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Economy

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 →

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 →

January 11, 2019

Volume 40, Number 39

Property values are increasing dramatically in highdemand, lowavailability parts of Austin.  Take the land west of the UTAustin campus where hot new development projects include highrise (and highdollar) luxury living units.  But, prime land is at a premium.  So, how do you meet strong demand?  An emerging trend is to build in air space above existing structures that are ideally located.  At the forefront of this trend is a church.  Thats right, a church.

You couldn’t ask for a much more ideal location for high rise student living units than in the 2000 block of Guadalupe Street (The Drag), alongside the UTAustin campus.  This is the location of St. Austins Catholic ParishSt. Austins is in active negotiation for air space development rights above its property.  This could be a big win-win for both parties.

Currently we are negotiating an exclusive agreement with Greystar, where we will spend the next couple of months developing the financial model that tells us if we could make a project work for all of us,” the pastor, Rev. Fr. Charles Kullman, told his parish.  The property is huge.  It not only includes the church facility itself but other buildings such as the rectory, offices, school, etc.

Greystar, he said, is a global leader in student housing with assets close to $30 billion.  “They stood out with their global experience and specific experience in West Campus, and it has the balance sheet needed to support a potential project of this size,” said Fr. Kullman.

Negotiations are not public, but the church will probably want to improve its existing facilities and negotiate ongoing payments from the development, while it maintains ownership and control of the land and church assets.  Greystar would, within existing city zoning regs, see how many living units (condos? rentals?) it can build and how high it can rise above the church facilities.

So, what’s the timetable?  “No decision to move forward will be made until everyone is comfortable with the financial model and it is approved by the Diocese,” said Fr. Kullman.  “I expect it would be sometime in late February before we get through this next step.”  St. Austins, by the way, tried to work a similar air space deal with UTAustin, but was told the universitys business model does not include student housing off their own property.  Also, we understand a small UTAustin fraternity, Acacia, is also working on an air space deal. Read more →

January 4, 2019

Volume 40, Number 38

As a New Year begins, most folks only look ahead and plan for the upcoming year.  But, economists are not most folks.”  Part of what they do is go out on a limb and look waaaaay out.  In the case of Texas economist Ray Perryman, would you believe 25 years between now and 2045?  Austins economy is strong now, and his longrange prediction for the next quartercentury is very positive for the Austin metro area.

Long range economic forecasts for the Austin area have not always been bullish.  Back when Austin was only a state-government-state-university town — modest economic growth was the standard.  In fact, going back to only 1980, a 25year forecast would have been grossly underestimated.

That was then.  This is now.  Here’s what Perryman said in the first days of 2019:  “The Austin-Round Rock metro area remains one of the top performers in the state and continues to attract national attention; the area is projected to be a strong performer over the forecast horizon.”

All that verbiage is well and good.  But what about numbers?  What will happen to the job situation?  “Nearly 665,100 new jobs are likely to be added by 2045,” Perryman predicted.  Whoa!  This is a whole lot of new jobs, new payrolls, new residents in the 5-county metro area.

When you break down his job numbers, you find it amounts to a 1.78% annual growth rate, spread out over the next 25 years.  Sure, the Austin metro has notched a higher annual growth rate than that in the past.  But, when you average the ups-and-downs certain to occur over a quarter-century, this is impressive.

In fact, Perryman’s predicted 1.78% job growth rate ties the DallasPlanoIrving Metropolitan Division and leads the others:  the Fort WorthArlington Metropolitan Division, 1.58% … El Paso metro, 1.5% … HoustonThe WoodlandsSugar Land metro, 1.64% … McAllenEdinburgMission metro, 1.64% … and San AntonioNew Braunfels, 1.66%.

Interestingly, about 72.4% of Texans live in these major metros.  And that percentage has been rising.  In fact, Perryman predicts through 2045, 80% of new jobs will be in the seven largest metro areas in Texas. Read more →

December 14, 2018

Volume 40, Number 37

As 2018 winds down, its time to look ahead to what can be expected in 2019 (especially since this is our final 2018 issue, as we take our traditional yearend 2week hiatus).  In no particular order, lets hit as many issues as we can cram into this weeks newsletter.  First, as you plan your 2019 travel, heres what you can expect at Austins airport.

Frequent flyers know record-breaking passenger traffic has crowded the corridors, security lines and parking at Austin-Bergstrom International Airport (ABIA) this year.  It is averaging a huge 15.1% increase over last year, with no additional airport capacity.  Hang on.  Help is on the way.  And sooner, rather than later.

Nine new gates are nearing completion.  They should be quite impressive.  They will open in phases in the next year.  The north facing gates are on track to open in the spring of 2019.  This is none too soon.  But final construction will continue on new restaurant space, concessions and for an area ABIA calls the patio.  All this and the south facing gates are set to open by fall of 2019.

Important, but not as sexy, the remodeling and modernization of 13 vestibules is entering into the final construction phase.  Vestibules are the automatic sliding glass entrances and exits.  They will be enlarged to allow more space to enter and exit the terminal with luggage, while controlling drafts and the loss of cooled air.

In 2019, look for a continued major increase in passenger traffic.  But, by the end of the year, the new construction should alleviate some of the hassle as you travel through ABIA. Read more →

December 7, 2018

Volume 40, Number 35

Its common these days for glowing national articles to be written about Austin.  So when an opinion piece in a respected national publication criticizes actions by Austin, you need to be aware of what is being said.  Within the past week, The Wall Street Journal (WSJ) wrote the City of Austin risks becoming the San Francisco of the South an expensive playground for wealthy progressives.”  And it cited examples.

 “It would be hard to find a better example of left-wing naiveite in municipal affairs than what transpired here in November,” wrote the WSJ in its opening sentence.  “Voters in the Lone Star State’s progressive bastion overwhelmingly approved a $925 billion bond package, but rejected a simple ballot initiative for an independent audit of city spending.”

“The defeat of the audit wouldn’t be so galling if the new bonds didn’t so obviously demonstrate the need for an independent review of Austin’s books.  Spending in the Texas capital is more like what one would expect in some profligate California city,” observed with WSJ.  “With this new bond package, Austin has been reduced to using debt to fund parks, public safety and sidewalk repair instead of paying for them out of its $4.1 billion annual budget.”

It cited other examples saying Austin “spends too much of its steadily growing budget on dubious social programs and utopian schemes, financed by a steadily growing tax burden.”  It ticked off actions such as mandatory paid sick leave “with an exemption, of course, for union shops.”  A solar-ready requirement for all new homes and commercial buildings was another example, as was “exorbitantly high development fees that get passed on to consumers.”

The priority of the citys ultraprogressive political establishment is to serve the interests of the wealthy, ultraprogressive white people who fund and elect Austins insular political class,” claims the WSJ opinion piece.  “As living here gets more expensive and as the city’s elite dig in to protect their left-wing haven from disruption and change,” it becomes more like San Francisco.  Tough talk.

Let’s put this in perspective.  Readers of the WSJ can agree or disagree with this assessment.  This is not the point.  The pointthis review of the City of Austins governing policies is now out there for all to see.  In a respected publication. Read more →

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 nonpartisan 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 votegetters for District 1, District 3 and District 8 must face voters once again.  Here’s how it breaks down.

District 1 features newcomers Natasha HarperMadison 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 leftleaning 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 TrumpRepublican 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 lawmaking body.  Early voting runs from November 29th to December 7th. 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 →