What is ReBuild Houston?
ReBuild Houston is a new business model for reconstructing and maintaining our drainage and street system. For decades, the City has simply issued debt to pay for construction. The City currently has about $1.7 billion in debt as a result of bond obligations for street and drainage projects. The City pays nearly $150 million per year in interest on that street and drainage debt accrued in years past. Historically, the City spends between $150 to $200 million per year in our capital improvement program for streets & drainage.
Where does funding for ReBuild Houston come from?
There are 4 funding sources as follows:
Ad Valorem Taxes: 11.8 cents of every $100 of property value collected from property owners is currently going to pay off the debt incurred on previous street and drainage projects. As this old debt is paid off, the balance of funds from the 11.8 cents reserved by City Council via Drainage Utility Ordinance No. 2011‐254 will now go toward new street and drainage projects via Pay‐As‐You‐Go funding. As more debt is paid off – more cash projects will be funded.
Third Party Funding: Outside funding sources such as METRO, TxDOT, Federal Grants, etc. will continue to go toward our Capital Improvement Program. However, TxDOT and Federal funds have been reduced substantially. A portion of the METRO's one cent sales tax collected in the City of Houston is currently used for mobility purposes including operation & maintenance.
Drainage Utility Charge: This is the new charge that took effect July 1, 2011 to help pay for drainage and street projects with a drainage component. This charge, as stated in the Drainage Utility Ordinance (No. 2011‐254), will not be increased for a minimum of ten years.
Developer Drainage Impact Fee: On April 3, 2013, City Council adopted the Developer Drainage Impact Fee Ordinance in accordance with the November 2, 2010 voter-approved Charter amendment and Chapter 395 of the Texas Local Government Code. Drainage Impact Fee collection begins April 3, 2014.
How does the ReBuild Houston business model work?
It is now a Pay‐As‐You‐Go model, and as such is distinct from the previous "put it on the credit card" model. The most difficult task is that we must still pay off past debt and at the same time continue to rebuild our street and drainage system. The good news is that new projects will now be paid for in cash which means we will get about twice as much product for our dollar. For example, a $10 million project funded by a 30-year bond will cost more than $20 million after paying interest on that debt.
Why not continue to issue debt and get the infrastructure improvements we need now?
The problem is two‐fold. The debt issued sometimes outlasted the infrastructure's life while at the same time the annual funding level provided by debt was not enough to keep up with the service life of the infrastructure. We continue to see degradation of streets and drainage because we were not able to keep up with the system's useful life replacement schedule.