.

Metro comparisons to me are the best because the economy of the metro works together versus just one component (although large component) being described.

 
At 2:59 PM, December 17, 2008, Anonymous Mike said...

"I consider Houston a clean city. It's not Disney World, but very few places (except for Singapore) are. We're such a green city with a lot of urban forest. Far more than the metroplex."

I like Houston better and appreciate its greenness, but when you've lived away from it and come back, the dirtiness does jump out at you. I never saw it though until I had spent some time away.

 
At 4:23 PM, December 22, 2008, Anonymous common_sense said...

Honestly, I wish more people in Houston would live elsewhere for awhile. A bit of perspective would be a good thing. Houston has a lot to learn from other cities; and not just Dallas, Austin and San Antonio. If Houston truly wants to be thought of as a global city (which I would argue it is not at this point), it needs to expand its horizons and learn about the big old world out there.

 
At 9:35 AM, December 23, 2008, Anonymous kjb434 said...

I still don't get the business of us not being on some world class level.

We are quite ahead of the curve, our problem is that our press is primarily governed by media outlets located in the northeast (that aren't particular friendly to Texas traditional ways and love to stereotype the state).

Recently I was hanging out at my usual watering hole. There were three frenchmen who were flight attendants for Air France. They never been to Houston before. The flights were in an out of of IAH but Air France pays for them to stay at the Hotel Intercontinental in Uptown.

Their two days here, they utilized our public transit (buses) and metro rail to go to the Museum District, Montrose bars, and Herman Park. They are all residents of Paris, but they were quite impressed with Houston. The image they had came primarily from the craptastic media coverage given by CNN, New York Times, BBC, France 2, etc. They pictured Texas and Houston as an ass backwards, intolerant,craphole. They actually didn't understand why Air France has several flights in and out of Houston.

Their view totally changed. They were impressed by the city and how NONE of the characterizations of Houston seemed to be true. We also have to remember they had to see the city from IAH to Uptown also. Outside of being a lot smaller than Paris, they really didn't see much difference. The way they promoted Paris was there was the touristy central portion of Paris that you always see on TV and in movies where the affluent live then there is all the rest. Massive suburbia littered with a lot of slums on the periphery. The city spends loads of money to make a great impression that is far from reality.

 
At 10:25 AM, December 23, 2008, Blogger Michael said...

KJB,

According to the only academic compilation of "global cities" that I've seen, which seems to be primarily based on economic strengths, Houston is not in the same league as many other cities - although we are on the list!

The results are here.

Houston is a minor world city along with Dallas, Taipei, Washington DC, etc.

Common_Sense and I agree that Houston should look to places like San Francisco, Toronto, New York, and Madrid and some of our similarly ranked cities like Boston, Montreal, Rome, Beijing, Atlanta, Miami, and Minneapolis, as we grow to see how they do things. We certainly don't have to follow them in every respect - hopefully, we can improve on the way they do things and find approaches that are suitable for Houston.

I do think certain things like Houston's disorganization, visual pollution and unnecessary signage (aka dirtiness), and lack of quality local and commuter mass transit will strike you if you've done a fair amount of global traveling or living in other cities. I'm not going to say other cities are perfect either, but Houston certainly has some "low-hanging fruit" and other areas to work on.

-Mike

 
At 11:00 AM, December 23, 2008, Anonymous common_sense said...

Although I have to admit that Houston does have a generally poor image nationally and internationally but I am reluctant to place all of the blame on the “big, bad, boogie-man,” the “East Coast” media. Austin, for example, has an excellent national image despite it not being on the East Coast and being (last time I checked) in Texas.

Much of Houston’s poor image is its own doing. Its development pattern has generally modeled LA’s (another city with a poor national image) but unlike LA it doesn’t seem to care about trying to take steps to control sprawl, pollution, unsightliness, etc.

I also agree with Michael that the low hanging fruit in Houston could really be managed better and improve the aesthetic quality of the city. Billboards, giant inflatable weightlifters, sprawling highways that stick out like a sore thumb, dilapidated sidewalks and roads, abandoned buildings right on the edge of downtown…I could go on. Houston could, if it wanted to, take care of these eyesores (thankfully I think they are going to start to get rid of these giant inflatable things on the top of buildings) but it takes political will and, more importantly…money. Unfortunately, even when the oil price was sky high, the city was too cheap to address some of these problems.

 

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