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Governmental Affairs

Houston City Council Approves Proposition 1 Drainage Fee

In November 2010, City of Houston voters approved a ballot initiative – Proposition 1 – which created a “Dedicated Pay-as-You-Go Fund” for street and drainage improvements across the city. The initiative, dubbed “ReBuild Houston,” is the City of Houston’s plan to rebuild the city’s drainage and street infrastructure in order to improve the quality of life and mobility for city residents.

Proposition 1 has four primary funding sources: 1) developer impact fees; 2) 11.8 cents of the Ad Valorem Property Tax, which is currently used for streets and drainage; 3) remittances from METRO, TXDot and other governmental sources; and 4) a newly imposed Drainage User Fee.

On April 6, 2011, the Houston City Council passed ordinances implementing Proposition 1 and setting the schedule of rates for the Drainage User Fee.   As part of the initiative, residential and non-residential property owners within the City of Houston will be charged a Drainage User Fee as part of their city water bill to help fund the street and drainage improvements. The Drainage User Fee is expected to generate at least $125 million for fiscal year 2012.

The rate which applies to residential property owners on a curb-and-gutter street and all non-residential property owners is 3.2 cents per square foot of “impervious surface” on such property.  Residential property owners on a street with open ditches will pay 2.6 cents per square foot of impervious surface. “Impervious surface” is defined under the ordinance to include material such as concrete, brick, oyster shells and gravel, among others. Surface features on the property considered to be an impervious surface includes foundations, driveways, roofs, swimming pools and decks, among others.

The City estimates that the average homeowner’s Drainage User Fee will be approximately $5 per month. Property owners can expect to see the fee as part of their water bill beginning in July 2011.

Much of the political debate surrounding the Drainage User Fee implementation focused on exemptions. As originally proposed in the fall of 2010 and passed by voters, religious groups, schools and county property were not exempt from paying the Drainage User Fee. Beginning in late 2010, these entities began lobbying city and state officials to be exempt from the Fee.

HAR’s Governmental Affairs team closely monitored City Council proceedings in order to ensure any exemptions from the Drainage Fee did not ultimately increase the burden of non-exempt property owners.Ultimately, a compromise was reached, whereby existing churches and schools, as well as certain county facilities will be exempt from the Drainage User Fee; however, future builds by these entities will not be exempt from the Fee.

The important point for REALTORS® is that the compromise on exemptions did not result in an increased burden on non-exempt property owners. The rates which were originally proposed – 3.2 cents per square foot of impervious surface for curb and gutter property and 2.6 cents per square foot of impervious surface on open ditch property – will still be in effect.

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