Supreme Court Punts Floodplain Regulation Case Back to Trial Court

3/24/25 – On March 21, 2025, the Supreme Court of Texas ruled on a long-running lawsuit between a developer and the City of Houston over floodplain regulation. The Supreme Court reversed an Appeals Court judgement, which had dismissed the developer’s claims against the City, thus keeping the case alive.

The developer argued that the City’s changes to floodplain regulation after Hurricane Harvey made their river-front property “undevelopable” and therefore were an unconstitutional taking of their property.

The case could have far-reaching implications for property rights advocates, developers, the enforcement of floodplain regulations, building codes, public safety, availability of flood insurance, and more.

However, the case also involves many specific issues, not yet decided, that could limit those ramifications. The Supreme Court acknowledged validity to the claims of both parties.

After ruling on a few, pivotal underlying issues, they found the case should not have been dismissed. And they simply remanded the case back to the trial court for “additional proceedings.”

Commons of Lake Houston
Most of the area being developed lies within one of the designated flood areas shown above. But note the date on the map: 2007. Eight years after Harvey, FEMA is still updating such maps. Early indications are that flood zones will expand 50-100%.

Background: Developer Claims “Inverse Condemnation”

After Hurricane Harvey struck Texas in 2017, the City of Houston amended its floodplain regulation to increase the elevation requirements for construction in a floodplain. A developer (The Commons of Lake Houston) sued the City for “inverse condemnation,” alleging that the amendments caused a regulatory taking of the developer’s property under the Texas Constitution.

The trial court agreed with the developer. But the City appealed. And the court of appeals reversed that trial court’s decision. It agreed with the City and dismissed the case.

The appeals court said that the developer could not establish a valid takings claim because the City amended the ordinance as a valid exercise of its police power and to comply with the federal flood-insurance program. The developer then appealed to the Supreme Court.

What is Inverse Condemnation?

Inverse condemnation refers to a situation where the government takes or damages private property for public use without formally using its power of eminent domain—and without providing just compensation to the property owner.

In simpler terms, the government does something that effectively takes away or reduces the value of your property, but doesn’t officially “take” it through normal legal channels, i.e., condemnation.

So the property owner must sue the government to get compensated, which is why it’s called inverse condemnation. It’s the opposite of the usual process used by government to take someone’s property.

Floodplain Regulation Changed Before Development Completed

The Commons of Lake Houston first began developing a 3,300-acre residential community near Lake Houston in 1993.

The Supreme Court opinion says that, “Focusing on one phase at a time, it subdivided, platted, and cleared the raw land in sections, adding streets and utilities and then selling empty lots to buyers and builders who design and construct the homes.”

“This case involves a section called The Crossing, a 300-plus-acre area that includes many of the project’s most valuable lots. The Commons’ business plan relied on revenue from the earlier phases to finance the subsequent phases and ultimately produce profits from the last phases, including The Crossing,” said the Supreme Court.

Crossing at the Commons of Lake Houston
Crossing at the Commons of Lake Houston. Compare to colored map above showing floodplains.

“The Crossing’s lakefront and lakeview lots are more valuable than most, but they also lie in areas colloquially referred to as the 100- and 500-year floodplains,” continued the Supreme Court.

After the City approved the developer’s initial plans, Hurricane Harvey struck in 2017. The City of Houston changed its floodplain regulation in anticipation of changes from FEMA concerning the depth and width of floodplains.

Before Harvey, the City had initially approved the developer’s plans based on slabs being one foot above the 100-year floodplain. But in 2018, the City amended its code to require foundations at least two feet above the 500-year floodplain.

How Regulation Changes Impacted Developer

Justice Jeffrey Boyd, speaking for the Supreme Court, wrote, “Commons asserted that the amendment increased the required slab elevations in The Crossing by an average of 5.5 feet and, as a result, rendered 557 of the 669 total lots (and over seventy-five percent of the total acreage) undevelopable.”

“Because of the new elevation requirement, The Commons alleges it had to cancel development and sales contracts, lost $4.4 million in revenue and $1.8 million in bond reimbursements, and had to borrow over $1 million to cover cash flow. Ultimately, The Commons asserts, the amendment destroyed its expected profits from the entire 3,300-acre project.”

“The Commons filed this suit against the City in 2020, asserting that the amended ordinance caused a regulatory taking for which the Texas Constitution requires reasonable compensation,” said Boyd.

Underlying Issues

Like many legal cases, this one involved arguments over procedural elements and precedents:

  • Did the City actually deny a permit or did it just not approve one?
  • Does the City have the right to insist on approving plans for specific buildings when the developer does not actually build buildings? (The developer sells lots, not buildings.)
  • Does the City’s governmental immunity apply to this case?
  • Does a change in a regulation for the public good constitute a taking?
  • Did the City actually damage the Commons’ property?
  • Does the City have the right to promote public safety and minimize flood losses?
  • Is the City’s exercise of its powers in this case compensable?
  • Did the City justifiably deny the Commons’ anticipated profits?
  • Had the City not increased elevation requirements, would anyone have been able to obtain flood insurance from the Federal government?

Boyd references all these issues. But the court’s 30-page opinion doesn’t hinge on all of them. It focused mainly on those that constituted reversible errors in the appeals court decision, i.e., whether the:

  • City’s actions constituted a taking of the developer’s property
  • Developer sued prematurely
  • Developer lacks standing to assert them

The 30-page opinion will make fascinating reading for anyone:

  • Who owns property in or near a floodplain
  • Seeking to develop property in a floodplain
  • Affected by others developing property in floodplains.

What Court Did and Didn’t Conclude

In the end, the Court concluded the Commons:

  • Can assert a valid regulatory-takings claim even though the City amended the ordinance as “a valid exercise of its police power and to ensure compliance with the National Flood Insurance Program.”
  • Had a claim that is “ripe for adjudication.”
  • Has standing to assert its claim.

The Court did not address whether the Commons has, in fact, asserted a valid regulatory-takings claim under several different precedents or the Texas Constitution’s “damaged” provision.

In the end, the Supreme Court simply reversed the Appeals Court judgment that summarily dismissed the Commons’ claim. Then, the Court sent the case back to the trial court “for further proceedings.”

Resident Reaction

I called a Commons resident to discuss the community’s reaction to the Supreme Court decision. She summed it up in two words: “It’s tragic.”

She said that when she and her husband bought their property, the developer gave them assurances that the land in question would be used only for parks. She also said. “We were told by salesmen that there would never be anything down there. Now they’re taking away the nature.”

“In my opinion, there’s not one person out here that’s happy to know it would be built up like that,” she added.

We haven’t heard the last of this yet.

For More Information

Read the actual court documents and more:

Posted by Bob Rehak on 3/24/25

2764 Days since Hurricane Harvey

The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.

Editorial: The Perils of Pendulum Politics

3/22/25 – Enough of the pendulum politics already! We seem to swing from the left to the right and from overregulation to no regulation, oblivious to any middle ground.

The latest agency in the Washington crosshairs: the Environmental Protection Agency (EPA). No doubt, most business people can cite an extreme example of EPA overregulation. And no doubt, many will welcome a relaxation of environmental regulations.

But the last 45 years have proven that businesses can make a fair profit while still protecting the environment, jobs and public health.

Those old enough to remember a time before the EPA know what I’m talking about. As I read several stories today about the gutting of the EPA, I not-so-fondly remembered scary images from my early childhood growing up in the Cleveland and Pittsburgh areas in the 1950s.

The Cuyahoga River caught fire a total of 13 times dating back to 1868. It was one of the most polluted rivers in America. Photo: Cleveland State University Library.

At one time, people thought such horrors were the price of jobs and prosperity!

But the Dow Jones Industrial Average has risen fifty-fold in the 45 years after the formation of the EPA in 1970. That’s far more than the seven-fold rise in the 45 years before the EPA.

Is Changing EPA’s Mission a Wink-Wink to Polluters?

I just finished reading two articles in the New York Times about the EPA. The first began, “The Trump administration said it would repeal dozens of the nation’s most significant environmental regulations, including limits on pollution from tailpipes and smokestacks, protections for wetlands…” Yada Yada.

The second article quoted Lee Zeldrin, new head of the EPA. He reportedly said, “Those changes…would allow the agency to better focus on its core mission and powering the Great American Comeback.”

The core mission no longer seems to be environmental protection as the name of the agency implies. According to Zeldrin, the core mission is now lowering the costs of “buying a car, heating a home and running a business.”

The same article also quoted Ann E. Carlson, a professor of environmental law at the UCLA School of Law. She said the changes at EPA are “…essentially a wink, wink to…pollute with what may be close to impunity.”

Need for Consistency

No doubt, most business people in Texas can cite an example of EPA overregulation. And no doubt, many will welcome a relaxation of environmental regulations.

But consider this. In general, one of the primary needs of most businesses is consistency. What CEO would invest a billion dollars in a new plant knowing that a change in the Oval Office could cause a regulatory flip back in the opposite direction before construction of the plant even finished?

Such uncertainty slows businesses down. It makes planning, forecasting, and decision-making much more difficult as business leaders weigh political probabilities.

Opportunities Overlooked

In my opinion, rather than only trying to make government more efficient with a chainsaw, we should be trying to make it work better. And when it comes to flood mitigation, opportunities abound.

Last night, I published an article about how Montgomery County has spent an incredible eight years running the grant gauntlet to obtain money to clean logjams out of its streams. And it could still be another year or more before the work can even begin. The work will likely take only months.

But instead of focusing on such obvious opportunities, we are simply lopping off branches of government that we still need.

Why We Still Need a Strong EPA

As I not-so-fondly reminisced about those horrific images from my childhood, I received a text about Hallett’s sand mine on the West Fork San Jacinto. The text contained a video showing the mine still leaking wastewater into the public water supply – after a Texas Commission on Environmental Quality (TCEQ) investigation.

State, county and local government agencies, such as TCEQ, are far more susceptible to lobbying groups, such as the Texas Aggregate and Concrete Association, than a Federal agency like the EPA.

The video shows a road acting like a berm to keep wastewater from escaping. But close scrutiny shows the wastewater going under the road, rather than over it, as it used to.

Video supplied by concerned nearby resident shows wastewater now goes under road instead of over it.

Historically, different levels of government in the U.S. complement each other. When local levels fail, we need other levels to help. Without the EPA as a backstop for the TCEQ, you will likely not only experience higher flood risk, but higher health risks, too.

During the COVID pandemic, the EPA announced a pause in its enforcement operations. Air pollution surged 62% in three weeks after the announcement, according to a Texas A&M study. Such are the perils of pendulum politics.

Posted by Bob Rehak on 3/22/25

2762 Days since Hurricane Harvey

The thoughts expressed in this post represent opinions on matters of public concern and safety. They are protected by the First Amendment of the US Constitution and the Anti-SLAPP Statute of the Great State of Texas.

MoCo Receives Approval from GLO for 3 De-snagging Projects Totaling $60 Million

3/21/25 – Montgomery County has received approval from the Texas General Land Office (GLO) for three “de-snagging” projects totaling $60,374,999.66. The grant, first reported in 2022, stems from money allocated to Texas by the U.S. Department of Housing and Urban Development (HUD) after Hurricane Harvey.

I’ll discuss the complex, lengthy process involved in awarding these grants below, but first let me outline the projects and who will benefit.

De-snagging Projects Will Benefit 185,000 People

The $60 million will enable three “de-snagging” projects. They include:

  • East County – $36.4 million
  • Lake Creek – $9 million
  • Stewart Creek – $15 million (also includes bank stabilization).

All three projects involve removing trees and loose debris that have fallen into streams or rivers.

Obstructions on San Jacinto East Fork after May 2024 flood…
…backed water up, threatening homes and businesses.

In many cases, log jams have formed around bridges, also threatening roadways. In addition, other debris – such as old cars, tires, and appliances – also hinders conveyance and streamflow.

The three projects also involve stream bank protection, i.e., with riprap or revegetation. But the Stewart Creek project also involves bank stabilization to help restore and harden the bank that has been lost.

The projects will help protect more than 185,000 people. Specifically, East County will help protect an estimated 115,439 people. Stewart Creek will help 42,560 people. And Lake Creek will benefit 28,325 people.

Mitigation Funds Not Limited to Just Harvey Debris

According to the GLO, all three areas qualify as HUD Most Impacted and Distressed (HMID). And even though the money comes out of an allocation made to the state after Hurricane Harvey, debris that has fallen into streams after Harvey still qualifies for removal.

That’s because of a distinction between disaster-relief and flood-mitigation funds. Disaster relief funds can only be used to help repair damage directly resulting from a storm. However, flood mitigation funds can also be used to help prevent future damage. Disaster relief looks back; flood mitigation looks forward.

So, anything in the streams today qualifies for removal because it would help prevent future flooding. That includes, but is not limited to debris deposited by Imelda in 2019 and three storms in 2024.

In 2024, we had a derecho that downed many trees. Then we had floods in May that swept them into streams and against bridges. Finally, we had Hurricane Beryl that downed even more trees. We experienced one wave of destruction after another.

More trees blocking San Jacinto East Fork after Beryl.

There is no doubt that people are suffering and will continue to suffer if the log jams are not removed.

According to Morgan Lumbley with the Montgomery County Office of Emergency Management, trees aren’t the only problem. The streams also contain debris such as cars, tires, refrigerators and trash that can back water up and flood people.

Multi-Step Funding Process Finally Near End

These funds come from HUD via the GLO and the Houston-Galveston Area Council (HGAC). This complex process involves multiple levels of government.

In 2018, Congress voted $28 billion for mitigation money throughout the U.S. Then HUD allocated $4.3 billion overall to the state of Texas for disasters in 2015 through 2018. That included Hurricane Harvey.

The Federal register for the HUD allocation was not even published until August 2019, two years after Harvey, and 1.5 years after the appropriation.

After Texas received its allocation, GLO had to devise a state action plan and go through a public comment period and approval processes.

At the state level, a large portion of the Texas’ allocation went to local Councils of Governments, such as the HGAC. After HGAC finally knew how much it had to work with, it had to devise a plan for distributing the money locally.

HGAC then had to develop and negotiate a plan called a MOD (Method of Distribution) based on all the requests for assistance from its competing members. A MOD basically is a list of sub-recipients stating how much each gets for what. That involved lengthy submission and project-ranking processes.

Once finalized, the GLO approved HGAC’s MOD in principle. Then entities like Montgomery County actually started developing highly detailed applications involving demographic data, engineering reports, surveys, maps and more. That step is very expensive, which explains why projects are conditionally approved at a high level first.

Where We Stand Now and Next Steps

The GLO just approved three of those applications for MoCo. This page on the GLO site outlines a six-step approval process for Council-of Government projects.

Now that the GLO has approved the MoCo project applications, only one more step remains before work can start. The GLO and MoCo must sign contracts formalizing their agreements. Then work can begin toward construction. That involves bids, procurement of vendors, obtaining any necessary permits, etc.

Whew! And after all that…the actual de-snagging can begin – hopefully before hurricane season…next year.

One observer noted that while upfront processes take years, the actual work might take only months. That makes a great case for de-snagging the business processes around flood mitigation. Perhaps we can get DOGE working on that.

Posted by Bob Rehak on 3/21/25

2761 Days since Hurricane Harvey