Archive for January, 2017

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Austin’s shaky economic growth presents challenge to “strategic mobility plan” remake

31 January 2017
Austin Strategic Mobility Plan (title slide from official presentation)

Austin Strategic Mobility Plan (title slide from official presentation)

By Roger Baker

Roger Baker is a longtime Austin transportation, energy, and urban issues researcher and community activist. The following commentary has been adapted and slightly edited from his comments recently posted by E-mail to multiple recipients.

Once more, Austin officials are floating the idea of producing another “Austin Strategic Mobility Plan”. As a Jan. 30th article titled «Economic forecast puts focus on transit, housing, jobs for 2017» reports, this effort is being resurrected by Austin Mayor Steve Adler: “Adler said City Council will work this year on a ‘regional strategic mobility plan’ that will eventually lead to an ambitious region-wide transit plan that could include rail”

Austin’s previous most ambitious effort at a Strategic Mobility Plan was soundly defeated in the Nov. 2014 bond package, but few know that.

One problem that Mayor Adler now faces, as a real estate lawyer dedicated to promoting maximum Austin and regional growth as policy, is a sharp decline in our regional economic growth due to the related factors of gentrification, decreasing mobility, and a correspondingly sharp decline in venture capital startups, since it locally peaked in early 2015.

Low job growth is bound to be a big story this year. According to a Jan. 5th report from the Dallas Federal Reserve Bank, we now see an annual job growth rate of only 0.6% in the whole Austin region, according to the most recent Dallas Fed data. As the bank states in its report,

Austin jobs grew 0.6 percent annualized over the three months through November. Jobs in goods-producing sectors saw sharp decreases as manufacturing and construction have continued to shed jobs since the summer. Retail trade jobs continued to decline moderately, while wholesale trade fell sharply.

Austin faces another unique state economic problem due to lower state sales tax revenue needed to fund state workers, as compared to the previous biennial state budgets. A 2.9% revenue decline doesn’t sound like a lot until you add in two years of inflation.

A stagnant state budget and decline in tech job creation, too, put a big burden on the tourism sector to maintain the Austin economy. It seems to me that the Hotel Occupancy Tax increase is being primarily driven by hotels that want to expand the Convention Center again. They probably represent more than a billion dollars of local private hotel investments, so they have a lot of skin in the game.

A lot of total current US growth is now happening because of high-technology-related job creation. Depending on high tech job growth is a risky industrial policy because this sector is especially prone to booms and busts, as the 2001 Dotcom bubble showed in the Austin area. There is a lot of national tech job competition involved. Even Nashville is seriously competing with Austin for venture capital startups, a category of speculative asset bubbles that have been stimulated by nearly a decade of the Fed’s near-zero interest rates. Cheap money encourages risk.

Tech growth can often pay high wages, but over time it leads to gentrification and transportation problems. That is because major highways like Austin’s I-35 fill up with traffic comprised of lower-pay service workers trying to commute out to the cheaper suburbs to live affordably. Austin residents could use good rail and bus transit inside the city. More difficult is the fact that providing high-quality transit service is not very compatible with the doubling Austin MSA (metro area) population, and the low-density suburban development being planned by CAMPO.

These problems associated with a booming tech industry are discussed in a Jan. 26th Washington Post article:

https://www.washingtonpost.com/realestate/fast-growing-technology-sector-is-fueling-a-housing-boom-in-cities-across-america/2017/01/26/5c72c276-a5d8-11e6-8042-f4d111c862d1_story.html

As the WaPo article reports,

Silicon Valley isn’t the only place a tech boom is fueling rising home prices. From Nashville to Raleigh, N.C., Austin to Cambridge, Mass., thousands of high-paying technology jobs are lifting home prices and fueling a boom in construction…

Dwindling housing supply and an affordable housing crunch are perhaps the biggest challenges in many markets seeing rising tech growth.

Also relevant is a Jan. 28th article in Austin’s Community Impact paper, which reports that …

… if Adler had it his way, those using public transportation in the future will be heading to new jobs. “Our neighbors, fellow Austinites, need mid-income jobs,” said Adler. “We know who needs the jobs in our community. We know the kinds of jobs that employers most need to fill. Which, by the way are information technology, healthcare and skilled trades.”

Adler’s goal over the next five years will be to move 10,000 Austin residents out of poverty by getting them qualified for jobs in those targeted industries. “If we’re going to focus our efforts at bringing the right jobs to town, we need to do more to make sure people who live here and need these jobs are qualified to take them. That’s where the Community Workforce Master Plan comes in.”

One important thing to focus on now is CAMPO, because they have formal control of the regional state and federal money, and because they had planned extreme suburban sprawl in the CAMPO 2040 Plan, bankrolled by a hypothetical $35 billion in future funds, envisioned for Lone Star Rail, and from other sources.

CAMPO is now doing their new 2045 plan. But our regional growth is slowing, because of side effects of prolonged growth discussed above, led by real estate interests attracted to fast regional growth. The new CAMPO 2045 regional population growth distribution will help reveal the political picture. Lone Star rail was taken out, so how can they handle the numbers of commuters they anticipate from the tech job growth that they anticipate along the I-35 corridor to San Antonio?

It is getting hard to maintain that there will be as much money as CAMPO had claimed last time. I think it is impossible to predict toll road revenues decades in the future, as TxDOT and the CTRMA claim to be able to hire consultants to do. It is likely necessary to use bond money to widen I-35, so they find private consultants with proprietary travel demand models that we are not allowed to see or to question. The public can’t see the CAMPO models, either.

TxDOT is still $23 billion in debt, because Texas politicians haven’t raised the gas tax for a quarter-century, and neither has Congress. Denial has its limits – and that should make this year very interesting. ■