Saturday, October 15, 2022

Why Houston is better with TIRZs, our lack of zoning held up as a model for the country, 45N expansion gets support, professionals migrating to TX, and more

Before getting to some smaller items, I want to comment on the Chronicle's investigative report on TIRZs (tax-increment reinvestment zones).  While I'll admit they can be a bit of a mess and even a bit wasteful, what the reporters miss is that if the TIRZs were dissolved and the money sent to the City instead, it would just get gobbled up by the public employee unions long before it can do any good in any lower-income neighborhoods outside the TIRZs. As the pieces note, every mayor comes into office thinking they will go after the TIRZs, then realize they can make them work for the city as a whole by delegating projects to them (like improvements to Buffalo Bayou and Memorial parks), and shift City budget money to those neighborhoods outside the TIRZs. Finally, I think Houston's core (and the City as a whole) would be in a much more precarious position if it wasn't for the TIRZs making strong investments in Uptown, Downtown, Midtown, the Med Center, and other key districts to keep them attractive to employers and high-income professionals.

Moving on to a backlog of smaller items, mostly from my Twitter feed:

  • You may find it hard to believe, but Houston has the shortest CBD commuting times of the major metros due to a high-capacity freeway and HOV lane network with great coverage (Chart 5, page 7).
  • Harris County/Houston #2 behind Maricopa/Phoenix in total population growth over the last decade. Mapped: A Decade of Population Growth and Decline in U.S. Counties
  • Texas #1 for gaining rich young professionals from other states: States Losing (And Gaining) The Most Rich Young Professionals – 2022 Edition 
  • "According to Nolan Gray, one of the reasons Houston is among the most affordable, diverse and economically dynamic cities in America is because it never adopted zoning." 'Houston's lack of zoning fueled its growth and should be copied elsewhere'
  • Texas is their #1 destination: Young people earning $100,000 or more are fleeing California and New York—here's where they're going
  • Video: "Of all the Texas cities - most of which I'm very bullish on - the one that is probably going to have the biggest success story for the next 30 years is by far Houston." Hat tip to George.
  • The City Without Zoning: "For the most part, Houston’s positives are linked to its lack of zoning, and its negatives are essentially unrelated to zoning."
  • The Search for Intelligent Life Is About to Get a Lot More Interesting: "In 2018, Frank attended a meeting in Houston whose focus was technosignatures... seek out signs of technology on distant worlds, like atmospheric pollution... “That meeting in Houston was the dawn of the new era, at least as I saw it,” Frank recalls."
  • Public comment submitted on raising I10 at White Oak Bayou: this project seems unnecessarily disruptive and expensive to keep the freeway open a relatively tiny handful of days every few years, especially given that 610 provides a natural alternative when I10 is blocked by flooding. Additionally, when the city is flooding badly enough to put I10 underwater, most households and businesses are hunkered down anyway, reducing demand. There are better places to deploy TXDoT's limited resources.
  • "The planned rebuild of I45 in Houston drew the largest number of comments, 382 of the 1,685 TxDOT received through a month-long public comment period. Of those, TxDOT said 299 were supportive of the project while 66 were opposed." (source)
  • "Houston prioritizes the ease and cost of building housing above almost all else. As a result, residents with money have a higher standard of living and those without have more humane sheltering options. Cities with other priorities sacrifice on both of these." -John Arnold
  • Texas #5 state for racial equality, and #1 for states with a significant Black population share. Hat tip to George.
  • Houston is the largest metro below the national average for salary needed to buy a home. Map: This is the Salary You Need to Buy a Home in 50 U.S. Cities
  • The American Conservative: How Zoning Paralyzed American Cities: "America should learn from no-zoning Houston, says Gray...What proved crucial to rejecting zoning was Houston’s allowance of deed restrictions, whereby neighbors can voluntarily opt into zoning-like restrictions and design standards...And while neighbors get a say over their neighborhood, Houston as a whole is still allowed to grow. It builds housing at 14 times the rate of its peers and, in the process, has become one of the most affordable and diverse cities in the country.""
"Is Nolan Gray really calling for zoning abolition? Yes, he is. And before you dismiss him—perhaps Houston isn’t your cup of tea, or maybe you simply like your home and its zoning, thank you very much—consider that Houstonians agreed with Nolan’s view in 1948, 1962, and 1993, killing zoning each time it came up for a vote, largely thanks to working-class voters. What proved crucial to rejecting zoning was Houston’s allowance of deed restrictions, whereby neighbors can voluntarily opt into zoning-like restrictions and design standards to ensure whatever character of their community they desire for the next 25 to 30 years. And while neighbors get a say over their neighborhood, Houston as a whole is still allowed to grow. It builds housing at 14 times the rate of its peers and, in the process, has become one of the most affordable and diverse cities in the country." 

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Saturday, October 01, 2022

The Shocking Cost for All-electronic Tolling at HCTRA

(This week we have part 2 of 2 always-excellent blog posts by guest author Oscar Slotboom - see part 1 here)
In part 1 we examined the strong post-covid revenue recovery and the rapidly escalating admin cost. Today we'll look at transfers out and the cost of conversion to all-electronic tolling.
Transfers Out
HCTRA has a longstanding practice of diverting toll funds out of HCTRA. The five-year average prior to 2020 was $132 million per year, but in 2020 the diversion was increased to $545 million, and funds were no longer being used solely for county road projects. See last year's review for more details.
In 2021 the diversion was $254 million. This is 72.6% of 2021 net income of $346.9 million. (Reference page 55, which is document page 64)
In last year's review I included "opportunities for improvement", and the first item was "More details about the specific use of funds transferred out."
No additional information is provided. The annual report still has the historically-used standard statement that the transfers are "to pay or finance costs of roads, streets, highways, or other related facilities that are not part of the Authority’s toll road system."
Conversion to All-Electronic Tolling
HCTRA stopped manual collection of tolls in March 2020 during the Covid emergency to avoid exposing toll booth workers. The system was effectively all-electronic at that point, but of course the tolling infrastructure remains on toll roads constructed more than 20 years ago. All new toll facilities opened since 2004 are designed to be all-electronic, including the Westpark Tollway, Fort Bend Parkway, Tomball Tollway and the northeast section of the Sam Houston Tollway.
The annual report lists conversion to all-electronic tolling as one of HCTRA's three major initiatives. It alludes to the cost of this initiative in the commentary about expenses, saying the $21 million increase in the $164 million expenditure for services and fees "is primarily due to an increase in service contracts related to the Toll Road’s effort in transitioning to a cashless environment and an all-electronic tolling plan." There has been a steady stream of consultant contracts in Harris County agendas, including $7.3 million on September 27.
The annual report cover includes a depiction of what appears to be an electronic toll gantry which will replace an existing plaza.
However, the annual report does not provide the cost of the conversion. Another document available at the HCTRA site, the state-mandated FY 2022 HB 803 Report (page 5), drops the bomb about the cost of this effort.
Estimated cost: $494 million
This is especially shocking since the demolition and construction work applies only to the older parts of the toll road system, mainly the original three sections of the Sam Houston Tollway, from I-69 Southwest Freeway to I-45 North Freeway, and the Hardy Toll Road. This work will apparently include demolition of the legacy toll plazas, and demolition work is usually a relatively small cost compared to construction.
The $494 million cost is 141% of the 2021 system profit, or (stated another way) consumes 1.4 years of system profit.
This plot compares the $494 million cost to recent and ongoing major construction projects, all costing less than the electronic conversion. (Sources 1, 2)
The similarly-sized North Texas Turnpike Authority in Dallas-Fort Worth converted to all-electionic tolling starting in 2008 with manual toll collection ended in December 2010. A July 2010 Dallas Morning News report stated that NTTA had spent $92 million on the effort. That number may not be the final total cost (for which information is not readily available), but the total cost is surely vastly below $494 million. While inflation has increased construction costs since 2010, major elements of electronic tolling, including cameras, software, and communication equipment, are surely lower today compared to 2010.
This certainly creates the perception HCTRA is charging tolls to pay for the collection of tolls, especially since it is likely that most of the conversion cost applies to the original three sections of the Sam Houston Tollway, which are huge revenue generators and have paid for themselves many times over. Sorry Sam Houston Tollway users, you need to pay $494 million so tolls can be collected indefinitely on sections which have long paid for themselves.
Let's hope HCTRA will provide a detailed accounting of this sky-high cost for electronic tolling.
Final Notes
The Hardy Toll Road Downtown Extension was suspended by Harris County Commissioners Court in May 2020, and the long-anticipated main lane construction has been on hold. The 2022 annual report says Commissioners Court "continues to move forward" with the project, and there is no mention of any changes in scope. The HB 203 report lists $226 million in expenditures for 2023-2026, which is consistent with the cost of completing the main lanes.
HCTRA's annual reports are on an unconventional fiscal year from March 1 to Feb 28/29. In January 2021, Commissioners Court approved changing to a fiscal year ending on September 30. The period from March 1 to September 30, 2022, was a transitional seven-month fiscal year, and on October 1 the first 12-month fiscal year on the new schedule began.

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