September 2009 Cover Story

Mayor Bill White Speaks on Infrastructure at Joint HCA/ASCE meeting

Mayor Bill White was the guest speaker for this year’s joint meeting between HCA and the American Society of Civil Engineers (ASCE).  This meeting has historically been one of our best attended luncheons of the year and this year was no exception with 260 attendees filling the room to hear Mayor White talk about the Houston economy and infrastructure in the region.

Mayor White opened his remarks by commenting that the economy in Houston is going to get worse before it gets any better, and that statement was truer in January than it is today.  According to Mayor White we are closer to the perceived bottom.  The common mistake that people make in times like this is to underestimate the length of an economic downturn.  People are naturally optimistic stated White, but the fact of the matter is that this is a global economic recession and no law passed by any country will be able to repeal the human behavioral laws of fear and greed which cause economic cycles.  This is a classic case of a credit contraction and those usually take a while to work themselves out.  The good news is that this is not forever, this is only a cycle and there will be an uptick eventually.  Houston will come out of this more competitive than ever according to Mayor White.  He stated that the reason for this is because Houston has an affordable cost of living, a good business-oriented culture, and is a younger city with a cleaner, better government.  The Mayor stated that Houston’s leaders have taken the steps necessary to protect the city during hard times where some other cities have stuck their heads in the sand and are now suffering for it.  He gave the example of the current problems in California where businesses are migrating out of the state to other, more business friendly environments because the civic leaders did not recognize the financial problems that they had or the burdens they had placed upon their residents.

Mayor White moved the conversation to infrastructure and broke it down into short, medium and long runs.  In the short run the Mayor recognized the work done by Mr. Marcotte as Director of the Department of Public Works and the General Services Administration for the number of grant applications that they have submitted for stimulus funding.  Mayor White stated that when it comes to infrastructure the principal funding instruments are grants from the federal government that are allocated to groups such as the water board and TxDOT.  Some of those funds are then allocated to regional councils of government.  There are no direct allocations to municipalities.  Mayor White stated that if he is lucky enough to continue his political career in Washington D.C. one of his main priorities is to see that there are more direct allocations to the entities that are actually contracting for the work.  This creates more accountability and prevents bureaucrats from being able to siphon off funding before it reaches the contractors.  Mayor White went on to state that he had concerns with how the stimulus money was managed especially saying that while they were well intentioned, those in charge of the funds did not understand how infrastructure projects are funded.  The Mayor pointed to the requirement that stimulus projects be shovel ready but not have any funding allocated to them.  The Mayor questioned the logic of why anyone would design something with no intention of building it. He also called on representatives of both HCA and ASCE to help in Austin and in Washington D.C. to get Houston its fair share of infrastructure funding.  Mayor White stated that infrastructure funding is political, although it shouldn’t be, and the more voices we get calling for funding in Houston, the more projects that can be put out.  He also asked that we keep an eye on projects where funding has been allocated but the money hasn’t been spent yet.

The Mayor next addressed some issues within the City budget stating that the City had maintained a robust CIP program.  The overall CIP in the water/sewer program increased, in the general fund programs has mostly been flat.  He noted that Metro will be sharply up over last year.  Mayor White stated that there will be belt tightening over all parts of the budget.  Looking at the long run Mayor White stated that there are few things that you need to keep an eye on.  The first thing is the public policy agenda concerning infrastructure funding.  The mayor stated that for the first time the city has built into the budget a defined allocation for drainage projects.  This allocation increases the amount of funding for those projects from a fraction of a cent of the ad valorem taxes to about .57 cents.  The Mayor stated that when he got into office, getting water from the neighborhoods into the bayous was a major problem and severely underfunded.  The ad valorem tax is a tax that is collected every year and is based upon property evaluations and as contractors we need to work to protect that allocation in the future.  The next item to keep an eye on according to the Mayor is general mobility funding.  This funding is provided by Metro that goes to road projects in the area.  Mayor White said that in the future there will be a debate over how much of that money should be spent on general mobility versus transit.  This is a fair debate however experts in traffic engineering need to weigh in to make sure that the outcome is proper for the community. 

Mayor White also commented that there was another trend that we need to keep an eye on that he said may be a good thing but more likely will be a potential threat to the most cost effective use of infrastructure money.  That threat, according to the Mayor is the creation of tax increment zones that are not project specific and cover large areas.  There are many tirz’s around the city stated White, started by the prior administration and they have a wide variety of purposes.  The Mayor continued saying that what tends to happen is the tirz caps the amount of ad valorem tax that is available to the city from some of the fastest growing areas, and limits the funds available for our general fund purposes.  Areas such as the Central Business District or the Galleria area are good examples where the money that goes back to the city is capped at a level set ten years ago.  Mayor White stated that there could come a time when all of the growth could be within the zones.  He was quick to remind everyone that this is the only source of funding for the general fund.  On the good side the City has been leaning on the tirz’s to move forward and to get their money spent.  Mayor White said that there are some that have very ambitious capital improvement programs, however there are some tirz’s that have other purposes such as the removal of blight or building redevelopment and that money is not being fully utilized.   Mayor White stated that he is concerned about the possibility of a city where there are multiple tirz boards with substantial budgets that may or may not have the best interests of the city as a whole at heart.  He also mentioned the possibility that these boards could become less than transparent in their bidding process.

The Mayor closed by saying that Houston is doing good.  He recognized that these are tough times because of the downturn in private development market, however he noted that there is capacity in the Toll Road Authority and in Metro to do an expansion of the infrastructure.  He stated that it has been a pleasure working with the people of this group, and said that he wishes everyone could see the this city through his eyes.  He stated that he sees construction sites not as an obstruction, but as a real public improvement.  He has seen the benefits of construction throughout the city by making improvements to such things as improved traffic flow, storm water drainage or cutting the number of sewer line breaks.  If everyone could see the city the way I do, said White you would appreciate even more deeply what a wonderful city of opportunity Houston is.

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