Category Archives: News – Houston Local

Changing history

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Debakey050307.jpgThe NY Times’ medical reporter, Lawrence Altman, M.D., tells the story of how Houston’s famed heart surgeon Michael E. DeBakey changed the course of history by persuading the late Boris Yeltsin that he could survive heart bypass surgery after the Russian president had suffered a heart attack in the fall of 1996. The surgery saved Yeltsin’s life and allowed him to live for another decade.
Of course, there are some who would argue that Dr. DeBakey efforts did not change history for the better.

O’Toole on Houston’s urban planning

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rotoole.jpgCato Institute fellow Randal O’Toole was in town last week as the invitee of a Houston Property Rights Association luncheon and, by Tory Gattis’ account, provided an entertaining lecture on the overreaching nature of centralized urban planning and wasteful rail transit systems in various cities around the country. The Chronicle’s Rad Sallee caught up with O’Toole while he was in town, and notes the following observation by O’Toole on the impact of Houston’s biggest urban boondoggle:

Question: You say that for the most part, Houston gets it right, while Portland (Ore.), where you used to live, is a textbook example of government gone wrong. A lot of people would say it’s just the reverse.
Answer: Except for the light rail part, Houston really is a model for how urban planning ought to be done ó which is privately.

By the way, O’Toole has a new blog focusing on urban economics called the Antiplanner. Check it out.

OTC.07

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OTC_logo_450.jpgOne of the biggest and most interesting annual Houston conventions is taking place this week at Reliant Park, the 2007 edition of the Offshore Technology Conference (previous posts here). See my previous posts for background on the conference, and the Chronicle’s Tom Fowler is blogging this year’s conference. Regardless of whether you are involved in the energy industry, the exhibit area of the OTC is fascinating and well worth a few hours if you can score a ticket.

Metro Development Corp.

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metroraillogo10.gifKevin Whited over at blogHouston.net picks up on the latest boondoggle of the Metropolitan Transit Authority — providing kickstart financing for a couple of blocks of commercial property along the Metro light rail line in Midtown.
The entire deal is really preposterous for a transit authority to be getting into. Metro bought the blocks from the developer for $7.2 million with “the expectation” that the developer is going to buy the blocks back and build a bunch of condominiums (in an already overbuilt market) that will supposedly house 1,000 happy light rail riders. According to the developer, everything is really O.K. because — get this logic — it could have been worse!:

[Developer Robert H.] Schultz said Metro may join in developing a parking garage on the site that could be used by rail riders but that the agency chose not to invest in other parts of the project.
“They didn’t want to extend that kind of money. They wanted to be much more conservative until they could see this thing was going to happen,” he said.
[Metro real estate vp Todd] Mason agreed, saying, “Metro does not want to be a developer and take on a lot of risk, but we want to be an enabler of projects like this one.”

As noted earlier here, Metro isn’t good enough in doing what it was chartered for to be taking flyers on financing speculative real estate deals. Where is that type of activity described in Metro’s charter?

Who is running this asylum?

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ReliantStadium%20and%20the%20Astrodome.jpgLet’s get this straight.
First, the local hotel market has been overbuilt for years, partly because the city government financed some deals of questionable merit. Heck, most any weekend, it’s easy to obtain a discount rate on a very nice luxury hotel room in downtown Houston.
Then, the private financing market tells us that the redevelopment of the Astrodome into a resort hotel is not financially feasible.
So, given those clear messages, what does the chairman of Harris County Sports & Convention Corp conclude? Explore a financially feasible use for the Dome property, such as demolishing the Dome to save the county the millions it has spent over the past five years mothballing the facility and provide much needed parking for the Reliant Park complex?
No, he would rather do precisely the one thing that will ensure that the county will lose the maximum amount in regard to the Dome property:

The county may consider picking up some costs of transforming the Reliant Astrodome into a luxury hotel or doing the $450 million redevelopment itself if a private effort to carry out the project falls through, a top official said Friday. [. . .]
“From day one, we have always known that it is an option to do this as a publicly developed program,” said Mike Surface, chairman of the Harris County Sports & Convention Corp., which manages Reliant Park. “If I’m looking out for Reliant Park’s interests, I would say, ‘County, you should think about doing this.’ “

And just how would the county pay for such a folly?

No property taxes would go toward the project in any case, he said.
If the county paid for part or all of the project, it would use hotel and sales taxes generated by the hotel complex and other Reliant Park revenue, such as concessions.

Except that Houston already has among the highest hotel and sales tax rates in the country. Moreover, the county doesn’t even own the rights to receive the proceeds from a substantial amount of the concession sales at Reliant Park, such as those the Texans and the Houston Livestock Show & Rodeo generate in their events at Reliant.
Surface, bless his soul, sounds delusional:

Surface said he and some other board members are so confident in the project that the board may look for another developer to step in if Astrodome Redevelopment’s effort fails.

Thank goodness there appears to be at least one stable attitude among Harris County Commissioners toward the proposed Astrodome hotel:

County Commissioner Steve Radack has said, however, that he does not think the project makes sense and will oppose any county participation.

From my vantage point, it appears that Surface floated a trial balloon that Radack mercifully shot down. Hopefully, Radack’s clear statement will put an end to this foolishness. The county needs to move on and consider productive uses of the Dome property rather than chasing rainbows.

Astrodome Hotel deal on the rocks

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Reliant%20Astrodome%20Hotel%20032907.jpgIn an era of tightening credit and equity markets, the Astrodome Hotel idea — which never gained enough traction to become an official boondoggle — finally appears to be on the ropes:

The developer endorsed by Harris County to transform the Astrodome into a 1,000-room destination hotel complex has missed two deadlines to show suitable proof of a financial partner for the $450 million project.
An August 2006 letter of intent signed by the county and Astrodome Redevelopment Corp. outlined various milestones to be met in the process.
When proof of funding did not meet the specified December 2006 deadline, the county granted an extension to March 1.
Scott Hanson, president with Astrodome Redevelopment, found a New York bank interested in backing the mammoth development. County officials were not satisfied with the commitment as presented. [. . .]
Says Hanson: “It’s happening. It’s just a timing issue. Sometimes the wheels don’t turn as fast as we’d like them to.” [. . .]
The developer wants to enter into a definitive agreement with the county this year on the project, and hopes to begin construction by early 2008.
“I think that’s probably aggressive,” says Mike Surface, chairman of the Sports & Convention Corp.
“These projects wind up taking a lot more time than you anticipate,” he adds. “There are still a lot of approvals that have to take place.” [. . .]
“We’ve come a long way … but there is a long way between now and getting a deal inked,” Surface says. “For people to start booking their rooms today is a bit premature.”

Translation: This deal, which always has had earmarks of being a pipe dream, is on life support. The problem with procrastinating about demolishing the Dome and using the land for a better use (i.e., badly needed parking at Reliant Park) is that the Dome continues “to eat” — that is, Harris County continues to pay between $1.5 and $2.0 million a year just to maintain it on a mothballed basis. That’s an expensive price to pay while Harris County Commissioners chase rainbows. The only thing surprising to me about all this is that we’ve been talking about it for almost three years now!
Update: A very bad idea.

The Hamptons of Houston?

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galveston.gifGalveston has been compared with many things, but rarely with the Hamptons. But that’s precisely the comparison that this NY Times Sunday article makes as it reports on the throngs of Houstonians who have fueled the beach home building boom on the island over the past decade:

Only 51 miles southeast of Houston, Galveston still has plenty of vacant land, low home prices and miles of wide-open beaches. Over the last four years, the average price of a home has risen 89 percent, to $232,800 in January, according to the Galveston Association of Realtors. Prices for water-view lots are now more than double what the Wisemans paid. A single water-view lot at Beachtown costs $300,000, though other lots without views could be as low as $80,000.
ìThe world has discovered the Gulf Coast,î said James Gaines, research economist at the Real Estate Center at Texas A&M University. ìYou want a second home on the East Coast at an affordable price, and youíre not going to find anything. Here, itís still available and affordable.î [. . .]
ìGalveston is experiencing a renaissance it hasnít seen in 100 years,î said Jeffrey G. Sjostrom, president of the Galveston Economic Development Partnership. ìThe beauty of the development is that itís comprehensive and diversified. Our eggs are being spread across many baskets.î
The development seems to fly in the face of Galvestonís geography. As a barrier island, the city can flood during tropical storms. Sometimes, its beaches erode. In September 2005, the city was evacuated when Hurricane Rita threatened the island. But home buyers keep coming because a large-scale hurricane has not damaged the island in more than 20 years.
Developers are putting up condominium towers, resorts and acres of homes from one end of the 32-mile-long island to the other. More than 6,500 residential units are under construction; most of them are condos, according to the development partnership. At the western end of the island, Centex Homes is building one of the largest projects, a 1,000-acre development with 2,300 houses and condos.

Meanwhile, this Harvey Rice/Chronicle article reports that questions are being raised about the rampant develoment:

The first map detailing geological hazards on Galveston Island shows a potential clash between development and the environment.
Several subdivisions already sit in what may be the most dangerous areas of the island ó low spots where walls of water bulldozed their way through in previous storms.
More construction is planned in those areas and others despite the threat of storm surges and beach erosion as well as the impact on economically important wetlands, according to findings recently presented to the City Council.

By the way, if you’re interested in making an investment in Galveston, I suggest you wait awhile. The island is long overdue for a hurricane and many folks have forgotten the damage that the minimal category 3 Hurricane Alicia caused on the island in 1983. Beach home property values plummeted in Galveston after that storm. They are a good bet to fall after the next one, too.

Boom Town, USA

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Boomtown%20Casino_jpg.jpgMaybe it’s because I cut my teeth in business law during a prolonged recession in the Houston area in the mid-to-late 1980’s that followed a boom cycle earlier in the decade, but these kinds of articles always worry me a bit:

Galvanized by the record profits at energy companies, this city, the center of the countryís energy industry, has shaken off the effects of the Enron implosion six years ago and is enjoying its strongest resurgence in more than 20 years, business officials and real estate developers say.
Some energy companies are expanding and putting up new buildings. Others, like Citgo, Schlumberger and Halliburton, have moved their headquarters to Houston. Oil and natural gas companies have helped reduce office vacancy rates to 15 percent, a five-year low, according to Grubb & Ellis, a real estate company. Job growth is double the national average ó 97,400 jobs were created in 2006. The National Association of Realtors says the housing market in Houston is one of the strongest in the country.
ìThe increase in the oil business has made Houston,î said Randall Davis, a Houston condominium developer. ìIt feels a touch like the 1980s ó everyone is out, the restaurants are full, the bars are full. Itís like New York.î
The good news extends across the city. The port recently opened a $1.4 billion container terminal to tackle soaring traffic. In 2006, it handled 1.6 million 20-foot containers, up 29 percent from 2003. At the Texas Medical Center, hospitals and universities are investing billions in new facilities. Residential and mixed-use developments are going up downtown.

Read the entire article here. Houston in 2007 is a very different place than the Houston of 1985, particularly with regard to the more diversified local economy now than back then. But the energy industry remains the primary driver of the economy, although competition for that industry appears to be the bigger risk now than the price risk that has prompted the local economy’s boom and bust cycles through the years. This week’s announcement that Halliburton is moving its corporate headquarters from Houston to Dubai is a definite wakeup call for Houston’s leaders. Just as many Midwestern energy companies abandoned Tulsa for Houston over the past couple of decades, the same thing could happen to Houston as big energy concerns leave for greener pastures overseas.

Autry Court anecdotes

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Autry%20Court.gifRice University recently announced a $23 million renovation of venerable Autry Court, the longtime home of the Rice basketball and volleyball teams. An $8 million donation by Rice alum Bobby Tudor spearheaded the renovation, which will begin in July 2007 and be completed by January 2009. In the interim, the Owls will play basketball and volleyball games at Reliant Arena, a small arena in Reliant Park that is used primarily for cutting horse competitions during the Houston Livestock Show and Rodeo.
Autry Court was built in 1950, but to say that it has lagged behind other facilities is somewhat of an understatement. For Houstonians, probably the most incredible reflection of Autry’s antiquity is that air-conditioning — an essential element of life in Houston — was not added to the facility until 1991. This David Barron/Chronicle article passes along a couple of funny anecdotes about old Autry:

Consider the priorities associated with an institution of higher learning, and then consider the time Roy Williams brought his Kansas Jayhawks to play at Autry in November 1997. The team got off the bus and walked toward Rice’s sparking-new Shepherd School of Music before Rice athletic department publicist Bill Cousins intercepted them and said, “Uh, fellows, the gym’s over here.” . . .
[Autry Court] also [has] been renovated, in piecemeal fashion, to the point that finding the visitors’ locker room resembles a scene from the film This is Spinal Tap.
During Kansas’ 1997 trip, Mike PedÈ, Rice’s former marketing director for athletics, had the task of accompanying the Jayhawks to their quarters, a trip that required detours through the track and swim team locker rooms.
“I turn around and see Raef LaFrentz tearing up pieces of paper and dropping them on the floor,” PedÈ said. “Roy Williams says, ‘Raef, what are you doing?’ and he says, ‘Coach, I’ve got to figure out a way to get back to the court.’ “

My Autry Court anecdote has nothing to do with the facility, but with a brief conversation that I had there with former longtime Houston Rockets general manager Ray Patterson in the early 1980’s. A friend who is a Rice basketball fan took me to a game at Autry to see the Owls star of the time, Ricky Pierce. Patterson was at the game and my friend was also a friend of Patterson, so he introduced me and we watched a half of the game together. Pierce proceeded to put on a clinic, scoring over 20 points in the first half and completely dominating the game.
Stating the obvious, I turned to Patterson at the conclusion of the half and remarked: “Think Pierce will be available when the Rockets pick in the upcoming NBA draft?” Patterson, who made some of the worst draft choices in the NBA during his tenure with the Rockets (remember Lee Johnson?), replied:

“Wouldn’t touch him. Too short to play forward, not fast enough to play guard. He’s a ‘tweener.'”

The Rockets proceeded to pick the eminently forgettable Terry Teagle from Baylor rather than Pierce in the 1982 NBA draft. Pierce went on to enjoy a marvelous professional career, winning the NBA Sixth Man of the Year Award twice with the Milwaukee Bucks and setting the then-record for consecutive free throws made with 75 in 1991 with the Seattle SuperSonics. He retired after 16 seasons, scoring almost 14,500 points for his career while shooting 50% from the field.
Teagle, on the other hand, lasted only two seasons in Houston before moving on to play with three other teams (Detroit Pistons, Golden State Warriors and Los Angeles Lakers) in a journeyman NBA career. He also didn’t win any awards from the NBA.

The 75th Go Texan!

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RodeoHouston.jpgThe annual Houston Livestock Show and Rodeo (prior posts here) is currently celebrating its 75th anniversary at Reliant Park, and the Houston Press’ Richard Connelly does a great job of capturing the special subculture that defines rodeo time in Houston. I mean, where else can you eat a meal of sausage and fried oreos while viewing some of the most amazing animal specimens in the world, and then catch the rodeo and a quality musical act all in one day and location? Connelly’s article also passes along the now legendary story about the 1974 Sonny and Cher rodeo performance that took place just a couple of weeks after the then husband and wife team separated in preparation of their eventual divorce. The abbreviated show ended up generating the highest number of refund demands in the history of the rodeo. As Connelly notes, who would have ever guessed that such a debacle would hatch a political career?