Austin Letter

Trusted Insights and Perspectives Since 1979

March 29, 2019

Volume 40, Number 50

Well, this is it.  The final edition of The Neal Spelce Austin Letter.  It was precisely 40 years ago today that we began a weekly examination of the Austin area.  This is edition number 2,000.  Forty years, publishing 50 weeks a year beginning April 1, 1979 (we took a 2week break each year).  And those 2,000 issues totaled around 3 million words written about this remarkable city.  For us, it seems to be a good time to move on to other exciting ventures, which well detail further in the newsletter.  But for now, if youll allow us, its time for a bit of reflection.

In 1979, most major private newsletters, such as The Kiplinger Washington Letter, were fourpages of printed information snailmailed to subscribers.  So we followed suit.  We converted to Internet distribution in 2000.  However, many subscribers preferred a hard copy, and still do, so we designed the Internet version to print each edition in a 4page format.  It remained the same Austincentric 4page letter, but with the delivery system arriving at subscriber inboxes each Friday morning, instead of depending upon postal service delivery that usually didnt arrive until the following Monday or Tuesday or whenever.

Long-time subscribers will recall the content has changed somewhat since the early days.  Back then, there were very few sources of information that focused on Austin business and public affairs.  There was no Austin Business Journal and the business pages of the Austin AmericanStatesman were thin indeed.  So we focused on timely – even breaking – news developments.  Eventually, the Statesman expanded its business-oriented coverage, and the Internet blossomed, creating a wealth of information for those who wanted to seek it out.

So we carefully moved to providing insight, analysis and perspective about what was happening, predicting trends and offering inside information.  It turned out to be spot-on because, after all, we started covering news in Austin as a broadcast journalist in 1956, providing extensive experience and context that added unique depth to our weekly reports.

Ever wonder why our weekly notifications to subscribers listed each topic?  It didn’t just say, hey, click here to go to our website for this week’s issue.  Period.  It was a nod to the change in attention spans and demanding personal schedules.  Even if the subscriber didnt have ten minutes at that moment to read the newsletter, the topics were laid out at a glance.  Our newsletter adapted as the Austin area began its amazing transformation.  Check out a perspective on this in the next item. Read more →

March 22, 2019

Volume 40, Number 49

Its almost here.  One more edition of this weekly newsletter is all that remainsAfter exactly 40 years — we are ceasing publication.  It is triggering a bit of personal nostalgia.  But, put that aside.  Lets dive into this weeks look at the Austin area.

Speaking of looking,” if you want to know about a major overhaul of downtown Austin, you can get an elaborate look at the future plansIt will be more than just a dog and pony show, it will be dogs and ponies with bells and whistles.  The Downtown Austin Alliance (DAA) and the City of Austin call it The Downtown You Will Always Love.”  They call the presentation a celebration.”  And it will take place at the Austin Public Library downtown.

Plans are still evolving for the event April 30 (weeks after this newsletter ceases publication).  But, based on preliminary announcements of what is currently in place, they are going allout to convince you the redo of downtown will be spectacular (my word, not their’s).  Some examples:

Be the first to hear findings from our new State of Downtown report while enjoying some of the citys best food, drinks, and live entertainment,” said DAA in a promotional piece.  Okay, this is all well and good.  But, what about the bells and whistles?

“Take a step into the future with our unique VR experience,” DAA said.  “As the goggles go on, guests will be transported into a virtual world representing the future of Austin mobility.”

Or to put it another way:  “Guests will learn about the community’s vision for the future of downtown – and how we are going to get there – through compelling speakers and hands-on activations featuring local artists and the latest technology.”

Okay, let’s read between the lines.  When DAA says “the future of downtown will certainly feature welcoming, engaging places for all to enjoy” the translation is likely to include less auto access, less parking, wider sidewalks and more emphasis on bicycles and scooters.  Also, you need to raise some questions:  what will be the total cost, the impact on businesses and, importantly, will such a costly project with drastic changes be submitted for voter approval?  Participants at the 4:30 pm to 7 pm will be charged at least $55 to be dazzled. Read more →

March 15, 2019

Volume 40, Number 48

Counting down:  only two more editions of this weekly newsletter remain following this one.  Weve spent the last 40 years looking at Austin and where it is headed.  No reason to stop now.  So, lets jump right into this weeks insights.

Want to know what Austin streets especially downtown will look like in the future?  Well, there is a group that says all you need to do is look at certain crowded world cities where the streets are cluttered with bicycles, MoPeds, scooters, and pedestrians.  Cars will be vastly outnumbered if they are allowed at all.  This was the view discussed by some at South by Southwest (SXSW) this week.

Admittedly this would be a drastic departure from this car-centric community.  But if you check recent city downtown policies – reduction of car lanes, expanded bike lanes, pedestrian enhancements, sidewalk widening, parking elimination, etc. – you might detect a trend.  It’s important to watch these policies to see if this is truly a trend that will expand.

Speaking of the ubiquitous scooter situation downtown, an interesting explanation for the number of scooter-related accidents emerged at SXSW, courtesy of Carlos Bloha, the co-founder of the Flash e-scooter company that is currently active in Europe.  According to the Austin Monitor, Bloha said the practice of US scooter companies charging per minute of use leads to reckless behavior.

“If you start thinking in terms of time, when your need is (covering) space, you engage in pretty warped behavioral patterns,” he said.  “If youre billed by time, what is the natural human instinct?  It is to hurry up because no one wants to pay more than they should.”

“Hurrying up on a device leads to some seriously irresponsible behavior and serious accidentsYou have adopted a pricing behavior that is a moral and physical hazard,” Bloha claimed.

To bolster his theory, he said scooter riders in Austin had racked up nearly 250 serious accidents in the previous 60 days.

Of course, scooter scooting hit its peak this week during the SXSW events downtown. Read more →

March 8, 2019

Volume 40, Number 47

First an important announcementIn four weeks, this newsletter will reach its 40th anniversaryFor four decades, we have chronicled events about the remarkable Austin areaForty years, with a deadline every weekThis represents approximately 3 million words in 2,000 newsletter editionsAnd now, the time has come for us to change our career emphasis.

 The March 29, 2019 issue will be the final edition of The Neal Spelce Austin Letter, that we first published April 1, 1979.

 Were not going awayWe are just stepping aside from this timeconsuming enterprise, as we step forward in different directions.

Our efforts are now being turned toward an exciting new ventureAfter years of encouragement from numerous associates, friends and family, yours truly has undertaken the humbling task of a memoir book projectTo modify a line from a Farmers Insurance TV commercial, “Its about a thing or two, because weve seen a thing or two.”

The book project includes an indepth look at Austin how the metro has evolved to a globallyimportant city.  Humbly, we have come to recognize no else has during the past 40 years written each week (or, importantly, been involved in) how Austin has emerged in ways that many could never imagineThe book also includes some entertaining (we hope) accounts of a long and varied career.

We still plan to contribute our insights, perspectives and analyses to LinkedIn similar to what weve done in this newsletter, only it will be free to those who follow us on LinkedInSo, if you are interested, simply join our LinkedIn familyAlso, we are continuing ongoing consulting work, putting our decades of wideranging experience and knowledge to good use.

Well share more about all this with you over the next few weeks, before we reach the 40year milestone at the end of the month.  Well be working with our computer gurus to wind down.  Subscriptions will receive prorated refunds as appropriateAnd, we will be glad to answer any questions you may haveJust shoot us an email.

We want you to know how very much we have appreciated our loyal subscribersNow, lets get on to this weeks edition. Read more →

March 1, 2019

Volume 40, Number 46

Dear [MM_Member_Data name=’firstName’],

So, whats Michael Dell up to these days?  You know, Austins most famous billionaire who made so many Austinites millionaires the moniker Dellionaires took hold.  That was back in the day soon after the computer whiz kid came up with an industrychanging computer manufacturing concept in his UTAustin freshman dorm room.  Hes changed, his company has changed a lot.  Lets check in on how the now 54yearold is doing.

First of all, he and his wife Susan have poured immense amounts of their personal fortune into making Austin a better place.  Providing enough funds so the new UTAustin medical school bears the Dell name is just one example and no small deed.  But, as Michael Dell has grown older, his company has gone through a number of iterations.  The official company name change illustrates Dell’s new focus.  No longer is it Dell, Inc. it is now Dell Technologies.  Make no mistake, though:  Michael Dell is still very much in charge.

As the tech scene has changed since the 1980s, so has Dell.  It would take too much space to detail the move from the dorm room concept of a transformative way to build and sell computers, to going public, going private, then going public again.  The marketplace has changed and Michael Dell has continued to change with it.

A big part of the change was the acquisition of EMC, a company almost twice as large as Dell.  It cost Dell $67 billion — the largest tech deal at the time — reinforcing Dell as a powerful company specializing in selling technologies to businesses and running it for them.  Transformative!  You bet!

Wait a minute, what about the personal computers business?  As Darrell Royal used to say in a different context, you “dance with the one who brung you.”  Dell is still peddling PCs.  And, yes, you can still buy Dell personal computers.  But it is a smaller part of Dell Technologies business.

Dell is betting on the hybrid cloud, the latest iteration of cloud computing,” reported Texas Monthly (TM) in its March 2019 issue.  “Thanks to the EMC acquisition, Dell can manage … those tasks,” noted TM.  The mag also states:  “The new Dell will profit from being one of the largest, most comprehensive, most integrated product and service companies on the market.”  Check the March 2019 Texas Monthly article by Loren Steffy for more detail. Read more →

February 22, 2019

Volume 40, Number 45

Televised presidential primary debates played a huge role in helping newcomer Donald Trump beat a crowded field to win the nomination of the Republican Party last time around.  Now its the Democrats turn.  And it wont be long before the Dems line up maybe as many as 20 wannabe presidents on TV appealing for votes.  The first debate hold on is right around the calendar corner in June.  So how will the Dems decide who gets to debate?

Somehow it seems appropriate to review this topic in a week that started with the President’s Day holiday, and this issue is now being published on George Washington’s birthday.  Anyway, be that as it may, let’s get to the nitty gritty.  First of all, the Democratic National Committee (DNC) is running the show – setting the rules, negotiating with the TV networks and deciding which candidates “qualify” to participate in the debates.  And, the DNC is planning 12 – count them, 12 debates during the course of the 2020 campaign cycle.

The DNC has selected NBC News, MSNBC and Telemundo to carry/host the first debate on back-to-back weeknights in June 2019.  The second debate will be carried/hosted on CNN on back-to-back weeknights in July 2019.  The DNC says both agreements are unprecedented.  No debate has ever aired in prime time on back-to-back nights before.  Location, venue, moderators, date and time, format and logistics for both debates will be announced at a later date.

Which candidates will be selected out of what looks like a very crowded field?  Just because a person declares I am a candidate for president is not enough.  The DNC said candidates may qualify by meeting one of the two following sets of criteria:

A candidate must register 1% or more support in three different preselected polls conducted by different organizations and released between January 1, 2019 and 14 days prior to the debate.

The second criterion is the candidate must demonstrate the campaign has received donations from at least (1) 65,000 unique donors and (2) a minimum of 200 unique donors per state in at least 20 US states.

The Repubs haven’t announced any plans.  Trump is running for reelection and no one has yet officially announced a run against him.  Don’t worry.  Things will heat up in due time. Read more →

February 15, 2019

Volume 40, Number 44

Its more than a coincidence.  Its a bigtime trend unfolding before your eyes.  The companies of the future are betting on a future in Austin.  When you look at the size of the deals, its not bethedging or dippingacorporatetoe in the water.  Youre seeing fullblown commitments the likes of which are seldom seen in cities around the US.  The big office towers downtown and in North Austins Domain are visual indicators of this trend.

It’s usually risky business for a developer to put up a speculative office building.  Not now in Austin.  Before buildings are even completed, they are substantially leased by substantial companies.  Those pre-leases have the financial backers patting themselves on the back about how “smart” they were to support such normally-risky ventures.  Consider a few examples of what is happening in Austin in recent weeks.

The biggest and most obvious example is a visuallystrikingly 35story office building on the north shore of Lady Bird Lake downtown.  It soars to the sky, with setbacks that taper toward the top to resemble a sail on a giant sailboat.  According to news reports, all 723,000 sf have been leased by Google.  Let this sink in.  Then consider another example.

It was reported this week Amazon is leasing 145,000 sf (four floors) of a Tower under construction in The Domain that is set to be completed in the 2nd quarter of next year.  Amazon already occupies about 250,000 sf in two other office towers in The Domain.

One more example.  Facebook is said to have leased an entire 17story tower to be completed later this year in The Domain.  We’re talking about 320,000 sf.  Remember Facebook already employs about 700 people downtown, has pre-leased another 250,000 sf in a downtown skyscraper under construction and also has a fetch of employees in The Domain.

These are just a few examples and it’s certainly not a complete list.  (We haven’t even discussed the expansion of Oracles huge campus along the south side of Lady Bird Lake.)  But, let’s go back to our original thesis:  these successful mega companies are sitting on top of stacks of cash and they are pouring resources into the Austin area as they expand to become megamega entities.  Quite an endorsement of our economy, lifestyle and workforce. Read more →

February 8, 2019

Volume 40, Number 43

No doubt the availability of affordable housing is important inside the Austin city limits.  Check the exploding growth in metro suburbs where less expensive residential units can be found.  Austinites recognized this and voted in last Novembers bond election to raise $250 million toward affordability initiatives.  But, did they realize this expenditure could possibly reduce parking?  This is part of a proposal the Austin City Council will consider 2.21.19.

Austin City Council member Greg Casar has put forth a plan that will be considered in less than three weeks, and it has gained support from other council members.  City staff has been directed to draft a resolution to accomplish his objectives.  Generally, his plan would relax building size and parking restrictions if affordable housing is included in specific projects.

Right now, his plan would apply to the entire city – not limited to areas such as downtown or the West Campus adjacent to UTAustin.  As an example, this could include the high-dollar West Austin neighborhoods where it is difficult if not impossible to find lower-priced living units.

Admittedly, Casar’s plan is aimed at developers who are already specializing in subsidized, low-income housing.  It would allow those developers to make at least 50% of all rental units available to renters who earn 60% or less of the median family income.  For homeowners, income restrictions would be set at 80% of the median family income.

In return, developers would have looser height restrictions.  They could go 25% higher than the current building codes allow.  Also, and this is important, parking minimums would be eliminated.  Casar maintains that waiving these current requirements would allow a significant number of affordable units to be build at little cost to the taxpayer.

Of course, this does not address the additional stress of more vehicles in areas with no parking provided for them.  Don’t forget:  once these regulations are in effect for areas where affordable housing is currently desirable, the plan is still slated to be citywide.  So the devil will be in the details as the language is lockedin prior to the 2.21.19 City Council meeting when it will be up for consideration.  Another factor to consider:  this is planned to stand apart when the City Manager presents an overall code rewrite in the weeks ahead.  Stay tuned. Read more →

February 1, 2019

Volume 40, Number 42

It was a big publicity deal seven years ago when the mayor of Georgetown led the effort to make the Central Texas citys energy supply 100% reliable on renewable sources such as wind and solar.  Now, heres the big deal:  Georgetown residents paid more than $1,000 per household in higher electricity charges over the last four years.

“That’s right — $1,219 per household in higher electricity costs for the 71,000 residents of Georgetown, all thanks to the decision of its Republican mayor, Dale Ross, to launch a bold plan to shift the city’s municipal utility to 100% renewable power in 2012,” notes Chuck DeVore, a VP with Austin’s conservative think tank, the Texas Public Policy Foundation.

“His decision to bet on renewables resulted in the city budget getting dinged by a total of $29.8 million in the four years from 2015 to 2018,” said DeVore.  “Georgetowns electric costs were $3.5 million over budget in 2015, ballooning to $6.3 million in 2016, the same year the mayor locked his municipal utility into 20- and 25-year wind and solar energy contracts to make good on his 100% renewable pledge.”

DeVore said city leaders had to lock in a large excess of wind and solar power to be able to lend credibility to their 100% renewable claim, since wind and solar power can’t be relied on to keep the lights on 24/7/365.  “And, even with that surplus, there are times when Georgetown draws traditional fossil fuel power from the Texas grid, making the citys 100% renewable claim nothing more than spurious sloganeering,” he added.

Georgetown is now trying to renegotiate its costly longterm wind and solar energy contracts.  And, effective today, February 1st, Georgetown customers will see an average $13/month increase in their electricity bills – not due, say city officials, to wind/solar contracts, but because they leaned on forecasts back in 2012 and 2013 that predicted a shortage of power and a significant rise in energy prices.

Long ago, city-owned utilities (such as Georgetown’s) were exempted from competition, like you have in other Texas cities, where residents have a choice of electricity providers.  Keep an eye on the Texas Legislature.  A proposal is under consideration by lawmakers that would allow such monopolies to be changed, giving customers the ability to shop around. Read more →

January 25, 2019

Volume 40, Number 41

The City of Austin has invested heavily in contracts for wind energy to produce electricity.  It indicated it may continue to do so in the future.  Austins commitments have helped Texas emerge as the nations leader in wind energy. This is taking place in a state where oil is king, with no signs of relinquishing its crown.  So, what is the future for wind as a power source?

Let’s get this out of the way up front:  wind power can exist alongside Texas abundance of oil and gas.  Its not an either/or situation.  In fact, visual evidence exists in West Texas where both giant spinning wind turbines and oil/gas wells dot the same wide-open landscape.  It’s a below-ground industry working beside an above-ground dynamic.

Back to the original question, what is the future for wind power?  Wind energy is an expanding business.  And it is not just for generating electricity.  For instance, there are nearly 13,000 wind turbines operating in Texas for electricity.  Yet, there are still another 80,000 wind turbines spinning in the state that are used for pumping water and other purposes.  (Think windmills pumping water in the days of the Old West.)

We focus on Austin’s energy needs, rightly so.  But considering the future of wind energy it’s important to note “wind power has become an invaluable tool in the rural economic development space,” reports Powering Texas.  It is providing opportunities for landowners and local school districts, as well as creating jobs,

The national wind energy association reports Texas is home to nearly fourdozen manufacturing facilities and numerous component suppliers.  This is a growing support group for the expanding wind energy industry.  Not only this, but eight of the worlds ten largest wind farms are in the US and five of those are in Texas.

The US Department of Energy’s Energy Information Administration this month released bullish 2019 projections.  Some of its strong forecast is based on these facts:  1) there is already installed wind capacity in Texas amounting to 23,421 megawatts, 2) Texas wind capacity under construction is 6,148 megawatts, and 3) the wind capacity in advanced development is 1,804 megawatts.  Do the math.  In the pipeline (so to speak) is a capacity that will increase wind power in Texas by more than onethird.  This is a hefty increase, signifying a solid future. Read more →