Weathering the Storm: Development Post Hurricane Harvey

Hilary Tyson

August 23, 2018

Without a source of funding for flood control and drainage infrastructure construction and ongoing maintenance, the confidence of the market in the stability of development projects and real estate assets will erode. Houston’s real estate development community will have to seek out creative and likely costly solutions to be able to prove to consumers and investors that they can create sustainable projects that can weather the storm.

As the one-year anniversary of Hurricane Harvey falls upon us, the City of Houston continues to search for solutions to the problems experienced during the massive storm. The 50 plus inches of rain that Houston received tested the city’s drainage system and infrastructure and inspired conversation on what the Bayou City can do to better handle significant rainfall in the future.

A culmination of issues in the Houston metropolitan area have contributed to the repeated flooding experienced in the past few years. Expanded urban development, loss of green space, inadequate on-site detention in new developments and unfinished and unfunded infrastructure projects, all add to the devastating effect of Harvey.

Any city would have suffered major damage from a storm the size of Hurricane Harvey. However, there are opportunities to mitigate economic, social and personal losses that we can build on as a community to work towards a more comprehensive flood control plan. Even on the smaller scale of Harris County, there is a lack of coordinated drainage planning. While the Harris County Flood Control District, created by the Texas Legislature in 1935 to provide flood damage reduction projects, has consistently sought to improve its existing drainage infrastructure, the municipalities and other governing bodies within Harris County have failed to manage the continued population growth and resulting development. There is not a quick fix, or simple solution to the flooding problem Houston faces, but collaboration and coordination across jurisdictions, input from stakeholders, and creative and thoughtful approaches to regional real estate development may be the key to mitigating future damage and economic losses in our community.

Houston’s Development Boom

Harris County has steadily added to its population over the past decade. The increase of impervious surfaces clearly contributes to the effects of flooding as development in the County has exploded. In Harris County, platting property is part of the development process. Plats allow local governments to enforce city or county development regulations to ensure consistency of development standards within the community. Requirements for plat approvals include drainage criteria levied by the drainage district. While the drainage criteria may be satisfactory for the particular property being platted, the approving agencies do not look at the area or region as a whole. Therefore, while one project may provide for sufficient flood controls, the approval process may not take into account the additional development projects that have been approved and not yet completed, or the additional strains such a project may have on the larger community or region. This issue highlights the need for collaborative and coordinated regional planning between jurisdictions and stakeholders in Harris County and surrounding areas.

More stringent land use requirements have been consistently met with opposition by the real estate development community. Stricter requirements mean more expense and deter economic growth, which would result in the loss of tax revenue from increased assessed values and commerce that would have otherwise been available. However, neighboring counties, like Fort Bend, have been successful in enacting stricter regulations for development, and it’s growing faster than Harris County. Developers there must incorporate more detention ponds than in Harris County and Fort Bend County requires them to hold excess floodwater on their properties for longer and discharge it at one-tenth of the rate in Harris County.

New real estate developments within the Houston metropolitan area, which are essential to keep up with economic growth in the region, increasingly rely on funding sources from out-of-state investors. Harvey and the historic pattern of recurring flooding in the Houston area have increased the scrutiny of these investors and necessitated that real estate developers respond by providing additional diligence studies and/or improvements to design to ensure that the dollars invested will not be lost in the next weather event.

Infrastructure Funding

At a recent Urban Flooding and Infrastructure conference, Houston’s drainage system was given a failing grade. Lack of funding has been continuously cited as a reason for Harris County’s inability to implement flood control plans. However, set for special election on Saturday, August 25, 2018 in Harris County is a $2.5 billion bond that would help fund a range of projects meant to bolster Houston’s antiquated drainage system. Without these bond funds, the cities and counties within the Houston metropolitan area will have no choice but to rely upon funds from more significant tax increases (directly or through special assessment districts) or additional fees charged to developers, which will like be passed on to end-use buyers. In these alternative scenarios, the financial burden is shifted to the individual. While improvements to the existing drainage system is a positive step, Houston will have to continue to keep up with increasing development.

Additionally of concern are limitations on the ability for the City of Houston to raise taxes to fund infrastructure projects due to the City of Houston’s revenue cap and extended development outside of the City’s jurisdiction. As a result, the City and counties outside of the City’s jurisdiction rely on special assessment districts to fund drainage infrastructure projects. The coordination of these special assessment districts with the county and city with respect to ongoing maintenance and improvement of infrastructure may be lacking in some cases. In fear of losses (personal and/or by loss of market value) due to future flooding events and revised flood plain mapping in progress, some real property owners and developers are incorporating costly solutions such as raising the elevation of existing improvements and/or incorporating additional retention and detention features on-site.

While there may be no clear answer on how best to mitigate flooding by future weather events, the consequences should not be solely borne by the individual. It is clear that any solution will require the coordination and cooperation of cities, counties, developers and other stakeholder as well as the community at large.