Tag Archive for: bait and switch

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.

This and other screen captures below are from Shah’s presentation to Flood Task Force on 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

Austin Bait-and-Switch Lawsuit Could Set Precedent for Harris County

On November 7, Brad Johnson published a copyrighted article in The Texan under the headline, “Austin’s Project Connect Challenged for ‘Bait and Switch’ of $11 Billion and Rising Transit Plan.” The subhead reads, “The suit alleges a breach of what voters were originally promised by the city since the tax increase was approved in 2020.”

The details of the Austin Transit plan story differ from the Harris County 2022 Road and Parks Bonds. But both controversies arise from alleged “bait and switch” tactics used to sell voters something radically inferior to what was promised to them beforehand. If successful, the Austin lawsuit could set a precedent for Harris County.

Outline of Austin Lawsuit

To summarize the Austin controversy, voters approved a tax rate increase in 2020 to fund construction of three light rail routes and an underground transit system at a cost of $7.1 billion. Three years later, the cost has ballooned to $11.6 billion – a 63% increase in three years – while the length of the proposed rail system has decreased from 27 miles to 10 – 62% less.

The crux of the lawsuit: the current project is different from the one voters approved, “and represents the largest property tax increase in Austin’s history.” The complaint reads, “This lawsuit is brought because “Austin taxpayers are not getting anything close to the benefit of the bargain they made for Project Connect …”

The lawsuit continues, “They (the plan authors) unilaterally adopted a Replacement Plan, that in the context of consumer-protection law would be called a “bait and switch” because it is so inferior to what voters “bought.” For reasons described in the lawsuit…

“…the Defendant Officials no longer have statutorily required voter authorization to assess, collect, or spend the Project Connect Tax increase nor do they have authority to issue bonds to be paid from that tax.”

Austin Lawsuit

But it gets worse. Paragraph 18 of the suit contends, “None of the Project Connect advocates have publicly admitted that the dramatic 257% increase in cost per rider—a key criteria in the competitive process for federal funding—reduces the odds of Project Connect receiving a 50% federal match…” Then it continues, “Nor is there any recognition of the effect on whether federal evaluators—or Austin voters for that matter—can trust the figures presented…”

That plan went off the rails. Much like Harris County’s 2022 Road and Parks Bonds.

Parallels with Selling 2022 Harris County Bonds to Voters

The Harris County 2022 Bonds have nothing to do with the Austin Transit Plan – except for the way they were sold, i.e., with false information.

Before the Commissioners Court put the 2022 Road and Parks Bonds on the ballot, Commissioners Ellis and Garcia openly talked about the need to distribute funds based on so-called “equity” principles, using a race-based social vulnerability formula – not one that accounted for road miles or square miles of parks that required maintenance. Their race-based approach would skew the distribution of funds from the new bond in favor of their precincts.

An uproar then ensued that threatened to kill the bond offering. So, Ellis, Garcia and Hidalgo voted to guarantee a minimum $220 million from the bonds to each precinct. Based in part on the promise of an equal minimum for EACH precinct, the bonds passed comfortably.

Then shortly after the election, the deal changed again. Equity and social vulnerability were back in. The minimum guarantee was ignored.

Precinct 3, which has 47 percent of the county’s roads and 35 percent of the county’s parks to maintain, received $188 million – $32 million less than the minimum and only 19% of the total money allocated.

Commissioners Ellis and Garcia received 30% and 27% respectively. That was because of their race-based formula, despite the fact that their precincts fall largely within municipalities that maintain roads and parks. Those municipalities are responsible for their own roads and parks.

In a commercial context, the FTC would consider this bait and switch.

To sell the bonds, the County told people one thing in newspapers, on social media, in public meetings, in handouts and on the County’s website. But soon after the bonds were approved, the deal changed.

Ironically, Precinct 3 voters who were all negatively impacted could have sunk the bond offering had they not been deceived.

This 2 minute and 39 second YouTube video distills key dialog from Commissioners Court before and after the switch.

Key Before/After moments in Commissioners Court

It Started with the 2018 Flood Bond

Frankly, I see the Austin lawsuit as a positive thing. I hope someone in Harris County lodges a similar lawsuit. Perhaps it can rein in some egregious, bait-and-switch promises that have become hallmarks of Harris County politics lately.

The bait and switching didn’t start with the Road and Parks Bonds. Consider the 2018 Flood Bond. It promised “equitable” treatment of the various watersheds, with the worst being addressed first. Since then, equitable was redefined as “equity” by Rodney Ellis in a way that Webster’s Third International and Oxford English dictionaries do not recognize.

Ellis even bragged openly in commissioners court about tricking voters.

And of course, the areas with the worst flooding are among those getting the least help…and pushed to the end of the line.

worst first
Feet above flood stage at 33 gages throughout Harris County during Harvey.

The San Jacinto West Fork had the highest flooding in the county during Harvey. But the San Jacinto watershed ranks twelfth in the county in funding to date. See below. And most of that has gone to areas downstream from where flooding was so severe.

HCFCD and Partner spending by watershed

Worse, while we wait our turn for projects, a steady decline in the speed of project delivery has added to inflation costs which now threaten the delivery of promised projects. Just as in Austin.

HCFCD and Partner spending by watershed

Flood-mitigation spending has slowed to less than half its peak in 2020. Delays add to the inflation burden on the entire bond program and threaten cancellation of some projects.

No one can even guarantee there will be enough money left to do anything in the hardest hit Lake Houston and Spring Creek areas.

And the 2018 flood bond was a $5 billion program!

We need some civic-minded lawyers who care about the future of Harris County to step up and look at these policies.

Posted by Bob Rehak on 11/9/2023 with thanks to Brad Johnson and The Texan

2263 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.


Right a Wrong – Fix Bait-and-Switch Bond Allocation

Item 418 on today’s Commissioners Court Agenda reads, “Request by the Commissioner of Precinct 3 [Tom Ramsey, PE] for discussion and possible action on the allocation of the Harris County 2022 Road and Park Bonds.” What’s that about?

Before the election, Commissioners court voted to allocate a minimum of $220 million to each precinct. The County then trumpeted that on its website AND at community meetings. But shortly after the election, that all changed. (See photos, screen captures below.)

Now, according to the formula adopted by Commissioners, Precinct 3 gets $32 million less than the minimum – while other precincts get up to $70 million more.

Yet Precinct 3 has 47% of the county’s roads and 35% of its parks to maintain. 

But forget about fairness; the FTC calls this “bait and switch.” 

In a commercial context, promising something you don’t deliver is fraudulent.

I expected better of the county’s highest elected officials.

Please Commissioners, deliver what you promised. Vote to right this wrong today.

$220 million minimum guarantee
Handout at pre-election Bond Meeting at Humble Civic Center
The $222 million promise
The County’s $222 million promise, still evident on 2/2/23 before the vote to change the promise.
Minium $220 million
Screen capture from County’s bond website, before the switcheroo.
Allocation today.

Posted by Bob Rehak on 10/31/2023

2254 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.

Backward, Bait-And-Switch Bond Meeting a Bust

Those few who attended a meeting at the Humble Civic Center on October 3, 2022, hoping to get more details about the proposed new Harris County bond offerings were sorely disappointed. County Judge Lina Hidalgo, and Commissioners Adrian Garcia and Rodney Ellis are asking voters to approve $1.2 billion in bonds before the three have identified projects totaling $1.2 billion. The lack of defined projects and the lack of language in the bond that would guarantee a fair distribution of money should have all voters on high alert.

Bait and Switch?

I got the distinct impression voters are being set up for a bait-and-switch.

This reminds me of when Ellis bragged openly in Commissioners Court about how he tricked voters in the flood-bond election by redefining “equitable distribution of funds” after the vote. I just don’t trust these three.

Something Ain’t Right Here

My first tip-off that this meeting would be a bust was the nearly empty parking lot when my wife and I arrived five minutes before the start time. Clearly, the county had not advertised the meeting widely. Once inside, I noticed more strangeness.

  • Many of the displays sat behind tables – too far away to see any detail.
  • I found no one at the tables who would answer questions.
  • Staff outnumbered residents.
  • During most of the meeting, only three or four visitors at a time wandered through the cavernous space. I counted seven residents briefly at the high point.
  • Translators outnumbered residents most of the time.
  • I didn’t see one person entering suggestions at a table with a dozen laptops for that purpose during the hour I was there.
  • No one could produce a copy of the bond language. One staff member said it was “on the bond website.” I visited the site as we talked; it wasn’t. And still isn’t.

Equity, Lop-sided Spending, Minimum Distributions, Maintenance Not Disclosed in Bond Language

The bond language is, however, now posted on a sample ballot at HarrisVotes.org, the election administrator’s website.

See the jpeg below. It’s notable for what it doesn’t include. The bond language mentions nothing about “equity”, the lop-sided spending proposed by Hidalgo, or a minimum per precinct. Nor does it mention maintenance.

Three sentences of explanation contain no detail about where the $1.2 billion would be spent.

Nothing in the language would prevent Democrats from spending ALL the money in their own precincts.

If re-elected, they could change their minds about a minimum at any time, and blow it all on maintenance.

Compound Interest on Maintenance Expenses?

Let’s discuss maintenance. The official ballot language makes no mention of it. However, the bond website does.

Keyframe for YouTube video on bond website promotes spending $100 million for maintenance.

So does the motion approved by the three in commissioners court (see pages 3 and 4). The omission of maintenance in the ballot language is intentional.

That maintenance money would be paid back over 30 years WITH INTEREST. So fixing that pothole could easily cost 7X the out-of-pocket costs at today’s interest rates.

This is how $100 million worth of work turns into $700 million in debt.

And that’s why most bonds discourage spending money on maintenance.

Maintenance should be handled out of current income, not long-term debt. But Hidalgo, Ellis and Garcia propose borrowing to pay for it. And that’s just a bad idea. The potholes they fix now will need to be refilled a dozen more times before the bond is paid off. Who will pay for those repairs? And how?

Misleading Project Sheets

The meeting handouts, bond, and bond website discuss spending CATEGORIES. But they still do not mention one actual proposed project within any category – the main criticism of this bond package to date.

The County did have “project sheets” at the display tables. But staff wouldn’t let residents take them. I suspect I know why.

If you look closely, you can see that they were labeled “current” or “active” projects. That means the projects shown already had funding. They were NOT candidates for the PROPOSED bond. After lengthy, pointed questioning, a staff member admitted that to me.

Active projects masquerading as proposed projects.

Were such sheets simply displayed to create the appearance of a plan?

The visitors I talked to said they thought the lists contained proposed projects. They didn’t. They only contained examples of projects that could be covered – not those that will be.

Ellis, Garcia and Hidalgo haven’t yet made the effort to define one needed project, though they say the need is critical.

If it’s so critical, how come they can’t cite one example? This is such a contrast to the last bond election!

Free License to Spend Your Money

YES votes would give Hidalgo, Garcia (if both are re-elected) and Ellis a mandate to use your money when and where they want. And that would not include Republican-leaning precincts. One expert on Harris County government bond offerings told me that the lack of public input gives them license to do as they please. The language doesn’t even contain provisions that would force them to spend money within the categories they discuss.

As one finance expert told me today, “This is how Houston got into trouble. Once you get under that mountain of debt, it’s just about impossible to dig your way out,” he said.

Another bonding expert suggested, “A good slogan for this bond would be ‘Just Vote No. No Projects, No Transparency, No New Taxes – No Way!'”

Posted by Bob Rehak on October 7, 2022

1865 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.