Archive for April, 2017

Fed brings economic insights to Boerne

Investors in the Boerne Kendall County Economic Development Corporation convened for a semi-annual meeting two weeks ago. On the heels of the Federal Reserve’s third short-term rate hike in less than a year, the event’s guest speaker was timely.

Blake Hastings, de facto leader of the San Antonio branch of the Federal Reserve Bank of Dallas, addressed the meeting of about a hundred Boerne, Texas, business leaders.

Hastings started with macroeconomic data about the national economy. He specifically addressed the Federal Reserve’s balance sheet which ballooned from less than a trillion dollars in assets before the financial crisis to more than $4 trillion afterward.

Of course, Fed leaders didn’t call its balance sheet ballooning “money printing.” They called it “quantitative easing,” which sounds more like a gastroenterological process than an economic term.

During multiple rounds of “QE,” the Fed bought trillions of dollars of bonds (Treasurys and mortgage-backs). As Mr. Hastings admitted, it was an experiment of historic proportions.

Early on (ca. 2011), the Wall Street banks that sold bonds to the Fed took most of the cash proceeds and deposited them back at the Fed itself. There was simply not enough loan demand at the time to lend the money out in the marketplace. Plus, the Fed paid a quarter of a point on the deposits!

Since then, the economy has improved and the big banks are making more loans. The Fed’s balance sheet shows bank deposits have decreased by $500 billion in the last five years. Conversely, currency in circulation has increased by $500 billion.

It appears we have two problems on our hands: (1) an increasing number of dollars floating in the economy brings inflation risk; and (2) the Fed still has more than $4 trillion in bonds on its balance sheet.

A friend smarter than I summarized three possible solutions to the latter problem, a quandary  inexorably linked to our $19 trillion federal government debt. You can either grow your way out, inflate your way out, or default your way out.

Mr. Hastings and his Fed colleagues are clearly hoping for years of steady economic prosperity in order to grow our way out. This proposition seems too good to come true.

What’s not too good to be true is San Antonio’s recent economic performance. Hastings rattled off a number of encouraging performance indicators for our area.

San Antonio’s four per cent unemployment rate is below that of Texas and the nation. Military City’s job growth increased by three per cent in 2016 despite a lackluster oil price. We have seen similar employment gains thus far in 2017.

Stock prices of San Antonio-based companies trend above the S&P 500, though the margin is narrowing. Overall, San Antonio’s economy continues to track above its long-term growth average and has since 2011.

Hastings noted that Austin’s job growth has stalled for want of skilled labor. He issued a word to the wise: educated human capital is the single best predictor of an area’s economic prospects. He encouraged listeners to prioritize workforce training.

A diversified employment base saved Texas and San Antonio when oil dropped seventy per cent three years ago. Will it be there to save us at the next bust, oil or otherwise?


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Tension over riverside developments is nothing new


“Proposals for new use of the river’s tree-lined course as a park gained momentum … when irate citizens went before city commissioners to protest overzealous clearing of overgrowth along the river.”


That’s how the Texas State Historical Association (TSHA) summarized strong feelings expressed about the San Antonio River … in 1904.


About a decade later, some San Antonio businessmen wanted to send the dwindling river through a conduit underground in order to create more room for downtown development.


A newly formed San Antonio River Improvement Association opposed the idea and city commissioners took no action.


In 1920, when flood control measures required the river’s banks to be cleared of all trees and shrubs so as not to impede flow, a “wave of protest” persuaded officials to leave the trees.


By 1933, when the mastermind of the Riverwalk, Robert Hugman, proposed his Venice- and Aragon-inspired vision, city planners sided with a master plan to keep the River Park a natural area.


Just a few years later, hotelier Jack White championed a taxing authority to raise funds for Hugman’s idea. City and federal dollars soon followed and the Riverwalk as we know it began to take shape.


“But leaders of the Conservation Society and others still loyal to the River Park were dismayed at the lavish amount of fanciful stonework Hugman insisted upon adding to the once sedate park,” TSHA notes. The activists got Hugman fired from his own project.


For survival, civilizations are built beside bodies of water. Like San Antonio and the river that bears its name, Boerne, Texas, grew up where it did because of Cibolo Creek.


Naturally, citizens prize their water sources. No one, including the developers of the proposed 17 Herff Road project in Boerne, wants Cibolo Creek to degrade. The project’s stakeholders, especially those who live in Kendall County, would be shooting themselves in the foot if they did.


Like good neighbors, 17 Herff’s developers have accommodated many requests and alleviated many concerns of conservationists.


Through tree preservation, drainage filters, building height restrictions and other efforts, project designers are trying to maximize the property’s unique location and its natural beauty.


Given the alternative of not annexing 17 Herff into the city’s limits and leaving it subject to any industrial use county development regulations allow, the pending 17 Herff proposal should be a sigh of relief.


Boerne adds more rooftops every month as approved residential developments come on line. Boerne needs additional commercial services and commercial property tax base to keep schools and infrastructure solid.


17 Herff’s mix of high quality retail, office, medical and residential uses meets many of the public policy goals city planners have advocated for years. We would be wise to accept it, welcome it, shape it and patronize it.


Along with water sources, road construction predicts an area’s growth prospects. When interstate planners put IH-10 through Boerne, the city’s growth trajectory was set. And when Herff Road was widened and extended, the areas along it became prime for development.


Not everyone loves the Riverwalk. I don’t hang out there every weekend. But no one can argue the billions of dollars of positive economic impact the attraction has brought to our region.


All because conservationists and visionaries worked together to achieve common goals.

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