Monday, June 29, 2009

TX Smart Growth and Houston Urbanism

In case you missed it, Governor Perry vetoed a smart growth bill that came out of the recent legislature (Houston Tomorrow, Kuff, HRG). Setting aside all of the negative impacts that have come from smart growth plans elsewhere (the CA housing bubble, among others), and as relatively toothless as it was, I roughly agree with Perry and the Austin Contrarian that it was a misguided attempt to impose a state solution on what is fundamentally a local problem.

Where I disagree somewhat with AC is his comment on TXDoT and community control of their transportation. While the agency has run a bit roughshod, transportation is fundamentally a network that connects places, and that means it needs a master architect with control rather than every locality going their own way. Think about how master-planned communities prefer cul-de-sacs over street grids - nice for residents, totally unhelpful for people trying to pass through. Imagine that approach on a larger scale. Cities decide they don't like pass-through traffic so they constrict incoming boundry roads to 2-lanes - or worse put big tolls on them. Imagine if Bellaire could decide they don't like the 610 loop and they tore down the segment inside their city limits? Everybody wants the big infrastructure somewhere else - NIMBYism run amok is what we'd get. TXDoT has to have the power to break through those NIMBY barriers, even if it's not always pretty.

You might have also caught the Chronicle's front page story today on coming changes to our development code. Given the success of what we've seen inside the Loop, I'm all for expanding it out to the Beltway. But I agree refinements might help. Requiring some minimal guest parking is prudent. Make the new higher-density developments retain more runoff and drain it more slowly to prevent flooding. A simple barrel or underground tank linked to the gutter system should do it. If trees are removed, require the developer to sponsor new equivalent greenery coverage on site or elsewhere in the neighborhood (street medians, bayou edges, parks, etc.). These are relatively minor costs that would mitigate most of the issues.

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Thursday, June 25, 2009

Securing Houston's economic and world-city future

Houston has a unique window of opportunity right now to secure its economic future as well as improve its world-city status. We're currently the global capital of the oil and gas industry, one of the most important industries in the world. The short to medium-term future for oil and gas also looks bright. But the long-term future of energy technology is fuzzy. Will we be well positioned to be the capital of all energy technologies? Or will it pass us by, and we will become the next Detroit/Cleveland/Pittsburgh/etc.?

A good case study would the information technology industry and Boston vs. Silicon Valley. Boston was the original information technology hub, especially in the mainframe and mini-computer eras, but Silicon Valley's vibrant entrepreneurialism eventually left Boston in the dust. Could the same thing happen to us with alternative energy and California, Denver/Boulder, Austin, or elsewhere?

There is a lot of acknowledgment that we need to broaden our energy-industry base to include more alternative energy, but there doesn't seem to be a lot of specific strategy (Opportunity Houston excepted). My suggestion? Build on Paul Graham's idea for creating the next Silicon Valley (estimated price only $1B, or two Reliant Stadiums), but focus it instead on alternative energy companies. These companies are cheap right now and starving for capital in this economy (see this Business Week story on the Biofuel Bubble). Investing in them conditional on moving to Houston would be a bargain many would readily accept, helping to establish a Silicon Valley-like critical mass here.

Where would the capital come from for these investments? A massive private equity/venture captial fund would be established with a focus not just on absolute returns, but on broadly enhancing the Houston economy, especially in alternative energy. Employers all over the region would offer this fund as an option in their 401K plans (it's like one of those "special situations" funds you may have seen combined with a mission-oriented, socially responsible fund like the environmental ones), maybe limited to no more than 5% of your portfolio (since it is a high-risk investment category). I think huge numbers of people would happily put part of their retirement portfolios in this fund, not just because they believe in Houston and want to see it succeed, but also because it's in their own best interest: if the city does well, their home value does well and their kids will have more opportunities here. It's a win-win virtuous cycle.

I think the primary target should be biofuel companies (especially algae), since that plays to our engineering, refining, and distribution strengths more than wind or solar (and we already have some traction here). Just like Silicon Valley is awash in programmers all trying to create the next big thing, we need to be swimming in chemists and biogeneticists all competing to make the next big biofuel breakthrough.

Of course, all of this needs to be backed up with not just money, but with academic support in the form of the world's largest collaborative energy research institute spread across Rice, UH, and TAMU - just like the support Stanford provided Silicon Valley.

At the beginning of this post, I also mentioned that this could improve our world city status. The more I've thought about it, top world cities don't just have big economies, industries, and populations (which we certainly have), they also have an intangible "buzz factor" - a sexy, exciting story as part of their identity. The fame and celebrity of the entertainment industry gave it to LA. Technology and natural beauty gave it to the San Francisco bay area. Media, finance, the UN, and Manhattan gave it to NYC. Some cities have the buzz without the world-city economy or population to back it up - Vegas, Denver, Portland, and Austin come to mind. Atlanta tried to buy the buzz with the Olympics. You get the idea. Houston lacks that popular buzz factor, and oil and gas alone is not going to get us there. Top-tier tourism is not a realistic option. But if we morph into the Silicon Valley of Energy - one of the bedrock industries of the world - I think that would do it.

It's an incredible opportunity, and one we should seize quickly. If oil prices continue to re-inflate, these alternative energy companies will again become popular and expensive with plenty of capital options - making it almost impossible to move them here. Other cities may build an insurmountable lead in different alternative energy clusters, leaving us behind (right now it is very open, with no clear leader). It's all too easy to cruise on our recession-resistant economy and strong oil and gas industry, but this is the time to take aggressive action. Attack, while the moment is right, and secure Houston's future greatness.

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Monday, June 22, 2009

Rankings, livability, density, economy, clean energy, and more

Clearing out some more small items:
  • New Geography takes issue with the Economist's "most livable" city rankings, which are so unaffordable they are really only "most livable" for wealthy elite executives. Houston even gets a mention. Hat tip to Hugh and Wendell.
  • In case you missed it in the Chronicle, Texas cities scored 5 of the top 6 metros least affected by the recession according to a Brookings study, with Houston pulling in at #4.
  • Texas is also expected to be one of the first states to recover from the recession, as is Houston specifically. Hat tip to Jessie.
  • Joel Kotkin profiles the secrets of Austin's success. A big part of it: a livable, affordable, educated blue city in a red state with pro-business regulations and low taxes.
  • Texas takes top rankings in Pew clean energy study. Hat tip to Jessie.
  • I throw a lot of data around about Houston's economy, but if you want to viscerally feel how well we're doing relative to other parts of the country, watch this scary video about 'Lost Vegas' and read this NYT story on Oregon, which is rivaling Michigan for unemployment but still attracting waves of crazy Californians.
  • Speaking of Oregon, new data shows that Houston has significantly densified since 2000, even more than uber-planned Portland. Score one for Houston's relatively unregulated free market in land use.
  • The hidden mathematical patterns behind cities. Hat tip to Jack.
That's probably enough for this round.

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Friday, June 19, 2009

WSJ on the Ike Dike

A crazy week, so just another pass-along article from the Wall Street Journal on the proposed 60-mile long, 17-feet high, "Ike Dike" defense around Galveston and Bolivar. Estimated price tag is $2 to $4 billion, which is a bargain compared to the surge damage from even one hurricane. Some key excerpts:

Dike supporters argue that the project has implications far beyond Texas. The area is home to three of the country's 10 largest oil refineries, 40% of its chemical manufacturing capacity and the country's second largest seaport, handling some 600,000 tons of cargo a day.

"It's a national-security issue," said Bob Mitchell, president of the Bay Area Houston Economic Partnership, a local business group.

Potential funding sources: Army Corp of Engineers and federal highway funds (set back from the beach).

Estimated completion time: a decade+
Bill Merrell, the Texas A&M University at Galveston professor who first proposed the Ike Dike, said he based the structure on existing designs, including swinging floodgates built in Rotterdam, Netherlands, in the 1990s. London has had closeable floodgates on the Thames since 1982, and the Russian city of St. Petersburg is nearing completion of its own massive gates.

"All the technology's proven. We're not asking for a miracle," Mr. Merrell said.

Dike supporters find inspiration in past disasters. After an unnamed 1900 hurricane nearly wiped Galveston off the map, island residents built a 15-plus-foot seawall along the island's east end, then raised the island itself by as much as 17 feet, jacking up more than 2,000 buildings and filling in underneath them with sand.

Compared with that project, Mr. Merrell said, the Ike Dike looks trivial -- at least from an engineering standpoint. But the perception that the project is too difficult could be hard to overcome. Mr. King, the former Kemah mayor, said he initially thought the idea was too far-fetched. But he said the simplicity of Mr. Merrell's plan, combined with the cost of leaving the coast unprotected, won him over.

"The elegance and the appeal of something like the Ike Dike is, with one swath, all the problems are solved," Mr. King said.

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Tuesday, June 16, 2009

Rail to the airport

Running a little behind this week, so I just wanted to pass along this story from USA Today on domestic airports adding rail service. People love the service, of course, and many airports are doing it, but later in the article they get to the economic irrationality of it in America's decentralized car-centric cities (as opposed to Europe and Asia).
Still, airport-rail ridership in the USA is woefully low compared with other countries, says Andrew Sharp, director general of the U.K.-based International Air Rail Organisation. In many European and Asian airports, 20% to 30% of travelers get to and from the airport using rail. In the USA, ridership typically ranges from 2% to 5%, he says.

Ongoing debates

Like most large construction projects, airport rail proposals face stiff headwinds. Opponents challenge funding sources and new taxes and cite preferences for cars and buses. But the central argument in most debates has centered around ridership, specifically whether airports have enough demand to justify millions in cost.

BART's connection to SFO, completed in 2003, has yet to reach BART's initial ridership forecast and is still not profitable. Prior to construction, BART projected there would be 17,800 average daily boardings to and from the airport by the year 2010. As of this month, SFO ridership was at about 11,000.

Frank Sterling and Juliet Ellis, activists in the Bay Area, also questioned BART's plans to spend $500 million for Oakland International's people-mover and its decision to charge $6 for the service vs. $3 for the current shuttle bus.

"The proposal to charge double that for the new connector might drive away customers, unless it delivers twice the value," they wrote in a recent newspaper commentary, "Can East Bay residents afford this?"

Then they use some of my favorite arguments from past posts:

These are appropriate debates, Coogan says. Some cities are better off sticking to buses, he says. For example, LAX's FlyAway Bus, which provides non-stop rides to various neighborhoods in Southern California, is more convenient for many travelers than the metro.

For some cities, it'd be wiser to spend scarce funds for extending metro to public transportation-friendly suburbs before considering airports, Coogan adds.

"How often does a person go to work? And how often does a person go to Paris in a year?" he says.

More on these arguments here, here, and here (near the bottom). As I said in one of those posts: I agree, and I've said before that the market here is a niche one plenty well served by buses: young singles who can't get a ride to/from the airport. Business travelers will almost always rent a car or take a taxi. Families won't schlep their luggage on transit. Most others will have friends or family pick them up or drop them off. And our off-site airport parking is dirt cheap. The ridership drivers just aren't there.

Update: And then there are the fare increases.

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Thursday, June 11, 2009

Taxes drive the rich (and the not-so-rich) to Texas

Tonight just a quick pass-along from a recent Wall Street Journal op-ed titled "Soak the Rich, Lose the Rich", which has a lot of nice things to say about Texas:
The tax differential between low-tax and high-tax states is widening, meaning that a relocation from high-tax California or Ohio, to no-income tax Texas or Tennessee, is all the more financially profitable both in terms of lower tax bills and more job opportunities.

Updating some research from Richard Vedder of Ohio University, we found that from 1998 to 2007, more than 1,100 people every day including Sundays and holidays moved from the nine highest income-tax states such as California, New Jersey, New York and Ohio and relocated mostly to the nine tax-haven states with no income tax, including Florida, Nevada, New Hampshire and Texas. We also found that over these same years the no-income tax states created 89% more jobs and had 32% faster personal income growth than their high-tax counterparts.

Did the greater prosperity in low-tax states happen by chance? Is it coincidence that the two highest tax-rate states in the nation, California and New York, have the biggest fiscal holes to repair? No. Dozens of academic studies -- old and new -- have found clear and irrefutable statistical evidence that high state and local taxes repel jobs and businesses.


States aren't simply competing with each other. As Texas Gov. Rick Perry recently told us, "Our state is competing with Germany, France, Japan and China for business. We'd better have a pro-growth tax system or those American jobs will be outsourced." Gov. Perry and Texas have the jobs and prosperity model exactly right. Texas created more new jobs in 2008 than all other 49 states combined. And Texas is the only state other than Georgia and North Dakota that is cutting taxes this year.

The Texas economic model makes a whole lot more sense than the New Jersey model, and we hope the politicians in California, Delaware, Illinois, Minnesota and New York realize this before it's too late.
Hat tip to Joel.

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Monday, June 08, 2009

Rankings, plaudits, Metro costs, Mayor's race, TOD regs, and more

When I finally started to catch up after my vacation, the backlog of smaller items for the blog grew way too fast (approaching 20+), so it's time to start whittling that list down:
  • Details of how each of the four mayoral candidates view land-use regulation, light rail, TOD, economic development incentives, housing, sustainability, and infrastructure over at NeoHouston. Sorry, this one is a little old (from March). I was waiting to read it in-depth and add my comments, but when I finally got around to it, I didn't find anything major or notable. The candidates seem to be playing it safe. Thanks to NeoHouston for typing up notes from the event.
  • Speaking of TOD, in case you missed it, the official urban corridor development regulations are coming up to city council for pubic input and a vote. It looks like they decided to keep it mostly voluntary with incentives rather than mandatory. A good start. Christof's detailed critique here. Update: HRG's letter of support.
  • Sam Staley at Reason has written a report on Houston housing's affordability, dynamism, and resilience, and what other cities' planners can learn from us, here. Planetizen version here. Hat tip to Josh. "In my travels, I don’t see the kind of eclectic, diverse and broad-based housing development that is part of the normal way of doing business in Houston in other US cities."
  • Continuing that theme: LAT article on the decline of the Sun Belt, with a notable exception:
    And yet, to say all areas across the Sun Belt are in for long-term decline is simplistic, he says. Scanning the most recent employment maps put out by the Bureau of Labor Statistics reveals "a 'belt' in the middle of the country — Texas is part of it — that is doing quite well." (The AP Stress Map backs up that finding, revealing a swath of comparatively unscathed counties starting in North Dakota, stretching through South Dakota, Nebraska and Kansas and ending in Oklahoma and Texas.)

    Out of the nation's 100 fastest-growing counties, the majority were in Texas (19), Georgia (14), North Carolina (11) or Utah (nine), according to U.S. Census figures last year. Raleigh-Cary, N.C., and Austin-Round Rock, Texas, were the nation's fastest-growing metro areas, registering growth rates of 4.3 percent and 3.8 percent, respectively. Both high-tech centers, the two metros are also sites of major college campuses that helped cushion them.

    Dallas-Fort Worth and Houston registered the biggest numerical gains, the census figures show. Phoenix and Atlanta ranked third and fourth in growth, respectively, followed by Los Angeles, despite the housing slump.
    Hat tip to Jessie.
"...reports industrial employment in Houston ranks above that of New York, Chicago and Los Angeles.

According to the Register’s newest data, Houston is home to 3,957 manufacturers employing 221,697 workers, with employment unchanged over the past twelve months. Texas as a whole is home to 23,589 manufacturers employing 1,218,586 workers.

“Houston’s combination of low cost living, favorable business climate, educated work force and proximity to the oil industry have made it the choice of many manufacturers and other Fortune 500 companies,”

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Thursday, June 04, 2009

Job seekers heading to Texas

I wanted to blog on this Fort Worth Star-Telegram Sunday business feature before my trip, but ran out of time. The journalist interviewed me for the story and I have a couple of quotes. It's a long article with a lot of good stuff, so let's get right to the excerpts (highlights mine).
From the Midwest to the Pacific, job seekers are heading to Texas

'If you had to ride out this downturn, there is no better place than Texas. The declines here have been nothing compared to other states.’

Even in the midst of a recession, economists, demographers and relocation experts believe the Lone Star State is on the cusp of becoming The New California.

Or maybe it already is.

For people seeking economic opportunity, Texas is becoming what California has been since the Great Depression, says Los Angeles urbanist and author Joel Kotkin. Texas recently "ran the table" in a recent list of "Best Cities for Jobs" prepared by Kotkin for New Geography and Forbes. Austin, Houston, San Antonio, Fort Worth and Dallas were ranked as the top five large metro areas in the country to find a job. If that weren’t enough to get the moving van loaded, McAllen and Odessa top the mid-sized and small city categories, respectively. Among 333 metropolitan areas, Texas has a remarkable 20 in the top 100.

Relocation surveys show that Texas remains a top destination for people leaving other states. Its automobile registrations continue to climb, and the Texas housing market has avoided the double-digit declines other fast-growing states have seen. While the unemployment rate has risen in Texas, it’s nowhere near as high as most of the country, underscoring the state’s economic resiliency even as the downturn deals out its lumps.

Kotkin, a professor at Chapman University in Orange, Calif., who analyzed U.S. Labor Department statistics for his report, says Texas’ dominance at the top of the jobs list is unprecedented.

"Part of it is a function of the economic collapse of Florida, Phoenix and California. The collapse is still important in Texas, but Texas has had more balanced growth and that’s more sustainable," he said in a telephone interview while navigating an L.A. freeway.

"Part is the nature of Texas: People don’t move there for climate and scenery," Kotkin said. "They move to Texas for jobs and affordable housing. People make economic decisions to go to these places. They don’t go for perfect weather where you can surf one day and ski the next."


As the economy has soured, many people are moving to Texas for a new start.

In 2008 and the first quarter of 2009, 14.3 percent of the people leaving the once Golden State were bound for the Lone Star State, according to, which tracks moving trends. Other states with sizable outflows to Texas included Florida (7.9 percent), Illinois (4.7), Michigan (4.6) and New York (4.3).


Tory Gattis, who runs a software company and writes Houston Strategies, an urban issues blog, is convinced that Texas will be the "focal point" of the nation’s next historic migration trend. (referencing this post)

"During the Dust Bowl, during the Great Depression, California was the place to go. Texas is the place to go now," Gattis said. "Sure, we are clearly losing some jobs but people are still moving here. I can see it anecdotally in the license plates around town. I see a lot of Michigan plates, California license plates, I see them from all over."


"Why do people move? Generally, jobs," Gaines said. "Right now, Texas will probably be the only state in the Union that reports more jobs than the year before — by a total of close to 154,000 [in 2008]."Those numbers will be reduced this year. But if you are an entrepreneur or want to start a business, this is the best place to do it because of the pro-business attitude of the state."

Eventually, when distressed housing markets across the country stabilize, Gaines predicts that skittish homeowners will be weighing their options. In those places, "as soon as you can finally sell, you’re going to get the hell out of Dodge," Gaines said.

Jason Saving, a senior economist at the Federal Reserve Bank of Dallas, also believes that Texas has some "fundamental advantages" that are spurring growth, even in a recession.

First is a "very favorable business climate," and second is affordable real estate.

"These things make the state attractive to businesses and residents alike," Saving said. "I think that’s why, if you look at the migration data within the U.S., that you see so many people moving from other states to Texas."

Gattis says Texas’ cost of living is a key to its attractiveness.

"It’s not everything," he said, "but when you have more discretionary income you can buy a better house, a better car, you can spend it at restaurants. That’s income that leads to a better quality of life. "


"The real estate market here is stronger and more affordable," Mather said as movers were unloading the couple’s belongings. "You can buy a comparable house here for close to half the price what you can get on the West Coast."

Kotkin, the L.A. author, says Texas is benefitting by being in what he calls "the zone of sanity," a swath of the nation’s midsection where housing prices stayed stable.

The twin lures of jobs and affordable housing are important to young professionals planning to raise a family or start a business, he said.


Texas’ business climate of low taxes and a low regulatory burden draws companies and workers, Saving said.

"There is something inherently entrepreneurial about Texas. It’s the nature of the state from its formation, Texas was built by people who were looking to better themselves, and that has continued ever since," he said.

Kotkin says tight business regulation is hurting California. But not Texas. "Whether you are GOP or Democrat, you can’t imagine Texas becoming anti-business," he said.


The U.S. Census Bureau recently reported that because of the recession, Americans are moving at some of the lowest rates in 50 years.

But Saving, the Fed economist, believes people "will vote with their feet" and keep heading to Texas.

"Moving is costly, and it’s a hassle. It’s not something people want to do unless they see a better opportunity  . . . and looking long-term, I think it’s clear that Texas is a favorable place to be from an economic point of view."

Best cities for jobs

Texas dominated New Geography and Forbes’ annual list of best big cities for jobs in 2009.

1. Austin-Round Rock

2. Houston-Sugar Land-Baytown

3. San Antonio

4. Fort Worth-Arlington

5. Dallas-Plano-Irving

By the numbers

14.34: Of people leaving California in 2008 and the first quarter of 2009, the percentage that moved to Texas

$2,141: U-Haul rental from Los Angeles to Fort Worth

$557: U-Haul rental from Fort Worth to Los Angeles

17,962,300: Motor vehicles registered in Texas in 2000

21,185,173: Motor vehicles registered in Texas in 2008

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