Organic Waste – My Kind of Green

Inigo_MontoyaWhen I think about environmental action, my mind goes to the words we commonly use – particularly “sustainable” and “green.” And like the Princess Bride’s Inigo Montoya, I do not think these words mean what traditional environmentalists think they mean.

Because of my particular definitions, I am oddly excited about my city’s organic compost plan. I’ll explain why in a moment, but first, those words.

To me, an environmental plan is “green” when we make money or save money – cool, paper, greenbacks. A “sustainable” environmental plan is one that continues because everyone sees it as in his or her own personal financial self-interest. A “sustainable” environmental action, therefore, is one not easy stopped by a political change or a slight shift in market prices. If people want to do the right thing environmentally and it’s also in their interest financially, then that action will sustainably continue.

Ok, so why do I get all tingly about my city’s green organic composting barrel that showed up at the end of my driveway a few months ago?

After a little bit of research I found out that a business managing organic waste can make money – in a green, sustainable way. As it turns out, my city, and indirectly taxpayers, can save money from organic composting. The final piece – the specific financial benefit for households – is only weakly established, in my opinion. San Antonio is working on this as well, but that’s probably the part that needs the most strengthening in the years to come.

Figuring out how a private business makes money is why I visited the headquarters of New Earth, the company that has the contract with the City of San Antonio to collect organic household waste.

New_EarthIn theory, I’m enamored of their business model. They get paid to take in raw waste, and they get paid to sell compost. Getting paid both coming and going!

Organic waste dumpers – like landscapers, tree-clearing developers, and now the City of San Antonio – pay New Earth for the privilege of dropping off organic trash, the first source of the company’s revenue. New Earth then applies its processes – the art and science of industrial-scale composting – to that waste over 1 to 3 months. At the end, they produce ground cover, mulch, and compost bags for sale to landscapers, developers, and gardeners.

Of course, I’ve simplified the attractiveness of New Earth’s business model.

Like any real business, profit is not as easy as it at first seems. New Earth takes considerable financial risks.

Here’s just a sample of why it’s risky: Handling trees and brush cleared from a new construction site is relatively easy – you run the trees through a chipper and you have a relatively uniform product at the end. However, properly filtering household organic waste – produced from hundreds of thousands of sometimes careless trash-tossers like you and me – is a far more risky and manual-labor intensive process. Clayton Leonard – until recently the President of New Earth – explained to me that New Earth had to double their workforce to handle the city contract. They also had to invest in a multi-million dollar piece of equipment to sort through the waste. Leonard climbed up with me onto one of their giant sorting machines.

compostWe watched the household waste pass through a conveyer belt while guys with rakes – some of their new hires – separated the non organic waste from the pile. Pro-tip: Neither your old iPhone case nor your plastic bags should go into organic waste. Not all households, I saw from the conveyer belt process, have gotten that memo.

I mention all this to say that it takes significant capital and labor costs to try to make money on a citywide organic waste contract. The key point for me, however, is that New Earth is being run in my version of a green, sustainable way – to make a profit.

At the same time, the City of San Antonio has their own green, sustainable, reasons – saving money. Here’s how.

When the city hauls and dumps regular trash, it pays an average of $24 per ton to local landfills for that privilege.

When the city hauls and dumps organic waste over to New Earth it pays $16.50 per ton. The city is incentivized therefore to redirect as much volume of trash as it can to organic waste. As New Earth’s Leonard told me, “In order for us to survive, we have to be cheaper than a landfill.”

going_greenAs the city fully rolls out the green barrel program – scheduled for completion in April 2017 – it hopes to get a lot of residents dumping their compostable waste into those barrels. The goal for the household organic waste program is 60,000 tons per year, according to Nick Galus, Assistant Director for the Solid Waste Management Department. At current prices, that would save an estimated $450,000 per year.

As a public entity, Galus notes, their goals are a combination of financial gains and sustainability, traditionally understood.

“Our goal is to capture the greatest amount of the waste. The cost isn’t the driving force. We’re trying to get to our goal in the most cost-conscious way,” he said.

Interestingly, San Antonio is the first major Texas city to roll out an organic recycling program city-wide. The fact that other Texas cities haven’t done the same – despite some financial incentive to do so – indicates that there are risks for a city as well. Any city, including San Antonio, has costs for rollout and household education. Other Texas cities have pursued strategies focused on yard waste, according to Galus, making it costly to switch over to a plan that also accommodates food waste.

The San Antonio goal is to have 60 percent of all waste hauled by the city be recycled, composted, or repurposed in some way by 2025. They’re at 33 percent as of 2016.

If San Antonio can show cost savings, the case becomes more compelling for other cities. If they can even figure out the household financial incentives, the whole process becomes my kind of green and sustainable.

 

A version of this post ran in the San Antonio Express News and Houston Chronicle.

 

 

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School Finance And My Tax Bill

school_taxI got my real estate tax bill in the mail recently, and noted with horror that more than half of my annual chunk of flesh goes to my local school district. That chunk for schools got 16 percent bigger this year compared to last year, and on November 8th we’re being asked to vote yes for a bond and a “TRE” to make that wound permanent. As I finance guy, I like to understand why.

The immediate “why” dates back to a May 2016 ruling by the Texas Supreme Court that variously described the state public school finance system as Daedalean, Byzantine, Augean, and an “ossified regime ill-suited for 21st Century Texas.”

Clever classical references notwithstanding, the court also declined to intervene, found the system met “minimum constitutional requirements,” and referred future financing changes back to the state legislature. Immediately following that decision, school districts like my home district of San Antonio ISD began scrambling to find sources for much needed funding. Hence, my increased tax bill, and the ballot question to ratify that increased bill.

SAISDResidents in the San Antonio ISD residential area – like me – are asked to vote November 8th for two increased funding items. The first is a run-of-the-mill $450 million bond vote, the proceeds of which are limited by law to capital improvements like renovations of school buildings.

The second vote, for a Tax Ratification Election – or TRE – is a bit more unusual and offered me a window into the weird world of public school financing. Since bond money proceeds can only be spent on buildings – the “hardware” of education – TRE money pays for for improvements in the “software” of education, such as educational programs.

The need for this particular TRE vote arises from the peculiar funding rules and history that govern public school finance in Texas.

History of funding

Both nationally and in Texas, we initially fund schools at the municipal and county tax level rather than at the state or national tax level. This results, naturally, in huge inequalities in school funding based on property tax and property value differences across cities and towns.

Next, at least in Texas, we sue the legislature over unequal funding levels, as happened in 1989 when Edgewood ISD along with others won a state Supreme Court case based on this inequality.

The state then created mechanisms for roughly equalizing the distribution of money, primarily through a state fund called the Foundation School Program (FSP.) Money for the FSP come from a combination of state allocations and funds recaptured from property-wealthy districts, such as I described in Houston ISD last week.

Even though the burden of funding still sits with locals, in 2006, the state legislature ratcheted downward the amount of tax that local districts could raise, from $1.50 to $1.00 per $100 in property tax value. For example, a $200,000 house taxed at $1.00 per $100 in tax value would generate $2,000 in school taxes, rather than the previous $3,000 in taxes at the $1.50 rate.

That would normally be great because – “Hey look! Lower taxes!” – but the state legislature realized subsequently that if local districts don’t tax enough, the state would have to make up the difference with the FSP (state money). So that had to be undone, or else we’d have to raise more state taxes. Also, in the case of Texas in particular, a statewide income tax or “Ad Valorum Tax” is unconstitutional, so taxing decisions have to be – or at least appear to be – made at the local rather than the state level.

Between the 2009 and 2013 legislatures, a system emerged to incentivize more local taxation, presumably to relieve the legislature from providing more funds at the state level. As local districts raise more revenue locally, approaching $1.17 per $100 of property value ($1.17 is the new state cap on local taxation) the state will match some of that money through the FSP.

And that increase in property tax to capture matching state funds for your local school district are what’s at stake on the ballot in San Antonio ISD, and where many other school districts in Texas will look to raise money in the future. The $0.13 bump on my ballot of $1.04 to $1.17 per $100 property value will increase taxes on a $200,000 home by $260 per year.

My school district hopes to ratify the tax raise to the tune of about $15.6 million from local taxpayers, with the promise of about $16.5 million in matching state funds from the FSP.

Is that clear? Or clear as mud? This kills me with how confusing it is.

Look, I’m pretty good at bond math, cash flows, and spreadsheets. I have watched live presentations on the bond and TRE question; I’ve watched multiple video presentations online; I’ve read the entire 100-page Supreme Court ruling from May 2016; and I’ve sat down for long one-on-one conversations with SAISD officials – and I still find this ballot question incredibly confusing.

By state law, I understand this has to be a ballot question for voters, but honestly, there is no way for informed citizens to actually understand and vote on this other than an unsophisticated choice between: “Public Schools (Good!)” or “Taxes (Bad!)”

And that’s upsetting to me. When an issue is as confusing as public school finance is in Texas, you should always ask yourself – who benefits from the complexity and who loses?

I complained about this complexity to Seth Rau, SAISD’s Legislative Coordinator, who assured me, depressingly, that Texas is right in the middle of the pack nationwide when it comes to school finance complexity. Rau joined SAISD in 2015 from Nevada – as did Superintendent Pedro Martinez – where school finance is just as confusing. According to Rau, 45 of 50 states have tried to settle school finance problems through lawsuits. So I guess we don’t have a monopoly on “Daedalean,” “Augean,” and “Byzantine” systems here in the Lone Star state.

Full disclosure: public school finance feels very personal for me, with two kids in San Antonio ISD. As a parent of a first grader and sixth grader, I pinball between frustration with and empathy towards my school district, which at times appears intent on undermining positive student outcomes and at other times seems like it’s doing God’s Work Here On Earth under near-wartime conditions.

 

A version of this post ran in the San Antonio Express News and Houston Chronicle.

 

Please see related posts

HISD Ballot question – What is Wealthy?

 

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Minimum Wage Caveats and Local Update

minimum_wage_nationwideI recently wrote about how I worried minimum wage hikes in the city of Los Angeles could hurt the same people the law is supposed to help.

Two caveats go with that thought. First, I might be wrong. Second, San Antonio is already in the midst of a distinct minimum wage hike that deserves some context and background explanation.

I might be wrong
Anecdotally, I think my reasoning against private-sector minimum wage hikes is solid, but experts don’t necessarily agree with me.

Economists who have studied the issue argue that historic data in the U.S. does not agree with my fear of increased unemployment, noting evidence showing little effect on unemployment rates with moderate changes in the minimum wage.

Those economic studies, however, covered wage increases of approximately 10 percent — rather than the Los Angeles hike of nearly 60 percent. In addition, economists typically have studied federal minimum wage law changes, not municipal changes that create the “wage island” effect. So, although economists’ data doesn’t support my view, it typically covers a different set of conditions.

Supporters of minimum wage laws also make two compelling arguments.

First, they note that better-paid minimum workers tend to spend such a high proportion of their incomes that wage hikes actually stimulate the local economy through higher consumer spending, creating more overall wealth.

Second, wage hike supporters argue that stagnant wages over the past four decades in the U.S. — especially considering increases in worker productivity — mean that wages for the bottom of the labor market could rise quite a bit before they dampen economic growth.

These are fine points. I continue to hew to the muddled middle when it comes to private-sector minimum wage hikes.

Interestingly, the Los Angeles Times quotes L.A. Councilman Paul Koretz, who admitted uncertainty after his vote: “This is an experiment. If anyone tells you they know exactly how this is going to go … they’re not being honest with you.”

minimum_wage_Los_angeles

I like that.

Public-sector wage hike
It turns out that San Antonio’s two governments — city and county — currently plan similar-sounding, but distinct, minimum wage hikes, up from $11.47 to $13 an hour.

The San Antonio and Bexar County plans differ from Los Angeles’ law because it limits the minimum wage hike to employees of the governments themselves, not employees of private companies.

Bexar County announced earlier in the year that government employees would earn at least $13 an hour beginning Oct. 1. In addition, under the city’s currently proposed budget — to be voted on in September — city workers at the bottom of the pay scale would see their pay raise go into effect next January.

cops_metro

Local advocacy group COPS/Metro Alliance successfully pursued raising minimum wages for city and county workers over the past year. They raised with government leaders the issue of a “living wage” for government employees, arguing that workers should reasonably expect to earn enough at their jobs to be free of public-sector subsidies tied to poverty programs, such as food stamps.

Mike Phillips — a leader with COPS/Metro with First Unitarian Universalist Church — estimates the wage hike could help not just the 1,700 city and county workers directly affected, but perhaps twice as many workers who already have wages above the minimum, as those workers see their pay adjusted higher as well.

Over time, Phillips says, COPS/Metro would like to see the $13-an-hour minimum stepped up to $15 an hour, by 2018.

Public, not private sector
The San Antonio wage hike, compared to the Los Angeles plan, cannot lead to greater unemployment for a number of reasons. For starters, government workers generally cannot be “outsourced” to areas beyond city or county limits, nor completely offshored, as I feared with the Los Angeles situation.

Perhaps most importantly, public employers have a greater obligation to address the moral issue of “a living wage” than do private employers. Unlike private companies, public entities (such as governments) explicitly purport to represent the “public good” in everything they do. The public good should reasonably include paying workers so that they can live above the federal poverty level.

Nobody really asked my opinion but these wage hikes seem not only reasonable, but providing a “living wage” for public-sector employees seems like an essential step.

Steep obstacles in Texas 
Minimum wage advocates may be winning battles across the country, but they face steep obstacles in Texas.

San Antonio state Rep. Trey Martinez Fischer unsuccessfully attempted in the last Texas legislative session to bring to voters a state minimum wage of $10.10 per hour, up from the federal $7.25 minimum. He had to attempt a statewide public vote via a constitutional amendment because otherwise the state Legislature has the power to set (or not set) the private-sector minimum.

For now, Texas remains one of the states with the federal minimum of $7.25 per hour.

Dallas County workers currently receive a minimum of $10 per hour, and county lawmakers attempted last year to extend that wage floor to government contractors. In December, while still attorney general, Gov. Greg Abbott blocked that attempt.

Meanwhile in Bexar County, COPS/ Metro still is working on extending the $13 per hour wage to hospital employees and school districts.

I asked COPS/Metro’s Phillips if he envisioned a private-sector minimum wage campaign in San Antonio or the state of Texas.

His response: “We don’t tilt against windmills if we can help it. It doesn’t seem realistic.”

 

A version of this post ran in the San Antonio Express News.

 

Please see related posts:

Los Angeles minimum wage hike seems risky

Inequality in America – Video representation

 

 

 

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Downtown Revitalization – The Role Of A Billionaire

Monopoly BoardwalkIn downtown Las Vegas Nevada recently I visited a small business that is the opposite of everything we normally associate with Sin City. The small business made me think about the role of both visionary billionaires and geography to city revitalization.

The small, serious, bookstore The Writer’s Block opened last year as part of The Downtown Project, entrepreneur Tony Hsieh’s plan for bringing tech startups, small businesses, and a sense of community back to Las Vegas’s downtown.

How does this even exist?

The Writer’s Block is the type of business that is hard to believe even exists in 2015. Not to mention, it exists within shouting distance of the Las Vegas casino monoculture madness. While Amazon.com swallows up entire multiverses of retail shops – slaying Barnes and Noble and every other bricks-and-mortar shop in its path – how does an independent anachronism like The Writer’s Block dare to open?

The free market alone would never support this.

I’m just spitballing here but I suspect not enough Las Vegas residents live close enough to The Fremont Experience to need a quickie Dom Delillo White Noise discussion in person, while picking up their Kierkegaard paperback.

The crazy irony is that a precious, almost twee, bookstore like The Writer’s Block only exists because Hsieh, who sold Zappos for $1.2 Billion to Amazon, makes it exist.

Without Hsieh’s vision and investment, the free market does not, could not, create a bookstore like this. The free market in Las Vegas supports the casino monoculture.

Just like the “free market” in downtown San Antonio supports more tourism and hotels.

So places like The Writer’s Block need a financial thumb on the scale to overcome what the pure “free market” would produce all on its own.

So who provides the thumb on the scale?

Monopoly rich guy

It seems to take a big money capitalist like Hsieh to defend the small money capitalist growth of businesses like The Writer’s Block against the city monoculture.  It’s all very strange and ironic, but I feel like it’s important for San Antonians to consider.

On the role of the well-heeled visionary in making this happen

In my hometown San Antonio, we count one very successful urban infill development – called The Pearl – which originally depended greatly on the vision and investment of a single investor. It wouldn’t have happened without his purchase of real estate and investment in curating the businesses to fill The Pearl development.

Subsequent entrepreneurial investment and development has followed up this lead. The result is the rebirth of an entire section of the formerly neglected area just north of downtown.

With very few exceptions (only the occasional ‘The Rent Is Too Damned High’ complaint) The Pearl has garnered huge praise and very little criticism. It works. It also appears to have enough momentum to succeed far beyond the scope of the original investor’s investment in The Pearl.

It’s too soon to say the same for Las Vegas’ downtown.

Haters gonna hate hate hate hate hate
Haters gonna hate hate hate hate hate

Shake It Off

As you might expect for an ambitious project funded by a singular visionary multi-millionaire, not everyone is happy with Tony Hsieh. As my good friend Taylor Swift so rightly sings, “Haters gonna hate (hate hate hate hate.)”

I would sum up this shade as suspicion about a wealthy person pushing their vision on a city, backed by his own funds to enact that vision, and the natural schadenfreude that whole hot mess engenders. Personally, I disagree with the haters, as I don’t see this as nightmare dressed like a daydream.

Yet the haters have a point, because taken as a whole, the Las Vegas Downtown Project does not feel, yet, like a real downtown city. Huge gaps remain.

For this to work, I assume Hsieh’s catalytic investments have to be followed up in the next ten years by many more times the volume of independent investments, by other entrepreneurs, to actually make downtown Las Vegas come alive as a real place, for real people who live there. But you can see the outlines of a real place there, and that feels exciting.

taylor swift daydream

Geography in Downtown San Antonio

Another well-heeled visionary in San Antonio has taken on downtown proper as his canvas for urban renewal, tech startups, and a sense of community. Like the Downtown Project in Las Vegas, the rebirth of downtown San Antonio shows promising signs from a low starting point, but has a very long way to go to feel like a real, live, urban downtown attractive to residents rather than tourists.

One challenge is that the geography of downtown San Antonio is bigger than The Pearl. Also unlike the Pearl – which started out in a pretty empty section of town – any new construction in downtown San Antonio has to compete geographically with the still-thriving tourist monoculture already in place.

Real Estate in downtown San Antonio isn’t actually that cheap. Real estate owners by reputation have a habit of holding on until the next hotel chain offers top dollar, so we get more hotels to replace the emptiness rather than something new.

Hsieh’s Downtown Project in Las Vegas has the advantage of focusing on relatively empty, dilapidated areas a few blocks removed from the casino monoculture of the Fremont Experience, which keeps it from competing directly with the awfully repetitive, but financially viable, casinos.

Folks focused on downtown San Antonio do not have the same luxury of empty space enjoyed by the Downtown Project, but must work with and around the existing tourist infrastructure.

We’re years away from knowing whether these experiments will succeed.

Please see related posts:

Book Review: The Death and Life Of Great American Cities by Jane Jacobs

Las Vegas and San Antonio Downtown Monoculture Problems

Las Vegas Tourism and the Antidotes

A version of this post ran in the San Antonio Express News

 

 

 

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Downtown Revitalization – The Limited Role of Government

touristy alamoI wrote previously about the Downtown Project for Las Vegas NV that I think folks in my hometown should pay attention to.

I enjoyed visiting the nascent Las Vegas Downtown Project because it made me reflect on my original questions: How do cities die? And how do cities renew themselves?

I’m a ‘market-based capitalism’ guy most of the time, but I’m convinced that cities can die through the natural ‘market-based capitalism’ process when a single industry or economic monoculture sucks all of the interesting real life out of a place, as casinos have done in downtown Las Vegas, and tourism has done for downtown San Antonio. When I say ‘die’ I don’t mean the death of all profit or even a scarcity of jobs, but rather the harder-to-define but nevertheless deeply felt way in which a city ceases to be a place we would enjoy spending more than one day in.

But if economic monoculture is the cause of certain type of blight, how do we solve that? It’s quite a problem.

As a ‘market-based capitalism’ guy, I see little evidence that municipal governments are good at spurring city turn-arounds. Few local political leaders would ever block the addition of another casino in Las Vegas, or the founding of another hotel in San Antonio, and who could blame them? When you’ve got a financially successful industry in an area, municipal entities and political leaders can’t be in the habit of squelching additions to that industry.

In addition, public entities don’t seem great catalysts for city turnarounds. I trust that public entities can create ‘safer’ places. They can encourage the tear-down of blighted buildings. They can penalize rule-breaking or negligence among property owners.

But despite being filled with good people and good intentions, city governments rarely create beauty, or delight. They don’t generally have a singular vision for a human-scaled rebirth. Governments can do a good job of removing “the bad,” but are more hamstrung at trying to add “the good.”

That’s where the first-to-act civic-minded billionaire seems to come in.

To renew themselves, Las Vegas and San Antonio needed someone with both a vision and the resources to enact that vision. And then that vision and early investment needs to inspire many multiples of follow-up investment from others who can build on the catalytic actions of the first-to-act. The Pearl in San Antonio seems to have achieved that.

The Downtown Project in Las Vegas and the San Antonio Downtown by contrast are happening in parts of the city very much in the earliest stages of rebirth. Downtown boosters and haters alike can each point to evidence of the success or failure of the experiments up until this point, and neither would be completely right or wrong. To the pedestrian visitor, the monocultures still dominate, almost completely.

container_park_las_vegas
Container Park design, Las Vegas

The few pockets of human-scale renovation in both places seem disconnected, fragile, nascent. They all need massive follow-up investments by other entrepreneurs to make it connected and viable. But hey, I see reasons for hope, despite the odds. I’m an optimist. I mean, you have to be willing to forget the odds in order to take a trip to Las Vegas in the first place.

 

Please see related posts:

The Downtown Monoculture Problem

Tourism and the Some Highlights of the Las Vegas Downtown Project

 

 

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