Sunday, December 27, 2020

2020 Highlights

Hope everyone is enjoying the holidays.  Time for our annual round-up of the best posts of 2020 - overall an uneventful, not-very-memorable year (right?! ;-) If you missed them earlier this year - or just didn't have time to read them then - hopefully the holidays are a more leisurely time for perusal. 

These posts have been chosen with a particular focus on significant ideas I'd like to see kept alive for discussion and action, and they're mainly targeted at new readers who want to get caught up with a quick overview of the Houston Strategies landscape. I also like to track what I think of as "reference posts" that sum up a particular topic or argument; and, last but not least, they've also been invaluable for me to track down some of my best thinking for meetings or when requested by others (as is the ever-helpful Google search).

Don't forget we offer an email option for the roughly once/week posts - see the Google Groups subscription signup box at the bottom of the right sidebar. An RSS feed link for newsfeed readers is also available in the right sidebar (I'm a fan of Feedly).

As always, thanks for your readership.
And don't forget the highlights from the first few years. For what it's worth, I think the best ideas are found there, often in the first year (I had a lot "stored up" before I started blogging) and most definitely in the best posts from the first 15 years and 1.5 million pageviews.


Sunday, December 20, 2020

Post-pandemic housing reality, charter amendment, alt-cities to CA-NYC, housing boom, and more

 A crazy week with a *ton* of new items I'll only be able to partially get through in this post, including some followups to last week's post about California tech companies moving to Texas:

"In terms of tech hype, Houston isn’t Austin, but it does check an awful lot of boxes for Musk. Also, if he spends much time on Twitter—and we know he does—Musk might be aware that there is a robust argument among Texans on the platform about whether Austin has “jumped the shark” and been supplanted by Houston for the title of coolest city in Texas."
"Affordable suburban living
From the 1980s to the mid-1990s, cities suffered from high crime rates and numerous quality of life issues. New York City, San Francisco, Los Angeles, and some other major cities have recreated the environment of that era, with non-scientific pandemic restrictions that devastated local businesses and a penchant for placing the mentally ill directly in family-oriented, residential neighborhoods. These cities have stopped prosecuting many property and quality of life crimes, inevitably leading to bad quality of life and apathetic enforcement of more serious crimes.

The coronavirus has reset consumer expectations back to suburban living with the mental health benefits of living in greenspace. There has been an exodus from major industry centers to their suburbs and to the alt-cities. The alt-cities of Miami, Austin, and Nashville all offer car-friendly, suburban living, relatively cheap housing, and continual housing construction. With the acceleration of sustainable building materials and clean and cheap energy, the urban planning rationale to pack people into urban cores with mass transportation was already beginning to fray, and the coronavirus has sealed its fate.
Low taxes and quality government
People are not moving solely for tax purposes. New York and California’s tax rates are only a few points higher than they were twenty years ago. However, once people decide to move, of course tax rate is a factor in choosing a destination. Florida, Texas, and Tennessee seemingly offer everything that California and New York offer: highways, streets, schools, police departments, fire departments, and such. All the government services one would expect are there, and none of the capital gains taxes that entrepreneurs and venture capitalists typically pay.

As comedian and political commentator Bill Maher recently noted, California is reminiscent of a 1970s Italy, with high taxes and terrible government services. In return for high taxes, one would expect to go to Hunter's Point, East Palo Alto, or East San Jose and see excellent schools and services for disadvantaged people. A hyperloop instead of a failed high-speed train. Fire mitigation and stable power to complement long term climate change goals. A boom in middle-class housing rather than a $700K median house price. California and New York are becoming bad versions of Singapore, with a wealthy technocratic elite, an immigrant servant class, and a collapsed middle class."
"Buyers are paying more, too: The average sale price in Houston jumped by about 15 percent to a historic high of $341,765 in November. And luxury homes—or those going for more than $775,000—saw a staggering 80-percent increase in demand, as well."
  • The Houston Charter Amendment Petition Coalition has a good video arguing for the need to spread power from our mayor to city council by allowing three city council members to put items on the agenda.
  • Unfortunate that Houston is not on this list of top ten cities gaining residents during the pandemic (Austin and Dallas are), but with the severe oil recession, it's not too surprising. I have still seen a ton of out-of-state plates around town, and do think we are getting some significant migration during the pandemic. 
  • Southwest announced new service from Houston Intergalactic to Dallas Love, Chicago Midway, Denver, Nashville, and New Orleans starting April 12th. I expect Dallas Love to be especially popular for The Woodlands and north Houston suburbs since United only goes to less convenient DFW.
Finally, our think tank the Urban Reform Institute - A Center for Opportunity Urbanism held a recent panel on the Post-Pandemic Housing Reality in conjunction with the Bush Center in Dallas.  A lot of good insights here - well worth watching.

Labels: , , , , , , , , , , ,

Sunday, December 13, 2020

Texas +3, California -3: More details on the HPE, Elon Musk, and Oracle moves to TX

The big news this week is all the different tech companies announcing their moves to Texas.

The big one for Houston is the announcement that HP Enterprise is moving its HQ from Silicon Valley to Spring just north of Houston - a long-term legacy benefit of Compaq Computer (which was acquired by HP and kept substantial operations here).

“Houston is also an attractive market for us to recruit and retain talent, and a great place to do business,” Mr. Neri said, adding that as one of the largest and most diverse cities in the country, “Houston provides the opportunity over time to draw more diverse talent into our ranks.”

  • And some more detail from their press release: (hat tip George)  
"Why Houston?
    Houston has long been our largest U.S. employment hub, and construction has been underway since the beginning of the year on a new, state-of-the-art campus in the area. Houston is also an attractive market for us to recruit and retain talent, and a great place to do business. The most diverse city in America and the fourth largest, Houston provides the opportunity over time to draw more diverse talent into our ranks – a key priority for HPE as we work to be unconditionally inclusive.
      We also anticipate long term cost savings associated with this move that we can reinvest in key areas of our business and innovation."
      • And finally a repost from Facebook that digs into what that increased affordability really means for employees:
      "Hewlett-Packard announced its leaving Palo Alto for Houston. 
      $1,100 is the average rent in Houston. 
      $3,350 is the average rent in Palo Alto. 
      Just to give a concept of how much the extra $2,250 a month that saves is. 
      $530 is the average monthly payment on a car. 
      $460 is the monthly individual cost of health insurance. 
      $400 is the average monthly cost of food. 
      $145 is the average monthly spending on gas for a car. 
      $130 is the average monthly cost of car insurance. 
      $1,665 a month total. 
      Those 5 things which are just as essential for people in Palo Alto as Houston and cost about as much in both places cost that much. 
      If an HP employee moved to Houston and cut rent cost down, but chose to save $585 more a month and put it in a 401k paying 5% for 10 years, they’d have $92,700 or 7 years average rent in Houston. 
      Those 5 things are also essential, so let’s just say an HP employee moved to Houston and saved the entire $2,250 a month for 10 years. 
      $27,000 saved a year. 
      $357,000 saved over 10 years
      27 years worth of rent in Houston. 
      9 years worth of rent in Palo Alto. 
      A lot of people have a lot of different reasons for companies leaving, but I think the rent factor and how it’s extremely hard for employees to live is the problem. 
      Hewlett-Packard was the birth of Silicon Valley and it’s leaving. 
      I don’t see it as unlikely a future where Facebook, Uber, Google and more could join."
      Then there are the other stories on Elon Musk's and Oracle's moves to Austin:
      "California, with its steep housing costs, raging wildfires and strict business regulations, has been losing residents to other states, with Texas as the most popular exodus destination. Of more than 653,000 people who left California last year, about 82,000 went to Texas, more than any other state, according to census figures. 
      Or, as The Stanford Review wrote in a nod to the native Texan George Strait, “All of California’s Exes Are Moving to Texas.” (😅) ...
      California and Texas — two economic powerhouses, one led by Democrats and the other by Republicans, with respective populations of 40 million and 29 million — are in many ways natural frenemies. It is a rivalry made up of In-N-Out versus Whataburger, of Disneyland versus the State Fair of Texas, of tacos versus, well, other tacos."
      "Taxes, a more affordable cost of living for employees, a lower cost of doing business, and less competition for talent are among the top drivers for the companies’ moves, though there is also a growing sense that culture is a factor, as well."
      All in all a very good week for Houston and Texas!  Let's hope this is just the beginning of a much larger tech exodus from California to Texas...

      Labels: , , , , , , , ,

      Thursday, December 03, 2020

      Reason: Toll Agency Politicized in Houston

      Reason's newest Surface Transportation Newsletter by Bob Poole talks about Harris County's dangerous raid on HCTRA's toll road money, and this is so important I'm reposting it in full here (highlights mine):

       Toll Agency Politicized in Houston

      "Back in September, the governing body in Harris County, Texas—the Commissioners Court—voted 3-2 to take over the respected Harris County Toll Road Authority (HCTRA). They created a government corporation that will divert toll revenues to things like flood control and help to pay for deepening the Houston Ship Channel. This political move undercuts the widely followed principle of most U.S. tolling: users-pay/users-benefit. Harris County will receive a $300 million lump sum from HCTRA, followed by $90 million a year indefinitely.

      Another part of the deal calls for refinancing HCTRA’s $2.7 billion worth of toll revenue bonds to take advantage of today’s historically low-interest rates, with estimated savings of $60 million per year. That’s a move HCTRA could have made on its own, in the interest of delivering better value to its toll-paying customers. And its well-managed counterpart in the Dallas/Ft. Worth metro area—the North Texas Tollway Authority—the same month announced its own debt refinancing, but without any revenue diversions.

      The Houston change was decidedly political, with the three Democratic commissioners voting in favor while the two Republicans voting against it. One of the Republicans, Steve Radack, was quoted in the Houston Chronicle saying, “This is a money grab. They are going to use it to pay for things that are normally paid for via property taxes.” Also opposing the takeover was David Hagy, executive director of the American Council of Engineering Companies, who supported the sensible refinancing but not the county’s money grab. And the Transportation Advocacy Group urged the Commissioners to at least use the diverted funds for transportation purposes.

      I wonder how the rating agencies will view this politicization. HCTRA’s current bond indenture, as well as state law, limits the use of surplus revenues to non-toll roads, streets, and highways, according to a Q&A provided by the Harris County budget office. If that’s true, there might be grounds for bondholder litigation.

      Moreover, while short-term thinking would say this is only a small amount of revenue diversion, the real danger is that it sets a precedent and provides no safeguards against future raids on HCTRA’s toll revenues. Transportation professionals know what has happened to the Pennsylvania Turnpike when that state’s legislature imposed Act 44 mandating that the Turnpike divert $450 million per year to the state DOT for transit subsidies. The Turnpike has had to significantly increase its bonded indebtedness, and enact large annual toll rate increases to meet the new debt service. That same fate could await HCTRA’s toll payers the next time Harris County faces budget shortfalls."


      Labels: , ,