The money collected from a citizen-funded drainage fee meant to protect Houston against flooding is being diverted to salaries and other projects, according to documents and an interview with a city leader.
The drainage fee was passed by Houston voters in 2010 by a slim margin. The fee is at the heart of a program called Rebuild Houston, which the city credits with improving streets and drainage over the span of more than 900 miles across the city. “This includes 573 lane miles of repair/rehabilitation and 349 lane miles of reconstruction,” a city website states.
Bill King is skeptical of how much of the drainage fee, which is charged to homeowners, is being spent on actual drainage projects.
“The truth of the matter is that very little of that money has been spent on drainage,” said King, who has run for mayor in Houston and is a well-known columnist.
In addition, King said that under the administration of Mayor Sylvester Turner, much of the documentation of how the drainage fee money is being spent has been removed.
In 2012, which was the last time this money could be tracked closely, “it was apparent that many of the positions being paid from the fund were not workers on the street but rather city hall bureaucrats,” King said.
Since the start of the program, ReBuild Houston has been controversial. Critics derided it as a “rain tax” and it has been the subject of lawsuits.
Indeed, one judge ruled in 2015 that the city obscured the nature and the cost of the drainage fee.
Later in 2015, the state Supreme Court found that the city failed to mention that the fund would be paid through a fee attached to property owners’ water bills and directed the city to hold a new election with clear ballot language.
But before the Supreme Court issued its ruling, the city council passed an ordinance formally implementing the fee, a routine legal process to enact the assessment. The city contends that the Supreme Court ruling applies only to the popular vote, not the ordinance. As a result, the fee continues in effect.
In 2012, the City began collecting drainage fees pursuant to a Texas statute that authorizes cities to establish a “drainage utility.” That state statute requires that drainage fees be held in a segregated account. The City has never done this. Instead, it deposits the money into the Dedicated Drainage & Street Renewal Fund, more commonly referred to as Rebuild Houston.
The City uses two devices to obfuscate how the drainage fees are spent. First, they are commingled with other monies. The total income deposited in the Rebuild Houston fund has been running a little over $200 million. About half of that comes from drainage fees. The general mobility payments from Metro account for about a quarter of the money. The other big piece is a transfer from the General Funds which supposedly is equal to the amount that the City’s debt has declined because of the “pay-as-you-go” feature of Rebuild Houston… Of course, once these funds are all commingled it becomes much more difficult to sort out what money is being spent where.
In the ballot language and the advocacy leading up to the… referendum, no one ever mentioned that existing City employees were going to be paid from the Rebuild Houston fund. But as soon as the City started collecting drainage fees in 2012, it moved 498 of its 507 Public Works employees to Rebuild. Below is an excerpt from the 2012 Public Works Department budget showing the its headcount going from 507 to 9!
City Hall said as much.
“Drainage fee funds are used on street and drainage projects and the employees who carry out the projects,” a city spokesman said. “The city’s annual operating budget does not list the funds as a revenue source.”
The city points to this link for proof of transparency in the program.
King disagrees with the transparency — as it relates to how the fee was sold to homeowners.
“If you go back and look at the old advertisements, it was one hundred percent about flooding,” King said.
King did point to “fine print” in the ballot language saying that the money could be used for streets or flooding.
But King called the drainage fee election a “bait and switch”
A lot of what the city is spending this money on, King said, “has nothing to do with flooding.”
“We’ve paid for dozens and dozens of asphalt overlays,” he said. “And yes, sometimes you need asphalt overlays because the streets are in terrible shape. But that does nothing to help with flooding, and in fact makes flooding worse, when you increase volume on the street.”
Added King: “To me, the huge red flag here is that the accounting is so complicated. Why do you need to have six different funds and move the money from here to there, and commingle them?”
Trent Seibert can be reached at [email protected] or at 832-258-6119.