Ins and Outs of Texas Flood Infrastructure Funding

Alan Black, P.E., formerly Director of Operations at Harris County Flood Control District (HCFCD), is now Vice President at Quiddity Engineering responsible for helping public agencies secure local, state and federal partnership funding. 

While at HCFCD, Black oversaw planning, design and construction of all projects and managed applications to State and Federal agencies for flood-mitigation funding, bringing in more than $1 billion since Hurricane Harvey.  Since leaving HCFCD, Black helps clients understand the labyrinth of funding opportunities and develop a long term, proactive strategy to secure funds. His comments below provide insights into Texas’ multi-year funding process for the Flood Infrastructure Fund (FIF) and how to improve it.

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More Projects than Money

Rehak: So, you saw the three billion dollar list of projects that HCFCD submitted to the Texas Water Development Board (TWDB) for Flood Infrastructure Funding?

Black: Yes. We started developing that when I was still at Flood Control. That list was submitted to the San Jacinto Regional Flood Planning Group for inclusion in the State Flood Plan. It includes everything on the radar for Flood Control that they would like to be eligible for State funds at some point in the future. The list includes Flood Management Evaluations, Strategies and Projects. 

The labels can be a bit confusing, but Flood Management Projects (FMP’s) include design/construction; Evaluations include engineering studies, and strategies are things like flood warning systems. FMP’s involve the biggest dollars, but it takes a lot of upfront work to get there since TWDB requires a benefit-cost ratio (BCR). 

Calculation of the BCR is no small task, so there aren’t a whole lot of construction projects on the Harris County list; many got relegated to FME’s because the feasibility studies didn’t have enough information yet.

It’s hard pulling together lists like that because of the level of detail required, the short time allotted, and the politics involved. Commissioners’ Court members, for instance, might say, “There aren’t enough projects in my precinct!” 

Importance of Being in Flood Plan

Black: Even though state funding dollars aren’t available at this instant, you want every single project you’re contemplating to be on that list.

These projects will compete for whatever the state appropriates this year. And right now, that could be $400 to $700 million for the whole state depending on which bill you look at.

Houston Stronger has been advocating for $5 billion, but will consider themselves lucky if legislators appropriate $1 billion. 

Rehak: Where did this all this start?

Black: After Harvey, voters approved a constitutional amendment that created the FIF, which the legislators can replenish periodically.

In 2019, the legislature appropriated $770 million out of its economic stabilization fund, – the rainy-day fund – to get things started. 

The legislature is now modifying the flood-infrastructure fund rules so that dollars can only be spent on projects in the state flood plan.Alan Black

Need for More Frequent Plan Updates

Black: The flood plan is to be updated every five years. So, think about that for a second. If in the next five years you want to apply for FIF funding, the only way to be eligible is if you’re already in that plan. 

Many have already urged the San Jacinto regional flood-planning group to establish more frequent updates – say once a year – because HCFCD by itself is constantly developing new initiatives.

Method for Prioritizing Projects is Changing

Rehak: With so many projects, how will they be prioritized? 

Black: For now, look at the first round of applications on the TWDB website under the “flood intended use plan.”  TWDB spelled out the scoring criteria. They received 285 submittals and ranked them using those criteria. Then they invited the top projects to submit final applications that used up the amount of money available.

Rehak: The benefit/cost ratio seems to be a sticking point for a lot of people. Tell me more about that.

Black: Buried in the original plan was a statement that said a benefit/cost ratio greater than one is “generally preferred.” At the time, we interpreted that as a green light. We thought, “Hallelujah! Somebody finally gets it. They’re not going to make go/no-go decisions based purely on a BCR.” 

So, we intentionally submitted several projects with low BCRs because we thought we had a rare opening to get them funded. Unfortunately, TWDB rejected four of our applications – three in State Representative Armando Walle’s district alone – because of their low BCR. 

Possible Change In Benefit/Cost Ratio Requirements

Rehak: Are people trying to change the rules for future funding?

Black: Yes. This session, Senator Creighton filed SB 2524 to prohibit the TWDB from requiring a benefit/cost ratio on applications.

How Memorandum of Understanding Requirements Complicate Projects

Black: Also, currently, TWDB requires “memorandums-of-understanding” (MOU) between jurisdictions for FIF projects. Say one MUD has a project that benefits the entire Cypress Creek watershed. Right now, that MUD must enter into an MOU with every other MUD in the entire watershed!  Senator Creighton’s bill would remove that requirement. 

New Ranking Criteria Not Yet Finalized

Black: To be fair, TWDB has stated they plan to adjust how they award future funding based on lessons learned.  For example, to rank the projects in the State Flood Plan, the TWDB recently published draft ranking criteria and invited public comment.

TWDB has stated they don’t know yet how they will use that, but first and foremost, things will be narrowed down simply by who submits applications. If the state flood plan has 2,000 projects but only 300 submit full applications, that just filtered out 1700.

When New Funding Could Become Available

Rehak: When could we see flood infrastructure funding for projects on Flood Control’s list? 

Alan Black: Fairly quickly, I hope. Fiscal Year 2024 for the state begins September 1, 2023. They’re likely already working on their draft future intended use plan. So ideally, they roll out the application window late this year or early next and start that process. It takes a couple of months to put the applications together, evaluate them, score them, and invite final applications. Actual money maybe starts flowing this time next year.

Benefit of Two-Step Applications

Rehak: Why the two-step process? 

Alan Black: Two steps actually benefit local agencies because of the effort it takes to finish the final application. Abridged initial applications let you invest smaller amounts of time, money and resources. Why make people fill out full applications if TWDB knows it won’t have enough money to cover all of the projects?

Rehak: TWDB offers both loans and grants. Why?

Loans vs. Grants and the Local Funding Requirement

Black: Everybody wants grants because loans have to be paid back, but flood projects don’t generate revenue like water projects do. And the TWDB share of grant funding ends up the opposite of the way the Feds work. The Feds will say, look, you are going to have to have some local skin in the game, but we’ll cover 75% –  80% of the project.

The best grant percentage TWDB gave any Flood Control District project was 35%. All the rest had to come from local funds and they had to be truly local. 

For example, FEMA lets you use HUD Community Development Block Grant funds to offset local match requirements. But TWDB won’t. 

That’s going to greatly impact the number of applications in the future. People will say, “Oh, wait a minute, you’re only going to grant me 20% of my project? Well, I don’t have the other 80%. That’s why I was applying.” I hope they change that. 

Barriers to Cooperation Among Jurisdictions

Rehak: There were many projects in the Region Six San Jacinto flood plan outside Harris County that affect flooding inside Harris County. Is Harris working with other counties? 

Alan Black: The San Jacinto Regional Flood Planning Group represents eleven counties. But the Harris list comes from agencies within Harris boundaries. There was a tremendous outreach effort to other counties and municipalities. But many of them just never put two and two together. When I joined Quiddity, I asked one of our clients why they didn’t submit a project to the state flood plan. They said, “We didn’t even know about it.”

Fortunately, we got their project into the plan. But many smaller agencies just don’t realize the ramifications of not having projects in the plan. Getting their attention will be an uphill battle for several years. 

Rehak: Why isn’t Harris County cooperating more with other counties? 

Black: To be fair, they are somewhat.  But first, there has recently been some reluctance at Commissioners Court to spend Harris dollars outside of the County. 

Second, when Harris projects benefit other areas, we have to enter into an MOU with the adjacent agency or jurisdiction. It’s too complicated. People have other things to do. They have other, higher priorities closer to home. They just don’t have the time or the resources. 

In a perfect world, it would be great if the development of the San Jacinto Regional Flood Plan included every single agency in the region, but getting them all together at the same table at the same time is too big of a lift. 

Flood Infrastructure Funding “Only a Start”

Rehak: Will we ever have enough money to fill all our needs? 

Black: Let’s just say for the sake of argument, the legislature appropriates $400 million. That’s across the whole state. Now, let’s assume they have a $30 billion plan. That $30 billion could easily be spent in Harris County alone and still not meet half the needs.

Pulling together this state flood plan is a great start, but we WILL need other sources of funding.

At Quiddity, I preach being proactive with funding pursuits. Pick the project you want to apply for a grant for in 2 or 3 years and start developing the information now!

Black’s Guiding Principles for Funding Applications

Black: And understand my three guiding principles for funding. 

• You have to spend some money to make money. 
• There’s no such thing as free money. 
• And your project will go slower with federal funds.

Guest Post by Alan Black, VP at Quiddity Engineering on 4/7/23

2077 Days since Hurricane Harvey