Tuesday, June 08, 2010

The pros and cons of Renew Houston

Last week I was briefed on the Renew Houston city charter amendment initiative, which is trying to collect 22,000 signatures this month so it can be on the ballot in November.  The basic argument makes sense: we pay dedicated fees for water and sewer, which keep them maintained properly year after year, but we pay for roads and drainage out of the general fund, which is always being short-changed by the politicians for nearer-term needs, leading to massive underinvestment, flooding, and decay - so let's make roads and drainage work the same way as water and sewer, with a dedicated set of funding sources.  Drainage fees would be roughly proportional to the amount of land you own and how much you've covered it with an impermeable surface - which seems pretty fair to me.

Another benefit is that this initiative seems to shut down selling bonds for roads and drainage.  That may seem like a bad thing, but the problem is that politicians want to have a short term impact, so they sell a big bond issue to build something (and get the credit), and then make future administrations pay for those bonds, including significant amounts of interest.  If we operated instead on a pay-as-you-go basis, we could save all of that money going to interest and put it into actual infrastructure.

But the devil is in the details, and I'm hearing that the details were not vetted with some big players before going to petition.  The biggest issue seems to be the open-ended developer impact fees.  These have been a major problem in other cities.  The argument seems reasonable - "make developers pay their fair share" - but that's not how they really work out in practice.  Politicians find it easy to tax new development because that doesn't upset most voters (some of the anti-growthers even promote it).  By raising the cost of new housing (often by many tens of thousands of dollars), it has an insidious secondary effect of raising the market price of all existing housing.  Existing homeowners/voters love it - of course - but the city becomes less affordable and less competitive over time.  It can also dramatically reduce new construction - costing thousands of skilled and unskilled blue collar construction jobs - as well as increase sprawl and incentivize development to move outside of the city.  Discretionary incomes drop as more goes to housing, which means people spend less on restaurants, arts, sports, entertainment, charity, etc.  All in all, it's a very destructive slippery slope.

The charter mandates a minimum annual budget of $125 million.  I had a major concern that politicians would have too much incentive to make developers pick up as much of that burden as possible to keep the drainage fees lower for most homeowners - but after reviewing the charter language, that doesn't seem to be an issue: it clearly specifies that the $125m must come from drainage fees - all other sources of funding are "gravy", including impact fees.  But that doesn't mean the city council still couldn't set up outrageous developer impact fees - they just can't do it to reduce the drainage fees on land owners.

So my feelings on the initiative are mixed: I agree with the concept, but have serious concerns about the details - especially the open-ended development impact fees.  Unfortunately at this point, the language is set - and I think that language will bring out some tough opponents in the fall.  In addition, this is shaping up as the year of the angry, anti-tax, Tea Party voter, which does not bode well at all for initiatives like this.  DOA?  Maybe.  We'll just have to see how it plays out.

An interesting side note: I've often wondered how much new development outside the city affects runoff into the city.  Steve Costello, a city councilman and engineer, said he felt pretty confident there are adequate regulations in the surrounding counties to make new development runoff-neutral, i.e. they have enough local water detention.  I do hope that's the case.  If you have confirming or conflicting information, I'd appreciate hearing about it in the comments.

If you'd like to read more, the Chronicle, Rick Casey, and lots of other bloggers have written on Renew Houston too: Kuff, Bay Area Houston, and Brains and Eggs (which also has additional links) to name a few.

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At 10:44 PM, June 08, 2010, Anonymous kjb434 said...

Council member Costello's comment about adequate drainage outside of the city is fairly solid.

Very little development that drains to the city from outside of it's boundaries were built prior to the initial detention regulations that when into practice in 1984. The oldest areas of development on the northern boundaries (Champions, Woodlands, Kingwood) all drain to the east to Lake Houston and out to the Bay. All development that enters Greens Bayou goes around the city and is buffered from undeveloped floodplain and wetlands on the northeast side. It enters the Ship Chanel in the tidal areas.

The only older areas of development that affect the city of Houston that it has no control over is the Bellaire and West U area (just ask anyone in District C since this is a hot topic in electing a council member).

Whatever impact Jersey Village presented has been mitigated by HCFCD through the White Oak Bayou Federal projects.

Like you Tory, my biggest issue is with the potential abuse of the charter amendment in regards to the developer fees. The only thing to keep that in check is hoping the developer/builder political machine is as powerful as all the anti-developer folder claim.....

What I do know is that the West Houston Association (made up of mostly developers) is supportive of the campaign. The developer community has their supporters in the engineers that pushed to write the ordinance. The engineers primarily hail from the HCEC (Houston Council of Engineering Companies).

The one point that the supporters do have that is good is that know one else will tackle this. The mayor even acknowledge this by essentially telling HCEC that know one in city hall will take this up but the engineering community can do it on there own.

At 9:49 AM, June 09, 2010, Blogger Jardinero1 said...

I would rather see the city auction off all roadways wider than two lanes and let private interests operate and maintain them with tolls. This would eliminate the political element as well as the corruption and waste that goes with road building. It would encourage car pooling and greater mass transit use. Unlike cities and states, private road owners would be subject to civil liability for unsafe roadways so roads would be safer.

At 1:23 PM, June 09, 2010, Anonymous kjb434 said...


Private interest will on like road they can control. Limited access such needs to be in place.

Very few city streets are limited access except for sections of Memorial Drive and Allen Parkway.

Also, much of the waste in public road building originates in regulations that don't exist for roads built by private interest and then handed over to the public.

If you look at a construction plan set for a road built by a private developer vs. City of Houston vs. TxDOT, you'll notice that TxDOT plans are huge and the developer plans are small, yet they all can build the same piece of road.

At 3:43 PM, June 09, 2010, Blogger Jardinero1 said...

kjb434, that was a good point thirty years ago but today, you don't need to have to limit access to have a tollway. Technology exists to track and bill any driver on any roadway based on reading license plates alone. The only reason you don't see it implemented more on existing public tollways is because public employees working on public tollways are impossible to fire.

By waste and corruption I am referring to such boondogles as the Grand Parkway. Such schemes would not occur if roadbuilders and owners built only where they could be sure there would be enough riders to make the road cost effective.

At 4:28 PM, June 09, 2010, Anonymous kjb434 said...

The Grand Parkway will be tolled in ever section except for the existing portion (which is heavily used) from I-10 to US 59. Even the southern part of that segment will likely be tolled when completed.

The new section of the Grand Parkway east of Baytown is tolled.

They are following your model of tolling for the roadway.

At 7:23 PM, June 09, 2010, Blogger Alon Levy said...

At least the way it's portrayed on the initiative's website, it's mainly a pay-as-you-go scheme. The total tax the website states is $5/month, which from the point of view of housing affordability is trivial. Am I misreading something and they're planning to tax new developments more?

At 7:46 PM, June 09, 2010, Blogger Tory Gattis said...

Yes, the impact fee for new development is open-ended (separate from the $5 drainage fee you mention). It could be in the thousands or even tens of thousands of dollars per new residence.

At 9:41 PM, June 10, 2010, Anonymous Anonymous said...

I would like to see something like $0.01 per impervious sq ft, or however much it would have to be to reach that $125 mil. It shouldn't place any tax on raw land, in terms of drainage raw land is good and impervious cover is bad.

I would also like this since it would be the equivalent of taxing sprawling development with massive parking lots.

At 12:24 AM, July 13, 2010, Anonymous RC Derr said...

Renew Houston, (a "Non Profit" comprised of large engineering firms), is asking Houstonians to hand over a blank check for $10 BILLION. They have absolutely no plan whatsoever... just hand over the $$$. Wnen taxpayers are balking at $98M for a new soccer stadium I can't see them handing over $10B for this rain tax. That would build over 100 soccer stadiums. We're already paying the Harris County Flood Control District & others for the same thing... correct?!

At 7:06 PM, July 13, 2010, Anonymous GusF said...

The Flood Control District deals with the bayous, not the storm sewed systems. renew Houston is focused on the storm sewed, which is the responsibility of the City.


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