Thursday, June 26, 2008

Mixed thoughts on Smart Growth Distinguished Lecture

I attended Scott Bernstein's lecture on smart growth tonight, put on by the Gulf Coast Institute. He came in from Chicago. First, where we agree. Clearly, if a person chooses to live in walkable density close to work and ride transit, they will use less energy and generate less carbon, as well as save money if they can get rid of a car in the household or use a shared car service. And obviously that lower spending on utilities and transportation should be considered when determining credit for a mortgage. No argument there. Clearly a fine and admirable lifestyle choice.

The real question comes down to a city's approach to that lifestyle: allow vs. encourage vs. compel. Some cities can't even get through their zoning regulations and NIMBYs to the 'allow' stage. Fortunately Houston (mostly) avoids that, although we do have regulations (like setbacks and minimum parking) that will need some relaxing (a la the urban corridors initiative). I can see some level of 'encouragement' also making sense - a few incentives here and there (full blown subsidies are probably a bad idea). But 'compel'? That's where they lose me. Active efforts to shut down people who want to live in suburban single-family homes and drive. And requiring mixed-use density around rail stops may well backfire and create stagnant dead zones down each line.

Scott made quite a number of specific points I'd like to address.

First, his stat about Houston households spending 21% of our expenses on transportation vs. lower elsewhere (like 17% in Atlanta). As I've said many times on this blog before: if someone has a good income and a cheap house and they splurge on their ride (luxury car, SUV, truck), that's not the same as saying "Houston forced them to have high transportation costs." They could've bought a Civic or Prius just like anyone else. Check out the ACCRA numbers at the end of this post to see that our transportation costs are actually below the national average and well below other big metros.

He also pointed out we have the highest average vehicle miles traveled per day at 36. It's actually a sign of economic vibrancy: more people going more places, socializing more and doing more things. Also, yes, when you massively invest in freeway infrastructure, people can commute farther in their half-hour time budget, so they live farther out. But if we had fewer freeway lane-miles, people would either live in more expensive housing closer in (less discretionary income = lower quality of life), or jobs would move farther out (fragmented metro where people can't change jobs without moving to a new suburb, plus a weaker tax base in the city core). Clearly, people are rethinking where they live and what they drive with $4 gas, but it's important to understand that doing things that would have reduced VMT would also have weakened the city (IMHO).

He completely ignored school quality in peoples' choices of where to live. He also didn't include private school tuition in his lower combined housing + transportation costs in the urban core. This is why childless households are more attracted to density and the core.

His graphs noted that our household sizes have been shrinking while our houses have been growing, which reinforces my longstanding maxim, "Higher wealth desires more private space." Our economy is always growing wealthier, and people like to convert that wealth into more personal space, as they have all throughout history.

He had another graph of the "hottest" cities for real estate investment, including NY, SF, Portland, etc. - i.e. all the cities that were the most regulated, where supply is constrained far below demand, and where developers who can get over the high barriers have little competition and are very profitable. Contrast this with hyper-competitive Houston with low prices, plenty of supply, and thin developer margins. Which is really better? Should our goal really to be the city most profitable for real estate investors and developers because we limit their competition?

In another graph, he lamented that Houston has increased our job share of over $75K salaries, while reducing the absolute lowest incomes (poverty). This is bad? I think he was trying to make a "rich are getting richer" argument, but I think he was misinterpreting the graph. Isn't this exactly what cities want, to keep adding high paying jobs?

He gave some history of Houston and many anecdotes (to be honest, many seemed less than directly relevant). He pointed out the rise of air conditioning in tropical Houston while lamenting the replacement of trolleys with cars, without catching on to the fact that our cars let us bring air conditioning with us, accounting for at least some of their popularity in Houston vs. walking.

I was flummoxed by his argument that streets beat freeways because people aren't buying things and contributing to the economy when they're flying along a freeway. But aren't these people simply headed to a destination where they will shop and/or contribute to the economy? Might they even go out and do more because they can go farther in the same amount of time? Would Houston's economy really pick up if we shut down all our freeways and replaced them with surface streets? Or, more likely, would people just stay home more because they quickly tire of the options within a couple miles of their house?

Finally, he had a graph that showed higher density means fewer daily vehicle miles per household, but he neglected to point out that it doesn't decrease as fast as the density increases, so you actually get more trips and traffic per square mile, creating London/NYC/LA-style congestion.

Bottom line: a smart nice guy with admirable goals, but a weak foundation of arguments for changing Houston's good direction or interfering in people making their own free market choices. Offer the options - and even promote/market/sell the smart growth lifestyle if you like (as Apple has proven: make something seem cool and people will buy it) - but let people weigh up the costs and benefits on their own and pick the lifestyle that's right for them.

P.S. Erik, he was thankful for the Houston freeway pictures from your site he used in his presentation.

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Sunday, June 22, 2008

Response to Peter Brown's op-ed

You may have caught Councilmember Peter Brown's op-ed on transit and planning in the Sunday Chronicle. While I've (mostly) made my peace with Metro's core LRT plan and support efforts to encourage walkable density near the stops, he made several points I feel I need to address:
Our region's sprawling highway system has not reduced congestion. Worse still, it encouraged the flight of city jobs and residents to the suburbs, diminishing the city's economic life.
Actually, it reduced congestion substantially after 1983, only rebounding to those levels in the last few years after we added more than 2 million more people. The added capacity has enabled millions of people to afford nice new homes in good school districts while still having a reasonable commute to jobs in the core. Employers demand that their employees have access to such amenities within a reasonable commute. If they don't, the employers will move to where they can. It is a fantasy to believe that limiting mobility will force people to move to the core. No - employers will move out to them. If the highway expansions had not been built, jobs would have fled to the suburbs (as they have in many other cities), leaving a hollowing-out core with a deteriorating tax base.
Major world cities are making huge "smart" investments in carefully planned, pro-growth rail systems. The transit menu includes conventional streetcars and subways, fast commuter lines, 180- mile-per-hour bullet trains and even higher speed mag-lev lines, such as the link between downtown Shanghai, China, and its airport. The European Union, with sleek, high-tech trains linking just about every major city, is a model for transportation efficiency, with one-half the per-capita energy consumption as the United States. This is a significant competitive advantage.
Hundreds of billions of dollars. Far higher taxes, unaffordable homes, and consistently lower growth in Europe than the U.S. (and especially lower than Texas). And, as I've pointed out before, European cities were built long ago during the walking age with single, dense, monolithic job cores amenable to rail transit (and without space for cars) - not to mention a non-tropical, relatively pedestrian-friendly climate. Houston is the exact polar opposite of these things.
On a recent flight abroad, I listened to a talkative business executive, who explained to me, "Houston is a great city to do business, very friendly, but if you expect to compete worldwide, you better have a high-speed train from downtown to your airports, and soon! That's what every international businessman expects, like you enjoy in Atlanta, San Francisco or Paris."
No city in America has anything resembling a "high-speed" train from their airport to downtown. Sluggish trains with stops and transfers - yes, in a few places - high-speed - no (and that goes for Metro's long-term plans too). Why build a multi-billion dollar train to connect a few business travelers to a less than 7% of our jobs downtown? Especially when most of these travelers are on expense accounts and will just grab a cab? Metro is planning frequent, high-quality, non-stop express bus service from IAH to downtown in the near future. More than adequate for our needs at a micro-fraction of the cost.
Significant increases in federal funding for rail transit are a reasonable assumption.
Really? My understanding is that the FTA cost-benefit hurdles for rail projects are getting ever-higher.
High-speed rail: It is time to think ahead and get very serious about the "Texas T-Bone" — the Bullet Train — traveling at speeds of 180 mph, connecting Houston, Dallas-Fort Worth and Austin-San Antonio.
Not just a 100+ billion tax dollars for a service that Southwest Airlines handles just fine right now, but there are plenty of other reasons this is problematic. Even California is balking, and they have far more density, population, local transit, and congestion of both highways and airports.
...the highest transportation costs in the nation (yes, that's right; it costs more to travel in Houston than in any other city).
Debunked here. All this says is that if you have a city of high wages and low housing costs (these are good things, yes?), people will spend a lot of that extra income on fancy cars, trucks, and SUVs. Surprise, surprise. People like nice things. They could just as easily buy a Toyota Prius if they so choose and spend far less. Oh, and the stat is also warped because high taxes to subsidize transit in other cities are not considered "transportation costs" in their calculations.

Houston has a history of being pragmatic when it comes to transportation infrastructure. Let's keep it that way.

Update (updated for 1Q08): The official ACCRA cost of living transportation index from 1Q08, where the national average = 100:
  • Houston 97.4
  • Atlanta 103
  • Portland 106
  • Chicago 108
  • DC 109
  • Boston 109
  • NYC 109
  • SF 113
Update 2: The PoliSci@UST blog on why Shanghai's maglev train to the airport is a bad model for Houston.

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Saturday, June 21, 2008

Newsweek: Houston, we have no problems

OK, that title might be a bit of an exaggeration. But the wave of plaudits just keeps coming as the media world discovers Houston, from Kiplinger to Business Week to MSNBC and now this from Newsweek (thanks to Jessie for the heads up - and to give credit where credit is due, I think the good coverage started with Joel Kotkin's various articles extolling Houston many years ago).

The whole thing is great, and I highly recommend reading it, but if I must pick excerpts...
THE MONEY CULTURE - Daniel Gross, Newsweek
Houston, We Have No Problems

Houston has become a sort of Silicon Valley for the global energy industry. Urban cowboy? Think suburban geek.

To find a hot spot where soaring oil and commodity prices, and the booming economies of the developing world, are keeping cash registers ringing and construction crews fully employed, you don't have to trek to Dubai or Moscow. You need travel only as far as Houston. In May, the unemployment rate in the nation's sixth largest metropolitan area was a measly 3.8 percent. In the past year, Houston-based companies, which include 26 Fortune 500 firms, added 71,000 jobs to their payrolls. The local United Way closed out its fiscal year with a record $76.1 million in donations. At the Galleria, a high-end shopping oasis, Bridgette Bottone, manager of the De Beers store, notes, "We're still selling the big guys": three-carat-plus diamonds that retail for more than $50,000. Pessimists are as rare as Birkenstock sandals, or OBAMA '08 stickers in ExxonMobil's parking garage.
"We're only 50 percent dependent on energy." (The city's biggest employer: the Texas Medical Center, the nonprofit megaplex that runs two medical schools and 14 hospitals.) At Houston's port, the second busiest in America, cranes are loading ships with industrial equipment. Exports rose 25 percent in 2007, to $72 billion.

Exports are rising because Houston has become a sort of Silicon Valley for the global energy industry. "There's hardly any oil and gas production in a 40-mile radius of Houston," says Mayor Bill White, a former energy executive, as he held court in the city's charming art deco city hall. (Think of a much smaller Rockefeller Center, but without the tourists.) "It's the knowledge that has concentrated here that is driving things." In 1981, the oil and gas industry was a domestic, blue-collar one. Today it's an international, white-collar one. Oil companies, wind-energy start-ups, consulting geologists and software developers compose what John Hofmeister, who is retiring in July as president of Shell Oil Co., calls "this mass aggregation of people who know what they're doing in the energy world." Urban cowboy? Think suburban geek. Houston has 70,000 engineers and architects (a concentration 60 percent higher than is typical for the United States) (city branding option?). The oil boom and weak dollar are boosting demand for their services, and engineering and construction firms like KBR and Fluor are applying their expertise to power plants and sewage facilities around the world.
The residential market, which avoided a bubbly run-up—thanks to endless supplies of land and a lack of zoning laws—has remained buoyant. Development is rampant, from $200,000 single-family homes in suburban planned communities to $1.4 million town houses (for real?!) that have replaced student apartment buildings near Rice University.
Such projections of endless growth are characteristic of bubbles that are about to pop. But they're also characteristic of an area that finds itself uniquely situated to capitalize on the longstanding megatrends that are transforming the global economy. For now, Houston does not have a problem.
And, as I've said before, rather than just basking in the good times, we should be using them to invest like mad in infrastructure and amenities that will help us when they end.

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Friday, June 20, 2008

"Anti-Paris" Houston #1 and #4, commutes and transit, toll policy, school choice, poverty, and more

Sorry for the late post this week. Busy, busy. Some smaller items to pass along:
From Randal:

Portland isn’t on the list...

Three of the cities are in Texas, two are in the Midwest, two in North Carolina, two in Colorado, and one in Idaho. None (except possibly Boise and Ft. Collins) have done much to attract the “creative class.” None (except possibly Ft. Collins) have done much “smart growth.”

Okay, these lists are pretty meaningless. But at least some reporters seem to have figured out that housing affordability, freedom, and mobility count for more than having streetcars and coffee shops in high-density apartment buildings.

  • Texas is the #1 destination for people leaving CA. I've certainly noticed more of their license plates around lately.
  • Loved this quote from a recent Chronicle front page story saying more people would move here if they could sell their current homes elsewhere in the country:

    Some companies are facing the opposite problem: They can't get homeowners to leave Houston. Jamie Belinne, assistant dean of career services at the Bauer College of Business at the University of Houston, said one high-tech recruiter recently complained that he's having trouble talking the newly minted graduates into moving to California.

    They get sticker shock, said Belinne. In Houston, "you can still get a lot of house in a decent neighborhood for not very much money."

  • Lisa Gray's column on Houston as the "anti-Paris." Maybe the Houston style will become known as the "Even Newer Urbanism"?... ;-)
  • A local blogger points out some inconsistencies in the way Metro's blogger portrays rail transit spending vs. long commute times:
    Atlanta has spent more than Dallas and Houston combined on rail transit. Both Dallas and Houston are larger cities. Yet the traffic in Atlanta is worse?

    Maybe the reason the commuting situation in Houston is better (and about to get a LOT better) than places like Atlanta and Dallas is because we spent more on roads and freeways and good bus service to get commuters from home to work and less on cute trains to get a handful of people from Destination A to Destination B along a very narrow corridor. Just a guess.

    And for those who think $4 gas will mean the end of suburbia and a renaissance of urban living for families, I have eight words for you: Commuters will just get more fuel-efficient vehicles. The Great Adjustment is already happening.
    Hat tip to Josh.
  • Good toll policy decisions by the Texas Transportation Commission and TXDoT, with my personal favorite in bold:

    The commission unanimously agreed that all Texas highways will be owned by the state, not private developers; that the state may buy back the interest of a private road developer; that only expansions to existing highways will be tolled and existing free lanes won't be reduced; and that "non-compete clauses" will be banned, meaning no state contract will limit improvements to nearby existing roads.

    The order also calls for an attempt to minimize disturbing private property and to consider using existing rights of way for roads.

  • Great quote from Brian, one of my favorite local libertarian bloggers:
    So if school choice lowers the drop out rate, which I believe it does, then income inequality will decline. Interesting how a free market system accomplishes the goals of socialism better than socialism.
  • And another one:
"If you are noticing any correlation to politics, so did I. Eight of the ten states that experienced the most rapid declines in poverty over the last 20 years voted for George Bush. Eight of the ten states with the worst increases or least declines over the last twenty years voted for John Kerry. How interesting that states tending to the right are better at reducing poverty than states tending to the left."

Given the popular stereotypes that Democrats are more focused on alleviating poverty than Republicans, this result is completely counter-intuitive. Would love to hear your thoughts on why in the comments.
More next week. Have a great weekend.

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Monday, June 16, 2008

Pros and cons of the new commuter rail plan

Last week H-GAC recommended five commuter rail lines (nice Chronicle map in pdf form here - thanks for getting them to put it online, Rad). I'm sure Christof will have a much more detailed and thoughtful commentary soon, but until then, you're stuck with my amateur analysis.

I still have grave doubts about the appropriateness of commuter rail for dispersed city like Houston, with only around 7% of jobs concentrated downtown. And $3 billion is very nontrivial money. It better have very high projected ridership to justify that. That said, if somebody put a gun to my head and insisted I map out 5 commuter rail lines for Houston, this might be pretty close to what I would choose.

What I like is that they avoid areas that are already well served by big freeways and HOV/HOT lanes, like the 59N, 45N/Hardy, 10W, and 59S corridors. That's why I'm not as upset as the article that Sugar Land, The Woodlands, and Kingwood/IAH are not included (a connecting shuttle to Hobby is possible). Those communities have plenty of good options today. Now, it's true 290 and 45S have HOV lanes, but there are other reasons commuter rail might work for them. (the 45S HOV does not go much beyond Beltway 8, and the rail line won't come inside the Beltway on Texas 3, so they're somewhat complimentary)

First, Galveston. My previous thoughts are here and here, and Christof's are here. From my earlier post, here are the reasons this route has potential:
  1. local transit at both ends to get you to your final destination
  2. highly populated corridor with heavy traffic flows both directions
  3. regular congestion on the existing freeway
  4. tourism potential in addition to commuters (better overall utilization for the capital cost)
  5. existing tracks that make the cost much more reasonable
  6. job centers at both ends and in the middle (Clear Lake/NASA)
Second, 290. Rumor has it that the planned Hempstead toll road won't happen because costs have risen too much for tolls to cover it (very unfortunate, IMHO). That leaves a gigantic swath of highly-populated northwest Harris County (check the map) with very limited (and congested) options to get to the core job centers (Downtown, TMC, Greenway, Uptown). The 290 and 249 lines could move a lot of people, and, when connected to the core LRT network, get them to all the core job centers (not just downtown). Piping them all on buses down a couple HOV lanes (290 and 45) may not be adequate.

I also like that the Ft. Bend line, by using the Almeda corridor, will offer good access to the Medical Center in addition to Downtown. That county will be even more popular with TMC employees than it is now.

One bit of irony I noticed. These lines go way the heck out to far Waller, Montgomery, Ft. Bend, and Galveston Counties. Usually anti-sprawl people are also pro-rail, but in this case, if these lines are built, they will open up previously unimaginable areas for living and commuting into the city - areas that very few people would contemplate driving from, but they might be happy sitting on a train with their laptop or Blackberry for an hour+ each way.

There are still a lot of issues to be worked out:
  • Since they go far beyond Metro's territory, who will run them an how will they be paid for? Other cities have proliferating numbers of transit agencies (like Chicago), and it generally seems to be a bad thing. Better for Metro to strike deals with adjacent counties and keep everything integrated.
  • Can these routes really co-exist with the freight on them? The study seems to think so, but it's gotta be tricky.
  • Many of the existing freight tracks seem to be single tracks. Will they be upgraded to double tracks? ($$$) If not, will trains have to be all-inbound in the morning and all-outbound during the afternoon? (which kills part of the value of the Galveston line) Or can special passing zones be set up and the trains timed right? (seems like it would be very tricky and dangerous)
  • Some of the connections will require all new track through residential and commercial areas (249 to 290, The Heights, 45S to Pearland). Always contentious. Just ask Metro...
  • Will end-to-end trip times really be competitive with driving or HOV express buses? I have concerns that stops and transfers will create painfully long trips, while Metro will cancel all competing HOV bus service on 290 and 45S.
As always with transit, it all comes down to speed and cost effectiveness (people moved for the money).

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Saturday, June 14, 2008

Business Week touts Houston

Some great stuff in here. Hat tip to Mark for the heads up.

Are You in the Best City for Your Job?
A high salary goes only so far if the cost of living is even higher. If you want your dollar to go further, maybe it's time to relocate

Friday June 13, 8:08 am ET
By Prashant Gopal

Elizabeth A. Campbell was happy with the job offer from a top Houston law firm, but she wasn't itching to leave the comfortable life she had built for herself and her two teenage boys in suburban New Jersey. Other than a detour to Michigan for law school, she was a lifelong Northeasterner.

Campbell drew up a table of the pluses and minuses of relocating. On the plus side: more affordable real estate, no state taxes, cheaper food and services, an international airport, and strong schools and sports programs. Only one minus: saying goodbye to friends and family.

It has been almost a year since Campbell joined Houston's Andrews Kurth law firm as a partner and chief diversity officer, and the angst is long gone. She sold her 2,800-sq.-ft. house in Bordentown, N.J., for $350,000 and upgraded to a 4,200-sq.-ft. place on a golf course with five bedrooms and a game room six miles outside Houston. The price: less than $325,000.

Houston Is Rolling in Oil

"The bottom line was: 'How come I didn't live here already?'" Campbell said. "I came here because of a job. But it's a wonderful city, and I can see myself retiring here."

Only a few years ago, Houston was reeling. The implosion of Enron in 2001 had sandbagged the local economy, and the mood was grim. But that seems like a long time ago now. The explosion in energy costs has boosted the city's oil- and natural gas-fed economy, which is home to ExxonMobil and Royal Dutch Shell, as well as Waste Management, KBR, and many more. Job seekers in all sorts of careers have started streaming into Houston, where the unemployment rate was 3.8% in April, the lowest level in eight years, and where the job growth rate was 2.8%. worked with Seattle's to determine where the best and worst cities are for 20 common careers and found that -- when it comes to earning a comfortable living -- Houston it at or near the top for most jobs, from human resources manager to graphic designer
. We adjusted the median compensation for jobs in each of the top 25 big-city metros for cost of living. Houston, Dallas, and Charlotte, N.C., rose to the top for many of the jobs because they're affordable cities with competitive salaries. New York, San Francisco, Washington, Los Angeles, and Boston, which have some of the highest salaries, sank to the bottom because residents there pay through the nose for real estate, parking, groceries, and almost everything else.


Barton Smith, a professor of economics at the University of Houston who summers in Colorado, towed his favorite 1987 Dodge Colt Vista station wagon back to Houston one year because it would have cost him more than twice as much to replace the engine in Colorado, he said.

"The real wages in Houston adjusted for cost-of-living differences are relatively high because cost of living is low," Smith said. "It's not just housing, but housing gets a lot of attention."

I've said it before and I'll say it again: a strong, high-wage economy combined with affordability is the foundation of real quality of life. Many other things certainly matter too, but that's the critical core.

Update: Here's the link to the story at Business Week (instead of Yahoo) and the slides/data by profession. Thanks Erik.

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Thursday, June 12, 2008

Randal O' Toole's thoughts on Houston

I am rushing out the door for a business trip to Austin, so I just want to leave you with some excerpts from Antiplanner and Cato Senior Fellow Randal O' Toole's thoughts on Houston after the PAD conference (he lives in Portland).

...I’ve noticed that the first objection many planning advocates have against Houston is its climate: “it’s hot and humid.” Yet I doubt any of them really believe that planners can do anything about local climates.

In any case, I came to Houston prepared to like it, and I did. This doesn’t prove anything; I may have looked at the city and region through rose-colored glasses. (Actually, I wore my amber ones.) I’ll be the first to admit that Houston isn’t perfect, and due to my ingrained prejudice against flat, I will probably never live there.

Yet no one can deny that Houston has a lot going for it. First of all, as I noted last week, because government is not standing in the way, builders can quickly meet any demand for housing or other developments. This not only means that housing is more affordable than most of the rest of the U.S., but that it is relatively immune from the ups and downs of bubbles.

Second, this also means that Houston offers a huge amount of variety. High rise, low rise, mid rise, granny flats, mixed use, mixed income, and of course plain vanilla single family. There should be and is something for everyone. In many ways, as I tried to suggest last Friday, the city of Houston should be a New Urbanist’s dream.

Third, the many master-planned communities in the Houston area are simply gorgeous and are wonderful places to raise families. I stressed this on Monday because government planning has effectively shut down the possibility of such privately-planned communities in Oregon, Washington, and other states that have growth-management planning. No developer in these states could ever assemble enough vacant land to do such a community because all large parcels of vacant land are outside of urban-growth boundaries or otherwise off limits to development.

Fourth, although Houston has plenty of congestion, it has done more to relieve that congestion than almost any other urban area in America. Between 1982 and 2005, Houston increased its freeway lane miles by almost 80 percent and its arterial lane miles by 66 percent. The average U.S. urban area, and in particular regions such as Los Angeles and Portland, only grew their highway networks by about half that much.

Houston’s highways are also some of the best designed roads in the world, with gentle curves, HOV lanes, lots of frontage roads, and other features to minimize congestion. The Texas Transportation Institute’s annual mobility survey (which ranks Houston as having the seventh-worst congestion in the nation) exaggerates Houston’s traffic because it assumes that a freeway lane in Houston has no more capacity than, say, Connecticut’s Wilbur Cross Parkway, when in fact the former’s capacity may be close to twice that of highways built to standards set in the 1930s.


Finally, it really doesn’t matter what I think. The fact that the Houston area is rapidly growing shows that it must be a great place to live. Since 1950, the Houston urbanized area has steadily added almost twice as many people per decade to its population as the entire state of Oregon. Since 2000, for example, the Houston urban area has grown by 88,400 people per year, while Oregon has grown by only 43,300 people per year.

Those who point to Oregon’s popularity as proof that “planning is working” will stumble over those numbers. If “a living hell” — someplace that is hot and humid much of the year and flat the entire year — can attract twice as many new residents each year as Oregon with its temperate climate and incredible scenery, well, just think how well Oregon would do if it adopted some of Houston’s policies. (Of course, some planning advocates would say that, by slowing growth, Oregon’s planning is doing its job, but this is an elitist view that most planners won’t admit to sharing.)

People are not the only thing attracted to Houston. The 2008 Fortune 500 list found that Houston is headquarters to 26 Fortune 500 companies, up from 20 in 2000. That makes it second only to New York City (which is losing headquarters), and Texas as a whole has more headquarters than any other state. People, businesses, and jobs are all attracted to places where property rights are secure and regulation is minimal.

As I say, Houston is not without its problems. More could be done to control industrial air pollution. There are inevitable land-use squabbles over such things as high rises on busy streets that happen to be next to neighborhoods of single-family homes. As one property rights advocate pointed out, if you buy a home that is surrounded by other homes that all have deed restrictions, you will pay more than if homes on one or more sides have no restrictions. People who knowingly buy a home next to properties without restrictions in order to save money and then want the government to “protect” (actually boost) their property value by restricting the rights of adjacent property owners are seeking special favors that the government should not hand out.

Some Houston politicians are willing to pander to such people in order to promote more central planning for Houston. Time will tell whether Houston voters are willing to give them that power. I suspect that, so long as developers can step across Houston’s city line to build for the market, the city’s government will continue to keep land-use regulation to a minimum. That will be a good thing for Houston’s economy and a good lesson for other regions.

Check out the whole thing, including pictures, here.

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Sunday, June 08, 2008

Historic preservation should be a neighborhood choice

You may have caught the op-ed in the Sunday Chronicle today arguing for stronger historic preservation regulations. Of course, they dance around the issue of hamstrung homeowners facing expensive renovations and devalued life savings. Instead, the bad guys are all those evil "speculators" and "developers." As always defining the terminology is half the battle (see also "sprawl" and "smart growth").

Addressing a couple of specific points:
To the contrary, there is a wealth of documentation showing that historic districts stabilize neighborhoods and do not hurt property values. For example, a Rutgers University study of nine other Texas cities documented that historic districts enjoy higher property values than neighborhoods without historic designation. In Houston's Old Sixth Ward, the city's first fully protected district, property values have shot up 27 percent in the last year. When given the chance, historic preservation works.
This is great news! It means there should be absolutely no problem getting voluntary neighborhood buy-in for deed restrictions. If it boosts their values, who could be opposed? Why do we need the government to impose it, when it's obviously in their own self-interest?
Would downtown's wonderful new park, Discovery Green, be a reality if the city had not stepped in and the land had instead gone to the highest speculative bidder? No. It would be the site of downtown's newest skyscrapers.
Um, not comparable. The city either owned the land or bought the land (plus charitable donations, of course - I can't remember the details). That means we, as taxpayers, through our elected representatives, paid for that amenity we wanted, one way or the other (either we bought it, or we chose not to sell it, thus the opportunity cost). Historic preservation involves taking value without taxpayers paying for it. If it's really that important to us, and the neighborhood won't voluntarily adopt the deed restrictions, then we need to pay them for the protective easement on their property. And, of course, that's not gonna happen, because at the end of the day, taxpayers claim to want it, but aren't willing to pay for it.

As Kevin put it ever so sarcastically over at blogHouston:
Experts know better than investors and property owners -- YOU, in other words -- what Houston needs to do with (your) property to be world class. And who can argue with such experts?
Bottom line: either historic preservation is clearly good for a neighborhood, in which case getting the voluntary buy-in of a broad super-majority (75-80%?) of the residents should be no problem - or it's not so clear or not so good, in which case we have a vocal minority of busybodies trying to impose their will on the majority of neighborhood residents via government intervention. If we need to make some technical tweaks to make it easier for a super-majority of a neighborhood to sign up for historical preservation, then so be it. But that should be all that's necessary.

More debate on HAIF here.

Update: I learned in the comments that sign-up by 70% of the residents is the required hurdle to impose deed restrictions - including any related to historic preservation - on an unrestricted neighborhood. Seems pretty reasonable.

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Thursday, June 05, 2008

Can Houston become a major biotech center?

I got to see Dr. Dan Monticello, Ph.D., President and Director of Molecular LogiX in The Woodlands, speak at The Houston Economics Club this week (held at the very cool new Federal Reserve building). He gave an overview of biotech in Houston, with strengths, weaknesses, and proposed solutions.

First, some of the strengths:
  • World's largest medical center, including huge numbers of patients for clinical trials
  • BioHouston supporting regional efforts from TAMU all the way to UTMB Galveston
  • We educate (and export) a lot of talent
  • Strong state funding via the Texas Enterprise Fund and the new $3 billion cancer initiative
  • Rapidly growing and successful Texas Life Science Conference (attracted representatives with over $6 billion of venture capital)
Despite all that, we only have 140 life science companies (most are small), and are really not in the same league as San Diego, San Francisco, or Boston. Why?

  • Extremely heavy competition (every city wants to be "the next San Diego")
  • Nonprofit institutions are doing more development themselves, rather than outsourcing to private enterprises
  • Easier for nonprofit institutions and universities to export ideas and talent than develop it here
  • Lack of experienced biotech management
  • No "soft landing" for failures (an executive is afraid he will move to Houston, and if his venture fails, there will not be other good biotech options for him to jump to)
  • Insufficiently informed venture capital and ventures with an unfamiliar value proposition (locals understand oil and software, but not biotech and its long time frames)
Evidently, even though VC from the coasts will come in to the conference to review local companies - and they might fund medical device companies (shorter time frames) - for therapeutics (i.e. long-term investments), they want the companies to move to the coast to be next to them.

An his proposed solutions:
  • Support "pump priming" efforts
  • Insist on regional cooperation
  • Strategic recruiting (get more and larger biotech firms moved here)
  • Monitor the state money (see strengths above) to make sure it is spent effectively
  • More philanthropic investments (don't just give to TMC institutions, but to worthy biotech ventures)
On the money issue, I think Texas universities need to realize it's in their own interest to put a tiny portion of their endowments - maybe 1 or 2% - into Texas-focused VC, including biotech. Those investments will make Texas a more interesting place for both talented professors and students, creating a positive feedback loop for the universities. The funds need to be sufficiently capitalized and structured to attract top-talent partners from the coasts to actually live here and cultivate ventures here.

Another idea: this is a total shot in the dark, but I've heard the FDA bureaucracy is very painful for biotech ventures. Could we cultivate partnerships with a network of Latin American medical institutions to make those clinical trials both faster and less expensive? Tapping that network might be very attractive to biotech startups.

Overall, my impression is that we're on the right track, it's just going to take many years of sustained efforts to get where we want to go. It's difficult for a city to have more than one primary focus industry - and ours is obviously energy - but if anybody can do it, I think we can given our tremendous foundation on the nonprofit side of health care. Building a for-profit side on top of it should be achievable.


Monday, June 02, 2008

CA columnist on Houston as an Open City of Opportunity

This columnist from Orange County, CA recently visited Houston for the Preserving the American Dream conference, and he liked what he saw here. I was originally planning to just highlight excerpts, but I liked so much of it, it ended up being pretty much the whole thing (with my bold highlights).
Closed case for 'open' cities
Urban planning should create "open" cities rather than New Urbanist ones.
Sr. editorial writer and columnist, The Orange County Register

Former Houston Mayor Bob Lanier, an old-school Democrat who ran the nation's fourth-largest city between 1992 and 1998, told those of us who attended the American Dream Coalition (ADC) conference in his city last week that he moved there, from a poor, industrial city in East Texas because Houston was "an open city." A person's race or economic background didn't much matter even when he got there decades ago, and it still doesn't matter much in Houston today. Anyone who works hard, he said, can make it in Houston – a city that sophisticates decry as insufficiently planned (it still lacks zoning), too tacky (money is still what matters there) and too "boom-to-bust." Houston remains a place where fortunes soar and fall, and where brashness and bigness aren't frowned upon.

Unfortunately, instead of trying to create cities with grand opportunities, government officials are trying to create compact, expensive, trendy places that appeal to wealthy elites – neat places to go out to eat and attend a concert, but bad places to raise a family and start a business.

Granted, Houston's not everyone's cup of tea, but it's a nice city with an impressive skyline, lush tree-lined neighborhoods, upscale shopping, great restaurants, endless economic opportunities and amazingly low home prices. During one session, Houston city councilman Peter Brown decried the growing lack of affordability in some parts of the city, where a person needs $220,000 to buy a nice house! The room broke out in laughter as those of us from California, Washington and Oregon guffawed spontaneously. As I rode to George Bush airport, I spotted a billboard for a new development boasting prices from the $80s to the $120s. The median home price is in the metropolitan area is $148,000, according to the National Association of Realtors, and anyone with 500 grand – about the median home price in Orange County – can afford a minipalace.

There's more to life than cheap houses, but you can certainly have a better life if you don't have to work three jobs to meet the $3,000 a month mortgage payment.

One obvious reason for the relatively low prices is Houston's location, in a swampy plain with few physical restrictions to stunt the region's growth. But the prices are mostly a reflection of the pro-growth, low-regulation attitude that is dominant in the Lone Star State. Regulations are slimmer than in most places, and that allows builders to respond to market demand. One of the key reasons for the current housing crisis is that when demand shot up, the market couldn't respond in tightly regulated, authoritarian places such as California and Oregon, explained Wendell Cox, a housing expert and Heritage Foundation fellow.

The lead time for putting up new houses was too severe around here – not because of the time needed to build the houses, but because of the months and even years necessary for West Coast builders to negotiate all the political hurdles. So prices shot upon inadequate supply and the bidding war got started, driving homes to inordinate price points. In places such as Houston, the market reacted to the credit boom by building more homes quickly to meet demand. Prices stayed low, so after the bust, there was no precipitous fall.

Low home prices are one indicator of an "open city" – a place where any person can make his mark if he works hard enough. In an open city, where regulations are low and prices are reasonable, it's easy for anyone to get a business permit and open a store or provide a service. That's the American Dream. That's the key to helping recent immigrants make it into the mainstream. It's a lot more cost-effective and kind-hearted than building a massive wall.

Yet as conference presentations explained, the dominant ideas found in city planning offices and among regional planners are Smart Growth and New Urbanism – efforts to set aside open land as permanent open space, to force builders to provide dense housing on small lots, and to replace highway construction with mass transit. The goal is to recreate old-fashioned city living and, supposedly, to enhance the sense of "community" we experience as we live cheek-by-jowl with our neighbors.

As a result, today's planners – and as ADC's outgoing director Randal O'Toole noted, government long-term plans are guaranteed to be wrong – are imposing one new restriction after another on what we do with our own private property. They push for more rules, more control, bigger regional planning bodies, less individual choice. Decisions, one speaker noted, are made either by free people or in the political process. Those are the only choices. In a free society, individuals can decide what to build and how to live – provided they follow some simple, easily understood rules. In un-free places, such as California, one must lobby councils, win over neighbors, pay consultants to twist arms, make promises to city governments. Approvals are based on the whims of the officials; there's no certainty or well-defined rights. Call a society that functions that way what you please, but don't pretend it's free or open.

The modern urban planning profession is, as author Joel Kotkin argued in a recent booklet called "Opportunity Urbanism," about enhancing an "area's ability to attract the wealthiest individuals, the people with the highest skills, and those who can perform the most rarefied economic functions. The resulting 'superstar cities' cater largely to the upper classes and to those who serve them; generally, those cities are becoming too expensive for middle income individuals or families." Hence, urban gurus such as Richard Florida entice cities to embrace policies that attract what he calls the "creative class." But it's perverse, really, for governments to use their power and energy to build cities for wealthy Yuppies, while ignoring – beyond lip service about affordable/subsidized housing – the needs of the middle class and poor.

A New York Times article in 2005 explained the result of such policies in the trendiest cities: "San Francisco, where the median house price is now about $700,000, had the lowest percentage of people under 18 of any large city in the nation … . Seattle, where there are more dogs than children, was a close second. Boston, Honolulu, Portland, Miami, Denver, Minneapolis, Austin and Atlanta, all considered, healthy, vibrant urban areas, were not far behind. … Officials say that the very things that attract people who revitalize a city – dense vertical housing, fashionable restaurants and shops and mass transit that makes a car unnecessary – are driving out children by making the neighborhoods too expensive for young families."

Those cities also lack an entrepreneurial culture. Southern California, for instance, is a fun place to live, but if you want to start a business, you'd be best advised to head for Nevada or Arizona. That's what the activists at the American Dream Coalition are about – reminding the public that when planners take over, our freedom, and our opportunity suffers. I spoke about the city of Santa Ana's Renaissance Plan, which is the effort to drive out long-standing businesses and settled neighborhoods and replace them with high-rise condos and fancy clubs to appeal to this upscale demographic sought-after by planners.

Instead of pitching an
aesthetic vision of recreating an old-time city, city planners ought to promote the ideas expressed by Lanier, of an open city where the future is as endless as the Texas prairie. It's not a bad thing for politicians to remember also: Lanier won resounding victories among every political and ethnic demographic in Houston – a testament, he said, to the enduring political appeal of opportunity.

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