Senior Judge Charles Lettow of the US Court of Federal Claims has ruled that the federal government is liable for damages incurred during Hurricane Harvey.
The ruling specifically applies to 13 test properties that were part of a two-week trial in May 2019. These properties were owned by private citizens and located in a (normally) dry reservoir upstream of the Addicks and Barker Cypress dams. However 10,000 homes in the neighborhood were affected.
History of the dams
After two major floods in 1929 and 1935 caused extensive damage to downtown Houston, the Addicks and Barker Cypress dams were built in the 1940’s to help protect downtown Houston. The dams (levees) were built about 18 miles west (upstream) of downtown. However certain aspects of the design, such as a levee on Cypress Creek (upstream of the dams) were never built. Even then, the government calculated that the land liable to flood in extreme storms was greater than the area acquired by the government for flood control purposes. At the time, the government didn’t consider this a big deal as the land behind the dams was used for ranching and rice farming. Land was purchased by the government for between five and ten dollars per acre.
During Hurricane Harvey in September 2017, the Army Corps of Engineers closed the gates at the dams to prevent flooding downtown. Over a four-day period, over 30 inches of rain fell in Harris County. This resulted in 154,000 homes being flooded in the county. However the actions prevented an estimated $7 billion of damages in downtown Houston.
The judge ruled that these actions amounted to the ‘taking’ of personal property for the benefit of the federal government. This requires the government to compensate landowners under the US Constitution’s Fifth Amendment.
The immediate next step is that the court proposes to adjudicate damages for five of the thirteen test properties. Each side will propose three properties for consideration for damages by January 21, 2020. The court will then select five properties from the six put forward.
Separate downstream case
There is a separate legal case concerning properties downstream of the Addicks and Barker dams that were flooded when the Army Corps intentionally let out water during Harvey that threatened to spill over the dams. According to the Wall Street Journal the judge in that case recently ordered the government and plaintiffs’ lawyers to discuss a settlement.
Federal ruling – Upstream Addicks and Barker dams
Two Miami women have been charged with participating in a scheme to fraudulently obtain Hurricane Harvey disaster-relief funds.
Fredna Frederic and Courtney Gillis, both of Miami-Dade County, have been charged with one count of conspiracy to commit wire fraud and three counts of wire fraud. If convicted, they could face up to 20 years in prison.
After Hurricane Harvey hit Texas in August 2017, the Red Cross offered $400 to every household directly impacted by the storm. Payments were made via Zelle, MoneyGram, WalMart or PayPal.
In order to qualify for these relief funds, an individual had to enter the names, addresses, and dates of birth of individuals who resided in the affected area. Once this information was verified, the individual would receive a reference code that could be redeemed for a $400 payment at a national retailer.
Frederic and Gillis’s co-conspirators applied for Hurricane Harvey disaster relief funds by falsely and fraudulently using the names, addresses, and dates of birth of individuals who resided in the disaster-relief area to obtain reference codes. Gillis worked at WalMart in Miami and Frederic offered a kickback if she processed the reference codes. On approximately 15 occasions, Gillis entered the codes that Frederic gave her. Gillis then issued payments of $400 per code to Frederic and her co-conspirators.
Frederic and Gillis have pleaded not guilty.
The Greater Houston Partnership has published its initial estimates of the impact of Harvey on the Houston economy and they are lower than initially feared.
The main points are
- In terms of 120+ entities represented on the Board of the Partnership, a quarter said that less than 6% of their employees were affected, half said that 6-10% were impacted, and a quarter said that over 15% of their employees were impacted.
- According to the Texas Dept of Public Safety, 72,000 single family homes in the Houston metro area were damaged or destroyed (5% of Houston’s stock).
- Only $6.5-$9.5 billion of the $25-$37 billion in residential damages will be covered by insurance.
- About 300,000 vehicles with a value of $2.4 billion were damaged by Harvey.
- FEMA has approved $202 million in disaster relief to residents in the Houston metro and the Small Business Administration has approved $104 million in small business loans.
- September job losses in the Houston-Beaumont area are forecast to be between 42,000 and 74,000. By November, employment should exceed pre-Harvey levels.
- At the peak, about 25% of US refinery capacity was shut down, it’s now less than 10%.
- Construction contractors have complained of skilled labor shortages for some time, so
the pace of rebuilding may be slower than hoped for.
UPDATE 9/16 : Apartment Data Services have surveyed 80% of the area complexes. Only 2% were damaged. That’s much lower, even in absolute terms, than from Tropical Storm Allison in 2001. Since Harvey average rents have risen by $12 (1.25%) to $966 a month. Those figures are before rental concessions. Prior to Harvey, many tenants were offered 3 months’ free rent. Those concessions have disappeared since Harvey.
Moody’s Analytics now estimates that Harvey’s total economic impact is $97 billion ($87 billion property damage and $10 billion in reduced output). This compares to Katrina which cost $175 billion ($144 billion property, $31 billion in reduced output).