Actually this song was probably not about Houston. The song is a reference to Leadbelly. Leadbelly had a song called Fannin Street. Fannin Street was the red light district of political boss Mr Tom Hughes' town, Shreveport, Louisiana. The initial verse that mentions Houston Town is a play on Tom Hughes' town. Sorry Houston.
Best New Song about Houston - 2007
"Fannin Street," Tom Waits
A lovely lament from Tom Waits's latest, Orphans: Brawlers, Bawlers and Bastards, "Fannin Street" seems especially timely. The song opens like this: "There's a crooked street in Houston town / it's a well-worn path I've traveled down / now there's ruin in my name / I wish I'd never got off the train and I wish I'd listened to the words you said / Don't go down to Fannin Street / you'll be lost and never found, you can never turn around." It would seem that Waits doesn't get here that often, as there was only one block of Fannin Street where those words applied – the area around the Hotel Metropole, one of the last flophouses downtown. And now that too is gone. Earlier this summer, this last piss-reeking, wino-friendly block on Fannin was bought by Gerald Hines, so the hotel and the eminently funky, Bukowskian dive bar on the ground floor are now boarded up, likely enough soon to be "lost and never found."