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Austin Letter

November 23, 2018

Volume 40, Number 34

While enjoying leftovers from the Thanksgiving holiday weekend, its time to look ahead at a special Austin City Council runoff election that will likely be largely overlooked.  Even though Council positions are theoretically non-partisan candidates are not listed by political affiliation Council District 8 has taken on an aggressively partisan Dem vs Repub tone.

It’s a special runoff election December 11, 2018 for three seats on the Austin City Council.  No candidate got 50+% of the vote November 6, 2018.  So the top two vote-getters for District 1, District 3 and District 8 must face voters once again.  Here’s how it breaks down.

District 1 features newcomers Natasha Harper-Madison against Mariana Salazar.  District 3 is a re-match of a family affair:  incumbent Pio Renteria is in the runoff with his sister, Susana Almanza.  Neither of these contests has partisan overtones.  No matter who is elected, these districts will continue to be represented by another left-leaning Council member.

The change in tone is for the District 8 Council seat.  You’ll recall this is the Council district currently represented by Ellen Troxclair.  An avowed conservative, Troxclair – who was frequently on the short end of 10-1 votes – decided not to seek re-election.

The runoff for this seat pits Paige Ellis against Frank Ward.  Why do we say this is a highly-partisan contest?  The Travis County Democratic Party endorsed Ellis.  And described the contest this way:  “Her opponent Frank Ward is a Trump-Republican and former staffer for the Republican National Committee endorsed by outgoing conservative Council Member Ellen Troxclair.”

The Dem Chair says of Ellis:  “Paige is an advocate for Planned Parenthood and believes that Austin can be a leader in gun safety reform … and is running to ensure environmental responsibility.”  The Democratic Party is raising money for Ellis and is block-walking Sunday, November 25th to get out the vote for her.

If Ellis wins, there will be no conservative voice, much less a lone vote, on the Austin City Council.  And, as the Austin American-Statesman noted previously, in the very diverse 11-member City Council, there will be no white, heterosexual, Christian male serving on the law-making body.  Early voting runs from November 29th to December 7th. Read More

November 16, 2018

Volume 40, Number 33

Dear ,

What would a race for President of the United States be that didnt include a Texan or two in the mix?  Remember last time around, the Republican primary featured Ted Cruz and Rick Perry.  It also included Jeb Bush, who was born in Texas and is a family member of the famed two-Bush-presidents-from-Texas.  Now its the Democrats turn.  Lets start with two Texas Democrats in the very early speculation Julian Castro and Beto ORourke.

Castro is the Texan frontrunner as we speak.  The former San Antonio mayor and former Housing and Urban Development Secretary is making the most overt moves to get the Democratic Party’s nomination for president, even saying he is “likely” to run.

What do we mean by “overt” moves?  Just last week Castro had a private meeting in the Alamo City with roughly 20 possible donors to fatten his presidential campaign war chest, as first reported by PoliticoHes also building a paid staff in the early nominating state of Iowa.  And, he’s talked to lawyers about “the mechanics of a possible 2020 presidential campaign.”

Just as important, he crisscrossed the country during the recently-concluded midterm elections campaigning for Democratic candidates.  This was a significant effort to build support, as his Opportunity First PAC endorsed (meaning, gave money) to 89 Democrats.  He’s visited early primary states like New Hampshire, South Carolina and Nevada, as well as Arizona and Florida.  He was an early (2017) endorser of Andrew Gillum’s Florida campaign for governor.

And, right now, he is the only Hispanic to privately make major presidential moves.  Not coincidentally, Castro is raising money and speaking in Hispanic-heavy California late this week.

Ironically, O’Rourke while not making anywhere near the national moves as Castro, is more top-of-the-mind with his fellow Democrats.  He is a media darling, as well as an inspiration for liberal Democrats – with many speculating about a presidential run for him. The El Paso Congressmans term ends in January.  So he has a national platform – if he decides to use it – as Dem leaders urge him to seek the presidency. His mega-financed race against Cruz raised his profile.  Check the next item for stats about O’Rourke’s campaign. Read More

November 9, 2018

Volume 40, Number 32

Austins reputation as a home for heavyweight companies of the future is well-recognized and well-deserved.  After all, when you start calling the roll of Austin majors Dell, Google, Apple, Facebook, Indeed, 3M, etc., its hard to know where to stop.  The list is long and impressive.  But what about smaller enterprises that could be the biggies of the future?  Where does Austin stand as the site for startups?  New information late this week:  startups accounted for a larger share of businesses in Austin than in nearly all major US metros in 2016.

Young companies account for a larger share of businesses in Austin than in nearly all other major US metros.  So, it’s important to note that for the first time, the Survey of Business Owners compiled as part of USCensus Bureau data, included data regarding the number of years a firm has been in business.

Here’s how the numbers break out.  Take the newbies, those firms with less than 2 years in businessAustin with 4,444 companies, or 11.6% of all employer firms, ranks #3 in the nation, behind #1 Las Vegas and #2, Orlando.

Those Austin companies that have been in business a little longer, but less than four years, break out this way:  10,807 Austin businesses, or 28.1% of employer firms, place Austin at #2 in the nation, behind #1 Las Vegas.

And the oldies?  Austin firms in business less than six years15,077 Austin businesses, or 39.3% of firms, place Austin at #2 in the nation, behind #1 Las Vegas.

How did other major Texas metros fare in this review of the 50 largest metros in the US, in business less than 6 years?  The Dallas-Ft. Worth metro was 5th in the nation, Houston was ranked #10 and the San Antonio metro was 13th in the US.

In the past, Austin has been noted as a good place to start a company.  After all, Dell started in a UTAustin dorm room.  But, this is the first report putting precise numbers to the entrepreneurial environment in this area.  This late report came to us from the Austin Chambers VP/Research Beverly Kerr.  Her analysis goes much deeper by the way.  For instance, she breaks it down by women-owned firms, minority and veteran entrepreneurs.  And she reports on Austin’s #4 US 2016 ranking for firms receiving significant funding from outside investors. Read More

November 2, 2018

Volume 40, Number 31

This story has nothing to do with political campaigning.  (Youre being bombarded with enough of those stories prior to next weeks important election.)  Lets focus instead on some developments that will have significant economic benefits for the Austin area, in fact for the entire state of Texas.  The benefits are long range, but will take a long time to implement.

Business leaders and economists alike breathed a sigh of relief when the new three-nation trade deal was announced.  The US-Mexico-Canada Agreement (USMCA) replaces the North American Free Trade Agreement (NAFTA).  Get used to the new initials, because the agreement, once implemented, will be very important for the Austin, and Texas, economy. The key words in the previous sentence were “once implemented,” because the process is long and arduous.  Its been a long time coming and will be a long time before it might go into effect.  And the implementation process could hit a few political stumbling blocks.  The agreement is still not officially signed.  The agreement will be signed November 30th, Mexican President Enrique Pena Nietos last day in office.

Now comes the hard part,” observes Austinite Jack Martin who is the global Chair/CEO of Hill+Knowlton Strategies.  Martin points out USMCA will not go into effect until it gets legislative approval in all three countries.  “No one expects this to be much of a problem in Canada or Mexico.  But early next year, USMCA will arrive before the US Congress, which is when the task at hand moves from private negotiations to public salesmanship.”

Winning over America will be the hard part,” Martin predicted, “as it was in passing NAFTA in the ’90s.  It was, safe to say, an uphill fight.  Back then, the key to passing NAFTA was getting enough support from Democrats.  The core of opposition was led by labor unions.”

Now, what?  “There could be a devil hiding in USMCAs details that we dont know about yet,” Martin noted.  And the process itself is complicated.  Both the USHouse and USSenate must ratify the Agreement and they can only vote up or downNo amendments are allowed.  Also Congress can only start consideration when the administration decides to send it to Congress.  And, Martin says “what is likely to happen is that the administration will submit the legislation when it has the votes to pass it.”  Take a deep breath and be patient. Read More

October 26, 2018

Volume 40, Number 30

Historic flooding up-and-down the Central Texas Highland Lakes is affecting many more than those touched by the flood waters.  Lakes Buchanan, Inks, LBJ, Marble Falls and Travis have been closed by the Lower Colorado River Authority (LCRA) until further notice, as the surging waters move rapidly downstream, causing dangerous conditions on Lake Austin and Lady Bird Lake.  But the impact is broader than that.  A boil drinking water order was issued for 1.4 million users because of the massive amounts of silt, mud and debris1.4 million users!

One lakeside resident watching water surge into Lake Austin through the Mansfield Dam floodgates from the bottom of Lake Travis said the roaring water looked like chocolate milk because of all the silt, mud and debris.  This is the same water that is straining the facilities at Austin area water treatment plants.  These extreme levels of crud are 100 times the typical condition of the Highland Lakes.  And these levels have to be treated for your drinking water as well as for use by businesses, industries, agriculture interests, etc.

But here’s what is not being talked about in the lake water.  Think how many septic systems are being flushed by rising/flooding water.  Thats human wasteWhat about animal waste that is being washed from the nearby land into the lakeCan you say fecal coliform?  And what about flooded home propane tanks that are floating (leaking?)?  Construction porta-potties?  And agricultural pesticides washed from the land into the water?  To purify your drinking water will take a massive effort beyond getting rid of silt, debris and mud.

As this is a weekly publication, it is not possible for us to provide up-to-minute info as you read this.  Buchanan is set to open to the public at noon Friday.  LCRA will assess the other lakes Tuesday.  But, when we are talking about such widespread impact, we can provide you with a sense of how we got here and, importantly, what you can expectbecause, frankly, millions of dollars are being spent right now to address the situation. Just think what this unbelievable amount of water would be doing to the area if the LCRA weren’t controlling that water through its system of dam floodgates.  The biggest reservoir lake, Buchanan, was built way back in 1938.  It straddles Burnet and Llano counties.  Mansfield Dam created the other reservoir, Lake Travis.  It wasn’t completed in its present configuration until 1942.  It overlaps Travis and Burnet Counties.  Renovation work is underway on Mansfield now.  We’ll explore that and different solutions in the next item. Read More

October 19, 2018

Volume 40, Number 29

UTAustin is without doubt one of the Austin areas most important economic engines.  (Years ago we made a speech titled If you want to stop growth in Austinmove the university to Amarillo!”)  So,how is UTAustin doing?  Especially, how does it compare with other peer institutions?  In the world?  How about this UTAustin rose ten points to be ranked #39 worldwide by one of the most respected global rankers of universities.  Impressive.

The editors of Times Higher Education World University Rankings (THEWUR) singled out Yale University and UTAustin for making major advances this year.  It attributed UTAustin’s leap to “significant increases in its institutional income and research volume.”  The ranking relies on a combination of reputation surveys and quantitative metrics in five areas:  teaching, research, research citations, international outlook and industry income.

It’s difficult to get detailed information on the specifics underlying THEWUR’s ranking but, according to UTAustin, it “correlates with recent expansions in research funding, research reputation and academic reputation.”

UTAustin ExecVP/Provost Maurie McInnis said investments in faculty compensation and interdisciplinary research, combined with the addition of the new Dell Medical School, are enhancing UTAustins research impact.  (If memory serves us correctly, UTAustin’s rankings have suffered in the past because most peer institutions boasted medical schools.)

And UTAustin’s future appears even brighter.  McInnis said “by placing greater emphasis on doctoral programs and strategic hiring, the university aims to become even stronger in years to come.”

Other Texas universities placing in the ranking include Rice University (#86), TexasA&M (#159) and UTDallas(lumped into a range of #201-#250).  UTAustin has done well in several other global rankings:  Center for World University Rankings, #31 … USNews&World Report’s latest ranking of Best Global Universities (#32) and Nature Index’s ranking of #23 in the world for scientific research. As its stature grows nationally and worldwide (and this growth is expected to continue surging), UTAustin enhances much of what makes Austin, Austin. Read More

October 12, 2018

Volume 40, Number 28

Its a rare sight in Austin:  powerful activist environmental interests disagreeing among themselves.  Usually the environmental community leaders in Austin publicly march in lock-step -- fighting for or against the same issues.  Not now.  Distinct lines have been drawn over an issue that will be on Austin ballots November 6th.  Which side prevails may go a long way toward defining the shape of Austins growth.

The ballot item is Proposition J.  Huh?  What’s that?  Simply put, it would require any comprehensive change to Austins land use rules go to voters for approval.  Just getting on the ballot was controversial.  It took a grass-roots effort to bypass the Austin City Council to get Prop J on the ballot.  This grew out of the CodeNEXT development rules process that inflamed such strong opinions, it was ultimately abandoned. So, how has this pitted Austin environmental leaders against each other?  We need to credit Mose Buchele, an award-winning reporter for KUT-FM, for bringing this to our attention through his writing in Austin MonitorIt boils down to differing environmental philosophies as they relate to growth and climate change.  How so?

If Proposition J passes, then the voters will have the right to check the Councils work if we resurrect CodeNEXT and we have a comprehensive rewrite of our Land Development Code,” longtime environmental activist Bill Bunch argues.  Arguing against passage of Prop J is the director of Austin-based Environment Texas, Luke Metzger.  Where do they differ?

Bunch opposes development being shoved into the Central city where you would “scrape our existing city neighborhoods and try to force it on top of existing communities.”  He doesnt like adding density in downtown Austin and wants growth moved away from the city core.

Metzger disagrees:  “Are we going to increase sprawl, increase traffic, or are we going to do it in a much more walkable, transit-friendly way and bring people into the city core?”

They both cite strong, passionate environmental reasons for their approach.  Itll be interesting to see which approach prevails in this environmentally-centric Austin community. Read More

October 5, 2018

Volume 40, Number 27

The price of oil is surging toward an extremely high price of $100 a barrel.  In fact, this week the price moved up to bounce around $80/barrel.  Good for the Texas awl bidness.”  Good for state government, as tax revenue is pouring into state coffers in advance of the Texas legislative session starting in January.  Good for the Texas economy.  Yes, but.  What about the price of gasoline you pay at the pump for personal and business driving?  Good question.

There are predictions that the price of gasoline will be increasing, even though the summer heavy driving season is behind us and the demand theoretically is lessened.  It’s a logical forecast.  After all, it is costing more to buy and then process crude oil.  So it isn’t surprising to expect the price at the pump may go up.  If it does, though, how high could it go?

As of mid-week, the price for a gallon of regular gas at Costco on Austins Research Blvd. was $2.48/gal.  (Admittedly, Costco generally has some of the lowest prices around.)  This is the same price range, slightly up and down, seen at Costco through the busy summer travel months.

Know what the gas price is in California?  “Gasoline prices are climbing toward $4.00 a gallon in Southern California, boosted in large part by a rise in worldwide crude oil prices,” reported the Los Angeles Times.  “The average pump price for regular gas in the Los Angeles-Long Beach area stood at $3.77.”

Wait a minute.  If crude prices were the biggest culprit, wouldnt you think similar prices could be found in Austin and all over the US where the price of crude is the same?  Hasn’t happened.  Something else is happening in LaLa Land.

The truth is that California policies, including its high state taxes on gasoline and diesel, drive up prices,” observed the conservative think tank Texas Public Policy Foundation.  “Regulations and corporate taxes also play a big role in determining refinery operating costs as well as expenses throughout the entire supply chain.  That’s why prices are rising, especially in California.”

You’ll probably always pay more at the pump in high-tax states than here in Austin or around Texas.  Competition and volume also play a part.  Still, the price you pay will likely rise.  See the next story. Read More

September 28, 2018

Volume 40, Number 26

Dear ,

Within the next few weeks, Capital Metro is planning to unveil an ambitious, long-term plan to bring high-capacity public transit to the Austin metro area.  What form will it take?  Well, thats what will be revealed.  Project Connect could include any, or all, autonomous buses, light rail, extensive expansion of the existing MetroRapid bus service, or other rapid bus service.  It could be a big deal.  And highly controversial.

Big – because the plan would probably propose a system so large it will provide a major alternative transportation mode attractive to motorists who currently drive city streets.  Controversial – because it will likely result in the removal of car lanes.

Underlying whatever is proposed may be the biggest concern of all:  which routes will the system run along, and importantly, what dedicated right of way will be needed?  Remember Capital Metro doesn’t have jurisdiction over roads their vehicles use.  In other words, CapMetro can’t dictate what happens to acquire needed right-of-way.  These roads either belong to the city, county or state.

Why right-of-wayWithout it, buses simply line up in the same slog cars get bogged down in.  Okay, what about light rail?  Well, in most cases, you would probably convert vehicle lanes to rail lanes.  You would likely also build boarding platforms in the middle of roadways.  Again, right of way problems.

For a transformative transit system to be successfully instituted, you will need leaders of differing governmental entities heavily involved, making serious decisions – and, in some cases, probably angering some of their constituents.  Complicated?  Oh, yeah.

And cost?  No estimate yet.  But local leaders like to look to Seattle and other similar cities for examples.  Seattle committed several billion dollars to convert a major downtown artery entirely to bus serviceIt runs as many as 200 buses an hour on the roadway.  It worked.  Seattle has seen a major reduction in car use.  But, at what price in dollars and to auto mobility?

What can you expect?  First of all, this is – as we said – ambitious planning and it is very, very long-term.  CapMetro will likely take the first public step within a few weeks to begin a more extensive planning and coordination effort.  The implications are huge.  Stay tuned. Read More

September 21, 2018

Volume 40, Number 25

Face it.  Whether you like it or not, advances in robotics and artificial intelligence will be used in battle by someone an enemy or an ally.  And Austin will be on the cutting edge of the effort to ensure US soldiers will have the best technologies available.  This was securely set in stone when the first new 4-star command in 45 years the Army Futures Command (AFC) – was established, not in a remote military base, but in downtown Austin.

While this is a development of yet-to-be-fully-understood, long-term-significance to the Austin area, it is a continuation of Austins quiet involvement for more than a half-century in private and public war-related activities.  Two quick examples:  1) UTAustins Defense Research Lab was active in World War II in North Austin, where the Pickle Research Lab now sits, and where Sam, the first monkey to launch into space, was trained and 2) Tracor, the first home-grown NYSE-listed company, was founded in 1955 to work on US defense electronics.

What we know about the AFC’s economic impact in Austin is that, once fully operational, it will employ about 500 employees, including 400 civilians.  Not Dell-huge in terms of numbers, but important in high-level positions.  This is where university graduates and private sector workers come in.

“By tapping into private-sector and academic know-how, the Army can better develop solutions to future problems,” observed longtime Texas economist Ray Perryman.  “With Austins large number of professionals in science and technology industries and thousands of graduates each year in science, technology, engineering, and mathematics career fields, the area is well equipped to work with the Army to modernize.”

The Army hasn’t said so yet, but you can anticipate that millions and millions of government dollars will start flowing, as if from a fire hose, into UTAustin, established tech and computer companies, start-up tech innovators, leading-edge researchers, etc.  This is how the Army can maximize the advantages of all that Austin offers.  Make no mistake, this will provide a significant infusion of funds into the area. Want a phrase from an expert that puts the Army Futures Command Austin/Texas location into perspective? Try this from Perryman:  “In one of the most important arenas imaginable, Texas has shown itself to be an innovation juggernaut of global significance.” Read More