Street sale: Houston offers city property to raise cash?

Street sale: Houston offers city property to raise cash?
The city council of Houston, Texas has approved selling or swapping almost $2 million worth of city streets and utility easements in a move to close a $123 million budget shortfall.

The first such sale was in the Manchester area, where the council abandoned and sold several streets and easements to the nearby Valero refinery for $1.4 million, according to the Houston Chronicle.

The oil giant already owns the blocks immediately surrounding its facility. The move will allow the company to expand and build an office facility, warehouse, and security building and to add parking farther away from the central plant.
A second example is the selling of five streets and an easement to Houston’s Milby High School, valued at $431,000. Instead of cash, the city is prepared to do a land swap for three miles of territory north of Milby.

Selling easements – the right to use someone’s land or property for a specific purpose – and strips of city land has become commonplace by Houston City Council to balance six of the last seven budgets.

In May, the council approved the $5.2 billion budget, with $2.4 billion coming from the general fund that is supported by residents’ taxes and that funds most basic services such as police, fire, trash pickup, parks and libraries, according to the Houston Chronicle.

The general fund budget aims to spend about $35 million more than the current one, due partly to a $51 million rise in debt costs. For the first time in about 15 years, the budget fully funds the city's pension costs, thanks to the reform bill Mayor Sylvester Turner successfully pushed through Austin and that Gov. Greg Abbott signed Wednesday while the council was in session.

The city has been spending more than it brings in for years, a structural gap driven chiefly by soaring pensions costs, and in recent years a spike in debt payments.

Debt payments for past public projects have risen by more than half over the last five years, to $346 million in 2015, and are projected to reach $411 million in 2020.

Changes in the early 2000s to pension benefits for police, firefighter and municipal retirees led to a huge spike in costs.

The city, the biggest and most populous in Texas, has been hampered by a cap on property tax revenues that voters imposed a decade ago. Houston can collect more property taxes each year than the year prior, but is limited to the combined rates of inflation and population growth.

Without the cap the city would have had another $53 million to spend this year.
Other measures to the one-time fix of selling city land include department cuts largely to police and fire department overtime, deferred payments to the Houston Zoo, and a dip into city reserves.

In May, the Texas house approved a bill potentially cutting billions in future costs from Houston’s cash-strapped police and firefighter pensions. Plagued by investments that didn’t meet high return expectations, Houston is facing about $8.1 billion in unfunded pension liabilities.

In the Twittersphere, comments on the sale ranged from "Conservative America is literally selling its streets," and "It's streets, but Houston should prioritize selling land it owns (or portion) for affordable housing development," and "Selling off public assets, looks like toll booths are headed to Houston."