According to a December 15 press release by the Texas Water Development Board, Phase 1 of Houston’s new Northeast Water Purification Plant expansion is nearing completion. Phase 1 will supply 80 million gallons per day of treated surface water to the residents of Harris County, Fort Bend County and City of Houston.
Two more phases remain. Phase 2A will deliver another 80 million gallons per day to the same areas. Phase 2B will deliver 160. So the entire complex, when complete, will deliver another 320 million gallons a day. That’s in addition to the 80 million gallons per day the original plant delivered before expansion.
Goals of Plant
The Texas Water Development Board provided $1.9 billion for the Northeast Water Purification Plant expansion project, making it one of the largest in the country.
The plant has two goals:
Provide water for a population that increases by almost a million people per decade.
Reduce groundwater usage and subsidence.
Completion Estimated in 2025
The TWDB did not provide a date for expected completion of the next two phases, but at a May 2023 community meeting, project managers estimated a completion date in 2025.
Artist’s rendering of completed project, looking NNW. Expansion area outlined in orange.Satellite photo from May with substantially complete phase outlined in red.Phase 1 in center of plant now substantially completed. Original plant is on far right.Photographed in August 2023.Phases 2A and 2B still under construction. Photographed in August 2023.Looking south.Entire plant. Looking east across older area toward new construction. Lake Houston at top of frame.Plant’s new Intake Facility.Those twin pipelines are big enough to drive pickup trucks through.
The Luce Interbasin Transfer Project is associated with the expansion of the treatment plant. The channel from the Trinity River will ensure a steady supply of water in Lake Houston as Montgomery County’s growth demands more water from Lake Conroe.
Inflation has reduced the 2018 Flood Bond’s purchasing power. The general rate of inflation during the last five years adds up to 20%. That could potentially eliminate one fifth of the projects in the flood bond.
It’s a serious concern for the people whose mitigation projects have been put at the end of the line by the County’s Equity Prioritization Framework. Some residents may never see any benefit from their tax dollars, which are going to other areas.
Here’s how Harris County Flood Control District (HCFCD) will look at projects that now have an uncertain future.
Local Costs Consistent with General Rate of Inflation
In a presentation to the Harris County Community Flood Resilience Task Force, Jesal Shah PE, the new Chief Project Delivery Officer for HCFCD, discussed the issue of inflation. Shah, a Houston native, has been in his job since May, 2023. He previously led flood-risk reduction planning, design, engineering, and construction efforts for the government of British Columbia.
Shah cited 15-20% increases in construction, material, and right-of-way acquisition costs for Harris County flood-mitigation projects.
This and other screen captures below arefrom Shah’s presentation to Flood Task Forceon 12/14/23.
Summary of 2018 Flood-Bond Funding To Date
The 2018 flood bond contained $2.5 billion in funding for approximately $5 billion worth of projects. Partnership funding, i.e., grants, were supposed to make up the difference.
And at this point, all of the partnership funding has been secured thanks to an infusion of $825 million in Community Development Block Grant funding from the U.S. Department of Housing and Urban Development (HUD) and the Texas General Land Office (GLO).
“Anticipated”should now be removed from this slide.
That’s very good news.
63% of Bonds Sold Already
Shah says that the County has sold $1.575 billion worth of bonds to date, almost two thirds of the original $2.5 billion.
Of the two thirds, about half the money has been spent or “encumbered.” Encumbered means the money is committed to projects and difficult to move. For instance, a project may be in construction, but not yet completed.
The other half has been committed to projects, but not yet encumbered. For instance, bonds may have been sold, but the construction job may not have been awarded yet.
See below.
Securing the partner funding is huge good news. But the impact of inflation is worrisome. To help deal with that, the County is re-evaluating all projects associated with the flood bond.
How Projects are Being Re-evaluated
Shah cited three types of projects listed in the original bond. Those with:
Well defined scope and accurate estimates.
Clear scope but inaccurate estimates. For instance, the Lauder basin has almost tripled its original cost estimate.
Vague scope and unreliable estimates.
See examples below.
To complicate matters, some backstop funding from the Flood Resilience Trust is no longer available because of new “guidance” from Commissioners Court. That will eliminate $343 million in funding flexibility.
And keep this in mind. The bond program is far from complete. We could easily see another 15-20% of inflation before its over. So what to do?
Sharpening the Pencil
Shah’s team is dividing the remaining bond projects into two piles.
Those with clear scope and funding will be completed.
Those without clear scope or funding will be re-evaluated.
Shah hopes to present an updated project list to Commissioners Court sometime during the second quarter of 2024.
Shah has already taken a first pass at re-evaluating the bond’s project list. Of the 181 projects identified in the bond:
30 have already been completed or eliminated.
63 will continue moving forward.
88 (almost half) will need more funding or more clarity (i.e., more engineering studies/tighter estimates) to move forward.
The slide below shows the guiding principles for evaluating the 88 projects that need more funding or clarity.
Lack of Balance Could Jeopardize Future Bond Offerings
One possible way to mitigate the toll of inflation involves phasing projects in areas that have already received large amounts of funding so that projects in areas that received little funding could move forward.
For instance, in a project that involves multiple stormwater detention basins, one or more of the basins could be delayed until the next bond. Meanwhile, delaying that basin could free up money for a basin in a different watershed.
However, during Q&A, Shah said he has no plans to phase projects.
A lack of equitable distribution could jeopardize future bond offerings.
And many areas have received little funding from this bond.
More than a 100 to 1 difference exists between projects on the left and right.
In the future, voters who saw no benefit from the 2018 flood bond might, once again, feel victimized by bait-and-switch tactics.
Selling future bonds will require restoring faith in the fairness of government. And that will require spreading bond funds around so that everyone – in all parts of the county – sees some benefit from them. That’s my humble opinion.
When HCFCD presents its updated project list to Commissioners Court in the second quarter of 2024, it will be interesting to see whether Commissioners and the County Judge agree with it.
John Whitmire’s landslide election in the Houston Mayor’s race may send a message to them. Whitmire is a Democrat who campaigned across the aisle and received heavy Republican support.
Posted by Bob Rehak on 12/16/2023
2300 Days since Hurricane Harvey
https://i0.wp.com/reduceflooding.com/wp-content/uploads/2023/12/20231214-Screenshot-2023-12-14-at-6.16.06%E2%80%AFPM.jpg?fit=1100%2C704&ssl=17041100adminadmin2023-12-16 14:47:262023-12-17 10:47:10HCFCD Grappling with Inflation’s Impact on Flood-Bond Purchasing Power
For residents of flood-prone areas such as Northpark South, only the National Flood Insurance Program (NFIP) stands between a river and ruin.
But ironically, efforts to staunch financial hemhorraging are making NFIP flood insurance unaffordable for many with low incomes. That creates an uncertain future for developments and people in or near floodplains.
Moreover, Congress must reauthorize NFIP before midnight on Feb. 2, 2024, to avoid a lapse in authority to sell flood insurance and borrow funds.
Approximately six million homes sit in special flood hazard areas nationwide. The National Association of Realtors estimates that should a lapse in the NFIP’s authorization occur, it threatens 1,300 property sales each day.
Hurricane Harvey inundated the area below with approximately eight feet of floodwater. Now, Century Land Holdings of Texas is clearing this risky area bordering the San Jacinto West Fork to build more than 230 homes.
This 50-acre patch of dirt is a symbolic battlefield in a growing debate over NFIP, which Congress must renew or reform next year.
Jobs vs. Jitters
A coalition of developers, home builders, realtors and mortgage lenders sees the NFIP’s nationally subsidized insurance rates as a tool to sustain employment, grow the economy, and enlarge the tax base of communities.
Others believe the subsidies encourage dangerous development in flood-prone areas by giving homebuyers a false sense of security.
Finding the right balance between encouraging responsible development and mitigating flood risks is a complex task for policymakers. Perhaps nowhere do the issues come into sharper focus than in Northpark South. Even the entrance to the subdivision was under eight feet of water. That would make evacuation difficult for anyone caught napping when the waters rise.
Contradictory Lawsuits Against FEMA
Contradictory lawsuits symbolize the two sides in this debate. An article in Government Executive noted that FEMA is being sued for making flood insurance too expensive AND too cheap!
The second lawsuit alleges taxpayer-subsidized, discounted coverage encourages floodplain development in high-hazard areas by providing insurance policies that obscure risk to property owners.
“This FEMA-incentivized development puts people in danger, harms communities, and destroys ecosystems.”
The contradictory allegations in the lawsuits underscore the need for careful policymaking around flood insurance.
Battle over Risk Rating 2.0
What triggered these lawsuits? FEMA has tried to navigate these dangerous waters by introducing a new system called Risk Rating 2.0. Risk Rating 2.0 reflects risk to individual properties from multiple sources of flooding, instead of aggregating people in broad flood zones. It also takes into account factors such as building codes and elevation that can mitigate flood risk.
Risk Rating 2.0 is an attempt to eliminate the subsidy aspect of flood insurance by quoting rates on an actuarial basis. Reportedly, some homeowner’s flood insurance rates have fallen, but others are rising and will continue to rise for years to come as risk becomes fully priced into policies. Texas and other Gulf Coast states are in the highest premium increase group, according to GAO.
Right now, law caps annual rate increases under Risk Rating 2.0. But the Congressional Accounting Office says caps only perpetuate an unfunded premium shortfall. GAO estimated it would take until 2037 for 95 percent of current policies to reach full-risk premiums, resulting in a $27 billion premium shortfall by then.
GAO also believes that discounted premiums hide fiscal exposure, address affordability poorly and hinder private-market growth.
In the meantime…
People who buy homes in Northpark South may find insurance affordable today and then find themselves quickly priced out of the market because of risk.
Higher premiums give policy holders a greater incentive to mitigate flood risk. But they’re also causing many homeowners to cancel policies.
One Congressional aid I talked to worried that if not enough people buy flood insurance, places like Northpark South will become “instant slums” after the first time they flood.
The reality: those who most need flood insurance can least afford it.
The GAO report comes as close to riveting reading as any government document I have ever read. Among other things, it points out how FEMA’s Community Rating System may send contradictory risk signals to potential buyers.
Approximately 236 homes and an 11.2 acre detention basin will be nestled between sand pits and occasional raging floodwaters.Northpark is the divided street in the background.Kingwood is beyond.
When Congress takes up NFIP next year, debate could lead to additional reforms. Watch closely. No one can predict the outcome at this point. Lobbyists are choosing up sides … between property rights and protection. Between a river and ruin.
Posted by Bob Rehak on 12/14/23
2298 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.
https://i0.wp.com/reduceflooding.com/wp-content/uploads/2023/12/20231213-DJI_0385.jpg?fit=1100%2C733&ssl=17331100adminadmin2023-12-14 13:08:102023-12-14 13:42:45Between a River and Ruin
Phase 1 of Northeast Water Purification Plant Expansion Nears Completion
According to a December 15 press release by the Texas Water Development Board, Phase 1 of Houston’s new Northeast Water Purification Plant expansion is nearing completion. Phase 1 will supply 80 million gallons per day of treated surface water to the residents of Harris County, Fort Bend County and City of Houston.
Two more phases remain. Phase 2A will deliver another 80 million gallons per day to the same areas. Phase 2B will deliver 160. So the entire complex, when complete, will deliver another 320 million gallons a day. That’s in addition to the 80 million gallons per day the original plant delivered before expansion.
Goals of Plant
The Texas Water Development Board provided $1.9 billion for the Northeast Water Purification Plant expansion project, making it one of the largest in the country.
The plant has two goals:
Completion Estimated in 2025
The TWDB did not provide a date for expected completion of the next two phases, but at a May 2023 community meeting, project managers estimated a completion date in 2025.
The Luce Interbasin Transfer Project is associated with the expansion of the treatment plant. The channel from the Trinity River will ensure a steady supply of water in Lake Houston as Montgomery County’s growth demands more water from Lake Conroe.
Reducing subsidence is paramount for the region. Subsidence has been linked to flooding. In fact, a whole subdivision on Galveston Bay in Baytown became uninhabitable before the State created the Harris Galveston Subsidence District.
Here’s its story.
Posted By Bob Rehak on 12/18/23
2302 Days since Hurricane Harvey
HCFCD Grappling with Inflation’s Impact on Flood-Bond Purchasing Power
Inflation has reduced the 2018 Flood Bond’s purchasing power. The general rate of inflation during the last five years adds up to 20%. That could potentially eliminate one fifth of the projects in the flood bond.
It’s a serious concern for the people whose mitigation projects have been put at the end of the line by the County’s Equity Prioritization Framework. Some residents may never see any benefit from their tax dollars, which are going to other areas.
Here’s how Harris County Flood Control District (HCFCD) will look at projects that now have an uncertain future.
Local Costs Consistent with General Rate of Inflation
In a presentation to the Harris County Community Flood Resilience Task Force, Jesal Shah PE, the new Chief Project Delivery Officer for HCFCD, discussed the issue of inflation. Shah, a Houston native, has been in his job since May, 2023. He previously led flood-risk reduction planning, design, engineering, and construction efforts for the government of British Columbia.
Shah cited 15-20% increases in construction, material, and right-of-way acquisition costs for Harris County flood-mitigation projects.
Summary of 2018 Flood-Bond Funding To Date
The 2018 flood bond contained $2.5 billion in funding for approximately $5 billion worth of projects. Partnership funding, i.e., grants, were supposed to make up the difference.
And at this point, all of the partnership funding has been secured thanks to an infusion of $825 million in Community Development Block Grant funding from the U.S. Department of Housing and Urban Development (HUD) and the Texas General Land Office (GLO).
That’s very good news.
63% of Bonds Sold Already
Shah says that the County has sold $1.575 billion worth of bonds to date, almost two thirds of the original $2.5 billion.
Of the two thirds, about half the money has been spent or “encumbered.” Encumbered means the money is committed to projects and difficult to move. For instance, a project may be in construction, but not yet completed.
The other half has been committed to projects, but not yet encumbered. For instance, bonds may have been sold, but the construction job may not have been awarded yet.
See below.
Securing the partner funding is huge good news. But the impact of inflation is worrisome. To help deal with that, the County is re-evaluating all projects associated with the flood bond.
How Projects are Being Re-evaluated
Shah cited three types of projects listed in the original bond. Those with:
See examples below.
To complicate matters, some backstop funding from the Flood Resilience Trust is no longer available because of new “guidance” from Commissioners Court. That will eliminate $343 million in funding flexibility.
And keep this in mind. The bond program is far from complete. We could easily see another 15-20% of inflation before its over. So what to do?
Sharpening the Pencil
Shah’s team is dividing the remaining bond projects into two piles.
Shah hopes to present an updated project list to Commissioners Court sometime during the second quarter of 2024.
Shah has already taken a first pass at re-evaluating the bond’s project list. Of the 181 projects identified in the bond:
The slide below shows the guiding principles for evaluating the 88 projects that need more funding or clarity.
Lack of Balance Could Jeopardize Future Bond Offerings
One possible way to mitigate the toll of inflation involves phasing projects in areas that have already received large amounts of funding so that projects in areas that received little funding could move forward.
For instance, in a project that involves multiple stormwater detention basins, one or more of the basins could be delayed until the next bond. Meanwhile, delaying that basin could free up money for a basin in a different watershed.
However, during Q&A, Shah said he has no plans to phase projects.
And many areas have received little funding from this bond.
In the future, voters who saw no benefit from the 2018 flood bond might, once again, feel victimized by bait-and-switch tactics.
Selling future bonds will require restoring faith in the fairness of government. And that will require spreading bond funds around so that everyone – in all parts of the county – sees some benefit from them. That’s my humble opinion.
When HCFCD presents its updated project list to Commissioners Court in the second quarter of 2024, it will be interesting to see whether Commissioners and the County Judge agree with it.
John Whitmire’s landslide election in the Houston Mayor’s race may send a message to them. Whitmire is a Democrat who campaigned across the aisle and received heavy Republican support.
Posted by Bob Rehak on 12/16/2023
2300 Days since Hurricane Harvey
Between a River and Ruin
For residents of flood-prone areas such as Northpark South, only the National Flood Insurance Program (NFIP) stands between a river and ruin.
But ironically, efforts to staunch financial hemhorraging are making NFIP flood insurance unaffordable for many with low incomes. That creates an uncertain future for developments and people in or near floodplains.
Moreover, Congress must reauthorize NFIP before midnight on Feb. 2, 2024, to avoid a lapse in authority to sell flood insurance and borrow funds.
Approximately six million homes sit in special flood hazard areas nationwide. The National Association of Realtors estimates that should a lapse in the NFIP’s authorization occur, it threatens 1,300 property sales each day.
Texas Ranks #2 in States with Most Flood Damage
Texas ranks #2 in states with the most flood damage. More people live in Texas floodplains than live in 30 states, according to the TWDB. Northpark South is a good example why.
Hurricane Harvey inundated the area below with approximately eight feet of floodwater. Now, Century Land Holdings of Texas is clearing this risky area bordering the San Jacinto West Fork to build more than 230 homes.
This 50-acre patch of dirt is a symbolic battlefield in a growing debate over NFIP, which Congress must renew or reform next year.
Jobs vs. Jitters
A coalition of developers, home builders, realtors and mortgage lenders sees the NFIP’s nationally subsidized insurance rates as a tool to sustain employment, grow the economy, and enlarge the tax base of communities.
Others believe the subsidies encourage dangerous development in flood-prone areas by giving homebuyers a false sense of security.
Finding the right balance between encouraging responsible development and mitigating flood risks is a complex task for policymakers. Perhaps nowhere do the issues come into sharper focus than in Northpark South. Even the entrance to the subdivision was under eight feet of water. That would make evacuation difficult for anyone caught napping when the waters rise.
Contradictory Lawsuits Against FEMA
Contradictory lawsuits symbolize the two sides in this debate. An article in Government Executive noted that FEMA is being sued for making flood insurance too expensive AND too cheap!
One law suit – that includes the State of Texas as a plaintiff – alleges that high flood insurance rates put residents and communities at risk of economic ruin.
A second lawsuit alleges that low rates do too little to stop developments on at-risk land.
The second lawsuit alleges taxpayer-subsidized, discounted coverage encourages floodplain development in high-hazard areas by providing insurance policies that obscure risk to property owners.
The contradictory allegations in the lawsuits underscore the need for careful policymaking around flood insurance.
Battle over Risk Rating 2.0
What triggered these lawsuits? FEMA has tried to navigate these dangerous waters by introducing a new system called Risk Rating 2.0. Risk Rating 2.0 reflects risk to individual properties from multiple sources of flooding, instead of aggregating people in broad flood zones. It also takes into account factors such as building codes and elevation that can mitigate flood risk.
Risk Rating 2.0 is an attempt to eliminate the subsidy aspect of flood insurance by quoting rates on an actuarial basis. Reportedly, some homeowner’s flood insurance rates have fallen, but others are rising and will continue to rise for years to come as risk becomes fully priced into policies. Texas and other Gulf Coast states are in the highest premium increase group, according to GAO.
Right now, law caps annual rate increases under Risk Rating 2.0. But the Congressional Accounting Office says caps only perpetuate an unfunded premium shortfall. GAO estimated it would take until 2037 for 95 percent of current policies to
reach full-risk premiums, resulting in a $27 billion premium shortfall by then.
GAO also believes that discounted premiums hide fiscal exposure, address affordability poorly and hinder private-market growth.
In the meantime…
Affordability of Insurance Increasingly in Doubt
Rising costs are the number one insurance-related issue in many states, according to Realtor Magazine. Risk Rating 2.0 aligns premiums with risk, but jeopardizes affordability.
Some who buy homes in Northpark South will drop flood insurance because of its cost. GAO says nine percent of NFIP policy holders will see price increases greater than 300%.
Higher premiums give policy holders a greater incentive to mitigate flood risk. But they’re also causing many homeowners to cancel policies.
One Congressional aid I talked to worried that if not enough people buy flood insurance, places like Northpark South will become “instant slums” after the first time they flood.
The reality: those who most need flood insurance can least afford it.
The GAO report comes as close to riveting reading as any government document I have ever read. Among other things, it points out how FEMA’s Community Rating System may send contradictory risk signals to potential buyers.
When Congress takes up NFIP next year, debate could lead to additional reforms. Watch closely. No one can predict the outcome at this point. Lobbyists are choosing up sides … between property rights and protection. Between a river and ruin.
Posted by Bob Rehak on 12/14/23
2298 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.