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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At 9:57 AM, October 26, 2015, Anonymous Rich said...

The mayoral election could have a potentially interesting impact, indeed.

Meanwhile, Houston Metro claims that it is experiencing ridership gains:

Hopefully during future years, Houston Metro (which gets around 80% of its budget from us taxpayers) won't use distorted statistics to make us think it's becoming more popular. As an example of something to look out for: the recently implemented system "reimagining" involves shorter routes. There's nothing wrong with that, especially since at least now bus arrival times will be far more predictable than they were. However, more boardings will result, because one has to change buses to travel distances. Will Metro use the resulting increase in boardings to artificially inflate its popularity statistics? Stay tuned.

By the way, as for purported increases in the southeast light rail lines' ridership, here's some historical perspective:

Can you imagine how much more growth there could be if one could refill one's QCard at all light rail stations? That's presently not possible on the new rail lines. Who is responsible for that procurement folly?

At 1:43 PM, October 26, 2015, Anonymous Rich said...

Meanwhile, isn't it interesting how the privately owned & operated Wave jitney service is providing (corporate-underwritten) FREE rides during Halloween?

Doesn't this go to show how we should increasingly force Metro to outsource to entrepreneurial upstarts?

At 8:22 PM, October 27, 2015, Blogger Max Concrete said...

I spent some time looking around the California High Speed Rail Authority web site and was surprised to discover that the alignment has not been finalized for most of the route. In fact, the only non-urban section to have a final route is the section with work underway, 29 miles from Fresno to Madera.

Work has just started to take investigative borings for alignments with tunnels on the Burbank-Palmdale section. All four options feature long tunnels and will be very expensive, and completion of that section is a long way off since they are just now starting detailed studies of the options. That section looks like it will be super-expensive.

At 10:00 PM, October 27, 2015, Anonymous Dom said...

You worried about NYC transportation? What about Houston's? What's the state of Houston's roads? What about our highways? Sprawl isn't cheap or efficient. How much does it cost for a driver to go from Katy to Uptown on the Westpark in tolls alone?

At 10:46 PM, October 27, 2015, Blogger Tory Gattis said...

Still cheaper - by far - than living in NYC!

At 1:06 PM, October 28, 2015, Anonymous Mike said...

Not sure about "Affordable Global City." People who are drawn to global cities aren't generally drawn to things that are affordable, or at least not things that bill themselves as such. It sounds a little like "Affordable Housing."

I think a better strategy, at least for regional tourism and choice of where to live, is to be a big fish in a small pond, rather than a small fish in a big pond. I always thought "Downtown, Texas," is something Houston could claim. We have the largest downtown in Texas, the tallest buildings, and could at least make an argument that it's the most vibrant.

I also thought of "Main Street Capital of the World," or something similar. This may have to wait a little longer until some of the dead zones along Main Street are taken care of. But... does any other major city have Main Street as the name of its major downtown thoroughfare? Think about it. Our Main Street may actually have the highest value of real estate of any Main Street in the world. No reason we can't claim the position, just like Austin claimed "Live Music Capital of the World" even though it's not exactly true. Marketing is half illusion, and then it becomes a self-fulfilling prophecy. "Main Street Capital of the World" is there for the taking.

At 11:46 AM, January 15, 2016, Blogger George Rogers said...

Main st capital of the world also makes sense because since 2007 Houston created almost half of us major metro middle-class jobs.


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