Pay-As-You-Go ReBuild Houston Program – Photo courtesy of City of Houston – ReBuild Houston
Here’s a novel idea for government – don’t approve a project you can’t pay for. It’s served the city of Houston well over the last couple of years in its pay-as-you-go ReBuild Houston program. Like many other cities nationwide, Houston is experiencing major growth. And, with that growth, the city’s street and drainage repair and improvement needs are growing exponentially.
With no surplus money in its budget earmarked for much-needed street and drainage projects and the city watching big dollars fly out of its coffers repaying interest on bond debt, the city turned to its citizens in 2010 to approve what is now known as the ReBuild Houston program.
Champion of what was originally called the Renew Houston initiative was Councilman Stephen Costello. Costello pushed hard for securing dedicated funding for drainage and street projects across the city. His goal was to create a pay-as-you-go program to improve the city’s street and drainage infrastructure without incurring debt.
And, it’s working.
The “lockbox” funds for these projects have reduced the city’s debt by more than $130 million. What makes the program a win-win, writes Costello in his blog, is that it not only has reduced debt, but it also has resulted in an additional $42 million for capital projects through last year, with another $33 million expected this year. The program also contributes more than $100 million a year to drainage improvements.
“It’s been a very successful program so far,” said Alvin Wright, public information officer for the City of Houston’s Public Works Department. “People, for the most part, are embracing it.”
Wright explained that the program actually is “a funding mechanism.” The pay-as-you-go program is what many other cities go through regarding debt for all of their programs, he said. The concept is to provide capital for projects in the future.
ReBuild Houston has resulted in a dedicated, pay-as-you-go fund that not only maintains current infrastructure and improves mobility, but it also allows for planning for needs that will arise because of the city’s growth.
The city’s sources for funding for street and drainage projects through ReBuild Houston includes property taxes, third party funding including money from federal grants and agencies such as the Texas Department of Transportation, a drainage utility charge and a developer drainage impact fee. With pay-as-you-go funding in the ReBuild Houston program, no debt is incurred. The first shovelful of dirt is not turned until enough cash is in hand to cover project costs from start to finish. The result is that no debt is incurred and there is no longer interest to be paid on debt for new projects. As the ReBuild Houston Web site notes, “The city gets twice the product for the same dollars.”
According to ReBuild Houston, the city currently has about $1.7 billion in debt in bonding obligations for street and drainage projects. Interest on that debt each year totals nearly $150 million per year. Under program guidelines, no longer is politics involved in what projects in what areas are pursued. The program uses real data and a technical evaluation to determine needs throughout the city. And, city officials have adopted a “worst first” mantra so that the most critical street and drainage needs are addressed first. The projects can range from a small local drainage project to a larger project of $6 million to $7 million, said Wright.
In its first two years, the ReBuild Houston program has been responsible for numerous drainage and pavement improvements, local drainage projects, local street reconstruction, thoroughfare and collector street reconstruction, asphalt overlays, concrete pavement rehabilitation, street intersection improvements, traffic signal reconstruction, intelligent transportation system upgrades, bridge rehabilitation and replacement, cleaning of storm sewer lines, local street asphalt overlays and re-grading of roadside ditches. Similar type projects are under way this year.
For all its successes, officials point out that the ReBuild Houston program is not a “quick fix.” But, it does provide a reliable, long-term source of funding that will give the city a viable option for future project needs that does not include increasing debt.
Wright said that because the concept is new, many government entities find it “interesting,” and contact Houston officials to ask questions. So, could Houston become the model for innovation when it comes to the proverbial “getting the most bang for your buck?” It at least sees itself as a trend-setter. The program bears watching.