A simple solution to help Houston traffic, our tax-debt-spend problem, HSR bankrupted Japan, Austin builds towards affordability, METRO comedy!
Just a few small items this week:
Charles Blain in City Journal: Saddled With Taxes and Debt - Houston-area leadership is losing touch with the fiscal restraint and pragmatism that made the city an engine of growth.
"I worried from afar that my hometown would meet the same fate as San Francisco, the poster child of the housing shortage and all its associated woes. I feared that Austin would become known as a playground for the rich, a city where displacement and mind-boggling home prices marred the natural beauty that once made it such a draw. In my hand-wringing, though, I'd overlooked one crucial detail: Texas is better at building homes than almost anywhere else in the country.”
There are differences between Austin (and Texas) and San Francisco that, if not changed will continue to make it possible to build in Austin (and Texas) and nearly impossible in San Francisco (and California). Unincorporated county territory in Texas is unzoned. That means that, barring environmental difficulties, developers and builders can build. By contrast, in the San Francisco metro, and virtually all of California, draconian state and local regulations make it very difficult to build on greenfield sites, where land prices would be much lower if the market were permitted to operate."
Caught my eye from Y-Combinator Demo day: XTraffic
What it does: Reduces congestion and accidents with smart traffic lights
Why it’s a fave: Controlling traffic lights with AI sounds like the perfect application of this technology. XTraffic says that it’s already doing it in several cities in Texas. I hope they make it to my town in California, too, because I sure am tired of waiting for the light to turn green when there are no other cars around.
"In other words, if we eliminated every passenger automobile in the U.S. in favor of a transit alternative and use completely unrealistic assumptions, the total estimated reduction would be barely out of the margin of error for total estimated GHG emissions. ...
I believe we need an efficient and effective transit system as part of the basic social safety net. Providing some mobility for those who cannot afford to own and operate their own vehicle and those who are physically not able to operate one is the right thing to do. It also helps the local economy by providing a way for employees to get to their jobs.
But transit does little to relieve traffic congestion and virtually nothing to improve air quality. We need to start having an honest conversation about the purpose of transit and what we can reasonably expect it to accomplish. And we need to stop lying to the public and voters about fanciful, non-existent benefits."
NYT: Olympics Precautions Failed to Halt Rail Sabotage. One of the issues I've pointed out in the HSR vs. planes debate is the near impossibility of securing hundreds of miles of HSR rail from sabotage or terrorism.
WSJ: The Smart, Cheap Fix for Slow, Dumb Traffic Lights - Most cities can’t afford smart traffic signals. Fortunately, data from new cars—and even drivers’ smartphones—can make old-fashioned traffic lights work a lot better. "the system yields a 30% reduction in stop-and-go traffic at intersections" Can we get this for Houston please?!?
NYT: Colorado’s Bold New Approach to Highways — Not Building Them. I really disagree with this. Studies have shown that highways are the great enabler of opportunity and upward social mobility for the working class to get access to better jobs and newer, more affordable, higher-quality housing in better school districts. Massive transit expansions, like LA, have not increased rideshare and don't work. Environmental solutions focused on reducing vehicle miles traveled (VMT) will be an economic disaster. Instead, gas stations should be required to charge at the pump for the necessary carbon capture to offset the gas, currently ~$1 per gallon.
The #1 way to revive urban cores, CA attempts the greatest white elephant project in history, Australia's home-building restrictions finally catch up with it, and more
Bill King: Harris County Grew By 1.2% In 2023, But Domestic Migration Continues Slide. The #1 change that could revive urban cores would be school choice vouchers. But in general the far suburbs definitely have a superior value proposition: less expensive newer homes in better school districts with lower taxes and less crime. More of their taxes go directly to services as well instead of public employee pensions and other long-term liabilities built up in the core. That is very hard to compete with.
Chronicle: "The trend of converting old offices and hotels into new spaces is gaining momentum in Houston largely due to the city's lack of zoning laws, which makes it easier for real estate developers to repurpose the land and buildings. The concept of adaptive reuse, which involves repurposing an existing building for a use other than its original purpose, is a contemporary approach to land utilization that has the potential to drastically alter the appearance of Houston in the years to come." (hat tip to Rich)
"Magical thinking caused politicians and the media to back this boondoggle in the first place, and more than 15 years later, incredibly, the spell still hasn't broken."
"The plan admits that the agency expects to spend more on the 171 miles between Merced and Bakersfield than the $33 billion it had projected the entire 463-mile project would cost when voters approved it in 2008. ...
Meanwhile, in light of the pandemic, the agency has modestly reduced its ridership expectations from 35 million trips per year to 27.6 million. This is still more unrealistic than the cost projections. In 2019, Amtrak’s high-speed Acela carried less than 3.6 million riders in a corridor with a higher population than the LA-SF corridor. While California is promising higher speeds than the Acela, the Northeast Corridor has the advantage of really being two corridors anchored by New York, America’s largest city. The California corridor has no similar mid-point metropolis; the Fresno urban area has fewer than 725,000 residents compared with New York’s 19.5 million. Incidentally, to the extent that the 27.6 million turns out to be too high, the supposed savings from not having to expand road and airline capacities dwindles."
Happy new year everyone! This week we have another excellent analytical guest post from Oscar Slotboom, author of Houston Freeways (reposted from HAIF here). TL;DR: if it was marginal with 2% interest rates before pandemic inflation, it is now *way* underwater economically at current construction costs and interest rates!
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On November 17, Texas Central provided the H-GAC TPC a status update about the high-speed rail project between Houston and Dallas. There was no "new" news, but a few tidbits of interest.
* The official status (previously known) is that Texas Central is cooperating with Amtrak "seeking opportunities to advance planning and analysis work associated with the proposed Dallas-Houston 205 mph high-speed rail project to further determine its viability." Texas Central and Amtrak are "evaluating partnerships to further study and potentially advance the project". Transit industry veteran Andy Byford recently joined Amtrak to coordinate high-speed rail initiatives for Amtrak.
* The Texas Central representative mentioned the previously disclosed estimated cost of $30 billion. A TPC member mentioned $40 billion.
* The Texas Central representative says there are 16 million trips per year between Houston and Dallas. (43,800 per day)
* Texas Central has 6 employees and a new CEO Michael Bowie
* There was discussion of who actually owns Texas Central now. The Texas Central representative was vague, but said that FTI consulting group now owns it. According to the FTI website, they seem to do anything and everything, and are not focused on infrastructure.
* There was discussion of the 2019 H-GAC MOU (memorandum or understanding) between H-GAC and Texas Central. The MOU mentions no public funding, and a TPC member mentioned it is obsolete and needs to be reviewed.
* There was discussion about the Environmental Impact Statement, and if it conforms to new flood standards in the Houston area.
* The Texas Central representative said that Amtrak will complete its "due diligence" in about 6 months, and we can expect some more information in that time frame.
In Dallas-Fort Worth, NCTCOG is continuing with its study of the section between Dallas and Fort Worth, and a newsletter was just released.
My observations
* The $30 billion cost number is more than two years old. Highway construction costs are up 56% in the last two years. I think 40+ billion is probably more realistic. In my opinion, an updated cost estimate should be Amtrak's top priority. If they don't get a new cost estimate, then they won't have any credibility because they can't do any analysis without the cost number.
* The entire project was contingent on a very low interest rate. With 30-year treasury bonds at 4.6%, it seems to me that project bonds would need to be at least 7% to get investors. If the project is $40 billion, that's $2.8 billion in interest per year.
* When Texas Central started, the cost was estimated at $12 billion and interest rates were very low. Now it is probably 40+ billion and interest rates are very high. It seems to me that the only conclusion Amtrak's "due diligence" can reach is that this project can only be done with government funding.
* Interstate 45 near Centerville has a traffic count of 39,000 to 41,000 per day. So the Texas Central number of 43,000 per day is realistic. The question is, what percent of those trips could become train trips?
* Just for illustration, let's say 50% of the trips switch to rail. (Of course it will be much less than 50%, but this is an illustrative calculation). $2,800 million in interest divided by 8 million = $350 interest cost for every boarding! Obviously this cannot be a private project at $40 billion construction expense and 7% interest. There would need to be some kind of government-supplied below-market interest rate. Even at 2% interest, the interest cost per boarding is still $100 for the hypothetical 50% traffic capture.
* Andy Byford at Amtrak really has only 2 choices for true high-speed rail in the U.S.: California and Texas. (It will be impossible to build a new high-speed right-of-way in the Northeast corridor.)
* The financial status of the federal government is shockingly bad. There's no recession or emergency or military conflict, but the budget deficit was $1.7 trillion in the recent fiscal year, which is 6.3% of GDP. Interest cost was $659 billion. At some point (probably sooner rather than later), the federal government will need to drastically curtail free money giveaways and wasteful spending.
Matthew Yglesias: American transit agencies should prioritize ridership over other goals - It's the only way to get costs under control. Hear, hear METRO! This might sound like "stating the obvious" to the lay reader, but transit agencies get pulled into all sorts of alternative goals from prestige rail and BRT projects to geographic coverage, regardless of whether or not ridership justifies the cost. Hat tip to the anonymous commenter that sent me this.
"Much of the national media, in chorus with urban political and economic leaders, have been pushing these train-focused approaches since the days of Jimmy Carter. The stated aim is usually to move Americans away from their supposedly evil and pernicious love of the private automobile. Americans drive not because they irrationally love cars—although some do—but because it is simply by far the best way to get around.
We know this because for the most part, train-heavy investments have reaped little in terms of riders and virtually no reduction in auto usage. Indeed, even before the pandemic, transit ridership, despite the creation of new lines, was sagging. Since then transit has continued and accelerated its decline. By the end of 2022, the transit market share had fallen 50%. Today, despite the end of the pandemic, that number has barely moved at all. It is into this fading market share that the current administration and much of the political class now wants to throw its money."
Speaking of rail follies, I really wanted the private Brightline train from Vegas to outside LA to work, but this piece makes a devastating economic case. Bottom line: travelers will be able to fly from SoCal airports closer to where they live (than the Victorville end-station) for the same price or cheaper, or if they drive it will only take a half-hour longer than the train while saving the train ticket and taxis/Ubers getting around Vegas. Who's going to ride it given those alternatives?
“The country can no longer afford this form of “shadow subsidy,” Smith argues. If America continues on this path, standing by the “build-nothing” mindset, then the middle class will slip into “genteel poverty” and America will lose its leading position in the global economy, he claimed indirectly, albeit poetically: “Someone else will build the future on the bones of our civilization.”
He urged America to slash the “thicket of red tape” around development, and it seems the world’s richest man agrees.”
"If 15-minute cities were so great, we would still be living in them. But as soon as people got cars, they moved out of them and used their new-found mobility to get better housing, better jobs, and a wider variety of low-cost consumer goods.
Every city in America is a 15-minute city if you take automobiles into account. Thanks to automobiles, the typical U.S. urban resident lives within 15 minutes of more than 100,000 jobs, several different supermarkets that compete hard for their business, one or two shopping malls, parks and other recreation facilities, a variety of health care facilities, friends and relatives, and many other potential destinations and activities. Even the densest cities in the world can’t provide that kind of variety and opportunity within 15 minutes on foot."
A Spanish news site in Madrid, “La Informacion,” reported that the entire management team of Texas Central has departed, and the project has entered “a hibernation phase in search for financing.” ...
“The unorthodox LinkedIn announcement speaks to the company’s lack of staff, lack of resources, and lack of leadership, with no successful path forward. No money, no permits, no progress…. It is abundantly clear that this project is more than dead in the water, especially when the captain jumps ship,” he added. ...
Their press release included hints that the agreement between Japan and Texas Central may not be as solid as once accepted.
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“Texas high-speed rail is collapsing before our eyes,” Rep. Kevin Brady, R-The Woodlands, a longtime skeptic of the plan, said in a social media post. “Today, with no leadership, no funding, no permits and no Washington bail-out from taxpayers, this project is dead.” ...
Texas Central, meanwhile, has not paid its property taxes for land it already purchased, something critics in rural areas opposed to the train have said for months.
“The math never made sense,” Waller County Judge Trey Duhon said Tuesday morning. “It did not cash flow at $12 billion, much less the current price tag of $30 billion, that was before the recent inflation and escalation of costs.”
Even supporters in recent weeks have started to memorialize rather than champion the project. During his annual state of transportation remarks in May, Houston Mayor Sylvester Turner — who signed an agreement with Texas Central to support development of a train station at Loop 610 and Hempstead — lamented the project’s fate.
“I was hoping before I left office that at least a shovel would have been somewhere,” Turner said, joking he might build his own train. “Hopefully, it can be revitalized.”
The economics were only ever possible if Japan was willing to subsidize it as a jobs program and to show off their trains in America (hoping for future sales). The economics never made sense: to repay $30 billion in loans (far higher now with inflation), 6m annual riders would have to pay $255 a ticket on top of whatever it costs to operate the trains! Compare that to typical Dallas-Houston airfares of around $100, and the math does not look good at all...
Sadly, I think the biggest loser here is Texas A&M and College Station, which would have been boosted enormously with the only intermediate stop and fast access to both Houston and DFW.
I wonder how much the rise of remote work/Zoom, luxury bus services, and autonomous vehicle tech also factored into investor resistance? Businesspeople just don't need to travel back and forth between Houston and Dallas like they used to, and when they do there are some very competitive options. Newer cars almost drive themselves on road trips while also getting you to your final destination and giving you local transportation, neither of which the train does.
My own prediction is that in the next decade there will be dedicated barrier-separated MaX lanes added to I45 that will accommodate very high-speed autonomous buses and other vehicles, probably north of 100+mph. Not as nice or fast as a 200+mph train, but an order of magnitude cheaper and with the flexibility of going between any two destinations rather than fixed stations.
If there is a silver lining, it is this: far better for it to die now completely unbuilt than to go bankrupt with the tracks half built or even fully built. What a white elephant scar on the state we'd have then, essentially forcing some sort of taxpayer bailout. I'm convinced that's the California strategy: build an absurdly incomplete line in the central valley (imagine if Texas built a Huntsville to Corsicana line!), and then point out how silly it is to not complete the SF and LA ends until somebody comes up with the funding. Let's just hope it's the California taxpayers that end up on the hook for that boondoggle rather than all of us federal taxpayers...
Preventing big infrastructure failures, mass migration to Texas, the Ion, costs spiral with Austin growth, and more
Lots of backlogged smaller items to clear out this week, especially from my Twitter feed (which you may want to follow if you're a Twitter user).
NYT: Years of Delays, Billions in Overruns: The Dismal History of Big Infrastructure - The nation’s most ambitious engineering projects are mired in postponements and skyrocketing costs. Delivering $1.2 trillion in new infrastructure will be tough. America can't do big infrastructure. Cost estimates are “systematically and significantly deceptive.” The solution is to require private insurance to sign off on budgets and cover cost+schedule overruns. When private contractors and insurance take the risk, these things will get done right, or - more likely - not done at all when they don't make sense! Alternatively, maybe we need a neutral agency similar to the Congressional budget office that would score projects and compare them to the actuals on other similar projects and then come back with a real estimate of cost and time BEFORE it goes through the approval process. Data points and excerpts:
Honolulu light rail from $4B to $11.4B
CA HSR from $33B to $100B
NYC East Side Access extension for LIRR from $2.2B to $11.1B
"Honolulu’s tribulations are far from a lone cautionary tale. To the contrary, they signal the kind of cost overruns, engineering challenges and political obstacles that have made it all but impossible to complete a major, multibillion-dollar infrastructure project in the United States on budget and on schedule over the past decade. ...
Bent Flyvbjerg, a professor at the University of Oxford who has studied scores of projects around the world, found that 92 percent of them overran their original cost and schedule estimates, often by large margins — in part, he said, because cost estimates are “systematically and significantly deceptive.” ...
In a candid admission of how the political world operates, Willie Brown, the former mayor of San Francisco, once dismissed cost overruns on a transportation hub intended for the bullet train.
“In the world of civic projects, the first budget is really just a down payment,” he wrote in a guest newspaper column in 2013. “If people knew the real cost from the start, nothing would ever be approved. The idea is to get going. Start digging a hole and make it so big there’s no alternative to coming up with the money to fill it in.”"
“People say over and over again, ‘Oh, the millennials are going to stay in the cities.’ They are not,” said Doug Shepherd, a real-estate broker based in the city of Riverside. …
“California is changing because of a desire of many millions of people to have something that looks like the conventional, traditional California Dream: a house on a lot in a neighborhood of similar houses on lots,” Mr. Waldie said. …
Last year, a half-dozen families left Eastvale for Montgomery County, Texas, a suburb of Houston near lakes and resorts.
Michele Nissen, a former city manager of Eastvale, was among them. She sold her house in June for $910,000, 3½ times what she paid for it in 2001.
Now, she and her husband own a 3,500-square-foot, four-bedroom home surrounded by dozens of trees and down the street from Lake Conroe. They paid $532,500."
"Texas, now, feels a bit like California did when I first moved here in the late 1980s — a thriving, dynamic place where it doesn’t take a lot to establish a good life. For many people, that’s more than enough."
NYT: How Austin Became One of the Least Affordable Cities in America - The capital of Texas has long been an attractive place to call home. But with an average of 180 new residents a day arriving, its popularity has created a brewing housing crisis that is reshaping the city.
"The Austin metropolitan area is on track to become by year’s end the least affordable major metro region for homebuyers outside of California. It has already surpassed hot markets in Boston, Miami and New York City."
WSJ: Samsung to Choose Taylor, Texas, for $17 Billion Chip-Making Factory. Toll Road 130 is becoming the new tech corridor of east Austin with Samsung and Tesla. I35 and Mopac are too congested, so companies go east. Easy straight shot to the airport, which I'm sure will be shipping a lot of these new chips.
"In 1999, Houston enacted new land-use regs that set in motion two decades of the city’s expansion. Developers prioritized multifamily townhouses and encouraged migration from other states and countries. These changes led to a 21% increase in developed land."
Carbon capture subscriptions, climate entrepreneurs, CA moves to HTX more than Austin, and more
Big idea of the week on Houston adapting to climate change: what if automakers sold a subscription with their cars that reported back monthly gas usage and sequestered that much carbon? Great new product for oil & gas companies to sell automakers...
Moving on to some smaller items to catch up on this week:
“Every day I meet another oil and gas guy who is now a climate entrepreneur. I think there is going to be an explosion of clean energy activity out of the O&G sector, and we’ll be stunned in the next 5-7 years by how many of these problems they handle.”
City Journal: Lone Star Waste - Two Texas transit projects embrace extravagance. Politically connected groups extract surplus from Austin LRT and Texas Central HSR.
City Journal: A Bridge Too Far - Pete Buttigieg’s remarks on Robert Moses’s “racist bridges” flatten history in service to an ideological fad. Hat tip to Jay.
WSJ: How Working From Home Could Change Where Innovation Happens - For decades, ‘superstar cities’ have been attracting talent and money. But thanks to remote work, their status is likely to change in unexpected ways, bringing tech expertise to places that have long tried to attract it. Profiles a tech exec moving from San Francisco to Houston/Katy for a better quality of life.
Aaron Renn, Governing: The Poor Places That Made Our Cities Richer - Dense, often dilapidated neighborhoods were routes to prosperity for an earlier generation of low-income urbanites. Their destruction has hurt us all. Key excerpt:
"This was cheap housing, but that didn’t just mean cheaper rents. It meant the opportunity for ownership. A key characteristic of many of these neighborhoods was what Husock labels “owner presence.” Even in crowded neighborhoods, apartment buildings like the Boston triple-decker or Chicago two-flats allowed residents to buy the building and live in one unit, while renting out the other to earn income. A surprisingly high share of people who rented in these places lived in buildings where the owner was also living. The owners accumulated wealth in the form of equity in their real estate that was a key to their ability to move up economically.
One common factor in these places was a tolerance for housing that reformers judged substandard. Tenements on the Lower East Side, for example, often lacked baths. Levittown houses were tiny, identical boxes on concrete slabs. But the policy response to the legitimate problems of some of these neighborhoods was a cure often worse than the disease. Mass slum clearance and the construction of huge high-rise public housing projects are the most infamous examples.
The replacement of “slum” housing with public housing was not only a quality-of-life disaster, it also locked its residents into permanent rentership. Detroit’s Black Bottom neighborhood may have been segregated, but it gave Black residents the opportunity to own real estate and own and operate businesses. In public housing, Black residents could do neither, cutting off critical avenues of wealth creation."
Political guide for moving to Texas (America's Future), Houston no-zoning video, TX HSR re-route? population growth and building permits, airport wins
Continuing from last week on catch-up items...
From Twitter: My oversimplified political guide for moving to Texas: progressives to Austin, conservatives to DFW, and pragmatic centrists and independents to Houston.
"But if you’re really looking for a bellwether state that offers a glimpse into the country’s economic future and engines of growth as well as its political fault lines in the long run, it’s not California. It’s Texas."
"For every new white resident that Texas welcomed over the past decade, there have been three Black residents, three Asians, three people with multiracial backgrounds and 11 Hispanics. Dallas-Fort Worth, Austin and Houston also have large L.G.B.T.Q. populations."
City Beautiful covers the details of Houston's lack of zoning in this 10 min video. Mostly pretty good, but I think he misses some of the densification and affordability benefits. He talks about affordability, but only on a metro level, ignoring how we're able to increase access and affordability for the most desirable core neighborhoods through new townhomes, apartments, and residential towers.
Passing this great graph along from Scott Beyer at the Market Urbanism Report: "A decade after the recession, and peak permits are still down in almost every major metro except in one state. Any mystery why this state remains affordable even as millions of people move there?" I'm impressed to see we're holding steady vs. our crazy-high peak building during a previous oil boom.
"Data from the 2020 Census released August 12 shows Houston at No. 5 (20.3 percent) among the country's 50 largest metro areas in the biggest jump in population from 2010 to 2020.
Houston maintains its position at No. 5 (7,122,240 residents), the Census data notes. For some perspective, Houston was No. 8 (4,944,332) in the 2010 Census.
The Bayou City is also one of the three U.S. metro areas to gain at least 1.2 million residents over the decade. (Dallas-Fort Worth and New York are the others.)"
One more lead item so the blog lives up to its name this week ;-) Assuming the River Oaks Theater won't be taken over by a live theater group (really the best option), my suggested best realistic option in a streaming world: since Weingarten wants another high-rise there, preserve and repurpose it as a cool public lobby and coffee bar, marquee and all. Sure it's sad to lose the actual movie theater, but does that have any chance when you can stream pretty much any independent film at home any time?
Moving on to lots of backlogged items to catch up on this week:
Dallas insanity: $1.7 billion for 2.4 miles of mostly subway. That's $708 million per mile! Glad Houston METRO is being a lot more pragmatic and prudent with their resources than this. Hat tip to Oscar.
Antiplanner on Reinventing the Jetliner (i.e. high speed rail) with some compelling opening paragraphs:
"Suppose I told you that I have reinvented the jet airliners that carried Americans more than 750 billion passenger miles–about 10 percent of all passenger travel–in 2019. My reinvented jet will go less than half as fast as existing jets. It will cost six times as much to operate, per passenger mile, as existing jets. Unlike existing jets, which can go anywhere there is air, the reinvented jet will only be able to go on a limited number of fixed routes.
This wondrous invention will become a reality if the federal government spends a mere one, two, or possibly three or four trillion dollars. Does that sound like a good deal? No? Yet that is exactly what high-speed rail advocates are proposing. Some proposals, such as the Green New Deal, even call for almost completely replacing low-cost, fast jet airliners with high-cost, relatively slow trains."
Now on an opportunity cost basis, just imagine if those trillions went directly into carbon reduction instead of white elephant high-speed rail lines??
"Less than 50 percent of people who worked in Manhattan offices in 2019 will be working from those offices in the coming years, according to a recent survey by the Partnership for New York City."
"One thing I always admired about Houston is how confidently immigrants claim public space for themselves—how working families picnic in Hermann Park or elated quinceañeras roam the Galleria with their brightly attired entourages and pose for portraits before the Waterwall."
Which relates to this good news for Houston: "Among his clients, more than half now cite diversity as a top criterion when choosing new locations"
I keep reading how Houston is losing its affordability and median home prices have gone up 34% since 2010, but isn't that just 3% per year (compounded), slightly above inflation?
Joel Kotkin: The death of the American city - Rising crime and a pandemic-inspired exodus are powering urban decay. Great quote:
"Cities do not thrive by having more cutting-edge coffee shops, trendy restaurants and edgy boutiques; they need safe streets, decent schools and jobs for middle and working-class families."
"Houston—whose median home values are only 76% of the national average—stands out. Since 2010, it has had America’s 2nd-highest net population growth but is #1 in permits issued. This has made it an affordable city even in core locations; 1-bedroom, 1-bath downtown condo units can be found for under $200,000.
How does Houston remain so elastic? Less regulation. The city famously lacks a zoning code, and many of its suburbs are also very pro-growth. This means it has fewer legal barriers to more housing than inelastic coastal metros, where proposed zoning changes can trigger lengthy and contentious review processes."
"Similar proposals show that the basic idea of hyperlocal zoning has precedent. Houston has been able to remain a city without zoning laws in part because residents had options in the form of deed restrictions, where neighbors could choose their own rules at the hyperlocal level. In 1998, policymakers were able to reduce the city’s minimum lot sizes by allowing residents on individual streets and blocks to opt out of that change, a move which helped overcome local resistance because residents felt they had control over the risks. The result? Some 25,000 more housing units, including denser townhomes, built close to job centers and transit, many of which Houstonians would not have seen built otherwise."
WSJ: How Remote Work Is Reshaping America’s Urban Geography (archive link) - Smaller cities and communities are turning into ‘Zoom towns’ and competing with coastal hubs as workers move to find more space and lower costs. Basically, Richard Florida articulates Creative Class 2.0, which is the same as 1.0 but for remote workers outside superstar cities. Key excerpts:
Eye-opening stat: "remote workers are often more efficient than their in-office counterparts. They don’t waste hours on mind-numbing commutes, and they aren’t distracted by unnecessary meetings and water-cooler chitchat. The productivity boost to the U.S. economy from remote work could be as high as 2.5%, according to research by Stanford University economist Nick Bloom and colleagues."
Conclusion: "The remote-work revolution promises to change the way that Americans work and live. It will allow smaller cities, suburbs and rural areas to compete with the superstar cities on the basis of price and amenities. It will shift the main thrust of economic development from paying incentives to big employers to investing and building up a community’s quality of life. As communities attract more remote workers, their tax bases will grow, allowing them to improve schools and public services, benefiting everyone. Eventually, companies will come too. That holds out the possibility of a better, more virtuous circle of economic development."
Finally, a couple items on Houston as a startup hub. First, we rank #4 on this list for annual startup formations and jobs created by startups (#10 for formation rate), behind DFW but - surprisingly - ahead of Austin! Second, the excellent Texas Startup Manifesto 2.0 is out (highly recommended), arguing for treating the Texas Triangle as one giant startup ecosystem (absolutely), with this excerpt on Houston:
"Houston (East and Gulf Coast) is the fourth largest, and the seventh most diverse city in the US. It’s the energy capital of the world and is home to the Texas Medical Center (TMC), the world’s largest concentration of healthcare delivery and research institutions; to the NASA Johnson Space Center, a hub for cutting-edge human space flight research and astronaut training; to the number one seaport in the nation for waterborne tonnage, for foreign waterborne tonnage, and for vessel transits. Houston is an international city — a seaport, a spaceport, a “health-port”, and an “energy-port.” As a result, Houston has a diverse, high-tech industry ecosystem, and is increasingly an industry destination, serving as the home to 22 Fortune 500 company headquarters (with Hewlett-Packard Enterprise becoming the latest addition)."
"I think oil and gas is going to be with us a long time. And Houston has a comparative advantage against every other city in the world.
If you get beyond the rhetoric about the energy transition and projections, what is it really about? It’s about infrastructure. It’s about an investment. It’s about technology. And it’s about scale. And those are all things that the energy industry is good at doing. So I think that Houston and the oil and gas companies here will be very much at the center of that. We’re starting from a point where 84 percent of the world’s energy comes from fossil fuels today. So you’re talking about a huge infrastructure of investment and embedded activity that just doesn’t change overnight. If you’re going to power what is an $87 trillion economy that’s going to be a $100 trillion global economy, you’re going to need a lot of engineering and a lot of technology and a lot of equipment. And that’s what Houston and energy companies bring to the table." ...
"...if you did have big restrictions on our domestic oil industry, it would simply mean that we would import more oil. That’s because there’s still 280 million cars in the United States, almost all of which run on petroleum."
Yet another reason to support an OPEC tariff over a fracking ban!
"Americans generally don’t give much thought to energy policy, except when they stop at the local gas station for a fill-up. But if state and federal leaders who want to ban fracking and “transition” away from oil prevail, that complacency will change quickly.
You may not think about energy policy, but it thinks about you. Energy is the foundation of society. Everything—food, clothing, shelter, your iPhone, you name it—requires energy to produce. When it costs more to supply that energy, the cost of everything else increases. The OPEC oil embargoes in the 1970s, for example, ushered in an era of double-digit inflation."
“...the most dynamic cities have been like Tokyo in the post-war decades, in a state of restless metamorphosis.” He later adds that “messiness is something to be embraced, especially for a fast-growing city: it is a dynamic feature of urban development.”
Remote work will increase migration in the U.S. Between 14 and 23 million Americans are planning to relocate as a result of businesses’ increasing acceptance of remote work. As a result, near-term migration rates could be three to four times what they normally are.
Major cities will see the biggest out-migration. 20.6 percent of those planning to move are in a major city.
People are seeking less-expensive housing. More than half (52.5 percent) of those planning to move are seeking a house significantly more affordable than their current home.
People are moving beyond regular commute distances. 54.7 percent of planned moves are to locations more than two hours away from their current location, which is beyond most people’s tolerance for daily commuting.
The highest-priced housing markets are taking the biggest hits. Rental data from apartments.com shows that the top 10 percent most-expensive markets are losing tenants at a much greater rate than markets in the bottom 10 percent.
"Even if Texas Central could manage to attract 6 million passengers a year, the annual payment on a $20 billion loan at 3 percent interest over 30 years is just over $1 billion. That means it would have to collect nearly $170 per passenger above its operating costs in order to repay loans or give funders a return on their investments. Since airfares are already far lower than that, I don’t see any way for this to ever happen."
“1,545 people per day settled in Texas last year, with Harris County seeing the greatest influx from out of state than any other region,” according to Yardi Systems."
WSJ published a chart on housing elasticity of different metros, and how it affects home prices. No surprise: the more elastic a metro, the more affordable. Houston looks pretty great here, with healthy growth both in house prices and units. High demand and we're building for it. Better price growth vs. Dallas because our urban core is more vibrant/compelling, IMHO (like Austin).
"The new code is very lean—based on the rural-to-urban Transect, it does not regulate uses, only nuisances. The thinking is that if the use creates no problem, why regulate it? There are no minimum lot dimensions or parking requirements. Shared parking is encouraged. Every lot is automatically allowed to have two accessory units. So, rather than the continuing the single-family zoning that is fiscally unsustainable as a dominant pattern, every lot can have three units. "
"California Governor Gavin Newsom was dismissive of Texas's claims, though. “They’re making false claims of being able to deliver electricity 24/7,” Newsom said, “but it just can’t be done.” Newsom was also dismissive of the Lone Star State's other claims, such as affordable housing, plenty of water, cheap gas, plastic straws, and not constantly being on fire. "
HTX tops for millennials, startups, and middle-class home affordability; Houspitality support, highway vs. rail cost-benefit
So a sad week here at Houston Strategies: I have a draft post where I keep ideas for future posts. It had gotten quite long over the last 14 years, with tons of good thoughts and links whenever I had time to get to them. Well, that all came to a crashing end last week when I discovered a Blogger quirk: if you open a post, paste in some content, realize it's not formatted right and accidentally hit Undo twice, it *wipes out the entire post* then auto-saves the blank version (and unlike Google Docs, Blogger does not keep a version history of posts). Then I unwisely compounded the error trying to close the browser tab before the auto-save instead of just hitting the redo button. Regardless, it's all gone now - 14 years of potential post ideas... 😳😢
Moving on to this week's items... lots of kudos for Houston this week!
"The region also has a reputation for welcoming newcomers, whether they’re from New York or New Zealand...a global city, with 90 consulates, two international airports, the second busiest seaport in the nation, and nearly 1,000 foreign-owned companies with HTX ops"
"Houston ranked among the top three cities in several specific areas, including diversity, ease of meeting new people, fair income taxes, everyday expenses, salary potential and amenities for children."
More details here, including some cool comparative graphs (hat tip to George). Houston is a pretty dominant #1, notably ahead of #2 Atlanta and #3 Dallas in the overall value graph (also notably ahead of #5 Austin!).
"In 2004, Denver-area voters approved a sale tax increase to pay for “FasTracks,” a plan to build 119 miles of rail transit lines in the metropolitan area. In 2008, California voters approved the sale of bonds to pay for the construction of a 520-mile high-speed rail line between Los Angeles/Anaheim and San Francisco/San Jose. FasTracks is within a metropolitan area and high-speed rail is supposed to connect several metropolitan areas, yet there are a lot of similarities between these two projects.
Both rely on technologies that were rendered obsolete years before they received voter approval. The agencies sponsoring both projects ignored early warning signals that the projects were not cost effective. Both had large cost overruns. Advocates of both lied to voters about the benefits and costs of the projects. Due to poor planning, both projects remain incomplete. Despite the failure of the projects to date, both have adherents who hope to complete them."
LA's costly transit failure, tech founder picks Houston over Austin, Houston is a food lover's paradise, and more
This week's items:
Our headline featured news item of the week: LA spends $20 billion on rail transit (along with a supporting 400% sales tax increase!) and gets a 42% ridership *decline* for the cost and trouble (!!). Are you learning this lesson, METRO?...
A great quote from a great Chronicle interview with hometown tech entrepreneur Matt Mullenweg of WordPress:
"Q. Houston has made a big push lately - really, yet another push - to become more attractive to start ups and technology businesses. What do you think of that effort?
A. You know I've been all over the world I think Houston is a really special city. It's a great place to live. It's a great place to raise a family. And I think that is important. If you look at the places that people are starting to flock to now - entrepreneurs are fleeing San Francisco and the Bay Area there - they're going to places the great quality of life. And I would put Houston above Austin there.
Houston’s a much more dynamic city. And now I think we have better food, better arts, better music. Austin is great but I think Houston is under-appreciated. And personally, I choose it."
"For a number of reasons — Houston’s position between Gulf seafood and Texas produce, its long history of overlapping immigrant cultures, and an ever-expanding vastness that has enabled those migrant cultures to settle and thrive — the city has one of the most exciting and undiscovered food cultures in the country. In a state of old traditions, Houston is a city of newcomers. It’s also now the most diverse metropolitan area in the United States.
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From the looks of Houston — its vast, featureless expanse pockmarked by potholes and parking lots — it’d be easy to mistake it for a whole lot of nothing. But Space City turns out to be a universe unto itself, and the families who have settled here are serving daily lessons in how a city of the future might look — and taste."
Fixing Houston's branding, hail-mary save for CA HSR, cautionary Chicago, learning from OKC, and more
A random thought before getting to this week's items: you know what might save the California high-speed rail white elephant recently dramatically downsized by the governor? Uber drone rides from the SF and LA metros to the new Merced and Bakersfield endpoints, respectively (ideally extended to be a bit closer, maybe Pleasanton and Palmdale). I know it sounds a little crazy, but they might be closer to reality than you think, and the total price and travel time could be very competitive with airports if neither your origin nor destination are near airports. Doesn't mean this thing hasn't been a gigantic waste of taxpayer money, but this solution might scrape together some value out of the boondoggle...
Moving on to this week's items:
Let's take a moment to be very, very thankful we're not the fiscal wreck of Chicago, and make a commitment that we never want to let Houston fall into the same hole. Some would argue we've already started down the same slippery slope :-(
"Chicagoans are suffocating under unfunded debt liabilities from every level of government totaling $130 billion."
That's $48k of unfunded debt per person in the city, or almost $200k per household of four!! How many families would buy a house in Chicago knowing it came with an extra $200k debt attached to it?!
"It’s curious that while every company tries its hardest to convince you of how much different and better it is than every other company in its industry, every city tries its hardest to convince you it’s exactly the same as every other city that’s conventionally considered cool.
Look at any piece of city marketing material, from promo videos to airline magazine ad inserts. It’s amazing how so many of them rely on the same basic ingredients: hipster coffee shops, microbreweries, bike lanes, creative-class members, startups, intimations of a fashion scene, farm-to-table restaurants, new downtown streetcars, etc.
These are all good things, mind you: things cities should be happy to have. Some of them may even be modern necessities. But you can’t help but notice how few unique things about these cities manage to come through. A video from the Greater Houston Partnership, for example, shows outdoor art, bicyclists, a live music performance, and a light-rail train going by—but nothing about oil or energy. Except for some references to the space program, little else about the incredible uniqueness of Houston comes through.
...
Atlanta and Houston are major cities with strong identities. They are much more than a collection of generic urban elements. Why cities with great identities and heritages of their own so seldom lead with them is something of a mystery."
"There is reason to take pause at such public works programs, and the general idea of attracting outside capital through industrial policy. It can lead to misappropriated resources, which in other cities have, in fact, included convention centers and streetcars. But there’s something reassuring about the way Oklahoma City does MAPS. The projects, for whatever one may think of them, are at least chosen and funded by residents themselves. And they are delivered low-cost and debt-free, providing more bang for the buck."
Solving the Corps' reservoir dirt problem, HTX vs. NYC apts, HTX > Chicago, transit's expensive demise, Houston's hilarious "end of the universe", and more
Before jumping into this week's items, an idea: The Army Corps of Engineers wants to dig out Addicks and Barker reservoirs deeper so they can hold more water, but they're not sure what to do with the dirt. How about using it to elevate the new high-speed rail line to Dallas, which has to be grade-separated anyway? Please pass along if you know anyone with the Corps or Texas Central. Idea credit to Patrick.
NYT: Cars are ruining our cities. Typical elitist urbanist arguments. They’re rich enough and happy to live in density in the core and don’t understand why suburban families don’t do the same. My counter on the induced demand argument is that wider freeways are moving more people where they wanted to go, even if at the same speeds. The government invested in infrastructure and it was popular – isn’t that good? The analogy I use is adding a runway at an airport: if it filled up with new flights, is that somehow bad? Hat tip to Jay.
"Fares paid by riders cover only about a quarter of these costs. That means taxpayers who do not ride transit are spending over $50 billion per year to subsidize those who do. In 2017, trips on transit were less than 1% of the total daily trips taken by Americans. That works out to the 99% of Americans that don't use transit paying about $160 per year for the 1% that do. The value to the 1% who ride transit is about $14,000 per year." ... But it is clear that we are in the midst of a technological revolution in transportation. The most important thing is that we don't spend a lot of money on inflexible infrastructure. I suspect that in the not too distant future, we are going to look back on our light rail experiment in Houston as the City's worst ever white elephant."
Houston has more people employed in city limits than Chicago! Hat tip and graphics credit to George. Click to enlarge.
"For about a decade, there’s been a growing bipartisan consensus that America’s cities need liberalization. This consensus formed because of the problems our cities now face thanks to government control. Urban housing supply has been artificially limited by regulations, causing price inflation; publicly-run transportation systems create gridlock and delay; and other services are riddled with patronage."
"No city in America runs on anything resembling a free-market model. But Texas' major cities are probably the closest thing, with vast improvements to their economies and living standards to show for it. Their looser land-use laws mean that housing supply grows quickly, stabilizing prices. Their lighter tax and regulatory structure helps businesses locate there and grow. And—shenanigans from the governor's office notwithstanding—their openness to immigrants means they have cheap and robust labor forces.
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Another thing Texas' toll roads have accomplished is greater mobility. The Dallas and Houston metros, in particular, have been the nation’s two fastest-growing metros by net population since 2010. But their congestion levels are not as bad as similar-size metros, according to traffic studies by Inrix and TomTom. This is because they've expanded highway capacity to accommodate population growth, acknowledging that the laws of supply and demand apply to roads like with anything else. Perhaps more crucially, though, they’ve priced the use of these roads, to avoid a tragedy of the commons. And it has worked at creating many excellent, self-funded roads: as I can attest from having lived last summer in Houston, Dallas and Austin, toll roads proliferate throughout each metro, are free-flowing, and charge users electronically, so that they're not having to stop and pay at booths."
While I find this piece from Richard Florida insightful (arguing that land-use restrictions and high housing prices on the coasts helped keep some talent and jobs in the rust belt cities that otherwise would have left), I don't buy the high-speed rail argument for increasing the labor pool that can access a metro area. Given the pricing of HSR tickets, it's highly unlikely to me that very many people are going to be willing to spend $100+/day commuting to work!
"In many ways, Houston’s Super Bowl was a tremendous success. On the field, it was perhaps the most exciting game in the 51-year history of the event. The weather was perfect, the mild Texas winter providing a comfortable respite for visiting fans and media. For locals and visitors alike, the events at Discovery Green and throughout the Super Bowl Live experience offered engagement with the event regardless of whether they could afford a (minimum) four-figure ticket to the game itself. Taylor Swift had a good time! So did Sting, The Goo Goo Dolls, Travi$ $cott, and the other entertainers who visited and performed for the crowds.
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Still, even with the fuzzy math of an economic impact report, the Houston Super Bowl was a success.
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The impact of Super Bowl 51 on Houston also highlights the significance of events like the Houston Livestock Show and Rodeo, or SXSW and the Austin City Limits Festival in Austin... Cities around the country compete, year after year, with aggressive bids for the chance to host Super Bowls. The Rodeo happens every year and brings in more money, while SXSW annually serves as a recurring pitch to the 85,000 or so people who come to town that Austin is a cool place to live, work, run a business, and spend money. No matter the exact numbers, the Super Bowl seems to have worked out for Houston—but the most impactful events seem to be the ones that are annually in our backyard."
The future of transportation, including METRO's new long-range regional transit plan
Before getting to this week's items, a quick debrief on METRO's new long-range regional transit planning process. They held a lunch meeting for bloggers to brief us on their plans, which included this slide presentation with some really interesting material (longer original version). There's some good info in the slides, and they show that METRO has performed better than most other transit agencies in the country (including DART and Portland - see below). My impression was that they're being very open-minded as they go through this process, including consideration of innovative new technologies like autonomous vehicles and high-speed platooning in MaX Lanes. This is also clearly not a case of "here's our plan but we need to go through the formality of public input" - they are genuinely looking for good ideas. If you'd like to give them your thoughts, the first open house is Tuesday, June 27 from 2-4pm at METRO, 1900 Main Street in downtown Houston, to be followed by additional public events listed here.
"...most spoke of a desire to refocus DART’s efforts on bus service and overall system ridership and reliability, rather than continuing to build expensive light rail extensions that have not been able to reverse a downtrend in ridership.
... a crippled public transit system in which residents have to endure the burden of impossibly long commutes and little access to employment or opportunity — sounded very much like DART as it exists today. In its 30-year blitz to build out the nation’s longest light rail network, DART has created a public transit system that is inefficient and unreliable, a system that has contributed to Dallas’ enduring struggles with upward mobility, high rate of neighborhood income inequality, and a burdensome cost of living when transportation costs are taken into consideration."
"The region has already spent between $4 billion and $5 billion on light rail. Before commencing construction on the city’s first light-rail line, 9.9 percent of commuters took transit to work. Since it is now down to 7.9 percent, rail clearly has not boosted transit ridership. According to a report released last October, one-third of the region’s capital spending on transportation is going for transit, yet transit carries just 2.5 percent of the region’s motorized passenger miles (and virtually no freight).
Cascade Policy Institute director John Charles points out that TriMet’s inflation adjusted budget has increased by 72 percent since 1998, not counting the $3.6 billion spent on new rail lines, yet transit’s share of commuting declined. “Just 5% of all commuters in Southwest Portland took transit to work in 2016,” says Charles, yet TriMet wants to spend $2.4 billion on a light-rail line through that part of the city. “Cannibalizing current bus service with costly new trains” is hardly a sound transportation policy, he advises, yet Portland remains wedded to that policy."
"The study predicts that everyday Americans will ditch their cars in favor of a system of distributed electric vehicles, and reap the financial rewards. On a per-mile basis, using TaaS will be four to 10 times cheaper per mile than buying a new car by 2021, and widespread adoption of electric vehicles will lower maintenance costs. In their most rosy scenario, each family could save up to $5,600 per year."
Read that number again. It is a massive boost to incomes.
"As we see it, the Private Autonomy model is likely to catch on first in developed suburban cities with high per capita GDP, openness to new technologies, and a successful record of implementing public projects. Such places include Houston, the Ruhr area of Germany, and Sydney."
An open dialogue on serious strategies for making Houston a better city, as well as a coalition-builder to make them happen. All comments, email, and support welcome.
