Sunday, October 25, 2015

America's affordable global city and Big 7 metros, Dallas envy, pensions, and more

Apologies for not being able to get a post out last week, which means even more items have stacked up for this week. Traveling next week as well, so there may not be a post then.

First, a random thought I had recently on a distinctive positioning for Houston: America's affordable global city (as opposed to NYC, LA, SF).  We have a global diversity not found in other affordable big metros like DFW and Atlanta, including significant populations from Asia, Africa, Latin America, and even Europe (welcome to the global energy industry).  I think our closest competitor under that distinction would be Chicago, although they are a bit more expensive and are facing an extremely serious financial situation.  America's affordable global sunbelt city?  America's affordable global non-bankrupt city? ;-)  Curious to hear your thoughts in the comments.
"If urban American governance has long been a cesspool for machine politics, then Houston, with its light regulation and pro-growth mentality, has been perceived as the exception. But it turns out that for at least one issue, Clutch City mirrors the rest. A recent report by the Laura and John Arnold Foundation, a local research-oriented philanthropy, found that Houston suffers from a growing public employee pension crisis that could soon make it just another debt-saddled U.S. city. 
The real culprit is that the retirement benefits themselves are too large, and the path to reform elusive. The under-funding problem for pensions began during the mayoralty of Lee Brown, right after changes were made in 2001 to increase pensions for public employees, in some cases doubling them for top officials.  The system has since run deficits, including over $50 million last year. And this system is hard to reform because it is protected by state statue, making it legally difficult to alter benefits. So what Houston residents and officials must do instead is either cut basic services, raise taxes, or both. 
Of course, the other option is for Houston to do neither, and just continue underfunding its pension system. But this strategy doesn’t seem to work out in the long run. Unfunded retirement liabilities were the main cause of default and bankruptcy in Stockton, Detroit and Puerto Rico; and have led to massive debts in other cities–$40 billion in Los Angeles, $46 billion in New York City, and nearly $60 billion in Chicago. 
The Arnold Foundation report noted that Houston’s current position is similar to Chicago’s in 2003, when the Windy City’s annual required retirement system contribution equaled one-fifth of its general tax revenue. When tax receipts dropped because of the recession, the unfunded retirement crisis worsened, and now Chicago has suffered from multiple downgrades, with the Illinois governor even seeking a legal route to bankruptcy. Houston’s debts are still mild compared to these other long-mismanaged cities, but hopefully they are addressed–aka cut–before they, too, create a fiscal emergency."
Time to get serious folks, and I'm glad to see the GHP, Chronicle, and several of the mayoral candidates (especially Bill King) really focused on solving this issue before it gets unsolvable.
Finally, the GHP recently released their October Houston Economy at a Glance, which contained a pretty interesting table of metro GDP rankings on page 8.  If you combine San Francisco and San Jose (the greater SF Bay area/Silicon Valley), you'll notice that there's a big GDP gap in the rankings after #7 (almost a $100 billion - a very clear first vs. second tier).  The Big 7 U.S. Metros (of roughly a half-trillion GDP or higher) are then NYC, LA, SF+SJ, Chicago, Houston, DFW, and DC, in that order.  These are America's tier one metros.  Fun fact: United Airlines hubs in 6 of those 7, DFW being the exception.

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Sunday, October 11, 2015

Texaplex rivalries, Sun Belt rail-fail, recycling overdone, Mayor Parker's legacy, and more

This week's items:
"Cities get ranked in numerous ways — by income, hipness, tech-savviness and livability — but there may be nothing more revealing about the shifting fortunes of our largest metropolitan areas than patterns of domestic migration. 
Bright lights and culture may attract some, but people generally move to places with greater economic opportunity and a reasonable cost of living, particularly affordable housing."
  • Yet another major company giving up on the core and moving to the suburbs (more here) - in this case Schlumberger moving out to Sugar Land.  When is Houston going to take this seriously?  I'm looking at you, Metro and TXDoT.  We need comprehensive MaX lanes and express services to every job center, or more employers are going to give up on traffic and move to the suburbs, slowly bleeding Houston's tax and job base...
  • John Tierney over at the NY Times does a clear-eyed rational analysis of our nation's near-religious dogmatic obsession with recycling and shows the benefits have declined to the point of even becoming negatives (i.e. it's actually worse for the environment to recycle than landfill for some items).  I'm an avid recycler myself, but it looks like Houston does it at the right levels with the right materials vs. extravagant "zero waste" initiatives in places like NYC, SF, and Seattle.  I also have my own somewhat unique perspective on this, which is that in a few decades we'll have smart cheap robots that can easily sort through landfills to recycle what makes sense.  Start thinking of landfills as temporary holding places until the technology gets better, and suddenly they seem a lot more reasonable, especially with all of the environmental safeguards they now have in place (linings, methane recapture for electricity production, etc.).  Worried about the lost land for landfills? How about this factoid: "all the trash generated by Americans for the next 1,000 years would fit on one-tenth of 1 percent of the land available for grazing."
  • Love this Texas Monthly piece on the dysfunctional family of Texas cities and rivalries. Some of the best excerpts:
"Here it is in a nutshell: Fort Worth hates Dallas. Houston hates Dallas and Austin. San Antonio hates Austin. Austin wishes all the rest of us would just go away, and Dallas pretends that none of the rest of us even exist."
As East Dallas resident Mamie Joseph puts it, “Dallas is too busy hating itself to notice anybody else.” 
That observation was borne out four years back when I wrote a piece for the Houston Press and Dallas Observer about how those two cities were getting cooler while Austin was becoming more business-like and big city. The piece was met with near-universal praise in Houston, but about half of the feedback I got from Dallas was that I was a lunatic to think that way, and that only their jobs were keeping them from escaping to Austin ASAP. Meanwhile, Houstonians were printing up T-shirts with slogans like “I’m Not Moving to Austin” and “Keep Austin 170 Miles from Houston.” 
Then some more good Austin myth-busting and...
"In reality, Austin is no more “weird” or liberal than inner-loop Houston is. In fact, when I was growing up in Houston during the 70’s and early 80’s, Austin’s brand of “weird”, or bohemian culture as it were… seemed pretty tame compared to the Montrose area of inner-loop Houston. Montrose has since been heavily gentrified, but I’d say it’s still on par with Austin’s most liberal/Bohemian areas, which are hardly a majority of Austin as a whole. Houston just doesn’t toot it’s horn constantly about these things, the way Austin does."

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Sunday, October 04, 2015

Affordability sense and nonsense, 45N update, MaX Lanes adopted, and more

Another week, another BS to call.  This time on this study claiming Houston is not affordable compared to cities like Philly, Chicago, and even NYC! (Chronicle story)  And yet you wonder why Philly and Chicago are losing population, and people flee NYC because of the cost of living? Maybe there's a flaw in this ranking? I'd say it's mostly this: if you live in an expensive city (including taxes), then you naturally have less of your income left over to spend on housing and transportation. It's not because these cities are affordable, but because you're forced to live frugally. You live in affordable Houston (albeit admittedly less so the last few years), and you get to spend more on those, which makes your city look expensive by these rankings!  See the confused irony of using income percentage as an affordability indicator?  This kind of affordability ranking is specifically designed to make expensive transit-dependent cities look better, and it gets fully debunked here.

Moving on to this week's items:
Finally, check out this excellent piece by Laolu Davies-Yemitan on Maintaining Houston’s Affordability for Working Class Families (PDF version).  Houston is naturally a reasonably affordable city, but that's becoming less and less true in core urban neighborhoods, and there's more the City can do to encourage more affordable workforce housing in good core neighborhoods.

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