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Austin Letter

October 26, 2018

Volume 40, Number 30

Historic flooding upanddown 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 portapotties?  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 lockstep 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, transitfriendly 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 environmentallycentric 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 midweek, 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 [MM_Member_Data name=’firstName’],

Within the next few weeks, Capital Metro is planning to unveil an ambitious, longterm plan to bring highcapacity 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 rightofwayWithout 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 halfcentury in private and public warrelated 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, startup tech innovators, leadingedge 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 →

September 14, 2018

Volume 40, Number 24

The Texas economy especially as it impacts the Austin area is so strong it has triggered an action not taken in 30 years.  State government, so important in Austin, is benefitting significantly from what is happening throughout the state not to mention the impact of the redhot Austin economy.  All this is due to betterthanexpected economic and revenue growth around Texas.

We’ve long maintained the Austin area is uniquely positioned economically.  Steady government paychecks provide a solid underpinning for the area.  In general, these jobs are not subject to ups-and-downs or twists-and-turns of the private sector.  So, add to this, the Silicon Hills of Austin is right now riding the crest of tech-driven private sector job growth, that is the envy of the rest of the nation.

Consider this:  the skyrocketing Austin private sector tech economy is set to get a rocketboost from normallystaid state government.  What?  How’s this?  The Texas Legislature that sets budget parameters for the many state agencies in Austin doesn’t even meet for almost four months.

Texas Comptroller Glenn Hegar, by law, is the state official who decides money guidelines the legislature must follow.  He says to legislators “this is how much money you will have to spend during the next two years of the biennium and you cant spend any more than that.”  Last October, he issued his forecast for fiscal year 2019.

For the first time other than a legislative session in 30 years, the State Comptroller has increased his certified revenue estimate he made last October.  And it was a big increase.  Remember, the Texas Legislature meets only once every two years for 140 days.  So its a big deal for setting a twoyear budget.

His reason for saying state agencies will have more money to spend starting in 2019 than earlier predicted are several fold:  sales tax revenue is up 10.5% over FY 2017 … oil/gas natural gas production tax revenue is up 56.1% … general revenue-related revenue, up 9.3%, etc.

The legislature will have more money to dole out.  If state agencies get bigger bucks, it will mean bigger paychecks circulating through the Austin economy.  A nice future boost. Read more →

September 7, 2018

Volume 40, Number 23

For a year now, the Austin area has been considered one of the favored locations for Amazons 50,000person second headquarters, Amazon HQ2.  Still no public word on when Amazon will announce its next step.  A $5 billion investment in the HQ2 city, spread over 1020 years, has many cities salivating.  In fact, it has been said a prosperity bomb will be dropped on the ultimate HQ2 city.  How can the Austin area prepare for such an event?

Austin’s proposal has not been made public, but several cities have revealed proposals that have incentives valued up to a billion dollars.  Hey, they probably figure, if we invest a billion dollars for a $5 billion returnits worth it.  Don’t know if this was their logic.

But it emphatically emphasizes the humongous aspect of Amazon HQ2.  Amazon estimates it generated $38 billion in economic activity in its home base of Seattle between 2010 and 2016.  Okay, so HQ2 will be big.  Really big.

Washington, DC-based think tank Brookings Institution in a new study examined how the city that wins Amazon HQ2 could ensure its arrival does not rapidly drive up housing costs – an important element in the Austin area economy.

Brooking’s Joseph Parilla said this “should include not only stimulating new market-rate development through zoning, but also setting aside some of the tax revenue generated by Amazon to fund and preserve affordable housing.”

Other than housing, Parilla said Amazon should invest in local business initiatives, such as a startup accelerator and should source services and goods from resident suppliers.  And, the new HQ2 city should prepare existing residents to take advantage of employment opportunities created by Amazon.  In other words, the “diversity of the entire region” should be brought into play in business planning around Amazon.

Back to housing for a moment.  In Amazons HQ1 city, Seattle, the cost of housing has outpaced wage gains.  While the income of families at the 20th percentile of the earnings distribution grew by 14% between 2014 and 2016, rents increased at 19%, according to Zillow.  Sound familiar?  If Austin is selected for HQ2, Amazon will be on familiar territory and should work with Austin to alter such an imbalance. Read more →

August 31, 2018

Volume 40, Number 22

Dear [MM_Member_Data name=’firstName’],

The National Science Foundation announced this week that UTAustin will receive a $60 million grant to build one of the most powerful supercomputers in the world.  And, it will be the fastest of any university in the nation.  This moves UTAustin to the very top in the field.  And while vastly important for academic disciplines at UTAustin, the recognition also reinforces Austins overall tech economySo, how did UTAustin reach this pinnacle?  It got a rocket boost 35 years ago when it did something it had never done before, nor since.

First a little background:  In 1983, Microelectronics and Computer Technology Company (MCC) was a brand-new consortium composed of 15 of the US’s top tech companies (it later grew to 21).  MCC’s task was to counter Japanese dominance in the tech field, which was supported/funded by its government.  In other words, Japanese companies were beating the butts off US companies that didn’t have that level of R&D financial backing.

With a wink and a nod to US anti-trust rules (later validated by Congress), these companies ponied up big bucks and committed to offering their best and brightest minds to work together for far-sighted tech research.  Then the companies took the research results and competed in their own way in the world marketplace.  MCC’s site location was a prize sought by 57 cities in 27 states.

Bear with us.  We’re getting to UTAustin’s unprecedented role.  But, first you need to know Austin, Dallas and San Antonio were all part of the initial 57 cities.  Following a presentation led by Texas Governor Mark White and UTAustin Engineering Dean Ben Streetman, Austin became one of the four finalists along with San Diego, Atlanta, and Raleigh-Durham.

Governor White tapped his chief of staff, Pike Powers, to corral the full force of state and Austin resources to successfully lure MCC to Austin.  The governor said “Don’t leave anything to chance, Pike.”  So, a team of mostly volunteers collaborated to prepare a precedent-breaking proposal that involved UTAustin.

Keep in mind, at the time, the university already enjoyed a solid reputation in computer science and electrical engineering.  But, in 1983 it decided to make a quantum leap, and invest heavily and uniquely (with the help of benefactors) to support the bid to attract MCC to Austin.  UTAustins commitment raised Austins proposal above all others.  Check the next item for how UTAustin helped itself, while it helped the city and the state. Read more →

August 24, 2018

Volume 40, Number 21

Things are going so well in the Austin area right now you might be tempted to pinch yourself to see if youre dreaming.  This is especially true if you happen to remember two past disruptions that caused some serious damage the dotcom bust and the real estate recession.  They occurred in Austin less than 20 years ago.  And, they were like a slap upside the head.  A lot of people and companies were seriously hurt or even destroyed.

This report is not intended to be a downer.  And it’s not a dull recitation of local history.  But, there are so many new residents in the area, it might be helpful to remind them they have arrived at a great time.  Those who have lived/worked here for at least twenty years have vivid memories of when times were not-so-great.  And, more importantly, many of those who survived those times are responsible for Austin’s economic success stories today.

Think about this.  Roughly a million people have moved into Austin and the surrounding areas in the 5county metro during the decades following the two downturns.  They didn’t experience the hard times.  All they’ve seen is one of the most amazing periods of expansion experienced by any major world city.

Many of these new residents are pulling down compensation greater than those who were hammered by the downturns.  A lot of them are living and/or working in gleaming, modern towers downtown – or, in new office buildings, apartments and homes outside the Central Business District.

The downtown newbies probably can’t comprehend “see-through office buildings, where three million square feet of office space had to go begging – even though the spaces were cut-rate subleases from leases businesses committed to prior to the recession.  This is as much space as six Frost Bank Towers!

Here’s one example that vividly illustrates the contrast between then and now.  Drive to Fifth and San Antonio Streets downtown.  Marvel at the architecturallysignificant Federal Office Building that will still be standing on that site a century from now.  At one point, global semiconductor chipmaker Intel started building a $124 million tower on that site.  Then as the dot-com debacle hit, Intel pulled the plug half-way into the project in March 2001.  For six years, the “Intel Shell” reminded all of what might have been.  The takeaway:  Recent residents will do well to understand what they have inherited.  This is a special place. Read more →