When I first came to Corpus Christi, I thought “this is a great place, I want to stay here til they carry me out feet first.” As it became clear that the city was governed by a small closed group primarily opposed to change, I chose to try and make it a better city by challenging what I saw as practices that held it back. After two years of teaching in the City’s education system, six years of losing mine and other like minded citizens money on various media (including the first Air America radio station in Texas and five years of publishing We the People Newspaper) it has become clear that while we won a few battles. that without massive change in thinking, the war appears to be lost. Macro economic and cultural forces will continue to prevent the area from reaching its full potential. While most seem ecstatic over Corpus Christi’s future, I believe little has changed and Corpus Christi will continue to be in the long run, well Corpus Christi.
My disillusionment is not with the wonderful and extensive environmental blessings or of the general population, but with the regular mistreatment of the land and its people by its entrenched power structure with its willful ignorance of reality and its failure to address the city’s underlying and inherent weaknesses. I will continue to be involved in nonprofit, cultural and humanitarian efforts while I reside here, but I must tell you I think that looking at the future prospects of living on a fixed income, residence in the city itself may be financially unsustainable for me and those in the same situation.
Consequently this will be the last column I will write on any political issue in this or any other public media venue about local conditions. While some may think my analysis is done as an unfair criticism, it is an attempt to provide an objective analysis of what needs to be considered and changed for progress. Based on my involvement and research I will leave you with this brief summary of what I think the basic weaknesses of the local culture and economy are that are responsible for our current and future situation. I do hope that there are others who will take up the cause of making this a better city and that they are more successful that I and that this information may be helpful to.
The Economic Realities of Corpus Christi
Author’s Note: Following is a brief summary based on information gathered in the last five years on local economic development, its challenges and assets. This could be the outline for a more in-depth study that would test these observations against available research from public and private sources to develop not only a clear picture of our historical path to the present, our current situation, and a future path for expanding the economic base to establish a sustainable economy.
The necessity of addressing the dynamic variables impacting the local economy should be clear when one looks at cities who have failed to address these issues. The most striking example is Detroit, Michigan whose population peaked in 1950 at almost 2 million people and has declined to 713,000 in the 2010 census the lowest since 1910 when the automobile first entered mass production.
John Kelley, Herodias Consulting
Economic Realities of Corpus Christi
Site & Situation
Every settlement has a reason for being where it is. Cities thrive or fail based primarily on their site and their situation. Their site or geographic location offers land forms with natural protective advantages sheltered by mountains or a natural harbor, variables like micro-climates, vegetation types, and availability of water, soil quality, minerals, and even wildlife must offer some natural advantage to its residents. Situation is defined as the location of a place relative to its surroundings and other places. Factors included in an area’s situation include how easy is it to get to, how naturally connected to other places is it, and proximity to raw materials if they are not located specifically on the site. Corpus Christi was created in spite of a lack of these circumstances and consequently has had a long history of boom and bust cycles because of it.
Corpus Christ is not a natural harbor or place to build a settlement. When the area was first explored it was a meeting place for trading between Indian tribes (who only had shallow water craft) and later European smugglers seeking to circumvent Spanish and later Texas civil authorities. What made it a good site for smugglers made it a bad site for a settlement. The Nueces River presented a water highway but its delta produced a huge barrier to coastal travel by land. The bay which was surrounded by mudflats shielded smuggler activity from the presence of authorities. Government authorities used large vessels that could enter Aransas Pass but couldn’t access the distantly visible high banks without stopping and transferring to small boats that could be seen by lookouts there miles and hours away.
The natural harbor in the area was at St Mary’s, just north of Bayside on Copano Bay where schooners could sail unimpeded to within 100 feet of the shoreline in 12 foot of water. Two wharves were built there in the early 1800s and cargo moved from there by cart overland north through Goliad to San Antonio. It was wiped out by the hurricanes that killed Indianola in the 1880s. Government focus on Corpus Christi finished the job.
Political vs Natural Site Selection
The decision by Kinney to locate his “rancho” here was strictly a political one not because of any natural trade route or harbor. Kinney was funded by Sam Houston and the Texas Republic to establish his fort here to lay a solid claim to the Nueces Strip, the land between the Nueces and Rio Grande rivers, which was disputed with Mexico. Kinney had about 60 gunmen on the payroll, was essentially a land bound privateer, a government licensed bandit authorized to do what he wanted to dominate the strip. He used this power to increase and control the smuggling trade, primarily selling guns and other supplies to both sides in the Mexican civil war, Comanche and other rogue groups operating in the strip when he and his men weren’t busy raiding Mexican wagon trains themselves.
It is important to understand that this happened because there was no natural resource or trade route that brought about natural settlement of the area. This condition lends itself to an inherent economic weakness that is a constant challenge to political and economic growth advocates. The closest thing to a natural trade route is the one used by Kinney, through Laredo to northern Mexico.
This political point was reinforced when the US annexed Texas and the first American military presence landed and raised the flag here in Corpus Christi to stress the fact that the US was claiming the Nueces Strip as part of Texas. With the arrival of the Army Corpus Christi grew over night to a major city in Texas (from 200-6,000), all living off from the US Army, if fact when they left town to invade Mexico proper, the whole town left as well to follow them.
After the war Kinney was only able to revive the town by committing what could only be described as a giant land fraud on desperate European immigrants who once here had no means to leave. Kinney promised a paradise of the richest land on earth only to find out they had to grub out the clay and sand to clear it from mesquite and cactus. One of the situational advantages the City was able to gain from Kinney’s role for his services to government allowing its survival was to establish it as the South Texas site for state and federal government offices.
When the Port of Corpus Christi was established it too was done for political purposes instead of trade reasons. Both Rockport and Aransas Pass were considered for Port sites. Both sites were preferable from the perspective of dredging and access to San Antonio. The Nueces River Delta poised a formidable land obstacle to transporting bulky cargo along the coast while mudflats pre-Inter-Coastal Waterway blocked bay transport to a port in those locations. Corpus Christi was chosen after a visit to the King Ranch with Roy Miller where Col. Adams from the Corps of Engineers was wined and dined by King. Adams became the first Port Director a when he retired from the Corps two years upon completion of the channel; he retained that position until he retired.
Resource based boom & bust
The Port was originally cotton and other crop dependent and did not grow much until the White Point Oil Discovery and the establishment of local refineries and export facilities at the port. The discovery of a new local natural resource gave Corpus Christi a renewed lease on life dominated by oil and chemical industries.
The fact that the City of Corpus Christi lacked other positive site location factors and natural resources for export other than oil products, had no large market population centers nor was it on any natural trade route did not seem to fall into anyone’s long term planning. The next growth impetus came with World War II when the area was selected for its open space over land and sea to train naval flight personnel, making federal dollars the other major economic input into the community.
For many years the Port and City were satisfied with the Port’s direction as it grew to the main economic engine of the community. The growth of the Port based on refinery products for revenue leveled off with declining local reserves and further exacerbated by the oil price crash in the 1980s.
Presently we are in a boom because of the Eagle Ford shale oil and gas play. The industry is touting this as a 25-30 year production boom. That may be overly optimistic as the National Convention of Geologists and recent New York Times series in 2012 say that only 2% of the reserves are extractable and that while the initial well production is high it tapers off 69% the first year and 98% in five years. In other words it is a drillers dream for making money because expanding the tapped reserves by drilling many wells quickly shows increases in yield that may very well be a “Red Queens Race” that will go bust much quicker. The danger to government entities planning on that revenue is ill conceived.
A government funded economy
The result becomes clear when one analyzes the Corpus Christi economy. As a result of government funding being the most available source of dollars entering the community, entrepreneurs and business people look to government contracts for income. Fully 60% of the money coming into the area is not wealth produced by manufacturing, natural resources or other normal means of wealth creation but through government contracts.
An army depot and until recently three naval bases, a university, community college, local schools, local, state and federal government offices, Medicare and Medicaid support of the healthcare community (60-80% of their funding) represent far more employment and available revenue to community professionals and companies than does the private sector. The lack of other exportable resources, manufacturing centers and a large population center that would support an import market was a direct result of the geographical location of the port and the city that leave it dependent on public money to survive.
Attempt at diversity fails
Private businesses have recognized these politically controlled dollars as key to their survival and worked to shape politics to achieve beneficial relationships with those making the decisions. In the 1990s Port Chairman Ruben Bonilla hired John LaRue with the idea of diversifying port revenue sources, a noble goal but the primary problems of rail and road infrastructure connectivity to population and manufacturing centers were ignored.
The result has been lost time, money and resources while competitors move ahead. Under LaRue the Port pursued a number of plans to increase its diversity but without any market research to support these concepts, more of a “build it and they will come” idea. Investments made during this period of readily available capital from oil tariff revenues failed to address the underlying connectivity issues. Consequently the Port has spent $158 million in capital improvement projects only to have most of them lose money and fail to make any positive impact on the bottom line.
Current expansion plans based on bulk or container cargo are not likely. There is currently no private or public study that shows ANY increase in Port traffic based on the expansion of the Panama Canal. While Port management states this is as a rationale for its La Quinta expansion, there is no evidence to support of it and ignores that we are a more distant than the ports from the canal that will receive that traffic, which are light years ahead in developing infrastructure and are based in or near major population centers.
Two proposed LNG export facilities, two plastics plants and other related expansion industries may well be based on incorrect assumptions about the length and amount of production of shale oil and gas. Exporting coal, another main effort of the port is also likely to end up to no avail. Foreign markets are also aware of the pollution costs and are importing technology to do fracking to tap their own natural gas as a power source.
The evolution of an executive survival culture
As a result the culture that has evolved is a port staff whose job depends on keeping commissioners and other major players in the community happy by delivering a piece of the available moneys (port tariffs and federal funding) to local power brokers who benefit for a while from a contract but lends nothing to the development of a long term comprehensive port development plan.
Port management has favored projects which contracts local businesses for engineering, construction, architecture, public relations, legal, accounting and lobbying filling their pockets but failing to address basic site issues. Some measures such as the destruction of the Teal Lake Rail Bridge seemed designed to damage relationships with potential rail carrier partners that could help address these issues.
In addition to multi-million dollar contracts for local business further disincentive to criticism is killed by a million dollars a year handed out from the local development fund (referred to as the “Fun Fund” internally). Money from this fund flows to various Chambers of Commerce, Economic Development Corporations, and local charities. This program along with a robust public relations campaign silences any protest of this misdirection of resources through what amounts to short term payoffs to defer scrutiny into long term planning and investment.
Doubling down and killing criticism
The latest example of the Port once more ignoring the basic underlying issues is its promotion of the La Quinta Terminal which has neither a developed site nor a fully developed channel as a potential container or coal port. Not only does the proposed terminal lack adequate rail access, it is located next to a large residential area and lacks any studies that demonstrate any demand for it. In effect the Port is doubling down on its previous misdirected diversification strategy without any evidence or justification for its decisions.
This lack of demand for hundreds of millions of proposed public investment recently resulted in Business Columnist Ralph Coker’s May 31, 2012 Op-ed in the Caller Times “Port’s $82 million responsibility” questioning decision there is no support for. As Coker found out criticism of Port decision making can quickly result in the withdrawal of advertising or funding for an organization. The article was pulled from the site after 48 hours, but Coker wrote another toned down article 6 months later which was widely ignored.
There has been a steady effort by more progressive forces that has been largely unsuccessful in bringing about large scale change because of the high personal costs. Progressive public officials and outspoken residents who have tried to tackle these issues have lost business, been blacklisted from financial pursuits, been sued for trying to enforce their rights and in general isolated from the larger community and positions of power if they persist.
The local newspaper, who is supposed to be the community watchdog tends to equally compromised by fear of loss of advertising revenue, censoring or omitting news that disagrees with the power structures objectives. It goes so far as to ban those who use the citizen comment section to question the accuracy of its articles or provide additional or conflicting facts with the “party line”. Meanwhile racist, hateful and sometimes obviously fact deficient obsessive paranoia is allowed to dominate the comment section without consequence. The result is an Orwellian “news speak” that denies citizens the information to facilitate change or even understand their true situation.
City and County officials tend to represent a small pool of powerful Democrats who have joined with the larger (but minority of the total population) pool of white conservative Republican establishment families that neither welcomes new money, players nor community involvement of its citizens. The primary characteristics of this group are that they are white, wealthy, have historic roots in the community and occupy most of the positions both private and public in the power structure.
This group has continually touted Corpus Christi as a low wage city, misunderstanding the impact of financial disparity on the local economy. The combination of that factor as well as ongoing racial resentment towards the Hispanic and Black populations has resulted in a “plantation economy” that has persisted well beyond its historical viability in more enlightened areas of the country. They have also maintained an anti-intellectual bent that stifles growth, discourages innovation and fails to attract higher paying jobs in modernized industries such as telecommunications, information technologies, and advanced manufacturing.
The resulting deficient financial support of human services and development by both local and state officials have further exacerbated this problem creating higher poverty levels, increased public health costs and little room for advancement for those who do seek higher education. That coupled with a wage disparity with other Texans, let alone other Americans, that increases with educational advancement, cause a significant “brain drain” out of the community of its most promising youth.
The future, a mixed bag
The result is a boom and bust economic environment not governed by any normal trade routes or resources but by two major economic factors: 1) the oil and gas industry and 2) government largess. On the public side the outlook is grim. The wind down of the wars in Afghanistan and Iraq spells lower need for the government’s helicopter repair base. With bases certain to be consolidated and closed and no current representation on any major armed forces committee, a risk of loss of CCAD to a more politically connected site is a real possibility.
In 1995 Naval Station Corpus Christi was originally targeted for closure, and time has not blunted that reasoning. The development and fast expansion of drones to take over manned aircraft duties bodes poorly for at least NSCC if not Kingsville Air Station as well. It costs an estimated five million dollars to train one pilot. NASCC is also in a flood zone and is a liability to the government in a major hurricane. Efforts to save it are unlikely to succeed, in spite of local lobbying efforts. Shrinking local, state and federal civilian payrolls also are in decline, yet the prevailing local sentiment is to continually shrink the role, size and cost of government.
On the private side, there is a mixed outlook. The discovery of the Eagleford Shale formation and major offshore deep water oil find Corpus Christi once again poised to experience a boom. While oil and gas companies promise reserves that will produce a forty year economic base, the lack of a long term plan to create additional situational reasons for settlement here will result in future busts if unaddressed.
Despite the presence of 20 times the reserves 120 miles offshore in deep water, this potential windfall is ignored if not outright resisted, (note the sabotage of the Canyon Port service proposal at the former Naval Station Ingleside). We are the closest port to that field and while only 5 wells are currently in production, there are 35 more permitted and the whole western gulf was put up for lease by the federal government in November.
With no direct connections to Rio Grande Valley, San Antonio, or Laredo growth will be limited to oil and gas related expansion and contraction along with declining government investment.
Corpus Christi has relied on land sales and real estate booms going back to Kinney’s “Garden of Eden” promotions have come and gone. Elihu Ropes later promotions and current island expansion have and are respectively following the same pattern. Expansion of coastal real estate development as a source of inflowing money will be limited by private and federal insurance concerns over higher sea levels and larger more destructive storms. Global climate change will be a major factor in the future desirability of residing or doing business in Corpus Christi.
The current federal flood insurance program is as underfunded as the state wind insurance program only on an exponential scale. Expected increases in federal flood insurance premiums are expected to be 25% a year with greater emphasis on buyouts after storms and restoration of the land to public property.
Additional macro factors
Other macro factors that will influence the future of local growth include access to fresh water, limits on polluting industries, failure to engage a multicultural cosmopolitan civic attitude, lack of investment in local infrastructure, building rail and road connections to other import/export markets, investment in intellectual capital (public schools, Del Mar College and TAMUCC), development of a more open and entrepreneurial supportive culture and an unsustainable tax structure.
While Corpus Christi has a history of being a great place for entrepreneurs and business startups, yet this is bemoaned by local officials as “why does every company leave” instead of promoting a “start your business here” campaign to attract the kind of energetic risk takers that change the culture of a city. Local officials also seem to have a scarcity mentality wanting to exploit or control outsiders who want to invest in our community, many times running them off in the process. Prejudice against progressive social concepts is a further impediment to progress. Local attitudes that alienate multiple viewpoints from power structures tend to ward off the kind of investor looking for the flexibility required by startups.
Corpus Christi has major impediments to having a successful future and again falling into stagnation and disrepair.
State policies are undermining education and social services through underfunding and both Texas attitudes along with dominant Republican ideology will prohibit raising sufficient revenues in an equitable manner. The current trend is to put fees on normal government transactions in order to avoid imposing higher business taxes or an income tax.
These fees are regressive taxes and will further income disparity locally and at the state level. Unfortunately local policies are following the same path creating an additional layer of taxes on workers who are already earning less for the same positions as the rest of Texas and the state pays lower than the country as a whole. The result will be an decrease in available per capita disposable income for low paid workers and those on fixed incomes.
Previous failure to maintain roads and other infrastructure coupled with expected boom growth will result in even higher revenue needs than the average wage earner in the Coastal Bend can support. If the Eagle Ford does go bust there is a huge potential for finding ourselves in a debt situation as a city that is unsustainable.
The addition of several new petrochemical facilities is very likely to put us out of compliance with the Clean Air Act, forcing new costs on consumers and business in higher gas costs and greater and expensive regulation.
Ignorance of, and failure to respond to increased climate change, emissions and sea level rise will have huge financial consequences in the near and long term future for the city. Failure to plan for the likely onset of greater and longer droughts, more frequent and larger hurricanes and tropical storms can have catastrophic financial consequences because of continued building in low lying areas. This will become very expensive even without a direct hit because as more areas fall into flood plains federal flood insurance coupled with wind insurance could mean large areas of abandonment as costs climb exponentially. In fact the insurance factor is not dependent on local hurricane/tropical storm events but on the overall Texas and national exposure to storms.
The current direction of proposed funding for water infrastructure (Mary Rhodes Pipeline Phase II) is based on surface water that is unlikely to be available. Also impacting the area is the possibility of Governor Perry’s proposed water plan. That plan is based on 40 new reservoirs that if built, will rob coastal communities of freshwater inflows to bays and estuaries as well as the silt necessary to reduce coastal erosion. This has the potential to increase erosion and create more saline bays killing lower parts of the food change that could be very damaging to our tourism, especially recreational fishing.
Failure of the Port to be prudent in its capital expenditures in response to market demands along with a bust in the Eagle Ford shale could cause major problems for the port in the future.
While Corpus Christi could have a bright future if it accepted it and tried to directly reduce the negative factors impacting its growth. Transition to an more open, tolerant city that seeks steady slow growth as opposed to constant comparisons to cities that have completely different sites and situations. Given the current political and intellectual climate it is unlikely to be actualized due to the conditions above that appear doubtful to change in the near (10 Year) future.