Jan. 3, 2004, 8:46PM

Houston business leaders mostly happy with economic outlook



Houstonians kept asking, "When will the economy get better?"

The answer is, in 2004, according to many local business leaders.

Peering into the future, they have a generally bright take on the year's economic outlook.

They see greater demand for energy -- always nice news for Houston -- a rising stock market, heady days for high-tech firms devoted to high-speed wireless and Web services, tremendous business opportunity in China, more corporate megamergers and increased hiring as the economy improves.

On the downside, they foresee a worsening of the troubles in the health care industry, making life harder for employees seeking quality coverage for their families.

They also speculated on which parts of town would be hottest in terms of real estate.

And they veered outside the world of business to prognosticate on the fates of Bill White, George W. Bush, the Houston Astros and the Texans.

Chronicle file
Jenni Tran-Weaver, an entrepreneur/flight attendant, expects to be flying high again this year

Bruce Williamson, Dynegy president and CEO

U.S. economy strengthens significantly first in terms of economic growth in Gross Domestic Product, followed by renewed hiring and reduction in U.S. unemployment.

Natural gas prices remain strong ($4 to $6 per thousand cubic feet) driven by strength in the U.S. economy in general as well as weather-driven demand spikes, which is good for Houston-based exploration and production companies and some energy merchants.

President Bush is re-elected in a relatively close, but not nearly as close as 2000, race against Democratic nominee Howard Dean.

Legal affairs
Joe Dilg, managing partner of Vinson & Elkins in Houston

During the past year, energy clients sold assets and restructured their debt, so they are ready to expand with the new year. And with the stock market in better shape, initial public offerings will become popular again as a way of raising capital.

There's also growing demand in China and other emerging nations for energy, which is putting pressure on finding new oil and gas reserves.

If there is one worry, it's terrorism. Another terrorist act in the United States could throw a kink into the improving economy.

Barring that, it will be a good year.

Restaurants, entertainment and tourism
Tilman Fertitta, CEO, chairman and president of Landry's Restaurants

As the national economy totally rebounds, it will be a wonderful year for the stock market, which will easily go over 11,000, and technology stocks will thrive.

The Houston economy will be better next year from a hotel occupancy standpoint and consumer standpoint, and part of it has to do with the revitalization of downtown.

Under the leadership of Drayton McLane, Roger Clemens and Andy Pettitte will lead the Astros to the World Series.

Jordy Tollett, president of the Greater Houston Convention and Visitors Bureau

We're not quite there yet, but within 120 days, people are going to say, "It's a good time to be in Houston. Life is good." All we've been working on the past several years is finally coming together, like the Super Bowl, the 1,200-room Hilton Americas-Houston hotel and light rail. The streets and lights are going to work, and traffic will move better.

Bill White is young and energetic enough that he's actually going to make things happen, because he's going to put in the hours. He's not going to ask any city employee to work harder than he does.

David Mendez, chairman of the Houston region of J.P. Morgan Chase Bank

Nationally, merger and acquisition activity is up. The capital markets have improved. Locally, deposit growth is good, and there is increased loan demand. The new year should be a continuation of 2003.

From the commercial side of Chase's business, the bank is projecting revenue growth across all businesses. The one area that will be noticeably different is the mortgage business. The auto finance side also will probably not be as strong as 2003. Because of that, the banking business won't be able to sustain the growth and momentum that existed in 2003.

Richard Shaw, secretary/treasurer of the Harris County AFL-CIO

Look for more union organizing activity this year, with a particular focus on the service sector, especially the hospitality and janitorial industries. Employees in both industries are largely immigrants seeking to improve their lives. That low-wage service sector is where organized labor has been growing.

The new Hilton Americas-Houston hotel agreed before it opened its doors that it would not oppose an organizing drive. If that is successful, a win at the Hilton will lead to other organizing efforts at area hotels.

With low interest rates fueling the demand for single-family homes, new restaurants and retail strip centers, look for new organizing activity in the construction industry, which is largely nonunionized.

Jose Benitez, organizer with the Working Families Association

This year's national election should boost the economy, as presidential elections have in the past. That will benefit immigrant workers in terms of being able to stay in the country and find jobs.

There will be fewer immigration raids, like the October deportation of janitorial workers at Wal-Mart stores across the country. As he campaigns, President Bush will want to avoid scandalous raids like that.

International trade
Carlos Lara, interim president of Houston's Hispanic Chamber of Commerce

A free-trade agreement between the United States and four Central American countries should give Houston's economy a lift. Congress is expected to vote later this year.

The United States is also negotiating a free-trade deal with all of the nations in Latin America, except for Cuba. If those two deals are approved, that should help local businessmen, exporters and importers, just like the North American Free Trade Agreement did. Houston is in a very prime location in the United States.

Bob Beauchamp, president and CEO of BMC Software

High-speed wireless and Web services will be the most important technology drivers for corporate spending and application rewrites.

There will be a significant increase in merger and acquisition activity across multiple industry sectors.

China's extraordinary economic growth will become the top macrobusiness story of 2004 and the decade that follows.

Health care
Dan Wolterman, President and CEO of Memorial Hermann Healthcare System

Expect to see a shift in where and how patients obtain care. As a result of technological advancements, more and more care will be conducted in the outpatient arena, and increasing numbers of procedures will become minimally invasive.

Expect to witness more evidence of the crisis in health care, which is attributed to rising costs. Watch for the continued escalation of health insurance premiums, which will result in more Houstonians being uninsured and underinsured.

As a consequence of that trend, note how many more Houstonians will flock to the emergency rooms, worsening the already critical overcrowding situation.

Expect hospital budgetary pressures to continue to increase as Medicaid and other state programs continue to be underfunded.

Mike Snow, president of the Gulf Coast division of HCA, the nation's largest hospital chain

Hospitals will see an accelerating migration of diagnostic/invasive procedures to alternative settings, such as surgery centers, outpatient imaging centers and cancer treatment facilities. The migration will burden hospitals with reduced revenues to provide essential emergency, tertiary and charitable services.

An acceleration in the trend of placing more economic burden of health care on employees, driven by double-digit growth of health care premiums to employers and other issues.

Lower government spending on health programs because of budget deficits, placing more hardship on the poor and uninsured.

Real estate and development
Ed Wulfe, president of Wulfe & Co.

The most real estate activity, both residential and retail, will occur in Houston's Northwest sector, along U.S. 290. More people will move to the urban core, and there will be more development there.

The importance of nanotechnology, biotechnology and other research areas at local universities and the Texas Medical Center will increase substantially, cultivating a sphere of influence that will eventually lead to new jobs and business.

With the groundwork laid over the past six years and a new mayor, City Council and private sector working well together, Houston will make major inroads in improving the city and its quality of life.

The Houston Texans will go to their first playoff game.

Kenneth Li, owner of Century 21 Southwest realty firm

Commercial realty activity will be strong in the Chinatown area along Bellaire Boulevard in 2004, a continuation of a trend that has been growing in recent months.

More home builders will be focusing on the starter home market next year as they address the huge demand for homes in the low end of the realty market.

Consumers should be feeling more confident in the economy in 2004, and real estate will be strong.

Ray Bailey, president of Houston-based Bailey )Architects

The entry of the Rouse Co., a large Maryland-based development firm, into the Houston market will have an impact on real estate development in Houston. Rouse typically creates huge developments with commercial and residential uses. It recently bought a controlling interest in The Woodlands, and separately Rouse purchased 8,000 acres near U.S. 290 for another major development.

The installation of new Mayor Bill White could inject some momentum into the effort to attract new businesses into Houston.

John Daugherty, owner of John Daugherty Realtors

Stronger job growth should produce a lift to the Houston realty market in the year ahead.

Houston lost jobs in 2003, but it's expected that we'll add far more jobs in 2004. The housing market was excellent in 2003, even with the job losses. With the job gains anticipated in 2004, sales should be even better next year.

Small business
Celene Pena, owner Celene Floral Design

In the floral business, more people are using the Internet to order flowers, so that's made things harder. But January and February should be good because of the Super Bowl and Valentine's Day.

In general, it was a struggle for Hispanic business owners. This year will continue to be a challenge.

Eunice Drexler Scott, co-owner Drexler's World Famous Barbecue and Grill

It's going to be an up-and-down year. For some reason, a lot of people are still unemployed.

On the plus side, the Super Bowl looks good.

Timothy Susberry, shoeshine man, Duke of Hollywood Tailors

The economy is not likely to improve. There might be a little change, but there will be no cure for real problems: layoffs, low wages, long hours, taxes.

"The haves got, and the have-nots ain't got," he said.

Donnie Wicks, owner of Hot Bagels

Houston has gone through the worst of it. But the city is coming into a new age in which consumers may spend their money more wisely.

Jenni Tran-Weaver, co-owner of the Jenni's Noodle House

She's also a Continental Airlines flight attendant who took a voluntary leave of absence after 9/11 and recently received a letter from Continental stating that she and others on leave will be due back to work in June. Her husband, Scott Weaver, and their staff will continue to run the restaurant.

"I think 2004 is going to be awesome," she said.

Chronicle reporters L.M. Sixel, Ralph Bivins, Bill Hensel Jr., Jenalia Moreno, Shannon Buggs, Darrin Schlegel, Laura Goldberg and Nelson Antosh contributed to this story.


 Copyright 2004 Houston Chronicle

  Jan. 10, 2004, 12:15AM

Democrats seek probe of Gramm Ex-senator accused of illegal lobbying


The state's Democratic Party wants the Texas Ethics Commission to slap former U.S. Sen. Phil Gramm's hands for alleged illegally lobbying.

Party Chairman Charles Soechting filed a formal complaint Friday with the ethics commission saying that Gramm, a vice chairman with UBS Investment Bank, had "lobbied on behalf of persons seeking legislative changes or rule making changes affecting retired school teachers and the Texas Pension Fund without registering or reporting as a lobbyist."

Bill Moss, a lawyer with the ethics commission, said he couldn't confirm or deny that a complaint had been filed against Gramm. If one has, and the commission eventually finds that Gramm broke the law, the maximum penalty is a civil fine of $5,000, he said.

Gramm, through a UBS spokeswoman, declined to comment.

Gramm joined UBS after leaving the Senate in December 2002. Last year, he started trying to sell Gov. Rick Perry on a UBS-engineered concept of using life insurance, annuities and bonds to infuse money into the Teacher Retirement System of Texas.

The $80 billion teacher pension plan is struggling to find a way to close a $700 million shortfall in its retiree health benefits program without cutting benefits or asking the Legislature to raise taxes.

State leaders have been talking about Gramm's proposal, which involves the pension plan buying annuities and life insurance policies on retired teachers, and then keeping the proceeds when they die, as a possible solution.

UBS executives last year met several times in person and by telephone with representatives from the governor's office and the pension plan, as well as with Insurance Commissioner Jos Montemayor and Securities Board Commissioner Denise Voigt Crawford.

In a written presentation explaining how the plan works, UBS said the state would need to make "large and small legal and regulatory changes" to implement it.

Soechting claims Gramm's sales pitch amounts to a violation of state law because Gramm did not register in 2003 or this year as a lobbyist. The Democrat also alleges that the Republican failed to follow state rules requiring him to report his expenditures to promote the plan.

Earlier this week, Soechting, an attorney in San Marcos, called on the state's Republican governor to "come clean about a secret scheme to sell life insurance policies on retired public school teachers in exchange for millions of dollars in fees and commissions for Perry's political allies and campaign contributors."

According to Soechting, political action committees and individuals connected to the insurance industry contributed more than $1.2 million to Perry's 2002 election campaign.

"I'm asking the governor to tell Texans once and for all whether he and his appointees intend to go forward with this morbid scheme," Soechting said. "Retired teachers in Texas deserve a simple yes or no."

Robert Black, a spokesman for the governor, said: "We have always maintained that the governor's office is interested in ideas that will avoid a reduction in benefits or raising taxes in order to solve the TRS problems."

UBS planned to make a formal presentation of its idea to the pension plan's board at its two-day December meeting. But UBS did not submit a request to be added to the agenda after news reports were published about the plan.

Trade associations and labor unions representing state employees and teachers slammed the proposal, saying the state considers its former workers more valuable dead than alive. They vowed if the plan was implemented they would encourage their members to not give the pension fund permission to insure their lives.

"It's easy to criticize ideas, but it's awfully hard to come up with solutions," Black said.

UBS would not say Friday if it has abandoned efforts to pursue the plan in Texas, but the teacher pension plan said no meetings with the company are scheduled.

"We never have known enough about this proposal to know if it is workable for the state of Texas, but we do know there is a serious problem with TRS that needs to be addressed," Black said. "A loss of benefits for teachers or raising of taxes should be the last option, not the first."


Copyright 2004 Houston Chronicle

  Jan. 9, 2004, 9:13PM

Most HISD teachers feel safe at work, poll finds Union conducting own survey, says too many feel threatened


The Houston school district released a survey Friday -- prompted by an assault last fall at Sam Houston High School that put a male teacher in the hospital -- that showed 89 percent of teachers polled "feel safe in their school."

Nearly nine out of 10 of the 406 Houston schoolteachers surveyed by Market Research Insight stated they felt safe in their schools, said Verne Kennedy, president of the Florida-based research company.

But at least 56 teachers said they had been physically assaulted or verbally threatened in school, Kennedy said.

The research company called randomly selected teachers at their homes during the winter break. The teachers were asked confidentially a series of questions about their personal safety and overall school safety compared with the surrounding neighborhoods, Kennedy said.

One question asked: "At any time during the current school year beginning in August have you been in a situation at your campus where you thought that your personal safety was threatened by a student?"

The survey showed that 86 percent have not felt threatened this school year. Of the remaining 14 percent, the majority said they were threatened by profane or abusive language by students or by a physical threat from a student.

Houston Federation of Teachers President Gayle Fallon said 14 percent is too high. "Even using their figures, that's more than 1,600 teachers out of 12,000 who are threatened, and that's too many," she said Friday.

The union, conducting its own teacher safety survey, has collected 1,452 responses so far from middle and high school teachers -- who face a higher likelihood of injury because they teach older students, said Fallon. She questioned the ratio of teachers interviewed for the HISD poll -- 55 percent were elementary schoolteachers.

"For the most part, this is not an elementary school problem when you have students 3 feet tall versus 6-foot-3 in high school," Fallon said.

But HISD spokesman Terry Abbott said the district's survey was scientifically based, unlike the "biased innuendo" of the teachers union survey.

He pointed out the union's one-page written survey is topped by the paragraph: "HISD has refused to acknowledge that some of our campuses are failing to comply with the Safe Schools Act. In an attempt to guarantee that all campuses enforce this state law that mandates the removal of all violent and disruptive students from your campus, the federation asks all employees to complete this survey and return it to the union."

Districtwide, HISD statistics showed 40 cases of reported assaults against school personnel, not only teachers, for the 2002-2003 school year, said HISD spokeswoman Adriana Villarreal. The seventh-largest school district in the nation, HISD has about 12,000 teachers and 212,000 students.

"Most of those (reported assaults) were against our HISD police officers because they're the ones who usually break up fights or make arrests," she said.

The HISD Foundation, a nonprofit organization of community and business leaders, commissioned and paid for the outside survey. The final cost will be between $10,000 and $16,000 with safety recommendations and other information pending, Kennedy said.

In response to the results of the outside survey, HISD Superintendent Kaye Stripling said, "I want every teacher to know that they have my word that we're going to work hard to make sure that they feel safe at school and are not subjected to inappropriate behavior by students."

Her plans include better district training for teachers to deal with problem students, working with parents to improve student behavior, and reiterating to principals to follow the law of moving violent and disruptive students to alternative campuses, Stripling said.

In an assault in October, Sam Houston High School science teacher Dennis Fischgrab found a 16-year-old student loitering in a hallway at the school in the 9400 block of Irvington.

After being ordered back to class, the student repeatedly hit the teacher in the face and head, causing injuries that included a cracked sinus cavity.

The student was arrested and expelled and faces a charge of Class A assault that includes a possible one-year jail sentence and a $4,000 fine.

Fischgrab returned to the school after the holiday break, Fallon said.


Copyright 2004 Houston Chronicle