Saturday, August 05, 2017

Where should Houston's innovation district be?

As Houston has recently reinvigorated efforts to support a tech innovation startup community, the idea of a concentrated "innovation district" has been raised to create a critical mass to concentrate Houston's dispersed initiatives.  The Chronicle article mentions EaDo, Montrose, and the Rice Village, all of which I think are bad ideas.  My own inclination was Midtown at first, but the more I thought about it, the more Downtown makes the most sense, specifically concentrated around the Main Street Square to Preston rail stops.  There are several reasons.

The first and most important reason is that Houston needs to concentrate the startup activities from entrepreneurs all over the metro area.  Because of the tremendous amount of commuter bus service concentrated there (including Metro's central transit center), downtown is the obvious choice.  An Exxon employee out near The Woodlands that quits his job and wants to work on a startup merely has to hop on an express bus downtown to join the community - no transfers required (or a quick transfer to the rail line).  Even if they don't ride the bus, all our freeways point there too - and that works both ways as well: it will be easy for entrepreneurs downtown to go visit customer and partner companies all over the city. Additionally, Rice, UH, and med center students and faculty to easily get there on rail lines.  In fact, I think they need to cut a deal with METRO for an affordable monthly rail pass for any members of Station Houston or other incubators there.

Other reasons downtown makes the most sense:
  • Plenty of unused office space, especially more affordable Class B space (maybe even the old Exxon building?)
  • Recent college grads love living in Midtown, which would have a short rail ride up to the offices.
  • Tons of walkable bars and restaurants for entrepreneurs to mix and mingle in.
  • Several parks within walking distance.
  • Short ride to TX/RX Labs for product design and prototype manufacturing.
The more you think about it, the more sense it makes.  I hope they're taking a serious look at it.

Additionally, this might be a good time to mention my other "big idea" for supporting innovation in Houston: give all the big company employees around the city (especially the energy companies) an option to invest up to a tiny percentage of their 401k funds in local venture capital (a Houston-focused "special situations" fund). Even if capped at 1-5% of their portfolio, that could still put tens or hundreds of millions of dollars into local VC, which would be a huge shot in the arm for Houston's startup scene.

Finally, it's worth stressing how critical this endeavor is to Houston's future. Nobody knows how the energy future is going to play out - especially when it comes to electric cars or renewables - or how it will affect the oil industry, but no matter what, Houston will have to adapt, and having a strong innovation scene will make that much, much easier and more likely to keep Houston thriving instead of going the way of other rust belt cities.

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Monday, July 31, 2017

Houston #1 renovator, culinary bragging rights, cash-out parking, global HTX, and more

This week I'm digging into a few older links I probably should have posted earlier, but somehow didn't get around to:
"...compel employers who provide free parking to offer transit benefits (like a pre-tax bus pass) or a cash payment to workers who find another way to the office. The goal here isn’t to stamp out cars, but to let the non-drivers “cash out” the value of "free" parking. Research suggests this sort of “parking cash-out” works. A series of LA-based case studies by UCLA urban planner Donald Shoup found these programs can decrease the number of drivers who motor alone to work by 17 percent, and increase rates of carpooling, transit riding, biking, and walking." 
"Everything’s big in Texas—including home renovations.
Houston homeowners, with a median budget of $704,000, outspent remodelers in 74 other U.S. metro markets, according to an analysis of building permits for high-end projects.
...
“People are feeling really good about the city, and the amount of money they can put into their houses,” said Stephen McNiel of Creative Property Restoration, a builder in Houston."
    Definitely a sign of the high standard of living here (average salaries adjusted for the cost of living) that people can afford to spend so much on home renovations.
    "With full recognition that our credibility is suspect, I nonetheless come today to proclaim Houston one of the great eating capitals of America. I mean (and here I mount the mechanical bull) far better than anywhere else in Texas, better than anywhere else in the Southwest, better for that matter than in my current place of residence, Washington, D.C. That the nation’s fourth-largest city is no longer one gigantic steak platter for oil barons should not constitute breaking news. One can go on about the city’s indigenous assets, such as its array of Gulf Coast ingredients and its surprising multiculturalism. 
    But the main reason for Houston’s culinary ascent is economic. This became clear to me one afternoon last fall while eating at Étoile, a vibrant French restaurant that opened in 2012 near the city’s famed Galleria mall, and whose chef and owner, Philippe Verpiand, hails from Provence. After running a restaurant in San Diego with his wife, Monica, for seven years, Mr. Verpiand decided in 2011 to check out Houston. What he discovered, he told me, was that the Bayou City “is very affordable and full of people who like to go out at night and spend money.” It costs probably one-third less to build and design a restaurant here than in California, he said, adding, “I can afford to pay sous-chefs full time and be able to spend the weekends fishing and duck hunting with my boys.” 
    Such cost savings are passed on to Houston’s consumers, who can enjoy a first-rate meal here for maybe two-thirds of what such a dinner would come to in New York or San Francisco."
    Finally, continuing our series of COU videos on Texas cities, this week's focus city is San Antonio, a city I visited last weekend and really enjoyed despite the 100+ degree heat.  The Pearl District is the most impressive industrial re-adaption I've ever seen - Houston needs something similar!



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    Wednesday, July 26, 2017

    COU Houston video, market urbanism, Super Bowl impact on HTX, open transportation markets in TX, and more

    Before getting to this week's items, I want to put in a plug for Scott Beyer's new Market Urbanism Report website (introductory video here). Definitely worth checking out and subscribing if you're a fan of the type of stuff I discuss on this blog. His intro:
    "For about a decade, there’s been a growing bipartisan consensus that America’s cities need liberalization. This consensus formed because of the problems our cities now face thanks to government control. Urban housing supply has been artificially limited by regulations, causing price inflation; publicly-run transportation systems create gridlock and delay; and other services are riddled with patronage."
    Definitely check it out. And here's a good introduction to market urbanism to go with it, with three key arguments:
    1. Housing is expensive, in part, because of bad regulations.
    2. Don’t underrate the importance of bottom-up solutions to urban problems.
    3. More money isn’t the solution to America’s urban transit woes.
    Moving on to this week's items:
    "No city in America runs on anything resembling a free-market model. But Texas' major cities are probably the closest thing, with vast improvements to their economies and living standards to show for it. Their looser land-use laws mean that housing supply grows quickly, stabilizing prices. Their lighter tax and regulatory structure helps businesses locate there and grow. And—shenanigans from the governor's office notwithstanding—their openness to immigrants means they have cheap and robust labor forces.
    ...
    Another thing Texas' toll roads have accomplished is greater mobility. The Dallas and Houston metros, in particular, have been the nation’s two fastest-growing metros by net population since 2010. But their congestion levels are not as bad as similar-size metros, according to traffic studies by Inrix and TomTom. This is because they've expanded highway capacity to accommodate population growth, acknowledging that the laws of supply and demand apply to roads like with anything else. Perhaps more crucially, though, they’ve priced the use of these roads, to avoid a tragedy of the commons. And it has worked at creating many excellent, self-funded roads: as I can attest from having lived last summer in Houston, Dallas and Austin, toll roads proliferate throughout each metro, are free-flowing, and charge users electronically, so that they're not having to stop and pay at booths."
    "In many ways, Houston’s Super Bowl was a tremendous success. On the field, it was perhaps the most exciting game in the 51-year history of the event. The weather was perfect, the mild Texas winter providing a comfortable respite for visiting fans and media. For locals and visitors alike, the events at Discovery Green and throughout the Super Bowl Live experience offered engagement with the event regardless of whether they could afford a (minimum) four-figure ticket to the game itself. Taylor Swift had a good time! So did Sting, The Goo Goo Dolls, Travi$ $cott, and the other entertainers who visited and performed for the crowds.
    ...
    Still, even with the fuzzy math of an economic impact report, the Houston Super Bowl was a success.
    ...
    The impact of Super Bowl 51 on Houston also highlights the significance of events like the Houston Livestock Show and Rodeo, or SXSW and the Austin City Limits Festival in Austin... Cities around the country compete, year after year, with aggressive bids for the chance to host Super Bowls. The Rodeo happens every year and brings in more money, while SXSW annually serves as a recurring pitch to the 85,000 or so people who come to town that Austin is a cool place to live, work, run a business, and spend money. No matter the exact numbers, the Super Bowl seems to have worked out for Houston—but the most impactful events seem to be the ones that are annually in our backyard."
    Finally, our COU video on Houston has just been released! I'm really proud of it - it came out great. Definitely check it out - it'll make you proud to be a Houstonian.

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    Friday, July 21, 2017

    Localism, piling on DART, Honolulu rail disaster, simple fix for housing, big ice, and more

    Apologies again for the posting delay. I recently returned from a great AEI-COU event in DC, including a fantastic speech by Senator Mike Lee on the importance of localism (vs. federal control of everything).  More local control seems like a bipartisan issue both parties could get behind. You may find some of their follow-up links of interest:
    "Thank you for your interest and participation in AEI's recent event "Localism and social capital: Sen. Mike Lee (R-UT) on why federalism is key to restoring civic connectedness and faith in the American government." We wanted to share the event summary and video with you; please feel free to share these with friends or colleagues. For more information on this topic, check out Arthur C. Brooks' publication "It’s better when all politics is local," Andy Smarick's publication "The infinite information problem and state centralization," and Peter J. Wallison's publication "Decentralization, deference, and the administrative state." 
    Moving on to this week's items:
    "Notwithstanding the massive investment in rail over the last two decades made throughout the country, only about 4% of the total daily trips made by Americans are on any form of transit, and less than 2% on rail. Bus ridership has been unchanged for the last two decades. It would be interesting, but ultimately impossible to know how bus ridership might have improved if even a fraction of the billions spent on rail had instead been invested in improving the bus service. 
    With the advent of disruptive transportation technologies like ride sharing, self-driving cars and the electrification of transportation power systems, any further investment in this highly inflexible technology would be folly. We need to be building a transportation system for the next century, not the last one. 
    But there is something akin to a religious belief in rail that I have never been able to understand. The late, great Bob Lanier best summarized it: 
    "First, rail's supporters say 'It's cheaper.' When you show it costs more, they say, 'It's faster.' When you show it's slower, they say, 'It serves more riders.' When you show there are fewer riders, they say, 'It brings economic development. When you show no economic development, they say, 'It helps the image.' When you say you don't want to spend that much money on image, they say, 'It will solve the pollution problem. When you show it won't help pollution, they say, finally, 'It will take time. You'll see.'" 
    Dallas' multi-billion dollar experiment with rail has proved Mayor Bob right. Sorry to all my friends that continue to believe rail is the solution to our mobility problems, but time is up."
    "It’s really not that complicated. Seattle has a housing shortage. Every occupied new unit of higher cost housing translates to one less higher income household competing for a limited amount of existing housing. And whenever there are more people who want housing than there are housing units, it will be the poorest who lose."
    Finally, our Center for Opportunity Urbanism has been creating a series of videos for Texas cities. Houston's isn't ready yet, so this week we'll start with Austin's:



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    Monday, July 03, 2017

    DART eviscerated, tolls vs sprawl, transit apocalypse, build the Ike Dike, top rankings, and more

    After my last post which included problems with DART, a reader sent me this Dallas Observer story that's even more damning of the utter failure of DARTs commuter light rail strategy while subtly endorsing Houston METRO's approach:
    "Since the founding of DART in 1983, the city has been shackled to the suburbs in the creation of what has become the nation’s dumbest mass-transit system
    Instead of investing money where it could actually make a difference — in the dense, urban core where people might be talked out of their cars — DART has spent billions of tax dollars building a kind of amusement park ride. DART has squandered our resources and our time building a slow-poke, light rail, surface-running system that screws up traffic, takes forever, attracts miserably few riders and, as a result, operates at an ungodly subsidy. Its real purpose has been to serve as an amenity and sales-pitch bauble for suburban apartment developers. ... 
    DART, as presently constituted and designed, is a massive failure that sucks up scarce resources we need to spend on smarter things. If DART were a horse, we'd shoot it."
    Wow. Doesn't hold back and tells it like it is! It's not all good news for METRO though - scroll down to some of the graph stats that are not so great.

    In other news, I find it amusing that anti-toll forces have joined with anti-sprawl forces to oppose new suburban toll roads, like the extension of 249 past Tomball.  In theory, anti-sprawl forces should vigorously support toll roads because they better price somebody's decision to live far out and commute in.  The problem with the anti-sprawlers is that they realize even fully priced with toll roads, people prefer affordable suburban living and will still live out there, so they prefer to kill the roads by any means necessary, even if that means aligning with the anti-toll people, who want the road, they just want it to be free (the opposite of what the anti-sprawlers want!).  The unfortunate bottom line is that the anti-toll crowd has gotten politically powerful enough the politicians have to go with it, but TXDoT and rational officials realize it's not toll vs. no-toll, it's toll vs. no-road, so they're going to keep building them because they keep filling up with demand as fast as they're built!

    After yet another story arguing transportation costs should be included in defining affordable housing based on the flawed stat of income percentage spent (i.e. pro-density+transit, anti-suburbs+cars; also here), I posted a comment that got enough up-votes to be the top response:
    "Isn't the more likely explanation that people who spend a lot on housing don't have much money leftover for transportation? And those who do have affordable suburban houses have plenty to spend on high-end vehicles? Is it really fair to say a suburban house has a "high cost of transportation" because people are buying high-end trucks, SUVs, mini-vans, and luxury cars, when they just as easily could buy a cheap used Honda Civic or Toyota Prius if they were really concerned with keeping their transportation costs low?"
    Moving on to make a dent in the huge backlog of smaller items to share...
    "Boasting affordable living costs and a large number of incubators, Houston takes the title as the number one best city for minority entrepreneurs. The city has one of the most diverse populations and its bustling startup scene is full of minority-owned business ventures. It also comes in fourth place for the most economic opportunities for minorities."
    Finally, from the Thrillist list of Totally Underappreciated Cities You Should Move To:
    Houston, Texas
    Texas' most underrated big city does almost everything right.
    City population: 2,167,988
    Cost of living index: 90 (10% lower than US average)
    If you lament your city's poor planning, crumbling infrastructure, and careless corporate community, look to America's fourth-largest city for examples of how all that should be done. Not gonna lie: The traffic can be a drag, and the swampy summers are a slog. But overall Houston has its shit together better than any city its size.
     
    Even though the oil industry isn't the king it once was, health care, construction, education, and tourism are bringing people to Houston by the tens of thousands. With them have come new sports stadiums, new neighborhoods like the artsy EaDo or the hipster-historic Montrose, and a worldly food scene that extends waaaay beyond the usual barbecue and Tex-Mex (though, obviously, both of those are great too). Through public-private partnerships, Houston has developed America's premier museum district, plus stunning urban green spaces like the 160-acre Buffalo Bayou Park, and it's only adding each year. In terms of perceived "coolness," H-Town is still in Austin's overinflated shadow, but in a state this hot, the shade is a pretty good place to be. Improving quality of life while still rapidly growing? Take notes, Austin. -- M.M.

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    Thursday, June 22, 2017

    The future of transportation, including METRO's new long-range regional transit plan

    Before getting to this week's items, a quick debrief on METRO's new long-range regional transit planning process.  They held a lunch meeting for bloggers to brief us on their plans, which included this slide presentation with some really interesting material (longer original version).  There's some good info in the slides, and they show that METRO has performed better than most other transit agencies in the country (including DART and Portland - see below). My impression was that they're being very open-minded as they go through this process, including consideration of innovative new technologies like autonomous vehicles and high-speed platooning in MaX Lanes. This is also clearly not a case of "here's our plan but we need to go through the formality of public input" - they are genuinely looking for good ideas.  If you'd like to give them your thoughts, the first open house is Tuesday, June 27 from 2-4pm at METRO, 1900 Main Street in downtown Houston, to be followed by additional public events listed here.

    They are certainly doing better than DART in Dallas: Cotton Belt Debt Issuance Fails to Pass DART Board - As Dallas support shifts away from sprawling light rail system, the future of the $1 billion project is in doubt. Hat tip to Mark.  Key excerpts:
    "...most spoke of a desire to refocus DART’s efforts on bus service and overall system ridership and reliability, rather than continuing to build expensive light rail extensions that have not been able to reverse a downtrend in ridership
    ... a crippled public transit system in which residents have to endure the burden of impossibly long commutes and little access to employment or opportunity — sounded very much like DART as it exists today. In its 30-year blitz to build out the nation’s longest light rail network, DART has created a public transit system that is inefficient and unreliable, a system that has contributed to Dallas’ enduring struggles with upward mobility, high rate of neighborhood income inequality, and a burdensome cost of living when transportation costs are taken into consideration."
    Portland is also a basket case:
    "The region has already spent between $4 billion and $5 billion on light rail. Before commencing construction on the city’s first light-rail line, 9.9 percent of commuters took transit to work. Since it is now down to 7.9 percent, rail clearly has not boosted transit ridership. According to a report released last October, one-third of the region’s capital spending on transportation is going for transit, yet transit carries just 2.5 percent of the region’s motorized passenger miles (and virtually no freight). 
    Cascade Policy Institute director John Charles points out that TriMet’s inflation adjusted budget has increased by 72 percent since 1998, not counting the $3.6 billion spent on new rail lines, yet transit’s share of commuting declined. “Just 5% of all commuters in Southwest Portland took transit to work in 2016,” says Charles, yet TriMet wants to spend $2.4 billion on a light-rail line through that part of the city. “Cannibalizing current bus service with costly new trains” is hardly a sound transportation policy, he advises, yet Portland remains wedded to that policy."
    These and all other transit agencies need to read this piece on ten ways to know if your transportation project is a boondoggle.

    What's the real future of transportation if it isn't light rail?
    "The study predicts that everyday Americans will ditch their cars in favor of a system of distributed electric vehicles, and reap the financial rewards. On a per-mile basis, using TaaS will be four to 10 times cheaper per mile than buying a new car by 2021, and widespread adoption of electric vehicles will lower maintenance costs. In their most rosy scenario, each family could save up to $5,600 per year."
    Read that number again. It is a massive boost to incomes.
    "As we see it, the Private Autonomy model is likely to catch on first in developed suburban cities with high per capita GDP, openness to new technologies, and a successful record of implementing public projects. Such places include Houston, the Ruhr area of Germany, and Sydney."

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    Monday, June 12, 2017

    City of the Future, top diversity, real livability, downtown's non-issues, declining transit, and more

    I'm back from CA with this week's items, including my own comments:
    "In some cases, the decline in bus ridership more than made up for increases in rail ridership. Phoenix light-rail ridership grew by 10.6 percent, but for every light-rail rider gained, Phoenix transit lost nearly four bus riders. Los Angeles light-rail ridership grew by 8.7 percent, but for every light-rail rider gained, Los Angeles lost nearly six bus riders. Ridership on Nashville’s Music City Star grew by 2.6 percent, but the city lost more than 30 bus riders for every new rail rider. Denver opened a new rail line to the airport but lost more than 1-1/2 bus riders for every rail rider gained. Charlotte lost more than 15 bus riders per new rail rider, while Portland lost nearly 2 bus riders per new light-rail rider. 
    Other major rail systems couldn’t even record gains. Washington’s Metrorail fell by 10.4 percent; Atlanta fell by 4.7 percent; and the biggest shock of all, New York City subways fell by 0.8 percent. Heavy-rail ridership also feel in in Baltimore (-13.2%), Chicago (-1.3%), Miami (-3.8%), and Philadelphia (-4.5%), among other places.
    ...
    Light-rail ridership declined in, among other places, Buffalo (-6.1%), Cleveland (-4.7%), Dallas (-1.7%), Minneapolis (-0.2%), Philadelphia (-6.0%), Pittsburgh (-4.3%), St. Louis (-4.6%), and Sacramento (-3.5%). Commuter-rail ridership fell in Albuquerque (-7.7%), Austin (-3.5%), Dallas-Ft. Worth (-6.1%), Los Angeles (-4.3%), Maryland (-1.9%), Miami (-1.6%), Orlando (-8.5%), and Philadelphia (-5.9%), among other places. 
    Salt Lake City has been getting more federal transit funding per capita than any other urban area, but the region seems to be losing its bet on light rail and commuter rail. Except for paratransit, every mode of transit in the region declined. The same thing happened in Dallas-Ft. Worth, which has built more light rail than any region in the country. Transit in San Jose, home of one of the nation’s worst-managed transit agencies, took a real nosedive, losing 10.0 percent of light-rail riders and 8.5 percent of bus riders."

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    Monday, May 29, 2017

    45N+downtown and transportation updates from the Texas legislative session (guest post)

    Today's guest post is from Oscar Slotboom of Houston Freeways.  A bit longer than usual posts here, but with some great updates.
    ---
    North Houston Highway Improvement Project (including downtown)

    In conjunction with public hearings in May and release of the Draft Environmental Impact Statement, TxDOT recently released updated schematics for the North Houston Highway Improvement Project, which includes the planned total rebuild of downtown freeways. I attended two of the three public meetings, and there were about 10-15 speakers at each meeting, with minimal or negligible opposition among the speakers. So this project appears to have community support.

    TxDOT and its consultant HNTB have continued the process of ongoing improvement of the design, with incremental refinements mostly on the north side of downtown. The numerous improvements on the northwest side of downtown and downtown access spur (on the west side of downtown) combine to provide a significant improvement in that area. These changes are most easily viewed in the green annotations I added to the official schematic here.

    I have updated my detailed analysis of the design on HoustonFreeways.com, noting the improvements but also identifying 12 remaining items of concern in the design. Some of these concerns have been submitted to TxDOT during previous comment periods, so they likely have already been evaluated with no action taken. Nevertheless, I included the complete list of all issues, new and previous, to provide an overall summary of remaining concerns.

    With a price tag of $4 billion for the downtown work and around $7 billion for the overall project, it certainly makes sense for TxDOT to take a look at every possible opportunity for improvement to ensure we get the best possible design for the huge expenditure.

    What Could Have Been
    I also prepared this map of a potential relocation of the IH 45 main lanes to create space to bring managed lanes through downtown. This option was not formally studied, although it may have been rejected very early in the process. It is now too late to consider this option, but I think this would be the only way to create a north-south corridor of managed lanes through downtown, assuming the Pierce Elevated will be removed. (see previous post on MaX Lanes)


    Texas Legislature

    Transportation was not expected to be an issue receiving much attention in the session which ended Monday, and that was mostly true. Here’s a summary of the results for this session.

    Funding

    The main question for this session was whether the legislature would fully fund the transfers of general revenue to TxDOT as specified in Proposition 7, approved by voters in 2015. The answer turned out to be no, but the immediate impact is expected to be minimal. TxDOT was slated to receive $4.7 billion in Proposition 7 funding in the next budget cycle, but that amount was reduced to $2.9 billion due to a delay in the transfer of $1.8 billion. Exact Proposition 7 amounts in the budget document are $2.205 billion in fiscal 2018 and $700 million in fiscal 2019.

    However, the delay in the $1.8 billion is reportedly only one month, from August 2019 to September 2019, an accounting gimmick to move the money to the next budget cycle. So this one-month delay is not expected to affect projects being planned with Proposition 7 funds. But it is not clear if and when funding will catch up to restore the $1.8 billion, or if the $1.8 billion is permanently deferred. According to a report in the Dallas Morning News, House Appropriations chief John Zerwas, R-Richmond, said the legislature is committed to restoring the $1.8 billion when budget conditions allow.

    TxDOT Budget summary 

    Here (see page VII-15) and here.

    The budget covers fiscal years 2018 (September 2017-August 2018) and fiscal year 2019.
    • 2018 budget amount: $12.4 billion
    • 2019 budget amount: $14.2 billion
    • Debt service is high and rapidly increasing, $815 million in FY 18 and $1.23 billion in FY 19. Nearly all of this increase is the result of shifting certain interest payments from the general budget to the TxDOT budget as a result of Proposition 7. Total financing costs in the biennium are listed at $2.3 billion.
    • A big increase in expenditures for professional fees and services, from $1.06 billion in FY 18 to$1.80 billion in FY 19. Presumably, this large increase is due to planning and engineering services for Proposition 7 projects.
    • The budget document instructs TxDOT to expand Houston’s Green Ribbon program to other areas of the state 
    Comprehensive Development Agreement Failure

    House bill 2861 called for authorizing 18 projects statewide to be developed using comprehensive development agreements, including two in Houston, the proposed Hempstead Tollway and Interstate 45 between Interstate 10 and Beltway 8, which is all of the North Houston Highway Improvement project outside of the downtown area. Comprehensive Development Agreements, called public-private partnerships in most places outside Texas, use private money to finance projects, with the private funding entity receiving the toll payments. The SH 288 toll lanes are the only project being built with this arrangement in Houston. The bill moved steadily through the legislative process, but the House soundly defeated the bill on May 5. According to remarks by the North Central Texas Council of Governments, it was believed to have failed due to general anti-toll sentiment in the House and a desire to wait and see what happens at the federal level, with President Trump’s infrastructure plan still a work in progress. So TxDOT cannot pursue the two Houston projects or any other projects as new CDAs in the next two years.

    Anti-Toll Legislation

    Numerous bills seeking to limit or curtail toll roads were filed, mostly in the House, but all of these bills died, most with little or no progress. However, three anti-toll provisions did become amendments on the TxDOT sunset bill.

    TxDOT Sunset Legislation and Other Bills

    The legislature must periodically review all state departments to authorize their continued existence, the so-called sunset process. This year TxDOT was subject to the sunset review process, and the TxDOT reauthorization bill was a must-pass bill which was approved on Saturday and sent to the governor. Due to the legislative procedural meltdown earlier this month, many bills died and the TxDOT sunset reauthorization became a vehicle for including provisions as amendments on the bill (final conference committee report). While there were no amendments specific to Houston, some amendments of statewide interest include the following:
    • Tolls will be removed on State Highway 255 in Laredo, which is formerly the Camino-Columbia private toll road which went bankrupt and was purchased by TxDOT and now operates as a TxDOT toll road. To the best of my knowledge, this will be the first removal of tolls in Texas since the Dallas-Fort Worth Turnpike became a freeway in 1978.
    • There is a provision to accommodate the potential removal of tolls on the Loop 375 managed lanes in El Paso, which (if implemented) would be the first removal of tolls from managed lanes in Texas. The Loop 375 managed lanes have been a failure, generating negligible traffic and revenue
    • A requirement that any TxDOT funds used for financing toll roads must be repaid by the tolling agency managing the project (non-retroactive)
    • Imposes new rules on delinquent toll collection, including limits on administrative fees
    • Imposes a large number of reporting and administrative requirements on TxDOT relating to project cost, schedule, performance measures, online reporting and coordination with MPOs
    • Requires TxDOT contractors to use E-Verify to verify legal status for employment
    Other bills sent to the governor (not signed as of May 29) include:
    • SB 2205 defines rules and regulations for fully-autonomous self-driving cars. This will clarify the legal issues, an important step toward actually having autonomous vehicles on the road.
    • HB 2646 which authorizes TxDOT to purchase right-of-way for a project before it receives a record of decision of environmental clearance. This will be a useful tool, especially for projects where environmental clearance can take many years.
    Legislation Targeting Houston-Dallas High Speed Rail

    Rural opposition to Texas Central’s planned Houston-to-Dallas high speed rail project  resulted in several bills to curtail or limit the project. Two bills have been approved by both chambers and have been sent to the governor:
    • SB 975 requires operators of high-speed rail service to meet strict security requirement to ensure safety
    • SB 977 prohibits the use of state funds to plan, build or operate high speed rail operated by a private entity
    Neither of these laws is expected to have a significant effect on Texas Central’s plans. The bill which probably posed the greatest threat to the project was SB981, which would have required the project to be compatible with more than one type of train technology. Since the project is being designed to use Japanese technology, this could have been a show stopper. But the bill died in mid-April. So the Houston-Dallas high speed rail project is alive and well.

    UPDATE from Texas Central

    Federal Legislation

    During the presidential campaign, Trump spoke about a trillion-dollar infrastructure investment, but the plan is still being developed and details are not expected until the third quarter of this year (here and here).  Preliminary indications are that it will focus on public-private partnerships, which of course translates to toll roads. Preliminary numbers mentioned are for $200 billion in new federal money to be used to attract $800 billion in private funds. Michael Morris, head of the North Texas Council of Governments, has commented that the completed Dallas-Fort Worth PPP projects (LBJ Texpress and North Tarrant Texpress) are being used as a model in formulating the plan, and the DFW projects also used the 4-to-1 private/public money leverage ratio.

    There are many reasons to be skeptical that this will plan will move forward in any shape or form, even massively downsized as a token effort.
    • The long delay in developing a plan suggests there is difficulty getting a consensus on a plan which can get sufficient support for approval.
    • President Trump’s influence on Capitol Hill is weak and probably getting weaker, so persuading Congress to adopt a sea change in infrastructure finance will be difficult.
    • PPPs are not consistent with the values of Congress. House and Senate members generally want to bring home the goods (some would say pork) to their district. Bringing home a PPP which imposes hefty tolls on their constituents and privatizes previously public assets is not necessarily good politics, and could be bad politics. 
    • Congress has shown minimal interest in PPPs and tolling in recent transportation reauthorizations. 
    • Previous reauthorizations of transportation legislation have been difficult and were delayed by numerous short-term stopgap reauthorizations, even though the current FAST Act (expiring in 2020) generally continued long-established policies.
    • Passing a sweeping PPP-heavy plan would likely rely exclusively on Republican votes, and as we’ve seen, holding together the slim Republican majorities in the House and Senate will be very difficult.
    • Financing $200 billion for the public share of PPPs will be difficult or impossible without increasing the deficit or raising fuel taxes.
    • PPPs financed by project revenue are generally suitable for toll roads only and will do little or nothing to help aging urban rail systems with massive deferred maintenance costs, particularly in Washington DC, Boston, New York and Chicago. Without funding for those political interests, the base of potential support is reduced.
    • Congress is still going to be focused on other issues like Affordable Care Act repeal/replacement tax code reform and another budget battle looming at the end of September.

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