State of the City 2015: Growing a Diverse Economy

Good afternoon! Thank you for joining us today for the State of the City. Gabe, thank
you for your leadership and all you do for our community! Foster, I also want to thank
you, your staff and your board for all your hard work. I must tell you one of my favorite
events the chamber puts together is Lemonade Day. Thank you for empowering our
young children in teaching them how to own, build, start and operate their own business
with the time honored childhood lemonade stands. Not only are you building our
entrepreneurs and leaders of tomorrow, you are teaching them the importance of giving
back to our community. There is a common question children ask me. What is your
favorite part of being Mayor? The answer is always simple; the people. To effect
positive change with good people in my hometown of Corpus Christi is what motivates
me to continue to want to lead our great city. We have invaluable assets with our port,
existing businesses, military installations and educational assets. But our most
treasured asset is you, the people. Together, we share a vision of building a successful
city for many generations to come.
So, today we will hear where we have been and where we are going in moving our city
forward. This past year has been a get it her done year with a great deal of work
producing substantive results. We have improved our streets, long term water supply,
code enforcement and public safety, thank you Chief Simpson and Chief Rocha. And
this does not even include the long list of major operational efficiencies that were
implemented this past year.
We still have much work to do, but none of this could have been accomplished without
our committed city staff, our very capable city manager and our courageous city council.
Introduce City Council Team: Lillian, Colleen, Carolyn, Lucy, Mark, Brian, Chad and
Rudy. Include thanks to David Loeb, Kelly Allen and Priscilla Leal.
Earlier I mentioned results in operational efficiencies. But one initiative must be
highlighted because no governing body to our knowledge has ever taken on the
colossal undertaking our city did this past year.

Keeping up with cutting edge technologies in order to deploy services and realize
necessary cost efficiencies is fundamental to our city operations. We had core
applications that were installed 12-14 years ago. In the world of technology, these
applications were in the cave man years. This past year we began an aggressive
initiative to modernize our technology business model. Listen to this. We replaced: Our
financial system; our payroll and Human Resources systems; our municipal court
management system; our imaging and document management systems and other
records management.
Most organizations would be happy to complete any one of these projects in a year. But
with the leadership of our City Manager and the City staff working long and hard hours
sacrificing evenings and weekends, these projects were completed on time and on
budget. This was a herculean performance by the entire organization. Your taxpayers
thank you for a superhuman job well done!!
Our city operations are 24/7 and we have such a dedicated and hardworking city staff.
You have a noble calling with your public service. To the employees of the city of
Corpus Christi, you deserve our utmost respect and gratitude. And I stand proud to
serve beside you. Introduce city manager, Kristina Leal, Sandy DeLeon.

I also want to recognize my sister, Marie Galvan and you met my brothers earlier when
they said the prayer, Fr. Frank and Fr. Peter Martinez. And an amazing woman: my
dear mother, Dr. Maria Consuelo Martinez. Mom, when I was putting my thoughts
together, I thought to myself how grateful I am to you for many, many things. But today,
I want to publicly thank you and Dad, rest his soul, for your decision to move to Corpus
Christi after you married to raise your nine children. It truly has been a blessing to have
been born and raised in Corpus Christi, TX, the most beautiful city in the Milky Way
Galaxy. Thank you, Mom.

This past year, our council actions were very ambitious, especially when it came to
infrastructure. Since the incorporation of our city in 1852, we have never had the
unprecedented volume of street work under construction that we have today.
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I am pleased to report that the roll out of the first year of our 15 million dollar streets
maintenance program has been successful. We have about 50 more streets from the
2014 plan that will be completed by the end of next month.

I also want to thank you for approving our bond initiatives this past November. We will
need to make modifications to this plan due to a strong economy with higher costs for
labor and materials, but we are steadfast in our commitment to fixing our streets. The
plan to deal with our 30 year old problem of our crumbling streets is moving forward.

The second half of the streets challenge is dealing with the reconstruction of
our residential streets. Due to the decades of neglect, we have over 70% of our
residential streets in need of reconstruction. In this current budget, we dedicated dollars
from our general fund and revenues from our Industrial District Contracts to address the
residential streets monster. We still have a long way to go in completing a
comprehensive residential reconstruction plan. This second phase will require an
incremental and resolute pace without financially crushing our residents and businesses
who are the very source of funding the basic services for our community.

All the while, we must continue to diversify our economy in expanding our tax base to
be able to invest in our aging infrastructure. Our future success depends on our
building on our strengths with our deep water port, our tourism trade in promoting our
beautiful beaches and natural assets, retaining and adding value to our military
installations, partnering with our educational institutions in growing a skilled and
educated work force and completing our comprehensive strategic city plan. Our new
city plan will be rolling out this year and we literally have an opportunity to paint a new
canvas that can transform our city into a more livable, healthy and resilient community.
Understandably many are concerned with what will happen to our region with the falling
oil prices. But our local economy is much more diversified today than it was in the 80s
when the price of oil collapsed and hit our local economy hard. This is what I do know
today. Companies directly related to oil prices are still investing in Corpus Christi. Valero
still plans on investing $340 Million dollars to help process more domestic crude. And
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Flint Hills is also moving forward with their 600 million dollar investment in their west
refinery. These are just a few of the examples of over 50 companies that will continue to
add capital investment into our community. Our existing businesses, large and small, oil
or non-oil related are more diversified, resilient and are the ones who truly have brought
us to the dance. Folks, from 2010 to 2014 the Coastal Bends unemployment rate went
from 8.1 % to 4.2% today. We literally cut that in half which is lower than the national
average! The best measure of success for a community is the number of people who
are working.

And our very capable Convention and Visitors Bureau brought in 8.5 million people into
our community last year and have a goal to bring in another half of million people this
year. And for the first time in our citys history, Corpus Christi hotels were sold out last
year for the 4th of July weekend.
And today, we have an unprecedented 32 billion dollars of new investment in our
region. And of that 32 billion, the large scale capital projects of Voestalpine, M & G
Resins and Cheniere Energy are just beginning construction. And the falling oil prices
will not negatively affect their operations. And with the impending new Harbor Bridge,
expanded rail yard and the continued expansion of Interstate 69, we will be strategically
positioned to move these products globally.
Ladies and Gentleman, The State of our City in Corpus Christi TX is alive and well!
It is difficult to shake off the fears of falling oil prices, but folks we continue to have
companies wanting to locate in our region. Currently we have major companies
seriously looking into moving here and economists are still projecting positive growth for
our city for 2015. We will come out this cycle even stronger. So, take a closer look at
this video on how we have diversified our economy and have planned for a stronger
future.
Video #1(Shake it off)

Our successes with our new global economy opened the door wide open for active
recruitment from Asia and Europe. There have been Ten Chinese Companies that
have visited our region in just the past year. These ten companies heard of TPCOs
story and recognize foreign investments in our region are working. And suppliers of our
new global economy are also locating here. Our Corpus Christi Regional Economic
Development team has been meeting with Tier I and Tier II suppliers for TPCO,
Voestalpine and M & G and two of them are currently in site selection.
Shale is bringing manufacturing back home to the United States. As a result, our region
has gained a competitive advantage for manufacturers due to the availability of natural
gas as an economical fuel and feedstock. According to a recent International Energy
Agency report, Although gas price differentials have come down from the extraordinary
levels seen in mid-2012, natural gas in the U.S. still trades at one-third of the import
prices to Europe and one-fifth of those to Japan. Over the next two years we will see
another wave of foreign investment into our region. We have been able to leverage this
strong economy through the many years of visionary planning.
And one of those visionaries is with us today. This man could see 100 years down the
road and could see what it would take for us to be globally competitive a long term
water supply with the Mary Rhodes Phase I pipeline, the Joe Fulton Trade Corridor, the
deepening of the ship channel, the elevation of the Harbor Bridge and so much more.
And because of your vision, here we are today; A global economy. Frank Brogan, you
said build it and they did come. Frank, please stand and be recognized so we may
acknowledge your invaluable contributions to our region.
Frank, you will be glad to know that Mary Rhodes Pipeline Phase II will be complete by
the end of the year, if not sooner. And with plans to add about 25 thousand acre feet of
effluent water, we have a long term water supply to about 2040.
Growing a diverse economy also requires a diverse water supply. And in water years,
2040 is around the corner. With our arid and drought prone climate, we must add a
drought resistant water supply for our long term strategic planning.
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This past year we worked in partnership with industry in exploring an industrial

desalination plant. Industry represents about 40% of our water usage. They need a
predictable water supply and with this proposed partnership our city also has the
opportunity to add water back to our supply for our regions future growth.
The city has been exploring desalination since 2004. Today we are contracted with an
engineering firm to design, construct, and operate a demonstration seawater
desalination plant that includes a pilot study component. At the end of the pilot study,
we plan to have a desalination playbook for various desal technologies. And this effort is
working in concert with the partnership proposed for an industry desalination plant I
mentioned earlier.
And lastly, this past year, we signed a memorandum of understanding with the
Guadalupe-Blanco River Authority to share data. They are currently conducting a
feasibility study for a project that would include a seawater desalination plant co-located
with a power plant along the Texas Gulf Coast. Time will tell, but we are in the game
should an opportunity materialize for our region.
Although the costs of seawater desalination are higher compared to the lower costs of
conventional water supplies, Desal technologies are changing every day. And public
private partnerships like our current initiative with industry are opportunities worth
exploring. We are fortunate we have time on our side to be best prepared in the long
term for a future full scale desalination water supply. But until then, we will continue to
be strategic, methodical and prudent with our approach.
In growing a diverse economy, we are also building on our strengths with the BIG win of
Texas A & M University Corpus Christi Unmanned Aircraft systems. When it gets to full
maturity, it will be huge for our area. The innovation Center is already making room for
new companies. The new Electrical Engineering Degree program will not only add
value to meeting the demands of our local workforce but the degree program is also
expanding the scope of the UAS project.

The University is also working toward alliances with our military installations with the
Corpus Christi Naval Air Station and the Corpus Christi Army Depot. CCAD will be
performing depot level maintenance on the Army UAS aircraft.
The Unmanned Aircraft Systems project is leveraging a partnership with our military
installations. Anytime you can add value to our installations, we are making a stronger
case to fight against future congressional mandates of sequestration or God forbid a
base closure. Our Military Installations are a huge part of our economy. The Corpus
Christi Army Depot is THE largest employer in our city with a $462.7 million dollar
payroll. Together, Naval Air Station Corpus Christi and CCAD account for 20% of our
tax base.
Here are Sequestration facts. The Budget Control Acts of 2011 and 2013 created
automatic spending cuts of $109 billion in 2013 and 1.2 trillion by 2021. Sequestration
was postponed for 2014, but is scheduled to resume in 2015. That is this year folks.

According to the Comptrollers Office, Texas military installations provide nearly $150
BILLION dollars of an economic impact for our state. This represents six percent of our
states total economic activity. And our local installations, I repeat are 20% of our local
economy.

For the first time, a unified coalition of Texas mayors has organized to help protect our
installations. And the Texas Municipal League is playing a strong role in providing
administrative support and other invaluable resources. Our purpose is to inform our
policymakers on the necessity for the State of Texas to invest to protect, preserve, and
enhance the military value of Texas installations and the jobs that are vital to our
communities. We are requesting 1/10th of 1 percent of the militarys economic value in
Texas which is equal to an appropriation of $150 million dollars to invest in our
installations across the state.

For many years, military installations in other states have been appropriating funds
from their state treasuries to add value to their installations. Texas has not been
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proactive in protecting our bases like our competitors across the nation. Our Texas
Mayors Coalition met with House Speaker Joe Strauss, the Senate Finance Committee
and many legislators to make our case. This is not a question of if this should happen
but a question of how soon it can happen? Our local delegation gets it. They
understand the value of our military installations and stand ready to fight side by side
with us.
We are military country here in the coastal bend and we love and support our men and
women in uniform. Last year I was leaving the USS Lexington after a Naval Air Station
Corpus Christi event. I was walking down the ramp with two flight instructors and
thanked them for their service and told them how grateful we are to have them here in
Corpus Christi. They both said, We have been assigned to many installations around
the nation, but none have been as supportive as Corpus Christi. One of them said, My
wife and kids dont want to leave! They also went on to say how we value our
veterans.it was a great testimonial of our regions commitment to those who serve
and have served our great country.

We also want to keep our veterans here in our region. They make great contributions to
our workforce with their strong work ethic. Our educational institutions are answering
the call. One example is Del Mar Colleges Pathways with a Purpose Program. Del Mar
will be integrating Veterans into the civilian workforce to train them for good paying jobs
that are just waiting for them. And it has been said, If you want somebody whos going
to get the job done, hire a veteran!

We must continue to build on the partnerships we have established to address the

compounding workforce needs. I do want to publicly thank Ken Trevino with Workforce
Solutions of the Coastal Bend and his teams hard work for helping train and place
thousands of workers in our area. Thank you Ken! We continue to struggle with the gap
in a trained and educated workforce. Vocational training is one piece of this challenge.
Research has told us that a city with a more educated workforce with college degrees
tend to experience stronger long-term economic growth. Per The US Census Bureau,
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our metro area has 6 percent fewer bachelors degree than the rest of nation. Twenty
percent of local residents at least 25 years old have not finished high school, compared
to 12 percent for the United States.

There are significant disparities that show the average unemployment rate to be much
higher for local residents with less than high school education than their counterparts
with a high-school diploma. And the unemployment rate is reduced significantly for local
residents who are college graduates as well as those with an associate degree. The
more educated one is the more they will earn in the long term. And this is what truly
defines a sustainable successful city.

And as our city has grown and the economy has become stronger, we continue to
address the housing crisis. Per the Corpus Christi Housing Authority, there is a waiting
list for those who have qualified for public housing. And in addition to those who have
been priced out of the housing market, we have families who are not even able to buy a
home due to the low housing inventory. In 2009, we had about 10 months of a housing
inventory compared to 4 months of inventory today. I had dinner with a Realtor friend
of mine last month and she said if there was a larger inventory of homes in the $160 to
$200 thousand range; she would sell 5 five houses tomorrow. We already have trouble
recruiting a workforce into our area, the last thing we need is our workforce moving
away because they do not have a place for their families to live. Our city council is very
aware of this challenge and will be working on a plan with our partners to address our
housing needs.

In addition to the need of improving our housing market, our city needs to become a
place where not only our families want to stay and raise their children but also a city
where the best of the best of a workforce including entrepreneurs want to come and
live. Having a city with a built environment that is vibrant, synergistic and promotes
healthy living actually is planning for a diverse economy!

So when you think of cities that are attracting a strong workforce, what is it they are
doing that we are not doing? We know we have a great city where you can live, work
and play. But what can city planners do to improve upon this? How can we become a
first tier city? Anthony Flint wrote an article in CityLab and said the key characteristics
for millennials and boomers is the need to include a walkable city, vibrant parks, public
spaces, multiple transportation options and housing that would allow aging in place. It
was found that the path to prosperity not only lies in recruiting companies but city
planners should be concentrating on making your city a desirable place to live. Richard
Jackson wrote in Designing Healthy Communities, that most Americans are living in
cities that were designed decades ago, before we even knew the potential health
consequences of these designs. Our car-focused community design has facilitated a
burgeoning obesity epidemic. And we are aware of the chronic diseases like
diabetes and heart disease we have in our own community. If we work toward a built
environment designed for a healthier community we will have a healthier economy.
For cities all the over the nation, there has been a resurgent interest in downtown
revitalization. Urban living has long been attributed to aging baby boomersmany of
whom have already become empty-nesters and sold the house in the suburbs and
right-sized to a condo near the symphony and fabulous bistros. The young
professionals, known as the millennials are also attracted to downtown living. Cities
are focusing on urban renewal to entice a talent migration into their cities. They want
a liveable cities where they can walk to work, walk to have lunch at museum caf, shop
on their stroll home and then later go to an open public green space where they can
either go bicycling, walking, listen to live music, enjoy a cultural festival or attend an
exercise class.

And when you have a healthy and vibrant downtown, you will also attract more tourists
who will want to stay in our city longer and enjoy our other treasures like North Beach,
the Island, our tourist attractions and all the great fishing and hunting, kayaking, beach
combing our birdiest city has to offer! Downtown revitalization breeds a healthier
community.

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Timing is everything. The Goody Clancy firm will be finished this year with our city
strategic comprehensive plan. It is perfect timing due to the building of our new
Harbor Bridge and the great opportunity in designing an area that will open up a wide
area in our Sports, Entertainment and Arts District. And a great deal of the feedback
we received from the public outreach on working on this plan mirrored many of the
elements of successful walkable and livable communities. Our city council is
committed to this initiative and looking forward to working on revitalizing our
downtown area. This revitalization can be a catalyst for the other five nodes we have
around our city in our sustainability plan.

One of those nodes is on the Island. The plan for the Park Road 22 Bridge is a great
example of a healthy built environment with the most gorgeous water lined backdrop.
It will not only allow for the healthy exchange of the canal waters, but it will also allow
for healthy activities that will include bicycle lanes, boating, pedestrians being able to
traverse an IslandWalk Canal connecting to the Schlitterbahn waterpark and a marina,
on the east side of the highway. And I am committed to being part of the solution for the
completion of the Schlitterbahn waterpark. In the end, Schlitterbahn will transform our
Island and our whole region for the better for many years to come.

We are entering a new era in our city to shape and define our community for the
public good. This new era is a vital component to diversifying our economy AND a
unique opportunity to tell our own story. I envision a city with a vibrant downtown with
bustling businesses filled with downtown living, surrounded by a wonderful arts
community with tourists coming in from all over the world to enjoy our beautiful
natural assets from Hazel Bazemore Park to our Island jewel over the causeway.

We have so much promise in front of us and have experienced so much success by

working together. We have been nationally recognized for so many reasons related to
our strong economy. But to be the only city in the state of Texas in the top 10 in the
whole nation as one of the Happiest Cities is really something to be proud of.

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We do have so much to be thankful and happy about. I want to share this last video
with you before my closing words.

Video #2 (Happy)

I believe what will sustain us in keeping us the happiest city is our continued efforts in
unity toward what we know we can become. In this unity, we will find strength and be
bold to rise to the challenge of a new thinking. You have my commitment to continue
to work hard for you as your public servant. And we have a great unified team in our
city who are helping make our dreams become a realityand here they come!

Play Happy Song for closing procession

Closing words:
God bless you and our most beautiful city in the Milky Way Galaxy!

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