David Oliver, Partner & Chair of Firm Executive Committee, Allen Boone Humphries Robinson LLP

In an interview with Invest:, David Oliver, partner and chair of the firm executive committee at Allen Boone Humphries Robinson LLP, discussed how infrastructure financing supports Houston’s growth, housing affordability, and local governance. “The growth pays for itself,” Oliver said.

What role does ABHR play in Houston’s development landscape?

We are a public finance law firm primarily focused on development and the infrastructure serving development. Some people think development means single-family homes, while others think of industrial, governmental, multifamily, or other market segments. When we use the word development, we mean all of it.

Houston’s economy has experienced population and business growth, including onshore investment in supply chains and industries that were previously more far-flung. We know population and business growth are interrelated. People need jobs and places to live, while businesses need workers and facilities. New and expanded facilities require infrastructure.

We help developers turn ideas for homes, apartment complexes, office buildings, commercial centers, and light-industrial facilities into projects and communities supported by necessary infrastructure, including drainage, water, wastewater, roads, parks and green spaces. We help create places where people live, work, and play, and infrastructure is the foundation.

Why must infrastructure planning come before growth?

Houston has traditionally met the needs of a population and business community growing at an exceptional scale. The region is among the national leaders in job growth and residential construction, but growth cannot happen without investment in infrastructure on the front end.

The public-private partnership to meet the needs of rapid growth requires foresight, planning, and execution. Plans must be matched with the needs of the business and residential communities. The Texas Miracle was not a miracle; it was the product of vision, policies that encouraged and supported growth, and people who planned, invested, and executed efficiently.

An attractive business environment, tools that encourage investment, and an entrepreneurial, pro-growth community create momentum. Before communities and business growth can develop, the necessary infrastructure must be in place. If there is no infrastructure, there is no growth. That’s what we do. Our work on infrastructure must occur before everything else. We develop creative financing solutions with the people prepared to invest so the infrastructure becomes the foundation for growth. From there, projects that begin as an empty field, forest, or abandoned urban area become thriving communities and business centers.

How do special districts support public-private development?

We work with developers and with other jurisdictions to create special districts to finance public infrastructure. A developer making a large investment in a project needs infrastructure to support the project. We create the special districts and agreements that make the process possible. Under the Texas system, the growth pays for itself.

Texas created a system in which developers can invest in infrastructure with confidence they will be reimbursed through special district financing if a project succeeds. The special district can issue debt based on the growth that occurs and reimburse the developer for public facilities. The district, city, or county will then own and operate those facilities for the benefit of residents, businesses, and the public, paid for by the people who will use the infrastructure.

The system is predictable. Approximately $5 billion in public infrastructure for new projects is financed annually through the systems in which we work. Developers can forecast when reimbursement will occur. The model permits public systems to be built while retaining local control, with special districts and developers working together to meet a project’s needs.

The facilities remain public. Developers are reimbursed only for the actual cost of qualifying infrastructure, while the district assumes responsibility for the debt and the long-term operation of the system. This structure gives the developer certainty without shifting the initial development risk to existing city or county taxpayers, while the public is protected through statutory and regulatory provisions governing special districts developed over many decades.

How does the model allocate risk and respond to market cycles?

Master-planned communities develop over decades, not in short bursts. Markets rise and fall. Cities and counties are not positioned to risk current taxpayer or ratepayer money to finance infrastructure for new growth. They have many competing priorities and must serve their entire constituency.

Special districts are targeted to a specific project with specific geographic boundaries. They can respond to market needs locally and are scalable across different areas. The system places the risk on the developer while rewarding performance. If developers perform, they are reimbursed predictably for public facilities at actual cost, without a markup.

This arrangement creates a public solution that can keep pace with private demand. It gives developers the ability to adjust appropriately whether the market needs more infrastructure or when construction needs to slow.

How does infrastructure financing support housing affordability?

Separating infrastructure financing from the cost of a home or business helps maintain affordability. The price of the building or home reflects the cost of the lot and the structure, while the cost of the public infrastructure is financed separately over its useful life.

Once new value supports reimbursement at a reasonable tax rate, the special district reimburses the developer at cost. The district then uses its taxes and service revenues to repay the debt while providing water and wastewater service and maintaining drainage facilities, roads, parks, and recreation facilities. These assets may have useful lives of 30, 40, or 50 years, so their costs do not have to be incorporated entirely into the upfront price of a home.

Houston and Texas have long been known for housing affordability. Challenges exist today, but compared with markets in California, New York, Chicago, Florida, and other large metropolitan areas, the quality of life, community amenities, and the type and costs of homes available in Houston are unmatched.

What does local control mean for growing communities?

Communities can maintain their water and sewer systems, drainage facilities, parks, and recreational assets over the life of a project. Local dollars are invested in local facilities. Residents do not have to travel to a distant city hall or compete with unrelated priorities in another part of town to address their needs. They simply connect with the district’s governing board comprised of local residents within the community.

People vote with their feet and their pocketbooks. Special districts provide local solutions while remaining transparent public entities. They can operate facilities, manage growth, repay infrastructure costs, and maintain quality of life as a community grows from an undeveloped site into a place with thousands or tens of thousands of residents and businesses.

This approach avoids forcing local needs within the district to compete with priorities elsewhere in a large jurisdiction. The district’s boundary and revenue are tied to the community it serves, allowing residents and businesses to see local dollars support local systems.

What role does the firm retain as communities mature?

We help create the districts and coordinate their work with developers to ensure that the construction and operation of public infrastructure follows all applicable rules and regulations. We then represent the districts as they grow, finance their systems, maintain and manage facilities, and operate their local governments.

Growth occurs over decades. The challenge is to continue building while operating existing systems and maintaining quality of life along parallel paths in the same community.

Which infrastructure needs are most urgent for Houston’s future?

Houston has historically planned well for water and mobility. The city has one of the country’s largest public utility systems and secured water rights decades ago. Despite frequent concerns about traffic, mobility planning has also been a regional strength, but growth requires continued investment, financing, maintenance, and replacement of assets as they age.

Drainage is another regional priority. Drainage systems perform well where they were completed and maintained, but problems arise where planned expansions were not finished, or maintenance fell short. Quality local and regional drainage is essential for Houston and the region.

Power is becoming increasingly important. Technology, data storage, and modern business activity require electricity. Water, roads, drainage, and power may sound less dynamic than other topics, but none of the region’s other ambitions work without them.