12/22/25 – The Texas General Land Office (GLO), which manages state and federal money for flood mitigation, has invested an undisclosed sum of money in a flood-prone development at the confluence of Spring Creek, Cypress Creek and the San Jacinto West Fork. See below.
From FEMA’s Flood Hazard Layer Viewer. Brown = 500-year floodplain, Aqua = 100-year, Cross-hatched = Floodway. Map dated 2014.Floodplains will likely expand 50-100% in updated maps based on Atlas 14.
On the surface, the GLO investment appears to be a conflict of interest. Dig deeper and two separate mandates for the GLO emerge that are not reconciled in state law:
Subsequent efforts to verify the GLO involvement in this project revealed that the School Land Board, a group within the GLO, invested in the property. However, the GLO refused to reveal the amount of the investment (and did not say that the investment had been revoked as Toth’s press release claimed).
GLO Statement Admits Involvement, But Sheds Little Light
The terse GLO statement below raises more questions than it answers.
“This investment was approved by the School Land Board (SLB) pursuant to Chapter 51 of the Texas Natural Resources Code (TNRC). The GLO’s investment in this project through the SLB as a limited partner was contingent upon Montgomery County’s approval of the drainage study, which was successfully completed in July 2025. As Land Commissioner, I am committed to preventing future flooding. We are meeting with stakeholders and have heard the local concerns regarding this project. Our agency is dedicated to serving the best interests of the community.” Commissioner Dawn Buckingham, M.D.
Conflicting Mandates
More exploration revealed that the GLO wears two hats. It simultaneously manages flood-mitigation programs and invests School Land Board capital – sometimes in flood-prone land – under conflicting statutory obligations and fiduciary standards.
Those functions report to the same elected official – Dawn Buckingham, M.D. They are:
Flood-Mitigation
Under various statutes and federal requirements, the GLO:
Administers U.S. Department of Housing and Urban Development Community Development Block Grant funds for Disaster Relief and Flood Mitigation (HUD CDBG-DR and CDBG-MIT)
Manages large-scale flood mitigation and buyout programs
Works with local entities such as Harris County Flood Control District, to reduce flooding
Evaluates flood risk, vulnerability, and benefit-cost ratios.
In this role, the GLO must:
Reduce flood risk
Avoid repetitive loss
Comply with federal mitigation standards
Justify investments of tax dollars based on public safety and resilience.
School Finance
Separately, under the Texas Constitution and Natural Resources Code Chapter 51, the GLO (through the School Land Board) must:
Manage land and money as a trust
Maximize long-term returns
Avoid sacrificing value for unrelated policy goals.
The real conflict here may be competing, internal statutory silos.
Texas law reportedly does not require the GLO’s flood-mitigation knowledge, data, or policy goals to constrain its school-investment decisions.
There seems to be NO:
Statutory cross-check
Internal requirement preventing such conflict
Duty to reconcile flood-risk mitigation goals with land monetization.
The same agency can therefore:
Fund buyouts downstream while…
Profiting upstream from development pressure that increases downstream risk…
…without violating any explicit statute.
Three Potential Conflicts
From a governance perspective, this arrangement creates at least three tensions:
First, the GLO:
Possesses detailed flood-risk data in its mitigation role.
But it is not legally required to make investment decisions that consider that data.
Second, the State can:
Invest capital in flood-prone land at a discount
Benefit from development-driven appreciation
Later deploy flood-mitigation grants funded by taxpayers to address resulting impacts.
Third, the conflict creates the appearance of policy incoherence. The State appears to be:
Subsidizing flood risk on one side of the balance sheet
Funding mitigation on the other.
Why This Remains Legal
According to ChatGPT, this dual role persists because “the Texas Constitution elevates school-fund fiduciary duties to near-absolute status.”
Absent a statute saying, “School fund investments shall be consistent with state flood-mitigation objectives,” the GLO operates in parallel lanes and pursues investments with the highest rates of return.
This case makes a powerful example of conflicts of interest. However, I have another concern: transparency. Two state legislators and multiple residents have requested information about the state’s involvement with little luck.
Both Toth and State Representative Charles Cunningham have reached out to the GLO on behalf of downstream constituents. But so far, neither legislator has received an explanation.
Even worse, residents’ FOIA requests (going back to October) have been denied and appealed to the State Attorney General’s office, which denied them also. Three months of inquiry have resulted only in the one terse statement printed above.
This is an absolute PR disaster fraught with multiple potential conflicts of interest. The GLO is creating the appearance of a coverup even if none exists.
Bob Rehak
Need for Full Disclosure Now
The State and GLO should insist on full disclosure now. That includes any political contributions made by the land owners or sellers (directly, or indirectly through family members, employees or PACs) to state officials, especially those connected to the School Land Board.
We also need to verify whether the developer really received approval of its drainage impact analysis in July of 2025, as claimed in the GLO statement above. The so-called “approval” letter I have from the Montgomery County engineer dated July 2025 (when Ryko still owned the land) is best characterized as preliminary. It says, “Here are three pages of issues you need to address to get approval.” It does NOT give full, final approval.
One issue MoCo raises is adequate emergency access during 500-year, Atlas-14 flood events. But a Townsend Blvd. extension across Spring Creek was taken off Montgomery County’s 2025 road bond to help deter development of Scarborough’s property.
To continue backing this Scarborough deal may make better financial sense than public policy. As one public official told me, “Typical government…trying to fix problems it creates!”
Posted by Bob Rehak on 12/22/25
3037 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/2020/04/Ryko-Flood-Hazards.jpg?fit=1200%2C773&ssl=17731200adminadmin2025-12-22 17:02:012025-12-22 19:40:05State Agency Responsible for Flood Mitigation Invests in Flood-Prone Development
12/20/2025 – People pay a premium to live near green space. But will the promises made during a sale be kept? Will that green space remain green, or will it be gobbled up by more development in the future? Here’s a guide to language that should raise red flags when looking at development plans, sales contracts, and public documents. Words can imply one thing, but not be legally binding. So, buyer beware.
The Proximity Premium that Vanishes
Many developers who build in or near floodplains promise early buyers that the green space around them will be “designated as” parks and is “intended for” recreational use.
But developers’ plans can change. And the home buyer’s beautiful view disappears. And remember, wetlands may no longer guarantee that land cannot be developed.
Why Developers May Leave Green Space Initially
There are also several regulator reasons why developers may leave large swaths of green space in their original plans. They communicate:
The project provides regional flood storage
Downstream impacts are minimized
Remaining land functions as mitigation, not loss.
Framing plans this way also:
Reduces perceived flood risk
Reduces organized opposition
Narrows legal exposure
Makes the project sound less aggressive.
This is standard practice on controversial floodplain projects according to flood experts I have interviewed.
But Will Green Space Remain Forever?
Many developers promise green space. But will it remain green forever?
Scarborough in MoCo
A Dallas-based developer named Scarborough recently purchased 5000+ acres west of Kingwood through a subsidiary called San Jacinto Preserve. Most of it is in floodplains and floodways. Their president, Ryan Burkhardt says they only “plan” to develop 38% of the land. He repeatedly emphasized that more than half of his land will be used as green space.
Ryko sold its property outlined in red to Scarborough earlier this year.
But he ALSO does not plan to put a conservation easement on the green space. Nor is he donating the green space to the City, County or State. This is typical.
I don’t care to cast aspersions on Burkhardt’s integrity. He was brave in returning my phone call and seemed quite candid. But to me, those are red flags. It follows a recurring pattern. For instance…
Signorelli in Commons of Lake Houston
In Huffman, Signorelli reportedly promised buyers in The Commons of Lake Houston that the floodplain land around them would remain green space for community recreational purposes, such as hiking and horseback riding. But now, the company is trying to turn a large part of that floodplain land into more homesites. Signorelli has fought the City of Houston for ten years all the way to the Texas Supreme Court for the right to do so.
Also on the East Fork, on the Kingwood side of the river, Friendswood sat on land in Royal Shores that people used for hiking for more than 30 years. Then they sold it to developer Ron Holley earlier this year. One hundred percent of the land is in floodplains.
Holley land is in center and is criss-crossed by wetlands. From National Wetlands Inventory.
Friendswood tried to develop this land for years before selling it to Holley. Here’s what the land just north of there looks like.
A natural wonderland for wildlife and humans
Friendswood gave East End Park to the Kingwood Service Association in 1988 to preserve it for the community. It is NOT in danger of being developed. However, Friendswood retained control of their Royal Shores green space until they sold it to Holley. And now nearby residents may lose their recreational area.
Recognize the Red Flags that Could Undermine Your Home Value
How can you be certain green space around you will remain green and not be developed in the future? Some hints:
Ask for legal guarantees in the form of conservation easements or deeds donating the land to a City, County or State as public parkland. If they don’t exist, be wary.
Be wary of what advertisers call “weasel words.” If a developer says he “plans on” leaving land as green space, that gives him a legal out if plans change. Same with “intends to.”
Look for designations on maps with words like “Buffer,” “Reserve,” “Future Phase,” “Drainage Reserve,” or “Open Space.” Such words have no legal or regulatory definitions.
If the land is dedicated to an HOA or POA, who controls the entity? The developer? If so, he can dedicate it for something else when he’s ready to develop the land.
Do you see maps from Commissioners Court saying things like “subject to future engineering review”?
Does the appraisal district classify any of the land as “livable” or “usable”?
Is there a binding commitment to Commissioners Court ensuring permanent floodplain storage or a conservation function?
Do deed restrictions explicitly prohibit future fill or structures?
Use them to make sure someone doesn’t try to turn “your” promised green space into greenbacks.
Posted by Bob Rehak on 12/20/25
3035 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/2025/04/20250423-Ryko-DIA-Floodplains-.jpg?fit=1100%2C704&ssl=17041100adminadmin2025-12-20 18:13:382025-12-21 05:39:37Home Buyers Beware: Will that Green Space Behind You Remain Green?
12/19/25 – Despite substantial hurdles, floodplain development can be very profitable for patient developers with deep pockets, even if only a small percentage of their land is developed.
For instance, Scarborough Lane Development/San Jacinto Preserve LP has purchased more than 5,000 acres of land in floodplains and floodways near the confluence of four waterways. They include the San Jacinto West Fork, Spring Creek, Cypress Creek, and Turkey Creek.
Base map from seller’s preliminary drainage analysis. Scarborough/San Jacinto Preserve property outlined in red.Shades of blue represent floodways and floodplains on property.
Buyer Says It Paid $140 Million for Property Appraised at Less Than $1 Million
Scarborough claims it paid close to $140 million for the property – 8X higher than the Montgomery County Appraisal District (MCAD) places the market value of the land and 175X higher than the appraised value. See below.
Even more stunning, Ryko, the company that sold the property to Scarborough/SJP, produced a preliminary engineering study that suggested only 38% of the land was developable because it has such high flood risk.
So, in what galaxy does this make economic sense?
Actually, it makes perfect sense – if you understand how the game is played.
Spread Makes Bread
Said another way, buy low; sell high.
The exceedingly low appraised value of floodplain land helps developers acquire and hold the land, sometimes for decades – at a very low tax cost while they work out regulatory issues. And when they do, the step change in value is so great, that if only 20% of the land is developable, they likely still make money.
This is according to ChatGPT, which costed out details of several development scenarios for me. One was even profitable with only 10% developable land.
A wide spread between acquisition costs and potential land sales after all permits and mitigation costs are accounted for is one of the main reasons why developers target floodplain land.
The dynamic is well understood in land economics and is particularly visible in fast-growing regions like Montgomery County.
Floodplain land often sells at a steep discount relative to nearby uplands because of:
Regulatory limits (floodway vs. floodplain)
Engineering costs (fill, detention, bridges)
Uncertainty (permitting, litigation, political risk)
Time value (increased holding costs because of longer periods before land becomes salable).
With steep, discounted prices in mind, even modest success—e.g., making 20–30% of a tract buildable — can make the entire investment profitable. Anything above that is gravy.
Why Floodplain Land Produces Unusually Large Spreads
Floodplain land tends to be priced as “mostly unusable.” Once permits are secured, the buildable portion prices like normal land. But the remainder can still be monetized as detention, mitigation, or open space.
Better yet for the developer, some of the land designated as green space may even be developed years later as the pain of flooding dims and political winds shift.
This can create huge “step” changes in land value.
Factors that Amplify Spread
In Texas, several factors amplify this spread. Consider, for instance:
Timber Exemptions that Lower Carrying Costs:
Developers pay only a few dollars in taxes per acre per year. On the five parcels above, taxes average $148 per acre per year. That makes patience very cheap. A well capitalized developer can afford to wait years while working out permitting issues.
Timber exemptions also mask speculative intent. On paper, the land looks like a passive forestry holding, not a development play.
Reliance on Post-Development Mitigation at Public Expense:
Some developers shift part of their mitigation costs onto the public. For example, some developers in Montgomery County have avoided building detention basins by using questionable flood routing studies. Even the former Montgomery County engineer criticized the practice. As flood peaks build over time, downstream residents clamor for mitigation. But it comes at public expense. So the developer has effectively externalized some of its costs.
Permissive Local Drainage Rules and Lax Enforcement:
This is especially true in counties that surround fast growing metropolitan areas. Some counties around Houston still use drainage criteria from the 1980s to help attract development.
Sometimes gaps in regulations cause flooding as Elm Grove discovered twice in 2019. Many floodplain developers tend to exploit such gaps in regulations and then claim they are complying with all applicable regulations.
Risk/Reward Ratio Attracts Only Certain Types of Developers
Floodplain land tends to attract well-capitalized, patient developers with a 10–20 year horizon. For those with deep pockets and powerful partners, economics may work even if 90% of the land never becomes buildable.
This is not accidental; it is a rational, well-understood land-banking strategy.
However, the spread only turns into profit ifrisk converts to permission. It collapses if floodway limits are strictly enforced, mitigation costs surge, public opposition blocks approvals, or political sentiment hardens after major floods.
In such cases, floodplain land can become a capital trap, not a bargain. But still…
The large spread between low purchase cost and high potential value is a major magnet for developers.
Courageous reporting, such as hers, makes flood risk highly visible and politically salient. And that makes the spread harder to monetize. Witness recent resolutions by Harris County Precinct 3 and the City of Houston. It will be interesting to see Scarborough’s next moves.
Next Up
I am working on a series of posts about floodplain development. Next, I’ll examine the seductive promise of green space. Floodplain developers often promote abundant, recreational green space to early buyers in a development.
But just as often, they try to monetize that green space during the latter stages of a development – green space they promised early buyers would remain green forever. Check out the warning-sign checklists in my next post before you buy property to see if your green space could someday vanish.
Scarborough property near US59 bridge west of Kingwood. San Jacinto West Fork on right.During Harvey, water was 27 feet above the level you see here.
Posted by Bob Rehak on 12/19/2025
3034 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/2025/12/20250622-DSC_2635.jpg?fit=1100%2C733&ssl=17331100adminadmin2025-12-19 10:41:562025-12-19 11:00:13The Profit in Floodplain Development Explained
State Agency Responsible for Flood Mitigation Invests in Flood-Prone Development
12/22/25 – The Texas General Land Office (GLO), which manages state and federal money for flood mitigation, has invested an undisclosed sum of money in a flood-prone development at the confluence of Spring Creek, Cypress Creek and the San Jacinto West Fork. See below.
On the surface, the GLO investment appears to be a conflict of interest. Dig deeper and two separate mandates for the GLO emerge that are not reconciled in state law:
The GLO home page trumpets how it manages $14.3 billion in disaster recovery and flood mitigation funds.
Simultaneously, the GLO’s website stresses how it manages $60 billion dollars in public school funds. But the investment funds strategic plan makes no mention of flooding. It does, however, say they seek “exceptional returns.” Developments in floodplains can provide those.
I gave multiple people in the GLO Press Office a chance to comment on this post before I published it. Not one replied.
Amount at Stake Could Be as High as $140 Million
A company called Ryko sold the 5,000+ acres in question to Scarborough Houston/San Jacinto Preserve earlier this year.
State Representative Steve Toth claimed in a press release on December 11, 2025, that he was working to revoke the state’s “$140 million investment” in the project by the GLO’s School Land Board.
However, Ryan Burkhardt, the president of Scarborough, told ReduceFlooding that Scarborough itself had close to $140 million invested in the project. He admitted the state was his partner, but refused to say how much the state invested.
Subsequent efforts to verify the GLO involvement in this project revealed that the School Land Board, a group within the GLO, invested in the property. However, the GLO refused to reveal the amount of the investment (and did not say that the investment had been revoked as Toth’s press release claimed).
GLO Statement Admits Involvement, But Sheds Little Light
The terse GLO statement below raises more questions than it answers.
Conflicting Mandates
More exploration revealed that the GLO wears two hats. It simultaneously manages flood-mitigation programs and invests School Land Board capital – sometimes in flood-prone land – under conflicting statutory obligations and fiduciary standards.
Those functions report to the same elected official – Dawn Buckingham, M.D. They are:
Flood-Mitigation
Under various statutes and federal requirements, the GLO:
In this role, the GLO must:
School Finance
Separately, under the Texas Constitution and Natural Resources Code Chapter 51, the GLO (through the School Land Board) must:
The real conflict here may be competing, internal statutory silos.
There seems to be NO:
The same agency can therefore:
…without violating any explicit statute.
Three Potential Conflicts
From a governance perspective, this arrangement creates at least three tensions:
First, the GLO:
Second, the State can:
Third, the conflict creates the appearance of policy incoherence. The State appears to be:
Why This Remains Legal
According to ChatGPT, this dual role persists because “the Texas Constitution elevates school-fund fiduciary duties to near-absolute status.”
Absent a statute saying, “School fund investments shall be consistent with state flood-mitigation objectives,” the GLO operates in parallel lanes and pursues investments with the highest rates of return.
Sadly, in this case, that includes property in floodplains undervalued upfront because of flood risk.
Where This Leaves the Scarborough/San Jacinto Preserve Issue
The school-fund investment side of the GLO may not even understand the flood risk or recognize the political sensitivity. It likely focuses only on evaluating the land primarily as an undervalued trust asset.
This case makes a powerful example of conflicts of interest. However, I have another concern: transparency. Two state legislators and multiple residents have requested information about the state’s involvement with little luck.
Both Toth and State Representative Charles Cunningham have reached out to the GLO on behalf of downstream constituents. But so far, neither legislator has received an explanation.
Even worse, residents’ FOIA requests (going back to October) have been denied and appealed to the State Attorney General’s office, which denied them also. Three months of inquiry have resulted only in the one terse statement printed above.
Need for Full Disclosure Now
The State and GLO should insist on full disclosure now. That includes any political contributions made by the land owners or sellers (directly, or indirectly through family members, employees or PACs) to state officials, especially those connected to the School Land Board.
According to the Texas Water Development Board’s most recent state flood plan, the number of Texans living in floodplains exceeds the population of 30 states. This investment illustrates one of the reasons.
We also need to verify whether the developer really received approval of its drainage impact analysis in July of 2025, as claimed in the GLO statement above. The so-called “approval” letter I have from the Montgomery County engineer dated July 2025 (when Ryko still owned the land) is best characterized as preliminary. It says, “Here are three pages of issues you need to address to get approval.” It does NOT give full, final approval.
One issue MoCo raises is adequate emergency access during 500-year, Atlas-14 flood events. But a Townsend Blvd. extension across Spring Creek was taken off Montgomery County’s 2025 road bond to help deter development of Scarborough’s property.
At this point, Montgomery County Precinct 3 Commissioner Ritch Wheeler, Harris County, State Representative Steve Toth, and City of Houston have all come out against this project because of the flood risk. But I have seen no official announcements from the Governor’s Office or the GLO about cancelling their support.
In my opinion, the only good investment in this land would be to turn it into a state park.
To continue backing this Scarborough deal may make better financial sense than public policy. As one public official told me, “Typical government…trying to fix problems it creates!”
Posted by Bob Rehak on 12/22/25
3037 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.
Home Buyers Beware: Will that Green Space Behind You Remain Green?
12/20/2025 – People pay a premium to live near green space. But will the promises made during a sale be kept? Will that green space remain green, or will it be gobbled up by more development in the future? Here’s a guide to language that should raise red flags when looking at development plans, sales contracts, and public documents. Words can imply one thing, but not be legally binding. So, buyer beware.
The Proximity Premium that Vanishes
Many developers who build in or near floodplains promise early buyers that the green space around them will be “designated as” parks and is “intended for” recreational use.
A review of 33 studies found that properties near green space command a premium of 8–10%. Another study suggests the “proximity premium” may be as high as 20%.
But developers’ plans can change. And the home buyer’s beautiful view disappears. And remember, wetlands may no longer guarantee that land cannot be developed.
Why Developers May Leave Green Space Initially
There are also several regulator reasons why developers may leave large swaths of green space in their original plans. They communicate:
Framing plans this way also:
This is standard practice on controversial floodplain projects according to flood experts I have interviewed.
But Will Green Space Remain Forever?
Many developers promise green space. But will it remain green forever?
Scarborough in MoCo
A Dallas-based developer named Scarborough recently purchased 5000+ acres west of Kingwood through a subsidiary called San Jacinto Preserve. Most of it is in floodplains and floodways. Their president, Ryan Burkhardt says they only “plan” to develop 38% of the land. He repeatedly emphasized that more than half of his land will be used as green space.
But he ALSO does not plan to put a conservation easement on the green space. Nor is he donating the green space to the City, County or State. This is typical.
I don’t care to cast aspersions on Burkhardt’s integrity. He was brave in returning my phone call and seemed quite candid. But to me, those are red flags. It follows a recurring pattern. For instance…
Signorelli in Commons of Lake Houston
In Huffman, Signorelli reportedly promised buyers in The Commons of Lake Houston that the floodplain land around them would remain green space for community recreational purposes, such as hiking and horseback riding. But now, the company is trying to turn a large part of that floodplain land into more homesites. Signorelli has fought the City of Houston for ten years all the way to the Texas Supreme Court for the right to do so.
Holley in Royal Shores
Also on the East Fork, on the Kingwood side of the river, Friendswood sat on land in Royal Shores that people used for hiking for more than 30 years. Then they sold it to developer Ron Holley earlier this year. One hundred percent of the land is in floodplains.
Wetlands occupy much of it. Wetlands used to deter development, but those rules could soon change.
Friendswood tried to develop this land for years before selling it to Holley. Here’s what the land just north of there looks like.
Friendswood gave East End Park to the Kingwood Service Association in 1988 to preserve it for the community. It is NOT in danger of being developed. However, Friendswood retained control of their Royal Shores green space until they sold it to Holley. And now nearby residents may lose their recreational area.
Recognize the Red Flags that Could Undermine Your Home Value
How can you be certain green space around you will remain green and not be developed in the future? Some hints:
Here are two checklists with even more warning signs to look for:
Use them to make sure someone doesn’t try to turn “your” promised green space into greenbacks.
Posted by Bob Rehak on 12/20/25
3035 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.
The Profit in Floodplain Development Explained
12/19/25 – Despite substantial hurdles, floodplain development can be very profitable for patient developers with deep pockets, even if only a small percentage of their land is developed.
For instance, Scarborough Lane Development/San Jacinto Preserve LP has purchased more than 5,000 acres of land in floodplains and floodways near the confluence of four waterways. They include the San Jacinto West Fork, Spring Creek, Cypress Creek, and Turkey Creek.
Buyer Says It Paid $140 Million for Property Appraised at Less Than $1 Million
Scarborough claims it paid close to $140 million for the property – 8X higher than the Montgomery County Appraisal District (MCAD) places the market value of the land and 175X higher than the appraised value. See below.
Even more stunning, Ryko, the company that sold the property to Scarborough/SJP, produced a preliminary engineering study that suggested only 38% of the land was developable because it has such high flood risk.
Actually, it makes perfect sense – if you understand how the game is played.
Spread Makes Bread
Said another way, buy low; sell high.
The exceedingly low appraised value of floodplain land helps developers acquire and hold the land, sometimes for decades – at a very low tax cost while they work out regulatory issues. And when they do, the step change in value is so great, that if only 20% of the land is developable, they likely still make money.
This is according to ChatGPT, which costed out details of several development scenarios for me. One was even profitable with only 10% developable land.
A wide spread between acquisition costs and potential land sales after all permits and mitigation costs are accounted for is one of the main reasons why developers target floodplain land.
The dynamic is well understood in land economics and is particularly visible in fast-growing regions like Montgomery County.
Floodplain land often sells at a steep discount relative to nearby uplands because of:
With steep, discounted prices in mind, even modest success—e.g., making 20–30% of a tract buildable — can make the entire investment profitable. Anything above that is gravy.
Why Floodplain Land Produces Unusually Large Spreads
Floodplain land tends to be priced as “mostly unusable.” Once permits are secured, the buildable portion prices like normal land. But the remainder can still be monetized as detention, mitigation, or open space.
Better yet for the developer, some of the land designated as green space may even be developed years later as the pain of flooding dims and political winds shift.
This can create huge “step” changes in land value.
Factors that Amplify Spread
In Texas, several factors amplify this spread. Consider, for instance:
Timber Exemptions that Lower Carrying Costs:
Developers pay only a few dollars in taxes per acre per year. On the five parcels above, taxes average $148 per acre per year. That makes patience very cheap. A well capitalized developer can afford to wait years while working out permitting issues.
Timber exemptions also mask speculative intent. On paper, the land looks like a passive forestry holding, not a development play.
Reliance on Post-Development Mitigation at Public Expense:
Some developers shift part of their mitigation costs onto the public. For example, some developers in Montgomery County have avoided building detention basins by using questionable flood routing studies. Even the former Montgomery County engineer criticized the practice. As flood peaks build over time, downstream residents clamor for mitigation. But it comes at public expense. So the developer has effectively externalized some of its costs.
Permissive Local Drainage Rules and Lax Enforcement:
This is especially true in counties that surround fast growing metropolitan areas. Some counties around Houston still use drainage criteria from the 1980s to help attract development.
Sometimes gaps in regulations cause flooding as Elm Grove discovered twice in 2019. Many floodplain developers tend to exploit such gaps in regulations and then claim they are complying with all applicable regulations.
Montgomery County recently upgraded its drainage criteria manual and adopted Atlas 14 rainfall probability standards. But willful blindness among regulators can still create a permissive environment to the detriment of people living downstream.
Risk/Reward Ratio Attracts Only Certain Types of Developers
Floodplain land tends to attract well-capitalized, patient developers with a 10–20 year horizon. For those with deep pockets and powerful partners, economics may work even if 90% of the land never becomes buildable.
This is not accidental; it is a rational, well-understood land-banking strategy.
However, the spread only turns into profit if risk converts to permission. It collapses if floodway limits are strictly enforced, mitigation costs surge, public opposition blocks approvals, or political sentiment hardens after major floods.
In such cases, floodplain land can become a capital trap, not a bargain. But still…
And that’s how the Houston region got 65,000 homes built in floodplains since Hurricane Harvey, as investigative reporter Yilun Cheng discovered for the Houston Chronicle.
Courageous reporting, such as hers, makes flood risk highly visible and politically salient. And that makes the spread harder to monetize. Witness recent resolutions by Harris County Precinct 3 and the City of Houston. It will be interesting to see Scarborough’s next moves.
Next Up
I am working on a series of posts about floodplain development. Next, I’ll examine the seductive promise of green space. Floodplain developers often promote abundant, recreational green space to early buyers in a development.
But just as often, they try to monetize that green space during the latter stages of a development – green space they promised early buyers would remain green forever. Check out the warning-sign checklists in my next post before you buy property to see if your green space could someday vanish.
Posted by Bob Rehak on 12/19/2025
3034 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.