Friday, January 19, 2018

Why Amazon's HQ2 rejection is good for Houston (plus a winner prediction)

Ok let's talk about the elephant in the room, Amazon's rejection of Houston for its HQ2 top 20 finalists list, validating Oscar and I's prediction (my key point: nobody wants to compete with energy companies for tech talent when oil might shoot up to unknown highs at any time!)  I don't think it's anything we need to panic about - I'm sure the freak timing of Harvey was the dominant factor. It's also important to remember that economic incentives are driven far more at the state level than the city, and so Amazon wants a wide range of states in the bidding war.  Amazon knows that by including cities like Indy and Columbus, Indiana and Ohio will go all-out on incentives, which they can then leverage over more desirable locations that aren't as likely to play the incentive game (NYC, DC, Boston, LA, Denver, etc.).  It doesn't mean they're more desirable locations than Houston.  Houston was not needed because Texas is already in the game with DFW and Austin, which are honestly better fits for Amazon if they choose Texas.

I personally think they want it in the DC region if they can get the incentives they want:
  • DC, Northern Virginia, and Maryland all made the final cut - lots of options.
  • Bezos has a home there and owns the Washington Post.
  • Most importantly, it's perfect from a talent perspective: DC is filled with underpaid and disillusioned government workers (including tech) - so it will be easy pickings.  In fact, I think an argument can be made that taxpayers are likely to be screwed twice over: once for the direct incentives, and a second time as the government has to raise salaries to recruit and hold on to tech talent in competition with Amazon.
There is one great silver lining for Houston, as Aaron Renn points out in his piece:
"The cities which made this list may also regret it. Putting together an initial bid only required a limited amount of money and civic time and attention. Now the costs start going up for the losers. It may well have been better to be one of the people who got cut early than to keep making through all these rounds only to lose (or potentially even to win)."
We're saving a lot of resources we don't have to spend on a losing battle, or even risk the "winner's curse" for whoever does win the bidding war.  We'll just keep growing with lots of small under-the-radar wins like we always do.  I'm not saying we don't have work to do as a city to attract more tech talent and companies (something Houston Exponential is directly addressing), but let's not blow this up to be more than it is.  Houston is doing fine - more than fine - and most cities would kill to be growing and thriving like we are.  Amazon was an unnecessary distraction. - let them cause havoc (talent poaching, driving up home prices, increasing traffic, draining tax incentives) somewhere else (Why You Shouldn’t Wish for Amazon’s HQ2 in Your Town).

Update: This Washington Post analysis includes why Houston didn't make the cut. Note that they give our transit high marks, as opposed to those who bias rail over bus.

Update 2: My thoughts on Dallas vs. Houston for Amazon HQ2.

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Saturday, January 13, 2018

Guardian on Houston after Harvey, tech to Houston? Market Urbanist transit, #1 city for young people, top migration, and more

Happy New Year!  Let's dive right into this week's items:
  • The Guardian did an in-depth piece on Houston after Harvey which has some extensive quotes from me: ‘The bayou's alive’: ignoring it could kill Houston - America’s fourth largest city is built on an ancient river network that flooded catastrophically after Hurricane Harvey. With 400,000 homes in the watershed, achieving resilience is the Texan boom town’s greatest challenge
  • Also from the Guardian: California and NYC are shipping us their homeless with bus tickets.
  • Next time you dismiss Houston's cost-of-living advantage: A report from the University of Southern California and the Los Angeles Business Council published earlier this year found that exorbitant housing costs in Los Angeles were inhibiting employers from attracting "high performers" or top talent to their companies.
"About 60% of the employers surveyed said Los Angeles' high cost of living affects employee retention, with 75% naming housing costs as a specific concern. And nearly all said they viewed high housing costs as a barrier to hiring new mid- and upper-level employees."
Finally, Scott Beyer posted this great piece to his Market Urbanism Facebook group describing key transit ideology I agree with here at Houston Strategies:
Let’s talk transit – and ideology. 
Many conservatives/libertarians dislike transit, because they think it's solely a subsidized public utility. But there's a small subset of this bunch called Market Urbanists, who not only like transit, but think transit use would increase significantly if free-market policies were used in cities. Because that would mean the following 4 things: 
1) Banning restrictive zoning, so that housing would get denser, creating the critical mass of people needed for transit 
2) Enforcing congestion charging, so that road use is priced based on driver demand. This would incentivize people to locate closer to their jobs, or commute in using different modes besides solo driving. 
3) Liberalizing private transit from pointless bans and regulations. This would cause the industry to grow, namely through “micro transit” options like rideshare, bikeshare, carpool, ebikes, shuttles, dollar vans, etc. 
4) Reforming public transit. Many Market Urbanists aren’t against public transit, per se, but think that transit agencies must improve their management and services as a condition to get more funding. And if they are unable or unwilling to do this, cities should seek privatization, by signing short-term, performance-based contracts with outside companies. 
All 4 of these market-based policy ideas are politically unlikely. But if any or all of them were applied, there's no doubt in my mind that many cities would have higher transit usage...because transit would be way better.

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Sunday, December 24, 2017

2017 Highlights

Time for the annual hike down memory lane for 2017, wrapping up the 13th year of this blog. It was quite an epic year in Houston's history, successfully hosting both the Super Bowl (with an equally epic collapse by the Falcons against the Patriots) and the Astros' first World Series Championship (!!) over the Dodgers as well as the thousand-year storm that was Hurricane Harvey - the one we'll all still be talking about decades from now. 

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 dozen years and million pageviews.


Sunday, December 17, 2017

My City Journal piece defending Houston, Katy commuter rail vs. freeway, Elon Musk vs. transit, zoning failures, and more

Before getting into the smaller items this week, I wanted to pass along an analysis from Oscar Slotboom responding to Judge Emmett's lament that we should have kept commuter rail in the Katy Freeway corridor, which I'm guessing would have removed a minimum of two and possibly more lanes from the new Katy:
"The freeway carried 387,144 average vehicles per day in 2016 at Gessner. I'm assuming that's all the lanes: main, managed and frontage. 
If you assume uniform distribution across all the 20 lanes (which of course it not correct, since the main lanes carry most of the traffic), you get 19357 vehicles per day per lane. Two lanes are 38714 vehicles per day. Metro reports 65894 boardings per weekday on all light rail, with the disastrously low 4588 on the Green line and 6769 on the Purple line. Since TxDOT numbers are an average over all days of the week, you can average the Metro data over the week, which lowers it to 55324 average per day. 
So the question becomes: what is the traffic of a main lane? I'm thinking the main lanes carry at least 75% of all traffic (but that's just a guess), and then that would be 387144*.75/10=29000 per lane or 58,000 vpd for two lanes. So the two lanes carry about the same number of trips as the entire Metro light rail system, and of course some cars have more than one person, further increasing the highway advantage
Of course the Red Line has good ridership. A better comparison would be a light rail lines going along a freeway corridor, like in Dallas. The entire 90-mile Dallas light rail system has only 96,300 average weekday boardings. The Red (26,800) and Green (24,900) roughly parallel freeways. The blue (22,200) and orange (22,400) lines are similar. I think those numbers are good for comparison, and a single Katy Freeway lane carries more trips than any of the radial DART lines."
And one lane of freeway is a heck of a lot less expensive than a commuter rail line!

One commenter on Swamplot also makes a good case for Park-and-Ride buses over commuter rail:
"The train isn’t going to travel that much faster than buses, if at all. Also, buses in the Katy corridor make just one stop at most between the burbs and Downtown (the major route is express from the Park-and-Ride lot direct to Downtown). And people play on their phones on the bus (have you never been on one? the park-and-ride vehicles have nice cushy seats and baggage racks). And unless one’s destination is outside the CBD, no transfers are required; you are likely dropped off within a few blocks of your destination, an easy walk. Furthermore, on the highly used Park-and-Ride routes the buses leave every several minutes; you don’t have to time your arrival, the wait time to depart is minimal. Commuter rail never works like that (though light rail can). The assumption that rail is going to provide superior service simply isn’t true. In fact, it’s likely to be worse service for the patrons than what we have now with the Park-and-Ride buses. Especially since most everyone will have to drive to the station anyway, so no difference there.”
Moving on to some smaller items this week:
Musk said that “public transport is painful. It sucks. Why do you want to get on something with a lot of other people, that doesn’t leave where you want it to leave, doesn’t start where you want it to start, doesn’t end where you want it to end?”
  1. Why Zoning Doesn’t Work
  2. Zoning Laws Destroy Communities
  3. Zoning laws: A tool for designing dysfunctional, unsocial communities
  4. Ten Good Reasons Why Zoning is a Bad Idea, Houston Chronicle, 1993
Finally, ending on a little heroic inspiration from a METRO employee.  If the opening few seconds of this video don't grab your attention, I don't know what will.  Wow.

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Sunday, December 03, 2017

Should Houston promote an annual TAMU-LSU football game? Houston's #1 Winner-Take-All-City Quotient, #2 std of living, innovation corridor, and more

Before getting to this week's items, an idea for Houston as we wrap up the college football regular season: just as UT and OU play each other every year at their midpoint in Dallas with the Texas State Fair all around them (quite the tourism boost for Dallas) - and now that TAMU is in the SEC with a new coach - has anyone considered trying to promote an annual TAMU-LSU game in Houston at NRG Stadium?  I think it would have a lot of potential given the numbers of alums of both schools here - high profile for the schools and a good tourism boost for the city.  And I could see a whole weekend of festivities around the event centered on downtown and midtown (like a mini Super Bowl).  Would love to hear thoughts in the comments... or if you know someone with the GHCVB please pass it along!

Moving on to this week's items:
"For each global city, and for the various categories of global cities, we calculate a “Winner-Take-All Quotient” (or WQ). This is a simple “over-representation ratio” that compares the share of the total amount of economic output, venture capital investment and/or, billionaires in a global city divided by its share of the world’s population.
Indeed, the 20 largest global metros (by economic output) account for a considerably larger share of the global economic output than they do of global population (see Table 2). The WQ for these cities range from lows of 1.2 and 1.3 in Mexico City and Sao Paulo to highs of 4.5, 4.7, and 4.8 in New York, Washington, D.C., and Houston."
Speaking of Amazon HQ2, I really like the new Houston proposal and the concept of the "innovation corridor" from downtown to the med center.  The video is especially well made.  I still think we're a longshot, but this is good stuff to share with any company that might consider coming to Houston.

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Sunday, November 19, 2017

Houston's cliches, people, image, and fast change; how new luxury units keep housing affordable, battling traffic, The Great Train Robbery, and more

Jumping right into this week's items, some of which I've had backlogged for a while (apologies).
"Here’s the takeway:  New housing is almost always built for and sold to the high end of the marketplace.  It was that way a hundred years ago and fifty years ago. But as it ages, housing depreciates and moves down market. The luxury apartments of two or three decades ago have lost most of their luster, and command relatively lower rents. And the truth is--that’s how we’ve always generated more affordable housing, through the process that economists call “filtering.”  And the new self-styled “luxury” apartments we’re building today will be the affordable housing of 2040 and 2050 and later. 
What causes affordability problems to arise is when we stop building new housing, or build it too slowly to cause aging housing to filter down-market. When new high priced housing doesn’t get built, demand doesn’t disappear, instead, those higher income households bid up the price of the existing housing stock, keeping it from becoming more affordable.  Which is why otherwise prosaic 1,500 foot ranch houses in Santa Monica sell for a couple of million bucks, while physically similar 1950’s era homes in the rest of the country are either now highly affordable–or candidates for demolition."
“The Sum of Small Things” both unearths evocative differences between big American cities—for example, Los Angeles leads in bottled-water consumption, while New York does in spending on shoes—and makes clear that the “aspirational class” Ms Currid-Halkett profiles is almost exclusively coastal and urban. However, that may yield a lopsided portrait of the top of the income pile: largely absent from her tale are the business-minded rich in politically conservative states. 
The reader learns that residents of Dallas and Houston dedicate unusually low shares of spending to housing costs and to fresh fruit, and a relatively high portion to textiles, furniture and beauty products such as wigs—but not whether the rich among them mimic their blue-state counterparts in seeking to project virtue via heirloom tomatoes and the like. Perhaps a sequel might explore the values of Sun Belt suburbanites, and how this other half of privileged Americans signal status through their spending.
Finally, I love this Houston "City of Doers" commercial from Chevron that was playing during the World Series. Fantastic image building for the city!  It'll make ya proud to be a Houstonian...

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Monday, November 13, 2017

NYT and COU on Houston after Harvey + the Transit Apocalypse

Before getting to a big backlog of items this week, my Center for Opportunity Urbanism post-Harvey paper with Wendell Cox got mentioned and linked in the NYT's lead feature story on Houston and Harvey last weekend! The reporter, Michael Kimmelman, spent a week in Houston, and I was able to speak with him a couple of times.  Unsurprisingly, a NYT piece is skeptical of Houston's high-freedom/low-regulation approach vs. more centralized planning, but we just have to prove them wrong with a pragmatic response to Harvey that preserves the successful essence of the Houston model while increasing our resilience against future storms.

This week's items can all be grouped under the growing theme of "the transit apocalypse" and rail failures as transit ridership continues a sharp decline across the country:
"But the expansion plan, which caused CityLab to once dub Denver “the most advanced transit city in the west,” has yet to translate into greater transit ridership, or even reduced use of cars. In 2006, then-mayor of Denver John Hickenlooper described a hope that the city would reach 20 percent ridership by 2020. But in 2016, only 6 percent of people in Denver used public transit as part of their commute to work."
"Some regions have seen catastrophic drops in ridership since 2010: 30% or more in Detroit, Sacramento and Memphis; 20% to 30% in Austin, Cleveland, Louisville, St. Louis and Virginia Beach-Norfolk ; and 15% to 20% in Atlanta, Charlotte, Los Angeles, Miami, San Antonio and Washington.
Adding rail service hasn’t helped. To pay for new light-rail lines that opened in 2012 and 2016, Los Angeles cut bus service. The city lost nearly four bus riders for every additional rail rider. Atlanta, Dallas, Sacramento and San Jose have seen similar results. The rail system in Portland, Ore., is often considered successful, but only 8% of commuters take transit of any kind to work. In 1980, before rail was constructed, buses alone were carrying 10% of commuters.
...measured per passenger-mile, the subsidies for transit are more than 40 times as great as for driving
The transit industry has compounded its problems by going heavily into debt, allowing unfunded pensions and health-care obligations to snowball, and failing to maintain the rail lines they already have. According to the Department of Transportation, the nationwide transit maintenance backlog is approaching $100 billion, causing exactly the problems you’d expect: derailments of New York City subways, slowdowns of Chicago’s elevated train, smoke in Washington metro tunnels, and other operational and safety issues. Even if all the money now spent on new construction were redirected to maintenance, according to the department, it would take 20 years to rehabilitate America’s rail transit systems."
"As transit gets squeezed from the outside by cheap and convenient competitors, transit agencies are buckling under the internal pressure of long-deferred maintenance and underfunded pension and health liabilities. 
New York's subway system is looking at a $6.3 billion maintenance backlog. D.C.'s WMATA needs to spend $17.4 billion over the next 10 years to fix the maintenance backlog in Washington's Metrorail system. In 2015, the Federal Transit Administration estimated that the transit industry as a whole had a $89.8 billion backlog, a number O'Toole considers "conservative."
As a fix, O'Toole suggest that transit agencies "stop wasting money on expensive and noncompetitive transit services and focus on providing basic, cost-effective services for those who need transit the most, while putting their economic houses in order by reducing maintenance backlogs, debts, and unfunded obligations." In other words: Stop building new rail lines, and replace the current lines with bus services as they outlive their usefulness. 
Instead of grappling with these long-run problems, transit agencies are exacerbating them by building costly light-rail extensions that fail to attract riders.
Seattle's $54 billion transit expansion is expected to net around 30,000 additional daily riders by 2040. That's $1.8 million for each new rider."
"...the four horsemen of the transit apocalypse include:
  1. Low fuel prices;
  2. Ride-sharing services;
  3. Maintenance backlogs; and
  4. Unfunded pension and health-care liabilities."
"Back in 1980, Portland transit carried 10 percent of the region’s commuters to work. Since then, the region has increased its population density by 20 percent, spent $5 billion building nearly 80 miles of rail transit lines, and subsidized scores of high-density, mixed-use housing projects in light-rail and other transit corridors. The result is that, in 2016, just 8.0 percent of commuters took transit to work."
I've got a ton of other non-transit items, but this already seems like too much for one post. More next week.

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Monday, October 23, 2017

Why congestion after freeway expansion is a good thing, entrepreneurship hotspot, people want space, market urbanism, those savages in HTX, and more

Before getting to this week's items, a commentary on this silly article in the Chronicle, "Adding lanes doesn't reduce congestion. So what is TxDOT doing?"  What always gets lost in these kinds of stories about congestion growing back to previous levels after a freeway expansion is the additional number of people being moved every day, even if they're at the same speeds as before.  More cars and people are being moved, and that's a good investment. Do people honestly believe Houston would have been better off if we had frozen our freeway network 20 or 40 years ago?  Think of it this way: we want government to invest in infrastructure that gets a high utilization (as opposed to roads to nowhere). If they built a new airport runway and it filled up with flights, people would sing the praises of such a great investment, yet if we invest in additional freeway capacity and it fills up, it was wasted money? How does that make sense? It means the government built mobility infrastructure exactly where people needed it - where there was unmet demand - and isn't that exactly what we want them to do as taxpayers? (I made a similar comment on this story criticizing the widening of I10)

The more I think about it, the more the airport analogy really exposes the absurdity of the "induced demand" anti-freeway expansion argument.  Applying the same argument to airports would say every city only needs a single runway, because new runways just enable more flights and "induces demand" for more flying! So absurd!

Moving on to this week's items:
"Cities will sprawl—it’s pointless to try to stop the phenomenon. To the dismay of many environmentalists and urbanists, most people dislike tight quarters. They use rising incomes to buy themselves more space."
Some great stuff recently from The Market Urbanism Report:
"Note: I don’t mean to pick on Houston. In fact, I really like Houston, which is why I talk about it. Plus, they have great urbanists there who are working hard on these issues and might actually ease up on citywide parking requirements!"
"He begins with the obvious case study of Houston. While not completely unregulated, Houston has lighter regulations than other major U.S. metros, and builds much more housing than any of them. Although Houston receives many of the stereotypical scapegoats thought to increase housing prices ― millionaires, immigrants, corporate relocations, and luxury condos ― median home prices in Harris County remain $141,000."
  • Does adding expensive housing help the little guy? According to our analysis, it helps not only the little guy but every other income group.
  • Texas toll roads: a big step towards open markets for transportation
  • Housing and transportation costs have become a growing American burden. Clearly shows the rise of the car (and the plane) in the 20th century. And I think the author is downplaying the huge benefits of all that freedom of mobility. But what I don't think it shows is how much the car has become a luxury status symbol. I'm stunned how many high-end models there are now, and it's a bit of a misnomer to call that a "cost of transportation" when a used Honda Civic or Toyota Prius would get you the same places for a whole lot less money per mile (especially depreciation). To call all these luxury SUVs, trucks, sports cars, and sedans a "cost of transportation" is like calling a Brooks Brothers suit or Chanel dress a "cost of clothing".
Finally, leaving you with a bit of humor from Reason ;-D

Houston's Anarchic Zoning Laws are an Affront to Sim City

They just build whatever they want, wherever they want, like a bunch of savages.

That's us - savages! ;-D

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