City Journal on Houston: America’s Opportunity City

July 17th, 2014

Joel Kotkin and Tory Gattis have a great piece in city journal about the growth of Houston and “opportunity urbanism.” Here is a section discussing how Houston’s lack of zoning promotes economic growth:

Houston is neither the libertarian paradise imagined by many conservatives nor the antigovernment Wild West town conjured by liberals. The city is better understood as relentlessly pragmatic and pro-growth. Bob Lanier, the legendary three-time Democratic mayor who steered the city’s recovery from the 1980s oil bust, when the metro region bled more than 220,000 jobs in just five years, epitomized this can-do spirit. Lanier was more interested in building infrastructure and promoting growth than in regulation and redistribution. That focus remains strong today. “Houston is getting very comfortable with itself and what it is,” says retired Harris County judge Robert Eckels. “We are a place that has a big idea—supporting and growing through private industry, and that’s something everyone pretty much accepts.”

Low taxes are part of that idea. Texas has no income tax, as Governor Rick Perry frequently points out to businesses in other states, and its average state and local tax burden is 11th-lowest in the nation. New York, New Jersey, and California, by contrast, impose the three highest state tax burdens in the nation. The friendly tax environment is one reason that Houston ranked as the most affordable city to do business in a recent survey of global metropolitan areas by PricewaterhouseCoopers and the Partnership for New York City. It means a lot more money in their employees’ pockets, too. A family of three making $150,000 moving from New York City to Houston would save upward of $8,000 in taxes, an analysis conducted by the District of Columbia found.

An even bigger component of Houston’s growth, however, may be its planning regime, which allows development to follow the market instead of top-down government directives. The city and its unincorporated areas have no formal zoning, so land use is flexible and can readily meet demand. Getting building permits is simple and quick, with no arbitrary approval boards making development an interminable process. Neighborhoods can protect themselves with voluntary, opt-in deed restrictions or minimum lot sizes. Architect and developer Tim Cisneros credits the flexible planning system for the city’s burgeoning apartment and town-home development. “There are a lot of people who come here for jobs but don’t want to live, at least not yet, in the Woodlands,” he notes. “We can respond to this demand fast because there’s no zoning, and approvals don’t take forever. You could not do this so fast in virtually any city in America. The lack of zoning allows us not only to do neat things—but do them quickly and for less money.”

The flexible planning regime is also partly responsible for keeping Houston’s housing prices low compared with those of other major cities. On a square-foot basis, according to Knight Frank, a London-based real-estate consultancy, the same amount of money buys you almost seven times as much space in Houston as it does in San Francisco and more than four times as much as in New York. (See “Houston, New York Has a Problem,” Summer 2008.) Houston has built a new kind of “self-organizing” urban model, notes architect and author Lars Lerup, one that he calls “a creature of the market.”

The unseen costs of cumbersome zoning regulations are often hard to measure. Houston give us a great way to recognize it. Further the lack of zoning promotes diversity in choosing where you want to live:

The city turns the whole debate that dominates urban thinking today—whether to grow the suburbs or downtown—on its head. Rather than advocate one kind of housing, Houston prides itself on providing choices. In fact, as the city’s outer suburban ring has grown—last year attracting roughly 80 percent of all new home buyers—the downtown has also boomed. The city’s vibrant inner ring, notes demographer Wendell Cox, grew 3 percent during the last decade—four times the average in the top 15 metropolitan areas and more than Chicago, Los Angeles, New York, and Philadelphia. “Most cities would die for our in-fill,” says Jeff Taebel, director of Community and Environmental Planning at the Houston-Galveston Area Council (HGAC). No one would mistake downtown Houston for midtown Manhattan, true; but it represents 6 percent of the region’s jobs—a proportion 2.5 to 4.5 times greater than one finds, say, in downtown Los Angeles or Phoenix. Houston’s experience refutes the popular notion that urban density and central city development require heavy regulation.

And even helps the “neglected” areas prosper:

Houston’s housing-market flexibility has also benefited some of the city’s historically neglected areas. The once-depopulating Fifth Ward has seen a surge of new housing—much of it for middle-income African-Americans, attracted by the area’s long-standing black cultural vibe and close access to downtown as well as the Texas Medical Center. Rather than worry about gentrification, many locals support the change in fortunes. “In Houston, we don’t like the idea of keeping an image of poverty for our neighborhood,” explained Rev. Harvey Clemons, chairman of the Fifth Ward Community Redevelopment Corporation. “We welcome renewal.”

By allowing and encouraging development in the inner ring and on the fringe, the city increases its attractiveness to younger people, who want to live close to the urban core, while also providing affordable suburban housing. “Houston thrives because it has someplace for young people to stay inside the city but also offers an alternative when they get older. Just because you grow up doesn’t mean you have to leave the region,” notes Gilmer, now head of the Institute for Regional Forecasting at the University of Houston.

I’m writing an article, Backdoor Zoning, that looks at efforts to impose zoning in Houston through nuisance law. This would be a big mistake.

The article also rebuts a common myth-that Houston has no culture. To the contrary. People with more people, due to lower taxes and higher economic growth, can afford to indulge.

Not everyone is impressed by Houston’s growth and prospects. Critics dismiss the city’s development model as a disaster for the environment, quality of life, and civic culture. For the most part, they regard Houston as a cultural desert—a throwback to the sprawling postwar model of many American cities. “When one asks to see the social center of Houston,” scoffs architect Andrés Duany, “one is taken to the mall.”

But such statements don’t reflect a city where opportunity urbanism is shaping an impressively vibrant cultural landscape. A 2012 survey by Economic Modeling Specialists International (EMSI) of the city’s creative economy found 146,000 jobs, generating an annual economic impact of $9.1 billion. Houston is projected to have the largest gain in arts-related jobs by 2016 of any city in the study. Arts and culture expenditures totaled almost $1 billion per year in 2010, with total event attendance topping 16 million—numbers sure to grow, with almost 150,000 people per year moving into Greater Houston. The city boasts permanent professional resident companies in all of the major performing arts, including opera, ballet, symphony, and theater, and its theater district has more seats than any rival in the country, except for New York’s. Houston’s 18 museums attract 8.7 million visitors a year. This is no cultural backwater.

With their higher real incomes and lower taxes, Houstonians dine out substantially more than residents of any other major American city—and they’ve got lots of options. “You used to go to New Orleans for food and music,” notes Chris Williams of Lucille’s, a cutting-edge Houston restaurant that serves sophisticated Southern food. “Now you go down the block.” Taylor Francis, a 24-year-old advertising executive who moved recently from the Bay Area, points to restaurants like Underbelly, a popular Beard Prize–winning restaurant in the fashionable Montrose district. “My friends in the Bay Area rarely go out because it’s too expensive,” he said. “All their money goes to rent—but here, I can live in a roomy place and go out. There’s something attractive about that.” Houston’s leaders hope to lure more young people like Francis away from coastal cities such as Portland, Boston, New York, and Los Angeles. The city is building one of the nation’s most extensive bike systems and constructing a $215 million park system along its long-disdained bayous.