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Business owners tell Dan Patrick to back off on bathrooms

More like this, please.

Saying Texas Republican leaders are threatening jobs and the economy, more than 200 small-business owners issued an open letter Tuesday urging legislators to abandon plans for a state law targeting transgender bathrooms.

The letter described “a growing sense of dread” that Texas will follow the path set by North Carolina, where a backlash to a similar law enacted in March will cost its economy several hundred million dollars in canceled sporting events, conventions, concerts and corporate investments.

“That’s why we oppose any Texas legislation — broad or narrow — that would legalize discrimination against any group,” the letter said. “That kind of legislation doesn’t just go against our values to be welcoming to everyone, it jeopardizes the businesses we’ve worked so hard to create, and it threatens the jobs and livelihoods of everyday Texans.”

Unveiled in San Antonio, home to the Final Four of the 2018 NCAA men’s basketball tournament, the letter was a direct response to Lt. Gov. Dan Patrick’s calls for legislation that he has dubbed the Women’s Privacy Act.

[…]

Tuesday’s letter not only sets the stage for an animated battle when the 2017 legislative session convenes in January, it underscored deepening divisions between social conservatives and many in the business community — a typically reliable GOP ally — on issues that include gay marriage and allowing transgender Texans to use bathrooms that conform to their gender identity, not the gender on their birth certificate.

The legislative priorities for the Texas Association of Business, adopted last month by its board of directors, calls for opposition to religious freedom bills that are “discriminatory” and would hurt the economy. The powerful business lobbying group also opposed similar bills in the 2015 legislative session.

Many business owners who signed Tuesday’s open letter — which was sponsored by Equality Texas, a gay- and transgender-rights group — said they rely on tourism or the ability to serve expanding corporations.

“Texas has always been a place of fierce independence and a great big pioneering spirit,” said David Wyatt with Wyatt Brand, a business-support company in Austin that endorsed the letter. “Companies, voters and political donors won’t stand for legislators dictating government overreach into individual liberties.”

Other Austin businesses listed on the letter include GSD&M advertising, Home Slice Pizza, Alamo Drafthouse Cinema and Bunkhouse, which manages Hotel San José, Austin Motel and Hotel Saint Cecilia, as well as hotels in San Antonio and Marfa.

Just remember, Dan Patrick is Donald Trump’s biggest fanboy in Texas, so you know how much he respects the ladies. This all comes down to the same question I asked before, when the normally Republican-aligned Texas Association of Business came out against any anti-LGBT legislation that Patrick and his buddies might want to peddle: How much damage does Dan Patrick have to do to Texas’ business interests before they decide that he’s not worth it to them? Putting it another way, at what point do the Republican members of these groups quit trying to reason with the radicals and work instead to defeat them? The definition of political insanity is to continue voting for people who oppose your interests in the hope that maybe this time they’ll listen to you. What’s it gonna be, fellas? The Rivard Report, the Chron, and the Current have more.

Buc-ee’s files another logo lawsuit

That’s one litigious beaver.

Buc-ee’s has sued the San Antonio-based operator of Choke Canyon Travel Center for promoting its barbecue and other travel essentials with its grinning, lip-licking, hat-wearing, finger-pointing alligator. The alligator sits in a circle -much like Buc-ee’s beaver — and adorns a wide range of products, from sweet and salty snacks to bags of ice to tee shirts.

The alligator, however, doesn’t have a name.

[…]

The case, which was filed late last year, alleged that the Choke Canyon convenience store, along with Choke Canyon Bar-B-Q and Choke Canyon Exxon, infringed on Buc-ee’s trademark by copying the look and feel of the roadside retailer, which has grown to 27 locations across Texas. Choke Canyon has three locations in and around San Antonio. Neither the owner of Choke Canyon or his lawyer returned calls seeking comment.

Besides the logos, Buc-ee’s alleges that Choke Canyon copied several other features, including oversized bathrooms, numerous fuel pumps, ample parking and a similar looking soda station. Buc-ee’s first learned of its competitor in December when it began receiving inquiries from vendors and customers about the Choke Canyon Travel Center, according to the lawsuit.

U.S. District Judge Keith Ellison set the trial for early next year.

Buc-ee’s won its previous logo lawsuit, against a company that also used a beaver in its branding. I get the zeal to protect these images, but I gotta say, this one seems like a stretch to me. We’ll see what happens in court. Whatever does happen in that case, I’d prefer Buc-ee’s stick to suing competitors and suppliers, and not former employees who will be impoverished by the experience. Don’t make me feel dirty about using your clean bathrooms, Buc-ee’s.

Here come the cannabis growers

For medicinal purposes only.

About 60 miles north of Dallas, amid green fields in the town of Gunter, population 1,486, Texas Cannabis CEO Patrick Moran has optioned to buy a former cotton gin, where he plans to grow the Cannabis sativa plant, known more commonly as marijuana.

The businessman and attorney is positioning himself at the forefront of what he estimates will be a $900 million a year industry in Texas – the recently legalized market for treating intractable epilepsy with a strain of marijuana that eases seizures without getting patients high.

Texas, as it turns out, may be one of the best states in the nation to grow pot. While the state has one of the most stringent medical usage laws in the country, it is setting up some of the cheapest licensing fees and one of the least restrictive markets for pot growers in the U.S.

Gov. Greg Abbott signed legislation last year allowing the state to license businesses to grow, process or dispense nonintoxicating marijuana or cannabis for medical use beginning next year. Moran wants to do all three with Texas Cannabis, cultivating marijuana from seed to sale.

Moran is waiting on the state to set up its registry, slated to go live by June 2017, to put in his application. He plans to use that former cotton gin, which has sat dormant for 40 years, to cultivate, extract and dispense cannabidiol oil, or CBD oil, from low-THC cannabis plants – just around the corner from the city hall in Gunter. THC, or tetrahydrocannabinol, is the psychoactive component that gives users a high when they smoke traditional marijuana.

The new market is being called the green rush.

“There’s a whole other industry that is being birthed in this country, just like what happened with the dot-com boom,” Moran said. “I think it’s once in a lifetime.”

[…]

The Texas law established narrow parameters on the type of cannabis that can be dispensed, who can take the medication and which physicians can prescribe, said Frank Snyder, a Texas A&M law professor who teaches the state’s first course on marijuana law, policy and business. But it doesn’t limit the number of competitors who can grow, extract or dispense.

“The process for getting a license and beginning to cultivate is probably the most liberal law of any of the medical marijuana states that I’m familiar with right now, in terms of putting up the fewest barriers to entry,” Snyder said.

Applicants aren’t required to have vast cannabis industry experience. They simply have to show they have the technological ability to grow, extract or dispense the product by having experience in related fields, such as cultivation, analytical laboratory methods and handling confidential patient information.

They also must show they can obtain the locations, resources and personnel necessary for operations, maintain accountability of all materials and have the financial ability to keep going for two years.

Regulations issued by the Texas Department of Public Safety in January also set fairly low licensing fees.

A cannabis operation seeking to become licensed in Texas must pay a $6,000 application fee to the state. Businesses will have to renew those licenses and pay another $6,000 application fee every two years.

That compares favorably with fees charged by some other states. Massachusetts, for instance, requires a medical marijuana dispensary to pay a $50,000 registration fee every year. Hawaii charges only a $5,000 application fee but requires a dispensary applicant to have at least $1 million in reserves, plus an additional $100,000 on hand for each retail site. Florida requires an applicant seeking a cultivation license to secure a $5 million performance bond.

Colorado, widely regarded as having some of the nation’s most permissive marijuana laws, charges as much as $25,000 in upfront application and licensing fees, depending on the type and volume of pot sold, plus additional fees.

See here for the background. One can look at the inexpensive fees for the grow/extract/dispense licenses and see low barriers to entry for cannabis entrepreneurs, and one can see a missed opportunity for generating revenue, since many of the arguments for legalizing pot in Texas come down to revenue in one form or another. What the Lege actually legalized is pretty limited, and some advocates for medical marijuana opposed the bill that got passed on the grounds that it didn’t really do anything for a class of people who need it. As such, I’m not sure how big or lucrative this business is going to be just yet. That said, I’m sure this issue will continue to be discussed in the Legislature, so the possibility of expansion will be there as well. We’ll see what the financial figures for these businesses look like once they’re fully operational.

Tesla takes its auto dealership fight nationwide

There’s more than one way to get into a market.

Tesla Motors Inc. hopes to capture mainstream auto buyers with its Model 3, an electric car it [recently unveiled] at a price about the same as the average gasoline-powered vehicle, but it may need a federal court ruling to succeed.

The Palo Alto, Calif., auto maker’s direct-to-consumer sales are prohibited by law in six states that represent about 18% of the U.S. new-car market. Barring a change of heart by those states, Tesla is preparing to make a federal case out of the direct-sales bans.

The auto maker’s legal staff has been studying a 2013 federal appeals court ruling in New Orleans that determined St. Joseph Abbey could sell monk-made coffins to customers without having a funeral director’s license. The case emerged amid a casket shortage after Hurricane Katrina. The abbey had tried to sell coffins, only to find state laws restricted such sales to those licensed by the Louisiana Board of Funeral Directors.

For now, Tesla is banking on a combination of new legislation, pending dealer applications and other factors to open doors to selling directly in Arizona, Michigan, Texas, Connecticut, Utah and West Virginia. But the company said it is ready to argue in federal court using the coffin case if necessary.

“It is widely accepted that laws that have a protectionist motivation or effect are not proper,” Todd Maron, the auto maker’s chief counsel, said in an interview. “Tesla is committed to not being foreclosed from operating in the states it desires to operate in, and all options are on the table.”

The ruling in favor of the monks, upheld by the Fifth Circuit Court of Appeals, could give Tesla the precedent it needs to join an “economic liberty” issue currently in dispute between circuit courts in the U.S., Northwestern University law professor John McGinnis said. The Second Circuit Court of Appeals, for instance, has upheld laws that require licensing to sell certain products even if there isn’t a clear reason for it other than protecting existing businesses from new competition.

[…]

Auto dealers are battle-tested and have notched a series of victories along the way. Earlier this year, the Second Circuit Court of Appeals refused to hear a case brought by auto makers that wanted to change laws using a similar constitutional challenge and involving warranty reimbursement levels.

Tesla could find powerful allies. The Federal Trade Commission has repeatedly said franchise laws are anti-competitive. Other organizations agree.

As we know, Tesla has tried and tried again to get a bill passed in the Lege to allow them to operate in their dealerless model, with no luck. I’m sure they’ll be back again next year, but in the meantime it can’t hurt for them to have a Plan B, especially if it solves the same problem for them in other states as well. We’ll see how this goes.

Bu-ee’s to expand to Louisiana

The road to world domination leads east.

The first Buc-ee’s outside Texas promises lagniappe, a little bonus, worthy of its Louisiana locale.

“It’s going to look like what we build, and it’s going to feel like what we build,” co-owner Beaver Aplin said this week. But in addition to the Beaver Nuggets and other proprietary snack foods such as fudge or jerky, Aplin said, customers should expect “Louisiana flair” with items like alligator, boudin and cracklins.

A 15-acre tract along Interstate 12 in Baton Rouge will soon get one of the Buc-ee’s mega-convenience stores. The chain known for its buck-toothed mascot, a cartoon beaver, has grown to 31 locations since the first one opened in 1982.

The store could also be the first of others in Louisiana and elsewhere as the Lake Jackson-based chain explores markets beyond Texas’ borders.

Exact plans are not yet available, but Aplin said Buc-ee’s has the Baton Rouge property under contract, and the company is working with the owner and the city. The store will likely be a 50,000- to 60,000-square-foot travel center, similar to ones in Baytown, Texas City or Madisonville. It will feature sprawling bays of fuel islands and expanded food and other items for sale.

“We think Louisiana will be a great market, and I look forward to being there,” Aplin said.

[…]

Many Louisianians, through traveling or living in Texas, have been exposed to the Buc-ee’s brand, said Kelli Hollinger, director of the Center for Retailing Studies at Texas A&M University.

“Buc-ee’s has a cult following,” Hollinger said. “You’re not just excited to go to Buc-ee’s, they’re part of the travel experience itself.”

Hollinger said tapping into Louisiana’s food culture should further help the brand there.

Added marketing professor Betsy Gelb of the C.T. Bauer College of Business at the University of Houston: “You always want to be putting a toe in a state where there are people who know you.”

General counsel Jeff Nadalo said Buc-ee’s continues “looking at all opportunities in Texas and outside of Texas.”

Louisiana is the current focus, Aplin said, with other sites, including along the I-10 corridor, under consideration. None of those projects is far enough along to announce, he added.

Makes sense. Just on billboards alone, you have to figure Buc-ee’s is well known to anyone who’s ever driven on I-10. Now you can stock up on Beaver Balls on your way to New Orleans. What more could you want?

TOP releases report on inefficiency of development tax subsidies

From the inbox:

[Thursday], the Texas Organizing Project and the Workers Defense Project released a report on the ineffectiveness of tax subsidies in cities across Texas, and proposed ways to increase requirements for such deals in Houston to offer benefits in the form of good paying jobs with community investment for Houstonians.

The report, compiled by the Workers Defense Project, looked at corporate tax subsidies throughout the state, including Houston, and found that Texas’ cities are giving away huge subsidies without enforceable community benefits agreements.

“Today, we are asking the hard, critical questions,” said Lola Garcia, a community leader with the Texas Organizing Project, “Economic development for whom? For out-of-state multi-billion dollar companies and wealthy developers? Or for neighborhoods and Houstonians in need?”

After analyzing Houston’s tax subsidy deals, contracts and compliance records, researchers found that Houston’s tax subsidy programs have failed to deliver on their promises of equitable development, specifically, they:

  • Failed to create good jobs that pay well;

  • Failed to incentivize affordable housing, and instead contributed to the gentrification of our neighborhoods; and

  • Failed to create a level playing field for small and local businesses to access these programs.

“It’s time to address the city’s long history of picking winners and losers through tax give-aways that fast-track gentrification and fail to provide any direct benefits to neighborhoods most in need of a lift,” said Tarsha Jackson, Harris County director for TOP. “The good news is that we have the opportunity to change this narrative, to redesign the programs, raise and clarify the city’s expectations and criteria for developers seeking multi-million dollar tax deals.

“We know Mayor Turner is committed to creating good jobs for Houstonians, and this research can help us set new standards on economic development projects.”

Get the full report here: The Failed Promise of the Texas Miracle: Corporate subsidies in the Lone Star state.

And here’s the executive summary:

Over the last year, researchers from the Workers Defense Project and the University of Texas at Austin have undertaken a study of tax subsidies and other economic incentives utilized at the state and local level to spur economic development in Texas. Researchers sought to understand the role economic incentives play in the Texas economy by examining how these programs have fulfilled or failed to fulfill their promise of creating high-quality, high-paying jobs and increasing local tax revenue. While there are over a dozen kinds of giveaways to businesses in the form of tax breaks, loans and grants in Texas, our research team conducted a thorough case study of one of the least transparent local programs: Chapter 380 (city) and Chapter 381 (county) agreements, which provide grants, tax breaks, and low-cost loans to corporations. To understand the impact of these economic programs, our research team combed through thousands of pages of contracts and compliance records from three Texas cities and county governments: Austin & Travis County, Houston & Harris County, and Dallas & Dallas County.

Researchers also examined data from over a dozen local, state and federal agencies including city and county governments, the U.S. Census Bureau, the U.S. Department of Education, the Bureau of Economic Analysis, and the State Auditor’s Office, among others. Additionally, researchers reviewed existing studies from numerous academic sources on the impact of economic incentives, as well as existing data on state incentive programs, including the state-level equivalent of Chapter 380/381 agreements: The Texas Enterprise Fund.

To provide context for the use and impact of Texas’ economic incentive programs, we have structured this report around the three pillars necessary to build a strong economy: good job creation, investment in education and training, and fair market competition. Researchers found that while the Lone Star State has made substantial investments to attract Fortune 500 companies to the state, it has failed to invest in Texas businesses and workers, and left many homeowners footing the bill for billions that have been doled out to big business. This study seeks to provide in-depth analysis to how these tax subsidy programs work, how they have failed or fulfilled their promise to Texans, and to provide robust solutions to ensure that our state builds a strong economy that puts Texas business, workers, and taxpayers first.

I’m not opposed to the idea of economic incentives. There does need to be a good, measurable return on the investment, there needs to be a way to enforce the agreements, and the benefits need to be distributed equitably among the population. There’s plenty of room to do all of these things better. The full report is here, and the Austin Chronicle, the Press, and KUHF have more.

Another look at AirBnB

Interesting.

The hotel industry is starting to object. On Wednesday, a report funded by a national trade group claimed some Airbnb hosts function illegally and operate essentially as full-time hotels without the same health and safety oversight. It also says they can reduce the number of affordable options for full-time renters.

The home-rental site has stirred tensions in cities such as New York City, San Francisco, Paris and Barcelona. Austin has created new short-term rental regulations as a result.

In Houston, which does not have similar regulations, the city’s primary tourism agency is working with Airbnb and similar operators about taxes.

A city of Houston spokesman said Wednesday that the state is responsible for health and safety regulations that affect short-term rentals. But a spokesman for the Texas Department of State Health Services, which regulates hotels and bed-and-breakfast operators, said it does not have a role in Airbnb or short-term rentals.

Houston is the state’s second-largest Airbnb market, behind Austin, and officials are preparing for an increase in tourism around the 2017 Super Bowl. It was one of a dozen large U.S. cities included in the American Hotel & Lodging Association study released Wednesday by Pennsylvania State University’s School of Hospitality Management. Researchers tracked Airbnb data from a 13-month period.

“This study shows an explosion in activity among multi-unit hosts and the rise of full-time operators in each of the 12 markets we analyzed. Further, operators renting out three or more units represent a disproportionate share of revenue with only 7 percent driving more than $325 million in the period studied,” said John O’Neill, the Penn State professor who directed the research and is director of the school’s Center for Hospitality Real Estate Strategy.

The study found that nearly 30 percent of the revenue generated from hosts comes from people operating as full-time landlords, or 360 days a year. Individuals or entities renting out two or more residential properties on Airbnb account for 17 percent of hosts and drive nearly 40 percent of the revenue in those markets, according to the study.

The report found that in Houston there are 30 full-time operators who rent out their space for at least 360 days a year, generating $3 million in revenue during the 13-month period studied. In all, 956 hosts generated a total of $11 million in revenue, the report said.

It found 83 hosts operating three or more properties and 82 others with two units.

A copy of that report is here. AirBnB has disputed its findings and released its own report about its potential tax revenue for cities. I have no judgment about who is right or wrong in their facts and figures, I’m more interested in how cities are going to react to AirBnB, which I presume they’re going to have to do sooner or later. So far it has not been on the radar in Houston, but it has been in Austin and may be in San Antonio and elsewhere. I’ll be a little surprised if we see AirBnB regulation on the Council agenda in the near future, but if there’s any indication that it’s negatively affecting hotel tax revenue that could change.

The Uberization of moving companies

For when you don’t have a friend with a pickup truck and you need to move on the cheap.

A new breed of online moving companies with names like Buddytruk and PICKUP has drawn interest from the Texas Department of Motor Vehicles, which wants to ensure the companies are following state laws requiring moving truck drivers to be licensed.

“Anyone moving household goods in a pick-up truck for hire is required to register with the Texas Department of Motor Vehicles and show proof of insurance in the amounts required by law,” reads a letter the department sent to Plano-based PICKUP in October. “Something bought at a garage sale for home use would qualify as household goods.”

Since May, the department has sent letters to four app-based moving companies, warning each that they may be violating state law, according to spokesman Adam Shaivitz. Along with PICKUP, they include Austin-based Burro, as well as HashMove and Buddytruk, both based in California but offering services in Austin.

“Providers that refuse compliance can be referred to law enforcement because moving household goods without a license is a crime,” Shaivitz said. So far, the agency has not referred any cases involving these four companies to law enforcement.

Department officials say the issue is more than just the state keeping track of moving companies. The agency has pursued unregistered movers in the past who demand more money before delivering goods or fail to show up for delivery at all. Often, such movers advertise their services on sites like Craigslist, according to officials in several states.

The past two years have seen the launch of more than a dozen Uber-style moving or delivery companies, most debuting in cities on the West Coast. Many advertise themselves as being more convenient than traditional moving companies. Like Uber, some encourage those with access to a large enough vehicle to sign up as drivers to make extra money.

“You need to have a smart phone, a full-size pickup truck legally registered to you and insured to State requirements,” says PICKUP on the driver sign-up page of its website. The company, which promotes its drivers as “Good Guys With Pickups On Demand,” launched in 2014, serving the Dallas area. Asked if the company requires its drivers be registered with the state as household goods movers, CEO Brenda Stoner said in an email that the company was addressing that issue.

“We are working closely with a very collaborative Texas DMV, other regulatory agencies, and our attorneys and consultants to ensure that customers can adopt this new style of delivery service in a trusted, safe, insured and compliant manner,” Stoner said.

Both Burro and HashMove only employ drivers that comply with state laws, according to company officials. Buddytruk declined to comment.

I don’t expect to move again any time soon, and if I were anticipating a move I’m not sure I’d go for a service like this. Too many questions about liability and insurance and how good the service is. That said, the last time we did move we used a no-name company that was basically a guy with a repurposed bread truck and his three or four helpers, so who am I to talk? I guess overall I feel the same way about this as I do about major software releases – I’d wait till the bugs have been worked out first. Your mileage may vary, and if you’re looking at a soon-to-expire apartment lease, this may be a good way for you to go.

Would you like to sit in armed or unarmed?

From Houstonia:

Imagine it’s a Saturday afternoon. You stop into Whataburger to pick up lunch with your kids in tow, the only thing on your mind remembering which kid doesn’t want ketchup on his burger, which kid only wants ketchup on his burger, and whether you want to add jalapenõs to your own. You place your order and are pulling out your wallet to pay when a man walks in with a Sig Sauer strapped to his belt. He’s not in any kind of uniform; he’s not wearing a badge. He’s just a guy with his gun, and you’re just a guy with his kids. Are you okay with this scenario? Maybe so. Or maybe you can’t understand why a guy would need to bring his gun into a fast-food restaurant, and you decide to leave without your burgers.

Whataburger has long bet that a good portion of its customers belong to the latter group, hence its company-wide policy against open carry, which has been legal for years in other states where the chain operates, from Arizona to Arkansas. In advance of the new statewide law that goes into effect in Texas this January 1—the much-discussed House Bill 910 that makes Texas the 45th state to allow residents to openly carry and display their handguns—the Corpus Christi–based company recently reiterated that policy.

[…]

The thing is, there’s still a great deal of confusion surrounding the impending changes, as business associations large and small, reluctant to enter the quagmire of gun control politics, have been slow to provide guidance to private entities that may want to ban open carry. (The Greater Houston Restaurant Association didn’t even return Houstonia’s requests for comment.) As a result, getting those signs up in the first place is proving tougher than expected.

And in fact, rules for the necessary signage are complicated. “Business owners that want to ban guns from their property must post a new sign that adheres to strict wording, colors and text size,” says Terry McBurney, president of the Greater Montgomery County Restaurant Association, one of the few restaurant associations to provide assistance in advance of the new gun laws. Those colors, the Texas Department of Public Safety mandates, must be contrasting. The lettering must be block, and at least one-inch high, for maximum legibility, with the notice in both English and Spanish, posted “conspicuously” at the entrance to the business itself. Any sign that isn’t absolutely perfect, down to the letter, will be null and void.

I would note that State Rep. Diego Bernal of San Antonio has taken it upon himself to help businesses who want to opt out on open carry by printing signs that conform to all of the mandated requirements, which he is providing free of charge. Perhaps one or more of our local legislators could follow that example – I’m sure plenty of businesses would appreciate it. Regardless, I wonder how long it will take before some establishments use open carry as a marketing tool, catering to whatever side they think represents a bigger opportunity for them. I feel reasonably confident saying that there will be more than a few establishments in my neighborhood that feature these signs, and that more than a few of them will not be shy about advertising themselves as such. Should be fascinating to watch.

On a tangential matter:

During a panel [recently] addressing Texas’s new open-carry law, Houston Police Chief Charles McClelland, Harris County District Attorney Devon Anderson, and City Attorney Donna Edmunson encouraged citizens to ask as many questions as possible.

Mostly, they asked McClelland and Anderson to consider a myriad of hypothetical situations.

For example, many asked, what if you’re just sitting on a bench at a park with your gun in your holster, and some concerned “mad mom” calls the police on you because she and her kids are alarmed by the very presence of your gun? Are the police really going to detain you and ask that you show your CHL even though you’re just sitting on the bench eating a ham sandwich? Isn’t that a bit invasive?

The resounding answer from McClelland and Anderson, to all of the above types of questions, was basically this: we understand your concerns, but you’re just going to have to deal with it.

Chances are, they explained, you’re going to come across a CHL holder openly carrying his or her gun inside of a Walmart, a Taco Bell, a JCPenny (not a Whataburger, which already said it’s not going to allow guns inside). And chances are, for CHL holders, a police officer is going to ask you to show your license once someone’s kids get scared and they call 911, and you’ll just have to comply, because that’s the law—even if you’re just sitting on a bench eating a sandwich.

This is going to be so much fun, isn’t it? There are already plenty of disagreements about what this law means and what if any restrictions can be legally enforced in various places. I suspect the courts are going to be very busy next year, and the Lege will be back to revisit this in 2017.

Some power companies like the Clean Power Plan

Not that you’d ever know it.

ERCOT

Thad Hill, in a split with many fellow power company executives, flatly opposes the lawsuits that Texas and 25 others states have filed to block the Obama administration’s Clean Power Plan.

The plan, which the Environmental Protection Agency unveiled in the summer, seeks to combat climate change by reducing carbon emissions at existing power plants. It would affect coal-fired plants most profoundly, because they emit the most carbon dioxide.

It’s no coincidence that the company Hill heads, Houston’s Calpine Corp., owns exactly zero coal plants.

While it’s intuitive that wind and solar power companies, which don’t emit greenhouse gas in generating power, support the Clean Power Plan, opinion within the traditional electricity generation sector is more nuanced.

Calpine, which operates the nation’s largest fleet of natural gas-fired generators, leads a relatively small group supporting the federal rule.

Most companies that generate power with coal oppose it, including Dallas-based Luminant, the state’s largest power generator. It also operates some gas plants and one of Texas’ two nuclear plants.

[…]

While the EPA has tightened other emissions regulations under President Barack Obama, the Clean Power Plan is the most sweeping overhaul, said Travis Miller, director of utilities research at Morningstar.

The plan is intended to reduce carbon pollution from existing power plants 32 percent from their 2005 levels by 2030.

“The Clean Power Plan is going to have ripple effects throughout the entire energy system in the U.S.,” Miller said. “Utilities need a long runway to adapt, but they’re willing to adapt.”

In the lawsuit challenging the rules put forth by the Democratic Obama administration, Republican Texas Attorney General Ken Paxton calls the plan a massive power grab by the EPA that would increase Texans’ electric bills significantly and threaten the reliability of the electric grid.

The Electric Reliability Council of Texas, which manages 90 percent of the state’s power grid, has estimated the rule could force the closures of some Texas coal plants and increase electricity prices 16 percent by 2030.

Miller agreed that the Clean Power initiative would affect Texas, though he said that Midwestern, Great Plains and Appalachian states most dependent on coal would feel the greatest effects.

Some of the changes in Texas’ power landscape are occurring anyway, because of cheap shale gas and Texas’ ranking as the largest wind power producer in the nation.

“There’s an impressive pipeline of new gas generation and new wind generation in Texas,” Miller said.

That presents market challenges to coal plants, and could move the state toward compliance with the Clean Power Plan. “Texas might not have to do all that much,” Miller said.

See here for the background. Miller’s statement is consistent with what ERCOT itself has said, and the Clean Power Plan would help conserve water, too. But this is Texas, and our leadership has to do things the hard way. Just remember, they don’t speak for everyone, not even in the power generation business.

Back to the business angle

I’m sure we’ll hear more of this in the next few weeks.

Business and tourism leaders worried Wednesday that voters’ rejection of a citywide anti-discrimination ordinance has hurt what had been one of their best recruiting tools: Houston’s emerging reputation as a diverse metropolis that supported an openly gay mayor and welcomes young talent looking to launch careers in a progressive environment.

Suddenly at risk, they say, are corporate relocations, nationally prominent sporting events and the lucrative convention business that generate millions of dollars and help the region thrive.

“In recent years, we have done a remarkable job of changing the perception and attracting people to Houston,” said Bob Harvey, president and CEO of the Greater Houston Partnership. ” … We have to quickly re-establish that this is a modern, open city.”

[…]

Mike Waterman, president of the Greater Houston Convention and Visitors Bureau, the group that recruits conventions that draw tens of thousands of people here annually, said many of those top organizers hope the new mayoral administration will pass an alternative measure quickly.

“We can’t go on as a city without a non-discrimination ordinance forever,” Waterman said. “It’s a differentiator, and one we do not have today.”

The Greater Houston Hotel & Lodging Association, which like the other booster group was vocal in its support of HERO, echoed that concern.

“I think the issue we face is we want people outside our city to know the true Houston, that we are very open and welcoming to all visitors,” association president Stephanie Haynes said.

[…]

There also was concern Wednesday that the defeat of HERO could make the city unattractive to diverse job candidates, including the increasingly sought-after millennial workers, said Keith Wolf, managing director of Murray Resources, a recruiting and staffing firm in Houston.

“I think the larger concern is that it feeds into the misperception by some that Houston and Texas, in general, is an intolerant, unwelcoming place,” Wolf said.

“If you’ve been on Facebook and Twitter in the last 24 hours, you’ve probably seen millennials expressing their embarrassment that the ordinance did not pass,” he added.

Harvey, of the Greater Houston Partnership, said it will be hard to know how many companies might avoid Houston because of the vote, but he said he agreed that major companies are eager for young professional workers. Those recruits, he said, care about social issues.

I’ve said this a few times before, and I’ll say it again: This is a political opportunity for Democrats to try and drive a wedge between business interests that tend to support Republicans and the Republicans like Dan Patrick and Greg Abbott who oppose them on matters of equality (among other things). All it would really take, at least in the beginning, would be for some Democratic elected officials to point out how Republicans are actively harming businesses in Texas by things like their opposition to LGBT equality. (There are plenty of other issues one could cite, from “sanctuary cities” to schools and pre-kindergarten and infrastructure, but with HERO in the news this is the place to start.) Acknowledge that business interests won’t always agree with Democrats, but they already strongly disagree with Republicans on many things, and they are not being well served by a political party that is taking them for granted. This is obviously a long-term project, but it’s basically free and has plenty of upside. Naturally, the first politician to take this path needs to be Sylvester Turner, since he’s the only candidate in the Mayoral runoff who has any interest in revisiting HERO if elected. I’m just saying.

Bring back postal banking

I still like this idea.

Postal unions and civil rights groups are among other advocacy organizations, along with the U.S. Postal Service inspector general, pushing USPS to expand into banking. Sen. Bernie Sanders (I-Vt.), a Democratic presidential hopeful, agrees. But USPS, which could use the business, has no interest.

Providing financial services in post offices “could benefit the 68 million underserved Americans who either do not have a bank account or rely on expensive services like payday lending and check cashing,” says an inspector general report issued in May. “The products also could help the Postal Service generate new revenue to continue providing universal service. Because it has a presence in every neighborhood, including many places where there are no longer any bank branches, the Postal Service is well suited to provide such services. In addition, its well-trained workforce is already experienced at handling complex transactions and watching out for related fraud and other risks.”

The push for postal banking received a boost this month with an article by Mehrsa Baradaran in The Atlantic. Baradaran, a University of Georgia School of Law associate professor, advocates a “central bank for the poor,” as an alternative to “the unscrupulous practices of payday lenders.”

Postal banking, she wrote, could provide short-term loans and “potentially drive out the usurious fringe-lending sector, which profits from Americans’ financial woes.” Her article was adapted from her book “How the Other Half Banks: Exclusion, Exploitation, and the Threat to Democracy.”

USPS officials regularly trumpet what they are doing to improve the Postal Service’s financial situation, including such things as selling greeting cards. But the officials have rejected postal banking.

“While we currently provide our customers with certain financial services, including money orders, electronic funds transfers, and cashing of U.S. Treasury checks, our core function is not banking,” said David A. Partenheimer, a USPS spokesman. Former Postmaster General Patrick Donahoe was more emphatic during his farewell press conference in January. “The key thing for any successful business is to work within their core,” he said. “We don’t know anything about banking.”

They must have forgotten.

Postal banking, known as the Postal Savings System, began operation in 1911 and officially ended in 1967, though the Post Office stopped accepting deposits a year earlier. Initially, savings earned 2.5 percent interest with a half-percent designated for operation of the system, according to a postal service history. “Although bankers first viewed the Postal Savings System as competition,” the history says, “they later were convinced that the Postal Savings System brought a considerable amount of money out of hiding from mattresses and cookie jars.” Most of the money was redeposited in local banks. The Postal Savings System, however, did not include lending, according to Mehrsa.

I’ve covered this before, and continue to be convinced that it makes sense. That Inspector general report quote above is a big part of it, but just having convenient access to their money without having to pay exorbitant fees or be at the mercy of the failings of unregulated “entrepreneurs” would be a huge book for millions of working people. I truly don’t understand the USPS’s objections to this, given their own history. It would be good for their business as well as good for so many people. Keep up the pressure, y’all.

Revisiting the Texas-Amazon sales tax deal

The Statesman looks back and concludes it was a pretty good deal all around.

Amazon

In 2012, the state rolled the dice on a controversial deal with e-commerce giant Amazon.com.

To end a two-year battle, Texas said it would drop a $269 million sales tax bill due from the Seattle-based company in exchange for an incentive deal, among other agreements.

Amazon said it would begin collecting sales taxes within 60 days and create 2,500 jobs in Texas and invest $200 million in the state by 2014.

Now, as the company says it’s exceeded those benchmarks, state officials and economists say the agreement was the right call for Texas.

“I believe Texas benefited from the deal with Amazon. The agreement meant Amazon began collecting and remitting taxes to the state, which the comptroller’s office felt were legally due,” Texas Comptroller Glenn Hegar told the American-Statesman. “The agreement also allowed Amazon to start building warehouses and to greatly expand their physical presence in the state, which was largely beneficial to the economy.”

This summer, the Internet retailer told state officials it reached more than 3,500 employees in Texas and made more than $300 million in capital investment in Texas by the end of 2014, according to documents filed with the comptroller’s office.

Amazon also paid an undisclosed amount to settle the matter in 2012.

With the deal, Texas ended a two-year fight seeking the company’s uncollected sales taxes, and Amazon began collecting on July 1, 2012 — potentially adding millions of dollars in new revenue to state coffers in coming years. Now, current figures seem to prove that out.

An American-Statesman analysis of data from the comptroller’s office shows the state’s sales tax collections have risen by hundreds of millions of dollars since Amazon.com began issuing the levy on Texas residents.

Since July 2012, sales tax revenue in Amazon’s sector has gone up more than $325 million, comptroller data shows. While state law prohibits the comptroller’s office from releasing sales tax collections by individual companies, it’s clear a significant portion of that increase is a result of Amazon’s Texas sales.

Although Hegar wasn’t the comptroller at the time of the 2012 deal, he says the state has benefited from Amazon’s presence.

“We welcome and appreciate Amazon like we do all the retailers in our state,” Hegar said in weighing the company’s role in Texas today. “We encourage and benefit from the economic activity generated by both their physical activities in the state through capital investment and job creation, and also greatly appreciate their following the law by collecting and remitting taxes from our citizens when selling taxable items.”

See here, here, and here for some background. I supported this deal back then, and I’m glad to see it has basically worked as intended. The rationale from two decades ago for making online sales tax-free has long since been rendered irrelevant, and the effect of that policy has become increasingly expensive for state and local governments. It just made sense for Amazon and other online retailers to start charging sales taxes. A few years later, this isn’t even controversial any more. Like I said, a good outcome and I’m glad to see it.

Bridal Extravaganza happily adjusts to a same-sex marriage world

Love is love, and business is business.

RedEquality

Vendors in the industry, from florists to caterers, are seeing a bumper crop of same-sex Texas weddings.

“I think there’s going to be some pent-up demand, and that’s exciting,” said Laurette Veres, Bridal Extravaganza producer.

In Texas, same-sex weddings could generate at least $182 million in total spending in the first three years, according to projections by the Williams Institute on Sexual Orientation and Gender Identity Law and Public Policy.

“That could be a lot of business,” said Carol Wyatt, who plans to marry her partner of two years, Sallie Woodell, on Aug.  2. The weekend bridal show really came too late for Wyatt and Woodell – they’ve been planning their Aspen, Colo., wedding since December – but they see a lot of other weddings in the works. “With almost every couple we know,” Wyatt said, “they’re either getting married or have gotten married in another state” and want to renew their vows closer to home.

Some of the show’s vendors made special efforts to welcome same-sex couples. Dream Bouquet Floral and Event Decor displayed a bouquet of roses with rainbow-hued petals. Who Made the Cake!, a Houston cake design studio, brought in a multi-tiered cake called “Love Around the World” that featured same-sex couples traveling together – two men riding a gondola, two women in a hot air balloon.

“We’ve always done cakes for LGBT marriages, so this is nothing new for us,” said the cake shop’s owner, Nadine Moon. “My view has always been love is love, and you deserve a great cake to celebrate, I don’t care who you are.”

The show’s name isn’t going to change, Veres said, because it’s been known (and trademarked) as the Bridal Extravaganza for three decades. But organizers are tweaking other details to make the show more inclusive to same-sex couples. Instead of signing up as bride and groom, couples now register as “Partner 1” and “Partner 2.” And for years, Veres said, engaged attendees have been given stickers that identify them to vendors as a “Bride to Be.” “We’ll use up the ‘Bride to Be’ stickers, but we won’t reprint those,” she said. The new stickers simply say “Engaged.”

[…]

Mark Phariss and Vic Holmes, who will marry in November after 18 years together, came to the show on Saturday. The two live in Plano and already have booked and ordered most of the things they want for their North Texas wedding, but they wanted to see what else they might find.

“Everyone was very accepting when they learned we were a same-sex couple,” Phariss said. “We had no issues at all.” But then, he said, that’s been typical of their experience since he and Holmes started planning their wedding in March. “Everyone we’ve called, we’ve told them that we’re a same-sex couple and asked if that would be an issue,” he said. “Everyone has said it’s not, and, in fact, said they were sorry we had to ask.”

Wyatt, who’s marrying next month, has heard talk that a same-sex wedding expo might be in the works in Houston, something made by and for the gay community. But she prefers the idea of same-sex couples “mixing and mingling in the broader wedding market,” as they did at this weekend’s show.

“Any time we can present ourselves as ‘We’re just normal; we’re happy to be getting married just like you are,’ it removes stigma from us,” she said.

God bless the Supreme Court and capitalism, eh? You’d think that if someone told Greg Abbott and Dan Patrick that a $60 million a year business was coming to Texas, they’d shout about it – and claim credit for it – everywhere they could. I guess Texas isn’t open for business for everyone. Still, it’s always good to be reminded who the mainstream is, and who the mainstream isn’t. They may raise a big fuss and may never quite go away, but they’re a shrinking and increasingly irrelevant minority.

Who’s afraid of a little climate change?

We should be in Texas, but we’re not.

Texas probably will see a sharp increase in heat-related deaths and coastal storm-related losses in the coming decades if nothing is done to mitigate a changing climate, according to a new study commissioned by a bipartisan group of prominent policymakers and company executives aiming to spawn concern – and action – in the business community over the much-debated warming trend.

The study is the third region-specific analysis by the so-called Risky Business Project, an eclectic coalition led by former banker and U.S. Treasury Secretary Henry Paulson Jr., former New York City Mayor Michael Bloomberg and billionaire hedge fund manager-turned-environmentalist Tom Steyer. The men co-chair a bipartisan 20-member governing committee made up mostly of former presidential Cabinet members – including President Ronald Reagan’s secretary of state – who agree that climate change is occurring and that it will have negative economic consequences, but have consciously avoided the debate over whether human activity is causing it — or how to respond.

The first step in their mission? Highlighting the potentially devastating economic impact of climate change in the not-too-distant future. And, of course, not everyone is buying it.

Published Tuesday, “Come Heat and High Water: Climate Risk in the Southeastern U.S.” found that Texas will be one of the states most negatively impacted by climate change by mid-century absent any changes.

Among the findings of the study, Texas will probably see by the 2050s:

  • The number of extremely hot days per year – with temperatures exceeding 95 degrees – more than double, from an average of 43 to 106.
  • About 4,500 additional heat-related deaths per year with nearly half that increase coming in the next five to 15 years. (For comparison’s sake, the study points out there were about 3,400 total automotive fatalities in Texas in 2013.)
  • A sea level rise of up to 2 feet in Galveston.
  • A $650-million-per-year increase in storm-related losses along the coast, bringing the state’s total annual damages to more than $3.9 billion.
  • A marked decrease in both worker productivity and crop yields.

The idea is that if the group can convince business leaders that climate change is a true risk, they will in turn pressure policymakers to do something to address it, said committee member Henry Cisneros, a former mayor of San Antonio and secretary of the U.S. Department of Housing and Urban Development.

“We’ve seen that happen time and time again” with other divisive topics, Cisneros said, adding, “The implications for the productivity of the workforce are immense.”

[…]

That does not mean the business community will accept the findings of the study, however. And that reluctance appears largely rooted in the parts of the climate change debate the Risky Business Project has avoided amid a lack of clear-cut consensus among its leadership.

Claiming you can accurately model climate change over the short or long term is “arrogant” and “unrealistic,” said Stephen Minick, the head lobbyist for the Texas Association of Business.

While the powerful group believes climate change is occurring and businesses should account for it, Minick said that whether it is being caused by human activity — namely greenhouse gas emissions — is far from proven, along with the extremity and accuracy of the study’s predictions.

“We absolutely acknowledge the fact that the climate is changing and that sea levels are changing, partly because of climate, partly because of other reasons, and they always have and they always will,” he said.

“We have a long, long way to go in terms of our scientific knowledge … before we can make valid assumptions along those lines,” Minick added, asserting that accurate predictions are difficult in large part because big changes take place “over millenia.”

I believe that response can be summed up as follows:

shrug_emoji

You can see why this is unlikely to be taken seriously here. Hey, most of the people who don’t want to do anything about this will be dead long before 2050 anyway, so let the kids worry about it, amirite? The Observer and Hair Balls have more.

Abbott sides with auto dealers

Sorry, Tesla.

Giving a nod to long-established franchised auto dealerships, Gov. Greg Abbott says Texas doesn’t need to carve out a loophole in its laws that would allow Tesla to sell its high-end electric cars directly to consumers.

“Texas has a very robust, very open, very effective automobile sector that seems like it’s working quite well the way that it is,” the Republican told Bloomberg Radio on Tuesday. “If you’re going to have a breakdown in a car, you need to have a car dealership there to make sure that the vehicle is going to be taken care of. We haven’t seen that from Tesla.”

Tesla’s business model is to sell directly to consumers, bypassing the middleman dealers as it does in many states. But a longstanding law bars that practice in Texas.

[…]

Tesla has refused to call last session a failure. The company says it educated more consumers and lawmakers and will continue its fight to enter the country’s second-largest automobile market. And on Tuesday, it said it wasn’t discouraged by Abbott’s comments.

“As a growing company, we are optimistic about the governor’s pro-business position and hope to be selling direct soon,” Ricardo Reyes, a spokesman, said in a statement.

Abbott’s comments contrast with those of his predecessor. Last year, Gov. Rick Perry suggested in an interview with the Fox Business channel that the state’s dealership laws were “antiquated protections” that should be revisited. Those comments came as Texas was trying to entice Tesla to build its $5 billion lithium-ion battery plant here. The company ultimately chose Nevada.

See here for previous Tesla bloggage. They’ve struck out in the last two legislative sessions trying to get a bill passed to change the franchise model, with no one even sponsoring a bill last time. Abbott may be “pro-business” in some sense, but he surely knows where his bread is buttered. It will be interesting to see what if anything Tesla does in the next session.

The wedding industry is rubbing its hands with glee

Nothing like having your market dramatically expanded overnight.

RedEquality

Within hours after the Supreme Court legalized gay marriage in Texas and across the country, local wedding businesses and venues already began getting orders and bookings from same-sex couples. Those in the wedding industry said they expect a surge of gay couples who were hoping to marry in Texas.

“The gay wedding business will grow instantly,” said Mariana Lemesoff, owner of AvantGarden, which received three new wedding requests from gay couples on Friday.

One study estimated an economic boost of $181.6 million in Texas during the first three years of legalization through direct wedding spending and spending by out-of-state wedding guests.

Until the high court’s 5-4 ruling, Houston had been missing out on the gay wedding business, said Betsy Gelb, a marketing professor at the University of Houston’s C.T. Bauer College of Business.

Competing primarily with Austin, Houston will have an opportunity to attract same-sex wedding business from other Texas towns where people aren’t as comfortable with their union, Gelb said.

“We are, in a sense, behind the curve in cities realizing there is money to be made in LGBT weddings,” she said.

[…]

In some weddings both women wear dresses. Other couples want pantsuits. Either way, [Christine Nokta, public relations director for Impression Bridal] said, the bridal store is expecting an increase in business.

“Two dresses, that’s better than one as far as we’re concerned,” she said.

Indeed. And don’t forget the boon that county coffers will receive by issuing all those marriage licenses, as places like New York City have been doing for years. You may recall that the original anti-gay marriage bill that was taken up in the Lege this year, from Sen. Charles Perry and Rep. Cecil Bell, would have transferred the marriage license business to the Secretary of State’s office. County Clerks raised a huge fuss about that, since that would have been a real financial loss to them. That’s a small amount compared to what this boost in the wedding business will be, however. Just remember, the next time Greg Abbott claims credit for Texas’ economy, SCOTUS and marriage equality will be a part of that. The Huffington Post has more.

Nothing but not-so-good-times ahead

Maybe if everyone chants “This time is different than the 80s!” loudly enough it will have the talismanic effect we all hope it will.

For five years, a domestic oil boom has created a bounty of high-paying jobs and a general climate of prosperity here. But as the rest country starts to see signs of economic revitalization, many of Houston’s biggest companies are slowing down. Both phenomena are due at least in part to the precipitous slide in the price of crude.

Halliburton, Schlumberger, Weatherford and Baker Hughes have dominated headlines with news of their layoffs, but the vast array of nonenergy businesses that feasted on their good fortune also are coming to the realization that the boom may finally have run its course.

That was clear in a series of interviews last week, in which even the most sanguine business owners agreed things could change dramatically over the next several months.

A financial planner whose customers include oil and gas executives said he’s advising clients to start “hunkering down.” A prominent hotelier is warning managers to get ready for “some belt-tightening.” A high-end real estate broker predicted builders could soon be offering incentives – “closing costs, appliances, upgrades” – in a market that only recently had homebuyers writing plaintive letters to sellers and paying well over asking price to get their second- or third-choice house.

“Nobody should be afraid, but people should be concerned,” added Patrick Jankowski, senior vice president of research at the Greater Houston Partnership. “We will feel the impact, even outside of energy. We just haven’t felt it yet.”

By almost every metric, Houston’s economy flourished during the domestic energy renaissance. The biggest impact has been jobs: nearly 485,000 added to the region in the last five years, according to Jankowski. The impact of those workers, whose wages are about double the local average, extends far beyond the energy sector itself, as they buy homes, purchase cars and spend money around town.

Optimists look to the medical, shipping and logistics industries to offer a cushion. But it’s naive to believe that if Houston thrived during the energy boom, it won’t suffer as the sector struggles.

Bill Gilmer, director of the Institute for Regional Forecasting at University of Houston, noted that although Houston’s economy has diversified since the oil bust that rocked the region in the 1980s, about half the region’s economic activity is still affected by the oil industry.

“I don’t think we have seen any significant diversification,” he said.

If the price of crude oil settles at $50 a barrel, the city would narrowly avoid a recession. But at $40 it won’t, said Mark Zandi, chief economist at Moody’s Analytics, in an interview earlier this month.

Doesn’t that make you feel better? I don’t really have anything to add to this. For what it’s worth, I agree that this time around, it likely won’t be as bad as it was before. That’s not going to be much comfort to anyone who’s been or going to be laid off, or whose business will suffer, but it’s something. And if you’re one of those people who once sported a bumper sticker that said “Lord, please send us one more oil boom, we promise not to piss it away next time”, well, I hope you feel like you’ve lived up to that.

Use less, pay more

Ain’t utility deregulation grand?

More than 70 percent of electric plans offered in the Houston area contain terms that may penalize customers who don’t use a certain amount of power, according to a Houston Chronicle analysis of more than 300 plans available in early January.

NRG and other companies with plans that include the fees say they offer a variety of products designed to meet the needs of different kinds of customers. They also point out that fixed fees covering some of their overhead allow them to reduce the rates they charge per kilowatt hour of consumption.

Some plans charge minimum-use fees to customers whose monthly power consumption falls below a particular threshold – usually 1,000 kilowatt hours. Other plans offer credits to customers who exceed a specified threshold of power use.

“The market probably still has a way to go toward rewarding people for using less,” said Troy Donovan, market development manager at CenterPoint Energy Services, which runs a website called TrueCost that factors the fees into its analysis of electric plans. It is a division of CenterPoint Energy, the transmission company that distributes electricity in the Houston area regardless of what retailer sells customers their power.

Consumer advocates say minimum-use penalties discourage energy conservation at a time when environmental groups, all levels of government and even electric companies themselves are encouraging customers to scale back on energy consumption.

“These fees often go unnoticed until you really cut back and you realize you still have a larger bill than you expected,” said Jake Dyer, a policy analyst at the nonprofit Texas Coalition for Affordable Power. “It’s bad news for a lot of folks doing their best to save power and save on their electric bill.”

Even customers penalized for using less energy pay for energy efficiency initiatives: A $3.05 fee on monthly bills in the Houston area covers installation of technically advanced smart meters partly touted as energy-saving measures; the city of Houston last year raised residential energy-efficiency requirements.

[…]

About a third of the Houston-area retail providers the Chronicle examined listed no plans containing penalties or credits based on power use.

TriEagle Energy, based in The Woodlands, charges customers flat monthly fees – in addition to their electricity rate per kilowatt hour – but the fees aren’t tied to power consumption. Consumers are more likely to stay with the company if they don’t get surprises like minimum-use fees on their bills, said Kasey Cline, TriEagle’s director of sales and marketing.

Other retailers, how­ever, say the fees make sense.

Champion Energy Services uses them to cover fixed costs that it otherwise would roll into energy rates, said Brenda Crockett, vice president for market development and regulatory affairs. The company has to pay costs of billing and other services for all customers, she added, regardless of their electricity use.

Other companies echoed that response.

“There’s a cost to cover, whether they’re using 1 kilowatt hour or 1 million kilowatt hours,” said Robbie Wright, a founder of Bounce Energy, which also charges minimum use fees.

That argument rings hollow with Dyer, of the Texas Coalition for Affordable Power. “You don’t pay a minimum-use fee when you step into a grocery store,” Dyer said. “You don’t pay a minimum-use fee when you shop for any other product. Most businesses price their product in such a way that the people who actually buy it will pay for their fixed-cost infrastructure.”

Dan Wallach noted this feature back in 2013, in his annual report of choosing an electric plan for his house that year. There’s no logical reason for this – the companies do it because they can, because most people don’t read the fine print closely enough. Jake Dyer is exactly right, but in the absence of some kind of market regulation, or better educated consumers, they’ll get away with it. It’s easy to say that other companies could undercut the ones that do this on price and steal their business, but that isn’t what has happened. Maybe this Chron story will help, but I doubt any one story could. It will take a lot more outreach than that to penetrate the public consciousness.

The LGBT Wedding Expo

I love stories like this.

RedEquality

The Houston LGBT Wedding Expo at the Galleria-area JW Marriott, which was hosted by the North Carolina-based Rainbow Wedding Network, showcased venues and companies marketing to the growing number of same-sex couples.

With the LGBT community gaining visibility and gay-marriage bans toppling in several states, wedding events and services for same-sex couples are becoming increasingly popular. Since launching the Rainbow Wedding Network in 2000, co-founder Cindy Sproul and her life partner have seen attendance at their events and demand for them grow quickly.

Sunday’s event proved to be the organization’s second-largest event of the year with more than 750 reserved tickets.

While gay marriage is not legal in Texas, many couples still exchange vows here or travel out of state for a ceremony and return home for the reception.

“Our shows in areas where there is no marriage recognition for LGBT couples tend to have a higher turnout. If you think about it, we kind of take that awkwardness out for couples,” said Sproul. “When they walk in here, they’re planning a wedding, all those businesses that are there are very excited for them. They don’t get that if they go to a traditional bridal fair.”

I’ve noted before that the legalization of same sex marriage is a boost to the economy, and with stories like this you can see why. The longer the current fight over the constitutionality of Texas’ ban on same sex marriage is drawn out, the less Texas will ultimately capitalize on this effect, since more and more people will decide not to wait but will take advantage of what is legally available to them in other states, but it will still be a boon when it happens.

The first same sex wedding I ever attended was in 1996, between my friends Martha and Elisabeth. Obviously, it wasn’t a wedding in a legal sense, but it was a lovely and very traditional ceremony at one of the progressive Episcopal churches in Montrose. The brides found a clever hack for dealing with wedding registries, which of course required a groom’s name as part of the couple. Each registered as the bride at one of the locations where they wanted to register, and for the groom’s name they simply entered the first and middle initials and last name of their betrothed as the groom. Neither Dillard’s nor Bed, Bath & Beyond were any the wiser, and they reaped the benefit of their business while the guests enjoyed the convenience of the service they normally expected. Oh, and the world didn’t end and eighteen years later they’re still married, now in the official legal sense, in California. And I hope that someday soon people like them will be able to register together without going through any subterfuge just as straight couples do.

No gigafactory for Texas

They’re going to Nevada.

Nevada Gov. Brian Sandoval announced Thursday that Tesla Motors will build a massive battery factory in the state as long as legislators approve tax breaks and other incentives worth up to $1.3 billion over 20 years.

Sandoval revealed terms of the deal he negotiated with the electric car maker at a Capitol news conference attended by Elon Musk, CEO of California-based Tesla. The governor called it a “monumental announcement that will change Nevada forever.”

Sandoval didn’t mention the total value of the package and his remarks seemed intended to pre-empt critics who will see it as too generous.

“Is this agreement good for us?” the governor asked. “This agreement meets the test, by far.”

Later, he said that for every $1 Nevada gives up, the project will produce $80 in economic impact.

“Even the most skeptical economist would conclude that this is a strong return (on investment) for us,” Sandoval said.

Musk told the audience that Nevada didn’t offer the biggest incentive package among the five states that tried to lure the factory, though he didn’t specify which did among California, Texas, Arizona, New Mexico and Nevada.

The most important considerations were not incentives, he said, but rather a high confidence that the factory will be ready by 2017, followed by assurances that batteries can be produced cost efficiently.

Later, Musk told reporters that Tesla would stop looking for another state as a backup, in case Nevada did not come through. “Nevada is it,” he said.

Well, I’m a bit skeptical of that 80-to-1 return claim, but I’m not an economist, so there you go. Texas was in the running for this, but there was a big obstacle in the way.

Despite the state’s advantages, the company had indicated that Texas’ long-standing state laws protecting auto dealerships – a challenge to Tesla’s business model – did not help the state’s case. Texas laws prevent car manufacturers from selling directly to Texas consumers, as Tesla does. Texas requires manufacturers to sell their cars through tightly regulated franchised dealers. A few other states restrict Tesla sales through franchise laws, but Nevada is not one of them.

I’ve blogged about that before. I wonder if this will have an effect on the effort to change that law in 2015. Because of this, Texas was thought to not be a serious contender for the gigafactory. I won’t claim to be a big fan of the money that was being thrown at Tesla by the competing states, but there’s no reason to keep that archaic setup for auto sales. The Rivard Report, the LA Times, and Think Progress have more.

It’s a great time to be a construction worker

For most people, anyway.

On a conference call earlier this month, the president of Houston-based developer Camden Property Trust described what it’s like building apartments in markets where construction is booming and skilled workers are in short supply.

“It’s a catfight to get subcontractors to fully staff at your jobs,” said D. Keith Oden. He added, “It’s hand-to-hand combat.”

The labor shortage has become so severe that the company recently started putting guards on job sites to keep its workers from being poached by competitors willing to pay more.

“We’ve had specific instances where people would come on site and try to round up workers,” Camden’s chief executive Ric Campo said in an interview. “During the World Cup, we actually put big screens on our sites to get people to stay.”

[…]

[Pat] Kiley, principal of Kiley Advisors said licensed trades are in high demand: “electrical, mechanical, plumbers, sheet metal workers, iron workers, operating engineers, certified crane operators. These are all crafts in short supply,” he said.

Labor unions are recruiting workers.

“You’re getting people moving here from out of state like they did in the ’60s, ’70s and ’80s,” Kiley said. “The unions have brought in people.”

Ed Vargocko, business manager of the Iron Workers Local 84, said the amount of construction taking place in the Houston area is attracting workers from other parts of the country where development remains slow.

“A lot of them come from California and quite a few from Detroit,” he said.

In some cases, the shortage is evident in higher wages.

Between the first quarter of 2010 and the first quarter of 2014, the average weekly wage in the local construction industry rose 24.5 percent, Jankowski said, citing the Quarterly Census of Employment and Wages. That’s higher than the 19.9 percent boost in the overall average weekly wage here over the same period.

The wage and benefit package for millwrights will increase by 4 percent for each of the next few years, Donahou said.

“It’s a strong market out there,” he said. “Everybody’s going after the same people.”

Still, a segment of the construction worker population, mostly immigrants, is underpaid and facing other problems.

A report on the challenges facing the construction industry in Texas, released last year by the Workers Defense Project and the University of Texas, found that the state’s construction industry is characterized “by dangerous working conditions, low wages, and legal violations that hurt working families and undercut honest businesses.”

The report cited a widespread practice of payroll fraud, where more than 40 percent of construction employees were misclassified as independent subcontractors.

In such cases, employers avoid paying payroll and unemployment taxes and workers are deprived of overtime and other employment benefits.

That gives an unfair cost advantage to companies that don’t abide by employment rules, said construction veteran Stan Marek, CEO of the Marek Family of Companies.

The report cited is here. It’s yet another reason why comprehensive immigration reform is so desperately needed, and another reason why I cannot fathom how business interests can say with a straight face that they support CIR while continuing to support the politicians that oppose it. But in a state where employers can legally lie to their employees, I suppose such duplicity isn’t that surprising. Anyway, it sure would be nice if this kind of leverage for workers made its way to other industries as well. After decades of stagnant wages, we could all use it.

AirBnB in Houston

When people talk about “the sharing economy” for good or ill, the main players that get named tend to be Uber, Lyft, and AirBnB. We’ve heard a lot about the first two in Houston lately, but prior to this Chron story I can’t say I’d heard anything about the latter.

Airbnb launched in 2009 as a way for those with extra space to connect with travelers looking for an alternative to traditional hotels, in the same way that Uber and Lyft help people turn their cars into temporary taxis. In November 2013 Airbnb chief technology officer Nate Blecharczyk reported that more than 9 million users, or “guests,” have now stayed in AirBnb rentals, up exponentially from the 4 million bookings that the start-up recorded in its first four years of business.

“I had a roommate, and when she moved out instead of going through the whole process of finding a new roommate, I had extra furniture so I thought I would give it a shot,” said Crystal Lee, who has been renting a room in her Montrose house on Airbnb since 2012.

“Everything is yours, so I think people are a lot more respectful of that,” she said. “With roommates, people get used to leaving their stuff everywhere and not caring. When you have a house guest, people tend to be polite. It’s kind of fun to play tour guide and tell people where to go and what to do.”

[…]

Airbnb is most popular in cities that attract a lot of tourism and where hotel prices and rents are high. Austin, with less than half of the population of Houston, boasts nine times the number of Airbnb properties that Houston lists. That’s partly because downtown Austin has only 6,000 hotel rooms, not nearly enough for major events like Austin City Limits and South by Southwest. The fact that Airbnb has made a major push for publicity at recent SXSW festivals – including a promotional park featuring live music and display rooms designed by musicians like Snoop Dogg – could also be a factor.

Houston, on the other hand, has nearly 75,000 hotel rooms in the metropolitan area. According to tourism data compiled by the Greater Houston Convention and Visitors Bureau, a higher than average percentage of visitors are here visiting family or on a business trip, implying that they already have a place to stay or that hotel price is not of primary concern.

Houston is also one of only two cities in the U.S. where the average hotel rate per night is lower than renting out an entire house or apartment on Airbnb, according to the website Priceonomics. (The other city is Las Vegas.)

Cheap, plentiful hotel rooms haven’t made a dent in the demand for Airbnb hosts though. Anderson says her property is booked about 75 percent of the time, and Wright, who only makes her house available on weekends when she is heading to family homes in Tiki Island or La Grange, says she turns down more offers than she accepts. The process has been so successful for Lee that when her job relocated her to New York earlier this year, she kept her Houston house and still rents out the extra room.

While Houston might be lacking in traditional tourists, many Airbnb guests are people who are planning to move to the city and want to get a feel for the different neighborhoods. Others, particularly international travelers, stop in Houston while on cross-country trips as a break between the frenetic nightlife of New Orleans and Austin. Internships, job interviews, weddings and family visits are also commonly cited reasons for a Houston Airbnb stay.

It’s an interesting contrast with Austin. I know several people who have made an envy-inducing amount of money renting their homes via AirBnB for South by Southwest. I suppose the difference between “normal” level of demand for hotel space in Austin and the peak level that happens when SxSW is happening is such that AirBnB makes a lot of sense to fill the gap. I seem to recall there being a few stories about people leasing their homes for outrageous amounts in Houston during the last Super Bowl for similar reasons. I get why people have concerns about the effect of companies like Uber and Lyft on employment opportunities in the industry they’re entering. I think those concerns are valid even as I support allowing Uber and Lyft into currently regulated vehicle for hire markets. I don’t see the same concerns about AirBnB, however. There’s no barrier to entry in the hotel market like there has been in many cities in the taxi market, and there’s no general complaint about the way the hotel business is run like there is for taxis. A ride is a ride, but there’s a vast difference between a Motel Six room and one at the Ritz Carlton, or a traditional bed and breakfast and a resort hotel like the Hyatt Lost Pines. Uber and Lyft could conceivably upend the existing taxi industry, but I don’t see AirBnB as being anything more than a niche. What do you think?

More on the Postal Service as financial service provider

I still think it’s a good idea, and so do a lot of other people.

The Postal Banking Consumer Survey [PDF] asked more than 1,600 consumers, many of whom do not have access to traditional banking services, whether or not USPS should enter the banking arena.

Most consumers, about 63%, reported that the addition of services, such as bill paying, check cashing, and small-dollar loans, would not matter to them.

However, a majority, about 58%, of consumers support the argument that providing financial services at USPS branches would expand access to safe financial products for low- and middle-income Americans while providing a new sources of revenue for the Postal Service.

Nearly 64% of consumers who identify as using alternative financial services believe the expansion of safe financial services would be beneficial to both consumers and the postal service.

Conversely, only 32% of those surveyed said they believe that providing financial services at Postal Service branches would divert resources from mail delivery and give the government-run Postal Service an unfair advantage over privately-run companies that already offer financial services.

“There is a market here but it’s limited,” Alex Horowitz, research officer for Pew Charitable Trusts, says. “When we look at people who already are using alternative services it changes. There is quite a bit of interest for lower-cost services among those who already use alternative services.”

[…]

Consumers who currently use alternative financial services were more likely to use lower-cost services though their local post office branch.

Nearly 46% would use check-cashing, 27% would purchase prepaid cards, 46% would use bill-pay services and 41% would consider payday loans through the postal service.

See here for the background. We all know that payday lenders are a big issue for a lot of people, but so are things like check cashing services, mostly because of the large fees they charge. The point of this idea is that the Postal Service could be a lower cost provider of conveniences like check cashing and bill paying. Another advantage of using the USPS for this is that there are post offices everywhere.

The USPS Office of Inspector General first made the case for expanding into financial services this January, calling itself “well positioned” to meet the needs of underserved Americans. It didn’t take long for the idea to garner attention from high-profile legislators like Sen. Elizabeth Warren, (D-Mass), who joined other lawmakers and experts at a Pew conference Wednesday to debate the merits and pitfalls.

There’s consensus on the easy part: the problem. Most people agree that an astounding number of Americans live outside the mainstream financial system and this often has a negative impact on their financial lives and futures. In total, they comprise a quarter of US households and spend tens of billions on fees and interest each year. To put this in perspective, Warren likes to point out that these Americans spend as much money on financial services as they do on food, which is to say they spend $2,412 a year per household, or roughly 10% of their income.

Clearly the big question that remains is whether the post office is the right vehicle for delivering change.

Postal services in dozens of other countries, including Japan, Switzerland and the UK, already do it. Many make big money from it. The USPS itself offered a savings program for over fifty years, but discontinued it in 1967.

One thing the post office has going for it is an extensive brick-and-mortar network, with over 30,000 locations in nearly every zip code. While there are three times as many bank branches, they don’t cover as many zip codes. In Montana, as in many rural places, “you can find yourself more than 75 miles from the nearest bank branch,” but close to two or three post offices, says Pew’s Clint Key. There’s a term for this: bank desert. Indeed, Pew found that 10% of census tracts (neighborhoods, essentially) don’t have a bank branch within five miles, but most do have a post office close by.

The problem is getting worse, not better, for America’s underserved families. Since 2008, 93% of bank branch closings have been in zip codes with below-national median household income levels. Meanwhile, banks have been opening branches in areas with median incomes above $100,000.

The post office also touts its trusted brand, saying consumers who walk in to any location would know they were getting safe, simple financial products. A Pew finding shows that 71% of people view the US Postal Service favorably, compared to 9% for payday lenders, 21% for check cashiers and 56% for banks.

“This is an opportunity for the post office to use its space and its employees more efficiently to bring needed services to more Americans,” said Warren.

If the post office were to get into banking, it wouldn’t just be out of the goodness of its heart. It estimates a revenue of $8.9 billion each year. If true, this is a big deal for an agency in crisis. The post office loses money every year. Thanks to the internet, mail volume has plunged 22% over the last five years. Meanwhile, the USPS is struggling with a Congressional edict that it pre-fund employee benefits.

“This is an existential crisis,” said James Gattuso, senior research fellow in regulatory policy at the Heritage Foundation.”The postal service needs a new line of business.”

Sure seems like a good fit all around. Getting into the short-term loans business is another matter, as it’s inherently risky and would require Congressional approval, which these days is nigh impossible to achieve. Still, this has the potential to do a lot of good for a lot of people. It’s worth serious consideration.

CFPB makes its presence felt in Texas

Good for them.

Texas-based payday lender ACE Cash Express has agreed to pay $10 million to settle allegations by the federal Consumer Financial Protection Bureau that it used harassment and other illegal tactics to push borrowers into a cycle of debt.

Under the agreement, the company, one of the nation’s largest payday lenders, will pay $5 million in refunds to consumers and will also pay a $5 million fine, the bureau said Thursday.

“ACE used false threats, intimidation and harassing calls to bully payday borrowers into a cycle of debt,” bureau Director Richard Cordray said in a statement. “This culture of coercion drained millions of dollars from cash-strapped consumers who had few options to fight back.”

Supporters of payday lending say it offers a needed service to consumers who have few options for short-term loans. Critics say the companies prey on struggling people by charging high fees and trapping borrowers in a cycle of debt.

Nice. The CFPB has been making noise about payday lenders for awhile, with some new regulations still to come. Hey, if you’re not lucky enough to live in a city that has passed a payday lending ordinance, the CFPB is what you’ve got. More like this, please.

Good times for the craft brewers

There’s a lot more growth to come for the craft brewing industry.

beer

Texas’ smaller craft breweries increased production last year by nearly half and made deeper gains in the overall beer market, suggesting the industry’s growth spurt will continue.

“Yes, this is a long-term trend,” said Charles Vallhonrat, executive director of the Texas Craft Brewers Guild. “Do I think we’re approaching a saturation point? No.”

The guild on Tuesday is releasing figures showing Texas craft breweries made 833,191 barrels of beer in 2013, an increase of 17.6 percent. When the Spoetzel Brewery in Shiner, maker of Shiner Bock and other widely distributed beers, is excluded from the list, the remaining crafts saw their production mushroom by 44.3 percent, to a combined 265,958 barrels.

Biggest among this group of 98 breweries is Houston’s Saint Arnold Brewing Co., which expects to brew at least 65,000 barrels as it commemorates its 20th anniversary this year.

A barrel of beer would fill 55 six-packs of 12-ounce cans or bottles.

“That’s what people think of beer now,” Saint Arnold founder Brock Wagner said of the public’s evolving attitude. “It’s not just mass-produced light lager.”

[…]

As a percentage of the total beer market, the craft numbers seem tiny. Last year, the 98 smaller crafts that reported to the Brewers Association trade group produced 1.36 percent of the beer sold in Texas.

But that is up from 0.93 percent a year earlier. Vallhonrat said the rapid increase proves demand is growing, while the small market share indicates there is plenty of room for growth. Even including the much larger Spoetzel brewery, Texas craft beer accounted for less than 5 percent of the beer consumed in Texas.

“Texas is just a really big, big beer market,” he said. “There’s tremendous opportunity for growth in Texas.”

The Brewers Association reports that U.S. craft production rose 18 percent last year, to 15.6 million barrels. The Texas guild notes that means Texas produced 5.3 percent of the total.

The guild hopes to mirror the Brewers Association’s goal of doubling U.S. market share by 2020. On a national level, bolstered by record numbers of new breweries and the emergence of several very large players in the craft segment, that would mean increasing market share to 20 percent by that year.

“As the BA doubles, we’d expect this number (in Texas) to double as well,” Vallhonrat said.

The fact that the craft brewers’ overall share of the market is still in the one percent range shows the potential for more growth. There are still tons of beer drinkers out there that haven’t really given the non-major alternatives a try. I don’t know what the saturation point is, but I feel confident as well that it’s a fair bit higher than this.

The big dog of craft brewers in Houston, Saint Arnold, is celebrating its 20th anniversary this month, and they get a feature story on their history and outlook to help celebrate it.

As Wagner likes to joke, in 1994 he had a great idea for a business in 2006. Except for a hard-core group of enthusiasts, many of them homebrewers, most of them male, college-educated and in their 30s or 40s, consumers were initially reluctant to part with their light, familiar beers in large numbers.

“It took 20 years to teach everybody who had forgotten what beer was like,” Wagner said.

In 1996, Wagner and original business partner Kevin Bartol, both former investment bankers, predicted in the Houston Chronicle that they would be making 100,000 barrels within a decade. In reality, sales flattened at just over the 5,000-barrel mark for the next few years.

Twelve years later, production exceeded 20,000 barrels for the first time.

Wagner stuck it out, buying out Bartol, repurchasing shares from initial investors and building Saint Arnold into an iconic local brand through its Saturday tours, pub crawls and an array of community fundraising projects. His and Bartol’s goal from the beginning, he says, was to make the best beer possible and to build a company that Houston and the state of Texas would be proud of.

By late 2009, business was booming and Saint Arnold was constrained only by physical space. That’s when Wagner moved his brewery into a renovated warehouse overlooking downtown, even though it would’ve been cheaper to buy a custom-built building outside the city center. But again, he said he wanted to create a community gathering point. Again, his decision paid off.

Wagner took on investors to raise enough capital to convert the century-old warehouse into a modern brewing facility with a huge beer hall that serves lunch daily, packs in crowds during tours and special events and is rented out for private parties. The brewery attracts an estimated 100,000 visitors annually.

The new digs also significantly increased capacity. Production is expected in the range of 65,000 to 70,000 barrels this year, boosted not only by consumer demand but also by changes in state law last year that Wagner had pushed for over several legislative sessions. Those production numbers are expected to continue to grow.

Read the whole thing, it’s a nice story about a great local business. I don’t remember exactly when I first discovered Saint Arnold beers, but it was back when their Saturday tours were free and a lot smaller than they are now. I never liked the taste of the big mass-produced beers, and after coming to Houston and becoming acquainted with Shiner while I was at Rice, I never looked back. I’ve been delighted by the success of the small brewers, and as you know I was extremely pleased by the long-awaited passage last year of legislation to help free up their operations. There’s still work to be done in that regard – one item on their wish list is being able to sell bottled beer to customers on their premises – but we’re making progress. This KUHF story on Saint Arnold’s 20th anniversary sums it up in a pithy little way:

A 2012 study prepared by the Texas Craft Brewers Guild puts the industry’s economic impact on the state at more than $600 million per year. The trade group says that’s likely to increase nearly tenfold by 2020. That’s thanks in part to reforms passed by the Texas legislature last year, loosening the state’s restrictions on marketing and distribution for small brewers.

Scott Metzger, founder of San Antonio-based Freetail Brewing, recently addressed the House Economic & Small Business Development Committee on behalf of the Brewers Guild. He says more reforms are needed to help Texas brewers to compete with those in other states.

“Just to make it clear, if the breweries of Texas were regulated by the laws of California, we would be worth more,” Metzger testified.

Take that, Rick Perry.

It’s not Tesla that’s asking for special treatment

A couple of auto dealers take to the op-ed pages to argue that up is in fact down.

The motor vehicle franchise laws in place do not in any way hinder innovation; instead they foster the competition that benefits consumers.

One motor vehicle manufacturer, Tesla Motors, has been seeking an exemption from the franchise laws that require new motor vehicles sold in Texas be sold through a franchised dealer. Franchise laws exist to prevent monopolies and promote competition in vehicle pricing and service to the consumer, provide for the efficient distribution of vehicles and service across the wide geographic area that is our state, and provide a local presence where Texas consumers can have service, warranty and recall work performed even in cases when a manufacturer ceases to do business.

Nothing in state law is currently preventing the delivery of new Tesla vehicles from California to the citizens of the state of Texas who wish to purchase them online. Nothing in state law prevents Tesla from using the exact same model it is using today, with gallery stores and service facilities at other locations, so long as any retail presence is operated through a franchised dealer of Tesla’s choosing.

As business owners, we can tell you first-hand that franchised motor vehicle dealers in Texas are more than eager to help Tesla succeed. In fact, numerous Texas dealers have contacted Tesla seeking an opportunity to retail their vehicles subject to Tesla’s desires. Not only will the franchised dealer absorb any capital outlays required for the Tesla model, but we also believe the franchised dealer can help Tesla sell many more vehicles over the long term.

Increased sales volume without the cost burden is a winning business model, which is why every other major auto manufacturer who sells in Texas participates in the model (not to mention those who already sell electric vehicles).

So why the request for special treatment just for Tesla?

Considering the value of the consumer-protection based system currently in place and the fact that Tesla Motors now has the opportunity to sell its cars to Texans, we do not see any compelling rationale to provide special treatment for Tesla. Other manufacturers produce electric vehicles.

See here and here for the background. Sorry, but it’s the dealers that are asking for special treatment by forcing Tesla to include them in their business model. Plenty of manufacturers are allowed to sell directly to customers. I get the dangers of vertical integration, but the existence of Apple stores doesn’t seem to have hindered innovation in the smartphone market. How would letting Tesla sell directly to customers affect innovation in the automobile market? Frankly, if anything I’d expect it to spur innovation, as it might force a reconsideration in how cars are marketed, sold, and maintained. I’m sorry, but someone who doesn’t benefit from the current setup is going to have to explain to me why it shouldn’t be changed for me to accept the plausibility of that argument.

Retail medical clinics

I for one think they’re a good idea.

Here’s a prescription for pediatricians fighting to keep easy-to-treat, well-paying patients: Expand after-hours and weekend services to serve desperate parents in search of quick remedies for their kids’ late-night sore throats and upset tummies. Otherwise, parents will continue choosing the closest CVS, Walgreens or H-E-B clinic.

With the store-based medical clinic business projected to double between 2012 and 2015, analysts and doctors say pediatricians must change their business model to fit parents’ needs. Otherwise, they risk losing their relatively lucrative patients and relying more on chronically ill ones who take longer to diagnose and treat and thus reduce the number of people that doctors can see in a day.

“Well-baby cases help compensate for a Medicaid enrollee who takes half an hour,” said Devon Herrick, senior fellow at the Dallas-based National Center for Policy Analysis. He added that the speed and convenience of retail clinics attract many of the better-paying cases, and doctors are working to keep from losing them.

Despite clear demand in the market, doctors have for years targeted retail clinics for criticism. They argue that doctors best understand their patients’ needs and provide the best care. Most recently, the American Academy of Pediatrics urged parents to avoid store-based health clinics, saying they don’t provide the high-quality care children need.

However, the nation’s leading professional organizations for doctors repeatedly have said there aren’t enough doctors to treat everyone now and won’t be in years to come. The American Academy of Family Physicians projects a shortage of 40,000 doctors nationwide by 2020. Texas already has a ratio of about 165 doctors for every 100,000 residents, which falls below the national average of 220 physicians for every 100,000 people.

“It’s about competition,” said Dr. Kaveh Safavi, global managing director of Accenture health business, adding that retailers came up with the idea for “embedded clinics” because people needed them.

He described pediatricians’ concerns with retail clinics as a “short-term skirmish” that doctors have been waging for years.

[…]

Texas Children’s Hospital’s chief medical officer, Dr. Stan Spinner, recently posted in a hospital website blog that retail clinics employ providers who lack proper training and experience treating children.

“As a pediatrician for more than 25 years, I’ve seen firsthand the inadequate care these clinics can provide,” Spinner wrote. “Numerous patients have come into our Texas Children’s pediatrics practices after visiting a retail-based clinic the night before questioning the medication or dosage they had received.”

When asked to elaborate later, Spinner said he didn’t know how many such incidents had occurred. He said parents waste time and resources at retail clinics and then follow up with pediatricians to ensure children received the correct treatment.

“(Pediatricians) should have seen them the very first time,” Spinner said, adding that some pediatricians are expanding their office hours and working weekends to accommodate patients.

All due respect, Doc, but there are bad physicians out there, too. I’d take your complaint more seriously if we had a more effective means of policing them, but between tort “reform” and the impotence of the Texas Medical Board, there ain’t much that can be done. Be that as it may, my own anecdotal evidence favors the retail clinics. A few years back, what I had figured was an insect bite on my left foot had turned into something painful and alarmingly swelled on a Saturday morning. With my alternatives being a visit to the emergency room and a fervent wish that it wouldn’t get any worse by Monday, I visited a clinic at the HEB on Bunker Hill. They prescribed some meds that did the trick, and by the time I did see my doctor on Monday, my foot looked mostly normal again, and he agreed with their diagnosis. Faced with the same situation again, I’d have no hesitation to pay them another visit.

One more thing:

Retail clinics revolve around a high-volume, low-complexity business model. Services usually range from $59 to $99. They include convenient and basic care – physicals, disease monitoring, vaccinations, and illness and infection diagnosis and treatment. The clinics usually employ nurse practitioners and physician assistants, who are less expensive than doctors.

[…]

Retail clinics will hold nearly 11 million visits annually, saving about $800 million in unnecessary emergency care costs, Accenture said.

One of the dirty secrets of health care and the amount that we spend on it is that controlling our health care costs necessarily means paying less money to doctors. It’s more complex than that, of course – prescription drug costs and a lack of transparency in pricing are other big factors – but in the end, less money being spent by consumers means less money being paid to providers. Given that there’s a shortage of general practice physicians anyway, more retail clinics and a greater use of advanced practice nurses are both modest steps in the right direction. Doctors are going to have to learn to live with that.

Uber uber alles

Very interesting.

Uber rolled out a new service in Manhattan [last] Tuesday that foreshadows the five-year-old company’s plans to become much more than a platform for e-hailing taxi and town car rides. Now, with UberRUSH, the company is piloting a bike and ped-courier service designed to move stuff, rather than people.

For at least $15 a trip, Uber wants to dispatch couriers to ferry everything from legal papers to fashion pieces around Manhattan below 110th Street (for now).

The new service signals the company’s expansion beyond local transportation and into the much larger world of urban logistics. And it’s a savvy play for several reasons: The same back-end technology that Uber has built to track drivers and connect them to riders can easily be used to order and follow deliveries. All that changes is the cargo on board and the mode of transportation, a detail around which the company is becoming increasingly agnostic.

These bigger ambitions bolster Uber’s claim that it is not, by definition, simply another kind of cab company. Most importantly, though, Uber foresees — as Amazon and eBay do, too — that the next growth opportunity in a shifting economy isn’t facilitating digital marketplaces: It’s moving physical stuff. It’s figuring out urban logistics in a world where crowded cities will only become more so, where e-commerce is actually making congestion worse, where the rise of “sharing” has created a need for coordinating the mass joint use of cars, tools, tasks and dinner.

[…]

Logistics are the logical companion industry to the sharing economy. As the latter grows, so will need for the former. Logistics also represent the unresolved territory of the digital age. The Internet has solved all kinds of other problems: It’s enabled us to communicate faster, to pay bills more easily, to shop for products that can’t be found in local stores, to open businesses that couldn’t cover the rent on a brick-and-mortar storefront. But for all those interactions that take place in the ether, we still need to move stuff in the real world. Your Airbnb keys can’t be e-mailed. You can rent a drill bit on SnapGoods, but an online platform can’t physically deliver it to you.

I don’t have anything to add to this. Frankly, the whole thing was just an excuse to use that headline. Nonetheless, this is very interesting, and if it’s successful we’ll see when it or something like it comes to Houston. TechCrunch has more.

Regulating Bitcoin in Texas

Bitcoin regulations. We have ’em.

Texas will not treat Bitcoin and other virtual currencies as legal money, according to a new memo from the Texas Department of Banking. Yet some companies that deal in Bitcoin transactions could draw state oversight, even if they are based outside of Texas.

Texas Banking Commissioner Charles Cooper issued a memo this month outlining the agency’s policies involving virtual currencies like Bitcoin.

“At this point a cryptocurrency like Bitcoin is best viewed like a speculative investment, not as money,” Cooper said in a statement.

In his memo, Cooper provided reasoning that echoed the IRS. Last month, the federal agency announced that, for tax purposes, it would treat Bitcoin as property instead of currency because no government recognizes the virtual currency as legal tender.

“Because neither centralized virtual currencies nor cryptocurrencies are coin and paper money issued by the government of a country, they cannot be considered currencies under the statute,” Cooper’s memo reads.

While Texas does not have a state income tax, the state’s Department of Banking does regulate certain financial transactions and license financial institutions. An exchange of Bitcoin for U.S. dollars between two parties would not draw the agency’s interest, according to the memo.

But some third-party Bitcoin exchanges are already drawing state scrutiny because of the way they handle transactions involving U.S. currency and Bitcoin, according to Daniel Wood, assistant general counsel at the Department of Banking. Cooper’s memo states that such exchanges are involved in “money transmission” because they act as an “escrow-like intermediary” that holds onto a buyer’s funds “until it determines that the terms of the sale have been satisfied before remitting the funds to the seller.”

Such exchanges do not need to be based in Texas to fall under the state’s regulations, Wood said. “If they do business with Texas consumers, we can force them to get a Texas license,” he added.

I’ll admit, I had no idea there was a Texas Department of Banking. I don’t know what effect this will have, but I suppose it’s good to be one of the pioneers in setting this sort of regulatory framework. I personally think that Bitcoin is more toy than currency, though I could see it maybe being useful for campaign contributions. Assuming all disclosure and other requirements are met, of course. What do you think about this?

Tesla’s stealth visit to San Antonio

May mean something, or it may not.

A pair of executives from Tesla Motors Inc., the electric carmaker that’s scouting a location for its planned $5 billion “gigafactory,” secretly met here Wednesday with top city and county officials, a person close to the discussion said.

The meeting came less than a week after the San Antonio Economic Development Foundation submitted a proposal to the Palo Alto, Calif.-based manufacturer for the factory, which will produce lithium-ion batteries for Tesla vehicles and battery storage units for use in homes, commercial sites and utilities.

While details of what local officials offered Tesla weren’t available, the proposal included a separate section for CPS Energy, positioning the city-owned utility as a potential partner for the company.

“It appears San Antonio is back in the game for the project,” the source said, acknowledging the city’s chances had seemed to be remote — until recently.

[…]

A Tesla plant, which the company wants producing battery packs within three years, would need between 500 and 1,000 acres with 10 million square feet of production space. The factory would create 6,500 jobs.

The company has said that with its partners, it plans to produce 500,000 lithium-ion batteries annually by 2020.

Late Tuesday, Castro used Twitter and Facebook to stake out his position on a state law that prohibits Tesla from selling its all-electric vehicles directly to Texas customers.

“Today, Tesla is prohibited from selling its cars directly to consumers in Texas. State law requires that they be sold through a dealer. I respect our state’s auto dealers, but that law ought to change,” Castro wrote on Facebook. “That’s like telling Apple it can’t sell its products at an Apple Store but has to sell them through Best Buy or Walmart instead. Makes no sense.”

In a Wednesday interview, he said he agreed with Gov. Rick Perry that the law should be changed. Lucy Nashed, a spokeswoman for the governor’s office, confirmed Perry has no plans to call a special session to address the issue.

It’s unclear whether that’s a deal breaker for Tesla. Arizona lawmakers currently are deliberating changes there that would allow Tesla to circumvent dealerships and sell directly to the public.

See here for the background. I will note that even if Perry called a special session to address this issue there’s no guarantee a bill would pass. The Texas Automobile Dealers Association pushed back pretty hard on this during the last legislative session, and they surely won’t go away any time soon.

Chances are excellent that Red McCombs could get Gov. Rick Perry on the phone.

So I asked the San Antonio billionaire last week if he’d called the governor about safeguarding the state law requiring automakers to sell their vehicles through franchised dealerships, the bedrock of McCombs’ empire.

[…]

As one of the state’s biggest auto dealers, McCombs has a dog in this fight, and he’s a big-time Perry supporter. Just since 2008, he’s written checks totaling at least $302,500 to Perry’s gubernatorial and presidential campaigns.

So the question about calling Perry didn’t seem weird. But it did turn out to be awkward, for me anyway.

A couple of long seconds of silence on McCombs’ end of the phone line.

Then the 86-year-old answered in a low rumble: “No … Why would I?”

In other words, he saw no need. In fact, earlier in the interview, McCombs had talked about the franchise law as immutable.

“That is as set in stone as it can be,” he said. “It’s as sacred as Paul’s letter to the Corinthians.”

[…]

Even with the tantalizing prospect of the gigafactory, [Rep. Lyle] Larson thinks a measure allowing Tesla to make direct sales in Texas would fail once again.

“I do not see the chance for an option allowing Tesla to sell direct,” he said. “I don’t see any appetite for it.”

Yeah, you could say that. Unlike the microbreweries, my go-to analogy for Tesla, the number of people that have used Tesla products is very small, basically negligible in comparison to the existing players. I just don’t think they have the lobbying muscle or the grassroots support just yet to overcome the resistance they’re going to get from TADA and the many people who will be naturally sympathetic to the status quo. I absolutely think it will happen eventually, but it will take time and outreach on their part to familiarize people with what they’re asking and why it’s a good thing. The battery plant story is a great start, but that’s all it is. Besides, as Jalopnik notes, the proposed factory Tesla wants to build is itself no sure thing. Assuming it is, Tesla is going to have to decide where to build that factory without any assurances from Texas that the laws about selling cars will be changed. There just isn’t the time for it.

No more wobbly tables!

I love this story.

A Houston businessman has an idea that could rid the world of having to use drink coasters and napkins to stabilize restaurant tables.

Steve Christian, owner of Houston burger institution Christian’s Tailgate Bar and Grill, believes so strongly in his invention that he sold interest in two of his restaurants, spent hundreds of thousands of dollars, and is auditioning to get on an ABC reality show to make it succeed.

He says his patented device simply eliminates wobbly tables. It’s a catchy claim for something that costs around $20.

“Something I built in my garage outlasted everything else on the market,” Christian said of his Table Jack.

The invention, now being sold online, is already used at a number of Houston-area restaurants, including El Real Tex-Mex Cafe in the heart of Montrose and Mi Luna in Rice Village. The jack is also in use at a number of national restaurant chains, listed on the device’s official website.

[…]

The genesis of the Table Jack came when he opened his Midtown bar in the late ’90s and found that the flooring made tables unsteady. It took eight years and seven or so prototypes to get the jack that he has on the market today. The first jack debuted in Midtown in late 2008.

The device requires the installation of three glides to the bottom of three of the feet of a pedestal table. A small jack with a foot pedal is installed on the fourth foot. It allows for the table’s level to be adjusted as needed by stabilizing the three glides.

“I’ve probably spent thousands of hours engineering the jack,” Christian said. “And that number probably doesn’t do it justice.”

This is one of those “Why didn’t anyone think of this before?” stories. As someone who is easily annoyed by wobbly tables, I think this is a great idea. I hope he sells a billion of them.

Craft beer: Still good for your economy

Yet another study says so.

Texas ranks second only to California in the economic impact derived from craft brewing, a report from the Brewers Association says.

This burgeoning class of smaller, independently owned craft breweries, along with their distributors, retailers and bar/restaurant workers, added $2.3 billion to the Texas economy in 2012, the report says.

That’s part of an estimated $33.9 billion national number cited in the report, which the industry group said measures “the total impact of beer brewed by craft brewers as it moves through the three-tier system (breweries, wholesalers and retailers), as well as all non-beer products that brewpub restaurants sell.”

The Brewers Association said the nation’s 2,000-plus craft breweries and brewpub restaurants sold 13.2 million barrels of beer with a retail value of nearly $12 billion during 2012.

[…]

The Texas Craft Brewers Guild hailed the Brewers Association findings as confirming its own assessment last year that craft brewing could be upward of a $5.6 billion industry here by 2020.

The guild noted that Texas ranked fourth among the states in the number of craft-related jobs and third in “labor income produced from craft breweries through direct and indirect economic impact.”

It also found positive news in the state’s No. 34 ranking for per-capita economic impact.

“This finding clearly demonstrates … there remains significant room for growth for the Texas craft beer industry,” the guild said in a statement.

You can see the study here, and the Texas Craft Brewers Guild’s statement is here. The TCBG has done its own study with similar findings. You can see it with your own eyes – craft beers are on the menu at restaurants all over town, local microbrewers are expanding, and as a general rule new startups do a lot of hiring as they expand. I don’t think the market is anywhere near saturated yet. Keep on keeping on, y’all.

One thing Wal-Mart could be good for

They could wreak havoc on payday lenders.

Raj Date says that with modern data analysis banks could offer payday loans on much less extortionate terms. Felix Salmon retorts that banks don’t actually want to do business with poor people unless they can scrape them for high fees. Otherwise the costs of dealing with the accounts exceeds the profits to be made by having them as customers.

The solution to this problem, I think, would be for banking services to be performed by a firm that already has low-income clients and would have an interest in increasing its level of engagement with them even if the payday lending operation wasn’t profitable per se. In a word, you need Wal-Mart. A few years back, Wal-Mart started offering check-cashing services that were much cheaper than the prices charged by stand-alone check-cashing places. And it’s no surprise that this worked. If your whole business is cashing checks, then your check-cashing fees have to be high. But if check cashing is basically just another way to get people in the door of your store, then it makes business sense to offer attractive terms. Wal-Mart once applied for a banking license and was turned down so it can’t lend money. But if low-end retail chains were allowed to get bank charters, you could imagine one or more of them wanting to offer discount payday lending services for similar reasons—it’s a great way to get customers in the door at a time when you know they have money to spend.

The embedded link about Wal-Mart in the check cashing business is worth reading. For that and for the payday lending industry, having WalMart come in and crush the existing players with the force of low prices would be a good thing. Frankly, letting Wal-Mart have a banking license, which would immediately give access to basic checking and savings account services for millions of adults that don’t currently have them. That could have a major effect right here in Houston.

The Houston area is now the sixth-most unbanked major metropolitan statistical area in the country, as 11.9 percent, or 264,000 households in the region, do not have access to a bank account, according to the Federal Deposit Insurance Corp. About 8.2 percent of U.S. households are unbanked.

It’s also the fifth-most underbanked major metro in the U.S., meaning the 28.4 percent, or 630,000 households, that fall into this category have bank accounts but rely heavily on alternative financial products, such as payday lending.

Even after the city of Houston in 2009 established Bank on Houston, a program to draw the unbanked to bank accounts, the numbers of the city’s unbanked and underbanked have increased. In 2009, when Houston was the seventh-most unbanked metro area in the U.S., 10.5 percent of the city’s households were unbanked and 21.4 percent were underbanked.

“Part of it is the population increase,” Alexander Obregon, special projects coordinator for the city controller’s office and chair of the financial education committee for Bank on Houston. “There aren’t enough service providers out there that can reach all the people who need a financial education. Houston’s population continues to grow, and demand for its safety-net services continues to grow,” outpacing the growth of those services, he said.

Roger Widmeyer, spokesman for the Houston controller’s office, added that the unbanked can be a challenging demographic group to draw to the financial services industry, as many have a generational or cultural distrust of banks.

“Houston is a mecca for skilled labor, and many of these folks get paid in cash, and they prefer it that way,” Widmeyer said. “We’re attracting a lot of new residents who are coming here without a bank.”

I’m willing to bet that if Bank On Houston could partner with Wal-Mart, that would make a major dent in those numbers. Hey, I dislike and distrust Wal-Mart as much as the next liberal do-gooder. No question, Wal-Mart is evil. Compared to the payday lending industry, though, they’re clearly the lesser evil. I’m not particularly sanguine about a legislative fix for payday lending, and while the city of Houston is likely to take action to restrict payday lending here, that can only cover the city. Bigger action than that is needed. I say let WalMart come in and squeeze all the profit out of payday lending. That’s one industry where there’s no downside to lower prices.