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Transportation

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 →

August 17, 2018

Volume 40, Number 20

Mexico is the most important international trading partner for Texas by far.  Austin also benefitsRelations recently have been a bit dicey, especially with the NAFTA trade agreement between Canada, Mexico and the US under review.  “Review is a soft word.  Soon NAFTA that went into effect in 1994 may no longer resemble its former self.  With a newlyelected president of Mexico starting a 6year term December 1, 2018, lets examine what may happen.

This is not the stuff of everyday headlines.  In fact, many find a discussion of international trade pretty boring.  But this is very important for the future growth of the Austin area and the Texas state economy.  Take Texas first.  Texas has been the nations top exporting state for 14 years in a rowAnd Mexico, by far, is the top country for Texas exports — $97 billion to 2nd place Canada’s around $30 billion in 2017.  All other nations are back in the pack.

Austin takes a big chunk of this dynamic export business.  In fact, the AustinRound Rock area is the 26th largest exporter region in all of the US.  And it is growing.  Exports grew 30% over a 10-year period from 2006 to 2016.  The metro area exports approximately $10 billion in goods and services a year.  More than 2,000 businesses in the Austin metro exported $540 million worth of merchandise to Mexico in 2016.

So what could impact this significant hunk of our economy?  First of all, President Donald Trump has long maintained the US gets the short end of the stick in NAFTA saying the trade agreement favors Mexico and Canada.  He even called for abolition of NAFTA (which stands for North American Free Trade Agreement).

Now Trump is playing Mexico against Canada, saying the US might end up with two agreements, a different one for each nation.  Hes saying negotiations with Mexico started again July 26th and are coming along nicely.” But talks with Canada are on hold.  Trump is even praising Mexico’s left-leaning president.

So, what is likely to happen?  Former USAmbassador to Mexico Tony Garza (who lives and works in Austin and Mexico City) said the new Mexican president has his own man sitting in on current negotiations.  “The new administrations embrace of the talks has sparked renewed optimism for a quick finish, with some negotiators even pointing to completion by the end of August,” said Garza.  Stay tuned. Read more →

August 10, 2018

Volume 40, Number 19

If you look at the calendar with eyes that have some economic development expertise, you can logically assume Amazon will soon publicly announce the next big step in the selection of a city that will be its choice for its second headquarters, Amazon HQ2.  In January, 20 cities including Austin were told they made the cut from 238 original submissions.  Since that time, Amazon has made no public utterance.  But, its selfimposed deadline is nearing.

Don’t expect Amazon’s next announcement to be the city.  Amazon initially said it will decide the HQ2 city in 2018.  But, if Amazon follows standard site selection procedure, a handful of finalist cities will be revealed a Final Four,” or some small manageable number.  Winnowing down the smaller number to the “winner” will probably include further site visitations, negotiations and a comparative analysis.  This could take a few months.  And by this time, Amazon’s own deadline will be upon them.  For these reasons, you can expect the final cut of cities should be announced sooner rather than later.

Amazon earlier confirmed site selection teams visited all 20 cities.  The visits were very private.  Even some city officials didn’t know they were in town.  And those who met with the site selectors were asked to sign confidentiality agreements.  Even the HQ2 team members didn’t reveal their full names.

This, by the way, is the norm for most economic development visits, though usually it is to make sure the company’s competitors are not aware of their plans.  However, in this case there are no competitors.  Amazon announced it would invest about $5 billion in the chosen city, and HQ2 would grow to about 50,000 new highpaying jobs over the years.  Amazon HQ2 has no peer.

The Austin and Dallas regions were the only two Texas sites among the 20 that made the first cut.  And, an Amazon team not only visited these sites, they also met with the Texas governors office to gauge the states role.  So, make no bones about it, Texas’ no-income-tax, low-regulations, business-friendly-leaders add tremendous clout to local presentations.

A final note about Austin’s chances:  from Day One, Austin Chamber of Commerce officials who guided the Austin effort, have used the phrase Austin Region” – not City of Austin.  So, if Austin makes the “Final Four” – and it is considered one of the favorites – dont be surprised if the physical location is outside Austins city limits. Read more →

July 27, 2018

Volume 40, Number 17

Dear [MM_Member_Data name=’firstName’],

As the state of Texas goes, so goes Austin.  Some think the vice versa is more true.  But since Austin is the home of the massive state government that must keep up with the impressive growth of Texas, its important to examine the economic health of the Lone Star State.  Especially as the Texas Legislature will meet in Austin in less than six months for its everytwoyears decisionmaking sessionAnd, legislators will have a lot of money to spread around.

When you think about it, it’s really impressive how the amazing Texas economy is churning out enormous amounts of money to run the government.  And, unlike the vast majority of other states, Texas is doing this without a state income tax.  The single largest source of revenue for Texas is the General Sales Tax instituted in 1961.  And, get this, the state sales tax rate of 6% has not increased since 1990.

The booming state economy has caused the sales tax source of revenue to zoom almost 10% since last year at this time.  As a result, State Comptroller Glenn Hegar now predicts legislators will have more than $110 billion (with a b”) to spend during the next biennium — $2.8 billion more to spend than originally anticipated.

Now then, enough about mind-numbing big bucks.  Let’s talk about another economic factor.  Separate from the sales tax, Texas has “benefitted from rising oil prices and production,” Hegar pointed out.  This translates simply into a 2019 balance in the states savings account – the Rainy Day Fund” – growing to almost $12 billion, the largest ending balance in the states history.  Talk about economic stability.

Not only that.  After voters approved a constitutional amendment in 2015 to increase funding for highways, the adopted formula means $2.5 billion will be allocated to highways from collections this 2018 fiscal year.  This is huge.  And it is occurring because of the increased sales tax receipts.

At least one group is urging legislators to “buy down some existing taxes” with additional funds. (Explanation:  Back in 1992, the legislature allowed municipalities and special districts, such as transit authorities, to levy local sales taxes.  The maximum municipal rate is 2%.  This is why some sales taxes are as high as 8.25%, depending upon the locale.) Read more →

July 6, 2018

Volume 40, Number 14

In this holidayshortened week, it seems appropriate that a number of short items should dominate this edition of the newsletter.  Not that they are any less significantIts just they can be covered with a few sentences or paragraphsTake the now-defunct ban on single-use plastic bags as our first example.

It didn’t take long after the Texas Supreme Court ruled local bag bans ran afoul of state law for the state attorney general to take action.  (Austin has had a bag ban since 2013.)  This week, Attorney General Ken Paxton officially notified Austin and other Texas cities their local ordinances were illegal and therefore unenforceable.

To make sure the word got out, Paxton directly notified the City of Austin, Mayor Steve Adler and the 10member Austin City Council, then he issued a press release to the media.  Now what?  The ruling that banning plastic bags is illegal as of this moment should stand until some counter action – if at all – is taken.

 

 

It may not be long now before you see electricpowered, autonomous transit vehicles circulating in Downtown Austin.  It will be a pilot program instituted in two phases technology testing and actual service runs.

The testing by Capital Metro and the City of Austin Transportation Department could begin later this month and take up to 60 days.  During the second phase, proposals will be evaluated to lease six vehicles, carrying up to 15 passengers, to run in the pilot program for 12 months.

CapMetro thinks the fleet of vehicles will be in operation on downtown streets in late fall.  Not to worryCapMetro says operators will be on board while the autonomous electric vans are being evaluated and running in service.

 

 

For Austin airport travelers, and those picking up arriving passengers, the renovated cell phone lot is offering this month a Texaco fuel station, 120 parking spaces, a convenience store (serving tacos, BBQ, etc.) and electric vehicle charging stations.

Read more →

June 29, 2018

Volume 40, Number 13

As Texas grows, so grows state government.  Right?  Uhhhh, not necessarily.  Government payrolls are a significant part of the Austin economy.  Always have been, always will be.  But, as the rest of the Austin area economy expands at one of the fastest rates in the nation to what extent is government keeping pace?  Bottom line:  private sector jobs are quickly growing in the Austin area.  And the jobs in the government sector are not in step.

This is not to downplay the role in Austin of steady government paychecks.  Far from it.  In fact government sector jobs are more than 17% of all jobs in the Austin area.  (These stats are lifted from a June report by the Austin Chamber’s VP/Research, Beverly Kerr.)  Other cities would die for such a solid job base.  Instead, the current economic situation is a testimony to the private sector that it is outshining the government jobs in the metro.

Without relying on the 17% government jobs (because government job growth was essentially unchanged) the Austin area added 33,900 net new jobs in the 12 months ending in May.  Let this sink in.  This growth of 3.3% made Austin the third fastest growing major metro in the US.  And it was basically in the private sector.  For the nation, private sector growth was 1.9% for the same period.

A half-century ago, we were quoted in TIME magazine as saying “Austin is a state government, state university town.”  True, then.  Not so much, now.  And it has occurred in less than one lifetime.

By most measures, the Austin area boasts of one of the most vibrant economies around.  And private sector jobs have been the defining difference compared to the area’s historical past.  This is a major economic sea change that has taken place in front of your very eyes.

Oh, by the way, all this is underscored when you understand that almost as soon as new jobs are created in the private sector, they are filled.  In May, Austins outstanding unemployment was at an eyepopping 2.8%.  Economists will tell you this is full employment – anyone who wants a job can get a job.  Other major metros in Texas are also doing well.  Their unemployment percentages are solid – ranging from 3.2% in San Antonio to 4.2% in HoustonDallas and Fort Worth were at 3.4% in May.  These are all better than the unemployment rates seen a year ago. Read more →

June 8, 2018

Volume 40, Number 10

You hear a lot about the Austin area being inundated by newcomers from California, New York, Boston, etc.  And its happening.  But you dont hear much about your fellow Texans leaving their hometowns to settle down in the Austin area. The common denominator is jobseeking. This is an important, often overlooked, part of the growth in the Austin metro.  And, in some cases the peoplemoving event is a twoway street.

According to a new study by a career-analysis website, Glassdoor, the biggest supplier of jobs for newcomers to Austin is tadahh, wait for it the DallasFort Worth (DFW) metroplexHouston and San Antonio are next.  New York City and Los Angeles follow in the pecking order.

Glassdoor measures job applicants.  The availability of wellpaying jobs in Austin is the lure, which we’ve chronicled for you for years.  And, of course, it’s easier to uproot and move down the road to attractive Austin, rather than make a cross-country move.  So, in that sense, it makes sense for ambitious Texans, seeking a better situation, to consider a move to the nearby Austin metro.

Not all Austinites stay here (I know, I know, it’s hard to believe).  And you must (grudgingly) admit, the much larger D-FW metro is also a pretty good area.  While Glassdoor reports DFW attracts the most job applicants from Houston and New York City, Austin comes in at #3, just ahead of Chicago and Los Angeles.  Aside from Austin, there’s a pattern here:  big city attracts residents from other big cities.  (Maybe, for some Austinites, it’s trying to “move-up” to the big city life.)

Another point that needs to be made:  weve always mentioned Austin area.  This population influx is not limited to the Austin city limits.  As we have regularly referenced, the nearby communities within the Austin metro offer more affordable accommodations and civic amenities such as nearby schools, quality neighborhoods and access to all Austin offers in terms of quality of life.  It’s part of the big picture.

Speaking of smaller Texas cities, didja know the most prosperous city in America is a small town in Texas?  And, a nearby city is also in the Top TenOdessa as #1 and Midland as #10 are stories unto themselves.  But, these boomtown oil patch Texas success stories bring with them a number of trade-offs.  Check out the next item. Read more →

June 1, 2018

Volume 40, Number 9

The sometimesbitter, pushpull battle between public schools and charter schools is ongoing in Austin and around the state.  South of here, in the Lower Rio Grande Valley, a public school district is considering a plan that could give its campuses more flexibility and funding by adopting some charter schoollike policies.  This is one to watch.

Immediately after our deadline this week, the Pharr-San Juan-Alamo (PSJA) public school district teachers will vote on a plan that will create an Innovative Management Organization, or IMO.  If adopted, PSJA superintendent Daniel King says the IMO approach could result in additional funding for the school district.

Stay with me now.  The non-profit IMO will operate as an independent contractor to PSJA and will be responsible for delivering services to the district.  King calls this a way to merge the benefits of having charter status with the current public school system.  How will it work?

To achieve a middle ground, King proposes holding the IMO responsible not for fully running the campus, but for creating methods in which teachers and staff are more involved in the decisionmaking of their campuses, according to the McAllen Monitor.

The IMO will be overseen by its own governing board and operate as a separate entity from the district.  It will hire its own executive director.  If this plan is implemented district-wide, it would partner with 5-7 IMOs.

It gets complicated and maybe even a bit convoluted.  Space prevents us into delving too deeply into the pros and cons. But King estimates this plan would bring in about $906 additionally per child, per year, and if it is districtwide, it would mean $28 million annually.  This approach is made possible by Senate Bill 1882, passed by the Legislature.

Long a supporter of charter schools and frequent critic of public school operations, the Texas Public Policy Foundation praises this approach, saying not only would it result in more education dollars for the Valley, but it should also provide improved opportunities for teachers and better student outcomes.  It bears watching. Read more →

May 18, 2018

Volume 40, Number 7

Amazon, the powerhouse Seattlebased company, continues its quest for a second massive headquarters location dubbed Amazon HQ2.  It hopes to settle on a site this year.  The Austin area is one of 20 finalists that have made pitches for the economic development prize.  Debates have erupted about how such a gigantic, 50,000job enterprise can be absorbed into the local economy.  Consider some arguments against HQ2s ultimate location.

“Many residents fear that winning the prize would actually exacerbate all the things they hate about living in the region:  horrendous traffic, expensive housing, crowded schools and gentrification.  The area consistently ranks near the top in surveys of the nations worst traffic congestion.  It has failed to keep up with the demand for low and moderate priced housing, a challenge that also concerns Amazon.”  Betcha thought these quotes printed in a national newspaper were about Austin.  Nope.  They refer to another “favorite” for HQ2 – the Washington DC region.

Make no mistake.  The DC region is very much in the mix.  It would give Amazon an East Coast presence to balance Seattle’s West Coast location.  With Amazon gobbling up more and more enterprises, it will face more and more scrutiny by the US government, and a local presence would be helpful.

Also, don’t discount this:  Amazon’s CEO Jeff Bezos (generally considered the world’s richest man) owns the influential Washington Post newspaper – which incidentally carried the DC quotes listed above.  Oh, by-the-way, the DC area offered Amazon nine sites:  four each in Northern Virginia and the District, and one in Montgomery.  You see why some savvy analysts pick DC?

But, looking beyond DC and other highly competitive sites such as the Dallas area, we wanted to share this information with you to “point up a point” we like to make.  In almost any competition you can name, the winner is not perfect.”  It is the best of the rest.  And oft times, subjective factors (such as “I just simply like this one” when the competition is close) play into the decision.  This is where handicappers fall short in predicting winners.

So where does all this stand as of now?  Don’t know.  Amazon’s lips are zipped, as they have been all along.  But an interesting development took place just this week in Seattle that upset Amazon.  Check the next item that might swing an intangible toward a Texas location. Read more →

May 11, 2018

Volume 40, Number 6

Multiinch rainfall fell throughout much of the Austin area last week.  The benefit is obvious when you look at the trees, shrubs, grass, etc.  Vegetation is thriving nowBut, emergency crews will tell you the dog days of summer harbor the potential for disaster.  Were not talking about flooding, were talking about wildfires.  As the summer temps rise, dry vegetation provides fuel for fastmoving wildfires.

Specifically, we’re referencing the northwest quadrant of Austin, lavishly graced with massive amounts of trees – especially cedar/mountain juniper.  Fire casualty companies have rated Austin #3 in the nation for high wildfire risk, with more than 37,000 homes at risk.

Public Safety Commission member Mike Levy says the Austin City Council chooses to ignore the critical, immediate need for another fullystaffed fire station in the Loop360 corridor.  “If a wildland fire pushed by high winds from the northwest is not contained at 360, there goes Austin,” Levy warns.

Pointing to recent widespread fires in California and Colorado, Levy says the heavily-wooded area of Austin along the 360 corridor poses even greater risk.  “We have massive amounts of cedar and persimmon,” he said.  “Because of their oils, they dont ignite; they explode.”

He envisions a scary perfect storm scenario:  Thirty-to-thirty-five mile an hour winds that don’t “lay down” at night.  Low humidity.  Very dry vegetation in large quantities serving as hot fuel.  “One home on the urban interface ignites, most likely by a flying ember under the eaves rather than direct contact with flame, similar to how Bastrop homes, several miles from the actual flames, ignited,” said Levy.

“Then that fire igniting homes on either side and then on either side of those, with the same pattern across the street, with the fire jumping to the homes behind those … Well, you get the idea of the checkerboard pattern of rapidlyspreading house fires,” he continued.  “A monstrous inferno.  In less than 2-3 hours, thousands of homes will be lost along with lives of firefighters and civilians.”

Levy continues to press for expanded fire protection in Austin’s northwest quadrant, saying “Austin so far has dodged the bullet.” Read more →