Houston’s Anything-Goes Business Model Under Siege After Harvey

'We really need a whole new scheme. Hopefully, this will be a wake-up call.'

Flood waters have risen into the Lakes on Eldridge North neighborhood near the Addicks Reservoir West Houston, Texas on Wednesday, Aug. 30, 2017. Hurricane Harvey inundated the Houston area with several feet of rain.
TNS/Tom Fox
(TNS) - As post-hurricane Houston dries out, cracks are appearing.

Harvey’s floods exposed the clash between two visions: Business leaders say the sprawling, economically vibrant metropolis shouldn’t change its hands-off approach to planning. Environmentalists and disaster experts warn that Houston is courting a repeat catastrophe.

In the middle are local officials, who have said in broad terms that they’re willing to consider rules and programs to protect Houston — but haven’t said what, or at whose expense.

“We really need a whole new scheme,” said Ed Emmett, the elected administrator of Harris County, which encompasses Houston. “Hopefully, this will be a wake-up call.”

Last month, Harvey destroyed or damaged about 136,000 homes in Harris County. Now at stake are their rebuilding or repair, the distribution of tens of billions of dollars in federal assistance and the essence of America’s fourth-largest city.

The next storm could be still more destructive. But protection means rules, and rules go against Houston’s ethos.

“One of the reasons that Houston has grown the way it has is because of no zoning, and it’s easy to develop there,” said Tilman Fertitta, chief executive officer of the Houston-based restaurant chain Landry’s Inc. Fertitta, who this month agreed to buy the NBA’s Houston Rockets for $2.2 billion, said that common sense, rather than rules, will dictate how the city revives.

“Houston is a big swamp that sits on the bayous and all the creeks and all the oxbows off the bayou,” Fertitta said. “We just need to be smarter. You don’t need to build homes next to a reservoir.”

Greg Brenneman, a private-equity investor, said that while he expected rebuilding to start quickly, the result wouldn’t necessarily be any different.

“I don’t know that there will be dramatic changes” to zoning laws or regulations, he told Bloomberg Television. “Nobody had ever seen 50 inches of rain before. If you dumped 50 inches of rain on any city, including New York City, you’re going to have flooding. There’s no city, however it’s governed, that can handle that.”

But experts say there are ways to minimize damage. Houston would benefit from better planning across city and county lines, said Wesley Highfield, a professor at Texas A&M University in Galveston who focuses on environmental planning and hazard mitigation.

“It takes a regional, high-level view to figure out why things worked out or didn’t,” Highfield said.

On its own, Houston could regulate where and how houses are built, keeping them out of floodplans and requiring that they be higher.

Chad Berginnis, executive director of the Association of State Floodplain Managers, said building homes just four feet above 100-year flood levels can cut insurance premiums 75 percent, meaning the cost can be paid off in a few years. He said the main objections come from homebuilders.

“I get so frustrated,” Berginnis said. “There is opposition to anything from their perspective that increases the cost of a building.”

Ned Munoz, general counsel of the Texas Association of Builders, said in an email that supporters of tighter codes don’t understand how stringent they already are. He said backers are generally members of the insurance industry looking to limit exposure and manufacturers who want to sell their products.

And Bob Harvey, chief executive officer at the Greater Houston Partnership, said Houston won’t stop doing what made it itself.

“We’re always looking at our development standards,” Harvey said in an interview on Bloomberg Television. “Even without zoning, there are ways to do that, and that will continue to happen.”

One of the toughest questions, according to Bill Read, a former director of the National Hurricane Center, is what to do about the tens of thousands of homes already in the 100-year flood plain. Houston’s median home price last year was $230,000; buying out a hypothetical 50,000 homes would cost $11.5 billion. Acquiring and demolishing every damaged structure would cost more than $31 billion.

Buyouts on that scale are “just unthinkable,” Read said.

But Emmett, the Harris County judge, is thinking about it. He said the government should move “as soon as possible,” and said it would cost “billions and billions of dollars.”

“There’s no question we’re going to have a large-scale buyout of houses in Harris County and in this entire region,” he added.

Mayor Sylvester Turner has likewise expressed a willingness to change — for instance, by spending more on infrastructure. Turner is willing to discuss not rebuilding in flood plains, as well as better regional coordination, according to Alan Bernstein, his spokesman.

“The reservoirs, the rivers, the bayous, and the bays don’t stop at the city limits,” Bernstein said.

Also in agreement that something ought to change: People whose homes flooded.

Bob Cantrell, 57, owns the $600,000 brick ranch house where he grew up in Houston’s Meyerland neighborhood, and floods inflicted uninsured damage that he expects to total $100,000 or more. Last week, furniture was piled on his tidy green yard awaiting the garbage truck.

Cantrell said the city needs to be cognizant of how much water is channeled into waterways like the one that overflowed and wrecked his house.

“Bayous can’t handle it, obviously,” he said. When it comes to new houses, “they do need to be above the floodplain. You can’t just rebuild every year.”

But even many who recognize that Houston’s laissez-faire ways have made it vulnerable are loath to suggest change.

Eduardo Sanchez, president of Sanchez Energy Corp., a Houston oil and gas exploration company, said “lax zoning requirements” make the city flood-prone by leaving little green space to absorb rainfall. Still, he said, “I’m not by any means encouraging that there be any reform.”


(With assistance from Jeanna Smialek and Jason Kelly. Flavelle reported from Washington, Wethe from Houston.)


©2017 Bloomberg News

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