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.
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.
There are 4 funding sources as follows:
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.