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“Bad, but not awful”

Your Houston economy, folks.

As Houston enters the second year of the worst oil downturn in decades, its once-booming economy has sputtered, and the strain finally is starting to show.

Houston could flirt with recession in 2016 as the oil and gas industry cuts jobs and spending, but the local economy isn’t collapsing the same way it has during prior oil busts, and most economists don’t think it will happen.

“It’s bad, but it’s not awful,” said Ed Friedman, director at Moody’s Analytics.

The infamous 1980s oil slump reverberated across Houston, causing 1 in every 7 local workers to lose their jobs before the market eventually recovered. This time around, a healthy national economy coupled with continued population growth and a surge of construction is buffering the metro area from deeper trouble.

The city is harnessing momentum from other booming sectors – petrochemicals, refineries, health care, construction – to offset the losses in energy and energy-related manufacturing.

“Houston is not the same Houston it was 30 years ago,” Friedman said.

Hospitals, clinics and medical offices are expanding as they try to keep up with a population boom of nearly 10 percent since 2010. Downtown Houston has been revitalized with new office towers and residential construction that sprang up when oil was hovering around $100 a barrel the previous two years.

And an estimated $50 billion in investment along the city’s petrochemical corridor is in the works, enough to build downtown Houston two times over. That industrial renaissance is bringing thousands of new construction jobs to the area that is helping compensate for the losses in energy.

“It’s the gift that keeps on giving,” said Bill Gilmer, director of the Institute for Regional Forecasting at the University of Houston.

Nevertheless, economists predict that 2016 likely will be an austere year for Houston. The oil and gas industry is bracing for anemic crude prices over the next 12 months, and most analysts don’t expect meaningful improvement until 2017.

As a result, Houston could lose as many as 50,000 jobs in manufacturing and oil and gas before the industry recovers. How much those cuts drag down the local economy is an open question. The city still is expected to see a net gain in jobs this year that could reach nearly 25,000.

[…]

If Houston slips into a mild recession, the city may already be out of it by the time economists can measure it, as government data often lags by several months.

The Houston Purchasing Managers Index, a closely watched predictor of the city’s economic health, indicates the city already may have reached a tipping point.

“We’ve got a pretty good chance of moving into recession in the first quarter, if we’re not already in one,” said Harvison of the ISM.

Still, any contraction in economic activity will likely be short-lived as the pace of energy layoffs slows and Houston’s population continues to grow.

“People aren’t abandoning Houston,” said Patrick Jankowski, senior vice president of research for the Greater Houston Partnership.

In addition, the flurry of construction activity in the region’s petrochemical corridor isn’t slated to peak until late 2016 or early 2017, with Houston expected to add up to 10,000 more construction jobs next year, according to the Greater Houston Partnership.

To put this in somewhat technical terms, upstream – i.e., finding and extracting oil and gas – is in the dumps due to low prices, but downstream – i.e., refining and selling it – is doing fine. The price of crude is a fixed cost for refineries, after all, and the area still has plenty of those.

That said, upstream is where the big money and the highest-paying jobs are, and there’s a trickle-down effect when upstream is struggling. Texas Monthly frets about the real estate market in Houston.

It’ll be different this time. We diversified.

When you make the comparison to the oil bust that devastated Houston’s economy in the 1980s, that’s the mantra you inevitably hear from those who have remained bullish on the Houston economy since oil went in the tank late last year. (For the record, comparing 2015 to 1982 exasperates the hell out of Jankowski: “This is in no way going to look like the ’80s and hopefully this is the last time I have to say that to anybody,” he said when the GHP released its official economic outlook for 2016 in December.)

Almost all of those people cite the booming Texas Medical Center as exhibit A in defense of Houston’s diversity, but as we pointed out in October, though it’s true that the Med Center has grown, O&G has grown even more. At its peak it was proportionally even more important to Houston’s economy last year than it was in the 1980s.

Many of those optimists struggle to come up with an exhibit B, but some of those who do cite a boom in the construction industry, which brings us back to real estate, and how we are just starting to see how oil patch job annihilation is trickling down into the residential real estate market.

It’s becoming apparent in home sales. Since we last looked in on the market, they have fallen 10 percent in October and 10.5 percent in November. Townhouses and condos fell 10.3 percent in November, and now the apartment market is starting to soften. That comes on the heels of a Forbes report that shows Houston has permitted more residential projects than any other large U.S. urban area between 2011 to 2014.

That extends to rentals. Neal Verma owns 16 apartment complexes in Houston, totaling 6,000 units. A quarter of those are Class B (8 to 20 years old) and the remainder Class C (older than 20 years.) Verma told the Houston Chronicle in December that many of his Class B tenants work in O&G, and many of his Class C tenants are construction workers. He is seeing a decline across the board. As oil workers get their walking papers, they move out. As oil companies tighten their belts, they stop building new office buildings, and thus construction workers pack up their toolkits and beat feet out of town as well.

The decline isn’t drastic—yet. Verma said that his complexes have dipped from 100 percent occupancy to 95 percent at his Class B properties and 98 at his Class Cs, but there’s no way to spin those numbers positively, especially not with a grim year ahead. The bulk of Houston’s top paying white-collar jobs are in energy, and construction stands atop the heap for blue-collar jobs. Now that the oil downturn has cooled construction, we have seen the first ripple, and barring a sudden, drastic upswing in the price of crude, it seems inevitable that these losses will soon become apparent in retail and restaurants, if they have not already.

What’s keeping the Houston real estate market above water for now is empty nesters from the suburbs who aren’t really affected by the fluctuations of crude oil prices, and the Chinese. You can click over to read the rest. However you look at it, pretty much everyone is hoping things will get better before they get worse, because there’s still a lot of room for it to get worse.

The rent is too damn high

The Houston area isn’t such a cheap place to live any more.

BagOfMoney

A job boom bringing highly paid energy workers to Houston and a pronounced decline in the percentage of people buying houses have combined to drive up the cost of living all across the region. Rents here rose nearly 9 percent in the last year, triple the traditional growth rate, driven by occupancy rates that average more than 90 percent and the construction of pricier apartments in such outlying areas as Tomball and Fort Bend County.

Rents for lower-end apartments inside the Loop and in places like Alief are increasing at the fastest rate.

[…]

Analysts say that as the middle and working classes are pushed farther out, their pocketbooks take a second hit from higher transportation costs to get to their jobs. At the same time, developers are working to build a stock of high-end luxury apartments close in to attract the oil and gas workers moving to Houston.

Many of these newcomers turn to real estate agent Matt Vargas, who says his clients often receive housing allowances of $3,000 a month. Some companies give their workers as much $8,000 a month, reducing the incentive to scrimp.

“You would be amazed at what some of these newer properties have to offer, and even more amazed at the pricetag,” Vargas said. “No one in their right mind will spend that much unless they have a housing allowance.”

Developers building the high-end luxury options in Midtown, near Memorial Park and the Galleria are likely targeting these type of renters, he said.

Bruce McClenny, president of Houston-based Apartment Data Services, said a steady or average rate of rent increases in a market should be roughly 3 percent. Locally, that average hit 3.8 percent in 2011 and began to spike rapidly, from 5.5 percent in 2012 to 6.2 percent last year and now to 8.8 percent.

The apartments being built around the region are mostly high-end, driving up rents in those areas, McClenny said. But even Class C apartments, those roughly 30 to 40 years old and offering fewer amenities, have gotten about 8 percent more expensive as occupancy levels have grown to 94 percent.

“As the market prices itself higher, people have been readjusting what they can afford,” McClenny said. “We may just have to adjust the rental reality.”

You have to figure there will be a “correction” in the market at some point, and when there is it won’t be pretty. You also have to figure this is going to start to have an effect on the area’s job growth. Normally, the Houston area is exactly the kind of place where housing prices stay reasonable because there’s still plenty of open space for new construction and you can build highrises as easily as you can single family homes. It’s just that now all the apartment and condo complexes that are being built are top of the market luxury places. No one is building affordable places any more. I don’t think this is a stable situation, but I don’t see what can be done about it. At some point, one way or another, something is going to have to change.

Stephen and Jessica Seagraves say the rent hikes drove them out of state.

The couple – he’s a Sugar Land native and she’s from the Austin area – lived in Houston for six years. During that time, their rent increased time and again. The monthly bill for their most recent place, a two-bedroom apartment in the Heights, was set to soar to $2,100 per month, up from $1,400 two years earlier. It was double what they’d been paying for a two-bedroom house in the same area in 2008.

In July, they moved to Portland, Ore., and into a spacious downtown apartment that leases for $1,600 a month.

Could someone make sure Rick Perry and Ted Cruz see that? Thanks.

Livin’ small

Kids today and their crazy ideas about how to live.

The modern apartment is increasingly likely to look like this: a 380-square-foot space with a separate bedroom; a kitchen with fewer cabinets and more shelves; and a place in the garage to plug in an electric car.

“Things are changing quickly,” architect Mark Humphreys said last week during a webinar in which he and other industry experts presented their outlooks and new trends for the apartment market.

Units have been getting smaller as more 20-somethings – a key segment of the renter population – no longer want roommates or big pieces of furniture requiring large spaces.

“Millennials coming into apartments don’t own a whole lot other than technology,” said Doug Bibby, president of the Washington, D.C.-based National Multi Housing Council.

Several years ago, Humphreys designed a project in The Woodlands where the smallest units were 550 square feet. There’s now a waiting list to get one.

The floor plans with 380 square feet, known as “micro units,” are slowly making it to Houston. Humphreys designed some in a project in Katy, and he said there’s “no question” more will start to show up in the urban core.

It’s a trend he calls “the Manhattanization of the United States.”

I presume the main attraction of these smaller units is that they’re less expensive than larger ones. Smaller spaces are also easier to keep clean, but really, it’s going to be about cost. If this sort of trend catches on, it might make it economical to build reasonably affordable apartment units in popular parts of town. Of course, small spaces like this are likely to only really appeal to single people, but I figure there will be plenty of them. We’ll see how much this actually catches on.

So long, Skylane Apartments

This is happening in my neighborhood, and it’s already generated a lot of interest from the locals.

Elan Heights, from Swamplot

The aging Skylane Central apartments, perched near the entrance of the Woodland Heights neighborhood, are headed for demolition as a developer makes plans to replace the building with an upscale rental complex.

Charleston, S.C.-based Greystar is under contract to purchase the property, a low-rise complex built in 1960. Less than two acres, the site is just north of Interstate 10, off the Taylor Street bridge and across from White Oak Bayou.

The sale is expected to close in September, said Trent Conner, managing director of Greystar in Houston.

The project is the latest example of the rapid redevelopment of old apartment sites in highly desirable areas close to downtown.

The Greystar project, called Elan Heights, is still in the planning stages, but one of the scenarios being considered is an eight-story building with around 250 apartments and attached parking. The building would have a contemporary design encompassing an array of materials, including wood, metal panels, glass and stucco. Houston-based architecture firm Meeks & Partners is designing it.

“We’re hoping to improve the site and improve the curb appeal as you enter the Woodland Heights,” Conner said.

The new property will be an upgrade from what’s there now.

The existing apartments at 2222 White Oak have 76 units.

“I think there are some in the community that look forward to a change with the property the Skylane apartments are on,” said David Jordan, president of the Woodland Heights Civic Association.

Swamplot has the rendering you see above. The reactions I’ve seen to this in various places basically boils down to the following:

1. Happiness to see the Skylane disappear. As one Swamplot commenter notes, this also almost certainly also means the demise of the Little Buddy convenience store and the Mango Beach nightclub. Though I haven’t seen any mention of this elsewhere, I doubt the neighborhood will be sorry at that news, either.

2. Concern about the size of the proposed new building. Eight stories is pretty tall. Other than the townhomes on Usener, who as another commenter noted will likely lose their unobstructed view of downtown, there aren’t any other residences abutting this property. As such, I doubt this concern will mutate into opposition to the project.

3. Amazement that the developer could get a permit, considering that the Skylane flooded like crazy during TS Allison. I’m sure the first two or three stories of the new structure will be parking, so it’s only cars that will be at risk. I hope the future residents of this know what they’re getting into, and that their insurance is up to the task.

Don’t forget about apartments

On the subject of how Battleground Texas can achieve its aims, Greg adds a note and some numbers about apartment complexes.

I opted to look at one of the most GOP-friendly places in Harris County: HD130 in the northwestern corner of the county. Simply put, this district won’t be turning blue with anything short of multiple miracles. But part of the approach outlined by Bird, and one that I feel like I’ve been beating my head against a wall on, is that it is just as important to raise some areas from 25% Dem to 35% Dem in order to improve the overall showing. Having driven through HD130 on the way to/from Austin, I noticed that there were a few new apartments along Highway 290. I’m also familiar enough with the area to know that there are some hubs of apartments full of kids moving out from mom & dad’s place.

In just a quick scan of apartment complexes, I ended up with four quick sample studies. One was a Senior complex, but I opted to leave it in to prove a point that any perceived GOP tilt among seniors in a heavily GOP district wouldn’t harm the overall showing. The five units I ended up with had a score of 67% Dem based on Clarity‘s partisanship score for 2012. For all apartments in HD130, the score came to 52.4% Dem. So while there are certainly good and mediocre targets within the district, comparing this to a district that gave Obama 23% of the vote in 2012 shows a far healthier target for where to improve.

Furthermore, we have some valuable data from apartments: namely how many units there are in each. For the five complexes I identified, the turnout clocked in at 25% of apartment units turning out to vote. The traditional metric of turnout comes in at 45.3% turnout of registered voters. How to increase these numbers comes down to what you believe. If you believe that the registered voters track pretty closely with actual, current residents in the complex, then you face a turnout issue. But if you’re like me and believe that the registered voters track significantly less with actual, current residents, then you have to add a voter registration component to the mix in order to capture the new voters and replace the old, out-of-date information.

Good stuff, and a reminder that a lot of the voters we want to target need to be registered first, and will need to be registered again in the future. I haven’t seen Jeremy Bird specifically address the matter of apartment dwellers in the various interviews I’ve seen so far, but as Greg notes this fits well with the overall philosophy of Battleground Texas. In an interesting coincidence of timing, David Jarman of the Daily Kos does related research showing how apartment renters correlate with the Democratic-ness of a Congressional district. As it happens, three of the five districts with the highest percentage of renters that happen to be held by Republicans are in Texas. File this away for future reference and comparison.

Your other one-minute real estate update

Basically, real estate good in Houston.

Inventory of homes for sale has fallen to a level not seen in more than a decade. Builders are trying to keep up with a growing demand from buyers relocating here for jobs. Realtors are going to new lengths to find properties for their buyer clients.

A letter from one realty firm that recently landed in a colleague’s mailbox at home read: “If you currently own a home and are considering selling, now is the time to act!” It wasn’t the first letter like that he had gotten. “Inventory of all kinds of housing inventory is in short supply,” said David Jarvis, the Houston division president of Metrostudy, a consulting and research firm for the home building industry.

Online real estate firm Trulia recently named Houston as the top healthiest housing market going into 2013.

The ranking singled out large metros with strong job growth, low vacancy rates and low foreclosure inventory.

[…]

Apartment development was one of the biggest real estate stories in 2012 with developers announcing a raft of new projects, many inside the 610 Loop.

Many of these complexes have already broken ground, and others will get started in the coming year.

High-rise cranes are multiplying, too.

At 40 stories, the city’s tallest apartment building should be well under way next year at the corner of Weslayan and West Alabama.

More office towers are on the rise, and some predict a big increase in development in 2013.

Consider that a bookend to the retail update. These stories are generally not specific about “city of Houston” versus “greater Houston area”, but we know that a lot of this particular construction is happening inside the Loop. Among other things, that suggests that the city’s budget outlook will continue to get better as well. It will be interesting to see what Mayor Parker’s budget for the next cycle looks like. What a difference a couple of years makes.

Sugar Land has its own Ashby

The unhappy dissenters part of it, anyway.

Today Southhampton, tomorrow the world!

The planned development of the city’s last piece of open land would turn the abandoned Imperial Sugar site – the very genesis of the city – into an $800 million urban space with museums, parks, luxury apartments, restaurants and a theater.

“It represents our evolution,” said Doug Adolph, a city spokesman, “where we’ve been and where we’re going.”

Yet the project has stirred vocal and passionate opposition. More than 2,000 residents signed a petition against part of the plan and homeowners formed a committee – complete with study groups, a website and an email distribution list – to track the project’s progress since 2007, fighting various components. Tuesday, before the City Council tentatively approved the project, many among the crowd of about 150 residents voiced emotional appeals against it.

The crux of their opposition: No more apartments.

Yeah, as Greg notes, the kid of apartments that will be built on this location are probably not what the folks who were speaking out against them have in mind. If they really want to put a “No Vacancy” sign up at Sugar Land’s city limits, I suppose that might be good for the other places that people would move to instead, but it’s not a good move for them. In the end, I suspect this will all blow over.

A deluxe efficiency in the sky

The hot trend in real estate is small apartments.

Admit it, you're singing the theme song

Apartments in Houston are shrinking.

As rents have gone up, developers have been building smaller units and a lot more of them to meet growing demand from apartment dwellers who want to live in cool new complexes but can’t afford larger units.

In many new properties, the average unit size has come down by 100 square feet or more and the percentage of one-bedrooms is growing.

“The numbers of larger one-bedrooms or larger two-bedrooms are kind of disappearing,” said multifamily designer Jim Wallace of Wallace Garcia Wilson Architects.

While small apartments can be found in the suburbs, the downsizing is mostly a close-in phenomenon.

One-bedroom apartments will make up as many as 80 percent of the units in some of the new complexes being built near the city’s center. Across the Houston area, efficiencies and one-bedrooms make up 53 percent of all units, according to Apartment Data Services.

[…]

Cost isn’t the only thing driving the shift.

Societal changes and technological advances are now making it easier to live in small quarters.

Space and furniture once needed to house bulky appliances and electronics are no longer necessary. Renters are getting rid of their big televisions and armoires that housed them in favor of flat-panel TVs that can be mounted on a wall. They’re replacing stereo systems and desktop computers with iPods and laptops.

Couple things here. First, there’s a nationwide trend towards renting and away from owning. It’s too early to say if this is a temporary response to the economic downturn and housing crisis or if it will last for the long term, but it’s significant regardless. Looking at it from a strictly Houston perspective, if this lasts it has the potential to change some of the growth patterns around here. One reason why the outer areas have grown so fast is because they have a lot of open space on which to build shiny new big houses, with big yards, for people to buy. But if that’s not what people want, then the inner core may benefit, as this sort of small apartment construction is well suited for established areas, with a bonus for walkability and proximity to various attractions. If the answer to the high price of inner Loop living is to make more of it available, this is just the ticket. Check back in five years and see where we stand.

The Bellaire “urban transit village”

Very interesting.

Nearly a year in the drafting, a sweeping change to Bellaire’s zoning laws creating an “urban transit village” where there is now a collection of nondescript warehouses will soon be before City Council.

On Nov. 1, the city’s Planning & Zoning Commission unanimously voted to recommend Council approval of the zoning ordinance they’ve has been working on since February with Gary Mitchell of the firm Kendig Keast, which had helped design Bellaire’s comprehensive plan five years ago.

Before the vote, the commission held a public hearing on the proposal. While members of the public were present at many of the marathon workshop sessions the commission held throughout the process, this was the first opportunity they had to speak directly on the proposal.

The warehouse district, previously called a Retail Development District in the city’s zoning plan, is a 28-acre area near the intersection of the Southwest Freeway and Loop 610. It includes a site where preliminary plans by Metro call for a light-rail station on Westpark where the regional transit agency hopes to connect the University Line with the Uptown Line leading into the Galleria.

This is the same basic location as the one-time proposed alternate site for Dynamo Stadium. The proximity of a future Universities Line rail stop was a key feature in that proposal as well.

Richard Franke, a Bellaire resident who ran unsuccessfully for City Council in May, said that the proposed ordinance was “an extraordinary effort.” Still, he peppered the commissioners with a list of questions he’d prepared.

“How will the legitimate interests of taxpayers be protected?.” he asked. “What if it reverts to an apartment complex? It’s clear that the residents of Bellaire clearly prefer detached, single-family housing.”

Responding to Franke, [Bellaire community development director John McDonald] said that while the quiet suburban lifestyle may have served Bellaire well in the past, recent trends in development throughout the greater Houston region have shown that a more “urbanized” form is beginning to take hold.

If Bellaire wants to attract new residents, particularly young professionals, it needs to seriously begin considering new forms of development, he said.

That’s almost shockingly forward-thinking of Bellaire. Who knew they had it in them? I hope Houston is paying attention.

Apartment boom coming

I have many things to say about this.

High occupancies and rising rents for apartments are driving a new wave of development in Houston’s high-end urban neighborhoods.

More than 3,500 units in a dozen complexes are under construction primarily inside the 610 Loop and around the Galleria. Nearly 8,700 more are proposed, according to Houston-based Apartment Data Services. Most, if not all, are being planned with top-notch finishes and high-dollar rents.

The flurry of activity is meaningful after a period where construction was virtually nonexistent. Amid the nation’s economic crisis, developers couldn’t get loans to start new construction and the appetite for apartments soured as renters moved in with relatives or doubled up in units.

But with the local job market beginning to recover, demand has been ramping back up, and the numbers of available units are dwindling. Few are concerned about a glut.

“If we ever needed construction, we need it now and need it soon,” said Bruce McClenny, president of Apartment Data Services.

Most of the units won’t be ready until late 2012 at the earliest.

The print edition of this story, which ran on Sunday, included a completely inaccurate map that among other things confused Weslayan with Shepherd and Richmond with both Bissonnet and Allen Parkway. I eventually gave up trying to make sense of it.

Among the projects listed were several of the longstanding vacant lots that I’ve noted from time to time. One that is actually under construction is the Ashton Rice Village, formerly the hippie bohemian attorney Sonoma development. Two others that are listed as “proposed” are Regent Square, home of the former Allen House apartments, which claimed last year that it would break ground in 2012, and the infamous Ashby Highrise, which may have lawsuit issues of its own to deal with. Not included: The site that used to house The Stables restaurant, which was torn down nearly five years ago. I have absolutely no idea what is going on with that site and when if ever something will be built there. At the time, one of the buyers said “We’ve acquired a crucial one-acre parcel in the Med Center area, which is hard to do”. You’d think by now someone would want to do something with it.

About two thirds of the 37 properties shown on the crappy map are in the rectangle bounded by the West Loop, I-10, the Southwest Freeway, and I-45. In other words, basically Montrose, Rice U/Med Center, Upper Kirby, West U, and River Oaks. If all of these projects get built, and all of the apartments get leased (I know, not going to happen) you’re talking 20 to 25 thousand more people in the area. As these are mostly high-end places, you have to wonder what effect this will have on the demographics and the politics; most of this territory is in the court-drawn HD134, and in the new City Council District C. Greg often talks about the re-honkification of the Heights. This isn’t the Heights, and this area was pretty Anglo to begin with, but there’s likely to be an effect nonetheless.

(Alta Heights, at 141 Heights Blvd, is the closest project listed to the Heights proper. This is basically across the street from the Ainbinder Wal-Mart site, and used to be a low-income apartment complex.)

With all this dense construction taking place in an already crowded part of town, you would hope that the need for more and better transit would be seen as increasingly urgent. Some of these projects will be close to the Universities rail line when it finally gets built, but a lot more than that is going to be needed to handle this and to allow for future projects like them. I’ll say again how nice it would be if the county, instead of spending gazillions of dollars on a road to nowhere to accommodate people that might live there 20 years from now, spent a few dollars helping to improve mobility where people are right now.

Recycling for apartments coming to Houston

Last December I noted a program in San Antonio to expand recycling to apartment complexes. I said at the time that I hoped Houston would do the same as it broadens its recycling capabilities. I’m glad to say that late last week I received this press release from the Houston Apartment Association:

The City of Houston Solid Waste Management Department (SWMD) and the Houston Apartment Association (HAA) announce the Go Green Community recycling program to implement more comprehensive recycling efforts in apartment communities. SWMD and HAA want 50 percent of HAA member communities in Houston to establish recycling programs by 2013. Approximately 2,000 apartment communities are located in Houston city limits.

The official announcement is today, which has been declared Houston Recycles Day. I’m delighted to hear this, and I look forward to seeing this get successfully rolled out.

UPDATE: Here’s the city’s news release:

The Houston Apartment Association (HAA) and the City of Houston Solid Waste Management Department (SWMD) today launched the Go Green Community initiative to increase recycling in apartment communities. The City of Houston also proclaimed Nov. 15 as Houston Recycles Day, which coincides with Texas Recycles Day and America Recycles Day.

With approximately 2,000 apartment communities in Houston city limits, HAA and SWMD hope to see 50 percent of those properties establish recycling programs by 2013. Many apartment communities already have adopted recycling programs and the Go Green Community initiative will recognize those efforts. Participating communities will be listed on the City of Houston and Houston Apartment Association web pages as Go Green Communities. They also will be eligible for a Go Green Community certificate to let their residents and others know of their efforts to create a cleaner, greener Houston.

“By its very nature, apartment living is a cleaner, greener option for Houstonians,” said HAA President Kim Small. “Apartment residents generally live in smaller homes and use less energy and resources than single-family home dwellers. As an association, we want to take our green initiatives one step further and encourage on-site recycling to create even more environmentally friendly communities,” she said.

“HAA and its members are commended for their leadership and stewardship on this key issue,” said Harry Hayes, Solid Waste Management Director. “Every Houstonian should be able to recycle easily, thereby preserving valuable landfill airspace.”

“Mayor Annise Parker knows Houstonians are interested in transforming their communities to a greener place to live and work, and expanding recycling is at the top of the list,” said Laura Spanjian, Sustainability Director, City of Houston. “The new avenues and partnerships being developed to expand our environmental efforts are more tools to help the City of Houston reduce its carbon footprint as well as decrease waste. The partnership with HAA to create a Go Green Community is a significant milestone in reaching beyond our traditional scope to offer recycling services.”

Communities interested in joining can visit HAA’s website at www.haaonline.org/Recycling to obtain information regarding Best Management Practices (BMPs) that will assist in creating, implementing and maintaining their recycling programs and to register as Go Green Communities.

I look forward to seeing how this goes.

RIP, Arabia Shrine Center

Swamplot noted that a demolition permit had been pulled for the Arabia Shrine Center on Braeswood near Kirby. Nancy Sarnoff tells us what is to come once the buildings have been razed.

Three years after an apartment developer bought the Arabia Shrine Center on North Braeswood, the company has started to redevelop the site.

Colorado-based Archstone said it will build 474 apartments on the property, at the northeast corner of North Braeswood and Brompton Road. The company acquired the nearly 8-acre tract in 2008 after the owners said the tax bill was too high for them to stay there.

The Arabia Shrine Center was first put up for sale four and a half years ago; that sale was finalized a year later. The property appears to have changed hands at least once more since then. It’s a good location for apartments – actually, a mixed-use development would have been nice, but that doesn’t appear to be in the cards – but it’s still a shame to see that funky old building go away. That’s Houston for you.

Recycling for apartments

The city of San Antonio is taking a big step forward in expanding its recycling program.

The new amendment ensures that all families and individuals living in apartments, condominiums, townhomes, high rise condominiums and San Antonio Housing Authority properties have an adequate number of recycling containers in which to dispose of recyclables and that the disposal containers be as accessible as garbage containers.

This program will provide residents in multi-family complexes a convenient means to recycle.

Recycling in multi-family complexes will be done in a phased-in over a 16 month time frame.

Some background is here. I like this a lot. Houston has expanded its single stream recycling program, though it still covers less than a third of the households, but apartments are not included in that. I hope we don’t forget about them as we keep moving forward with that.

Water rate rebate passes Council

Back in April, Council approved a water rate hike. There were some complaints from apartment owners at the time about the size of the rate increase that would apply to them, and the city agreed to make some changes to accommodate them. The first of those changes was approved on Wednesday.

The first part, a two-year, $10 million conservation rebate program, will be used to give water rate rebates to owners of federally-financed, rent-restricted apartment complexes.

To qualify this fiscal year for the rebate, which will reduce the effective rate increase from 30.1 percent to 12.5 percent, apartment owners must coordinate a water conservation education program for tenants. To qualify in the second year, they must demonstrate water conservation of at least 5 percent. That would reduce the rate increase from 30.1 percent to 21.03 percent.

Mayor Annise Parker said the program was designed to help those owners because federal guidelines don’t allow them to pass on water rate increases to their tenants.

This is supposed to phase out after apartment owners have had a chance to adjust rents. The second part of this, about which I’m a bit unclear, will be taken up in the coming months.

Farmers Branch prepares to waste more money

It sure must be nice to have all these taxpayer dollars to spend on such frivolities.

[Farmers Branch] plans to appeal a court ruling against its ordinance, which would prevent landlords from renting houses or apartments to illegal immigrants — and it hopes to serve as an example to other communities trying to deal with illegal immigration.

“Farmers Branch is a town of law and order … a patriotic, American-loving town,” Mayor Tim O’Hare said. “I think this is important for America. It’s important to show other cities and towns that you can make a difference, you can stand up for what’s right.”

They’ve lost every court battle so far, while spending millions of dollars for the privilege of having their ordinances declared unconstitutional. And those costs keep going up.

A second team of lawyers submitted their legal fees and costs to the U.S. District Court for the Northern District of Texas shortly before midnight Monday The team consists of the ACLU of Texas, the ACLU’s Immigrant Rights Project and the Mexican-American Legal Defense and Education Fund.

Earlier this month, the Bickel & Brewer Storefront law firm submitted a legal bill of $850,000. The two legal teams are linked by the consolidation of suits and their combined bill submitted to the court as the winning party is now nearly $2 million.

Farmers Branch Mayor Tim O’Hare called the legal bills submitted to the court “a joke.” He added, “When we win at the 5th Circuit Court of Appeals, which I believe we will, we won’t pay one nickel of this.”

Did I mention that they’ve lost every step of the way so far? O’Hare is actually talking about the city’s reserve funds in that story, which is just beyond crazy. I suppose some people just have to learn these things the hard way.

Council may consider higher water rate hikes

As we know, a water rate hike of about 12 percent was proposed by Mayor Parker earlier this month. That ran into some resistance from apartment dwellers, since the hike would be higher for multi-family residences than it would be for single-family homes. Now some members of City Council are pushing for a steeper increase that would even things out more.

Although the Parker administration on Monday presented a revised plan that kept single-family increases at about 12 percent, about half the council body expressed a desire to raise all rates to what it costs to provide the service.

Under that idea, the bill of an average single-family household using 6,000 gallons of water a month would go up, from about $47 to $60. That increase would put the cost of Houston’s water at a higher level than many other major U.S. cities, including Miami, Oakland, Dallas, San Antonio, Fort Worth and Los Angeles, according to a rate study commissioned by the city.

“We have to do this,” Councilwoman Sue Lovell said in a Monday committee meeting where the plan to raise residential rates beyond Parker’s proposal first surfaced. “What I’m concerned about is that everybody, across the board, pays and participates” in the rate increase.

[…]

The revised proposal also slightly decreased initial rate hikes for multi-family and commercial users and includes the creation of a $14 million fund to provide grants to owners of qualifying multi-family properties if they make investments that conserve water.

I’ve said before that the size of the increase should be more equitable for apartments, so I’m glad to see Council consider this option. No guarantee it will happen, but it deserves to be discussed. And I’ll say again, a more organized push for conservation, involving things like rebates and incentives, educational initiatives, and so forth, would also be a fine idea. I hope that will follow whatever action Council takes here.

Apartment dwellers push back on water rate hike

From Prime Property:

The Houston Apartment Association is urging its members to resist the city’s proposed water and sewer rate hikes that, in their current form, would hit apartment tenants much harder than single-family homeowners.

In a blog entry on its Web site, the association wrote:

Based on the City of Houston’s own Rate Study Executive Summary, for single family homeowners to fully pay for future services – including capital improvement costs – it would require a 42.7% increase in their fees alone. The City has only suggested a 12.5% increase in single family rate costs, while increasing all other rate classes to make up for this inequity. HAA understands that this would unfairly put the burden on apartment residents.

Please help us to encourage Mayor Annise Parker and Houston City Council Members to understand how such a proposal would negatively impact Houston’s apartment industry and its more than one million residents, by sending emails, writing letters or making phone calls. We have included a sample letter for industry professionals and residents below.

City officials said increasing water and sewer rates is essential to keep Houston’s drinking water safe. But the multi-family aspect of their proposal might change before it is presented to the City Council for approval, they said.

My understanding is that the rate structure was based on the cost of delivery of water service to different groups – single family dwellings, multi-family dwellings, commercial, industrial, etc. Given that apartment dwellers tend to be lower income, and given that apartment living is by its nature less water-intensive – no lawns to maintain, at least by the individual residents – it would be fine by me if things were tweaked so that less of this burden accrues to these people.

Water rate hike coming

We knew this was coming, and now here it is.

Mayor Annise Parker’s administration is proposing drastic water and sewer rate increases to shore up Houston’s Combined Utility System, which has operated with multimillion-dollar budget deficits for several years.

The estimated rate hike under the proposal, presented to City Council on Tuesday, would be about 12.5 percent for residential water users, increasing from about $47 a month for the average household use of 6,000 gallons of water to about $53.

Those who live in apartments would face a far higher increase, in many cases greater than 50 percent, although that aspect of the proposal could change in the coming weeks, city officials said. Across all classes of ratepayers, including multifamily and commercial users, the proposed increase comes to about 25 percent.

That earlier story said the increase was to be 14 percent, which “would equate to about a $3-a-month increase for the average residential water user”. This story talks about what it would mean for households at the 6000 gallon per month and 10,000 gallon per month levels; the latter would go from $74.39 to $90.34, an increase of $15.95. That’s a 21% addition, so it seems this is not a flat rate hike. The good news is that it means that if you use less than 6000 gallons per month, your increase will be smaller.

It’s not clear why the rate of increase is higher for apartments – the sidebar example shows a multifamily dwelling that had been paying $72.97 now paying $104.91. That’s something that ought to be reviewed to ensure fairness, and I’m glad to see that the Department of Public Works and Engineering has agreed to make revisions based on concerns raised by Council. And while it looks like this means the city is going to more of a tiered rate structure, I don’t see any mention of conservation measures, which I hope are in the works as well. We’ll see what this looks like when it comes back to Council for a vote.