Houston Public Works Director Randy Macchi: Major Infrastructure Improvements

When Randy Macchi took over as Houston's Public Works Director, the city had 1,900 active water main leaks running at the same time. He's brought that number down to roughly 100 — and other mayors have started calling to ask how.

Macchi isn't an engineer. He's a  University of Houston law school graduate who ran a nationwide property and casualty insurer before Mayor Whitmire put him in charge of the nation's largest accredited public works agency. In this episode, he breaks down what he walked into, what has changed, and what he's willing to promise on camera. That includes 750 lane miles of roadway rehabilitation in just 10 months — more than double the city's previous best — the new $5 monthly solid waste administrative fee, the right-of-way rental fee that ends the city's practice of charging every private Texas utility except its own, and the stat that reframes Houston's street problem: nine out of ten sinkholes trace back to a collapsed wastewater pipe.

He also explains why, the day before his first day on the job, he sat in a car dealership waiting room, watched a Public Works crisis break on the news, and quietly asked himself what he'd gotten into.

Key topics: Water main leak reduction · 750 lane miles in 10 months · Solid Waste consolidation · $5 solid waste administrative fee · Right-of-way rental fee · Houston sinkhole causes · What "delivery" means as a governing standard

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Transcript

SPEAKER_00 0:00

This time next year, in fact, a whole lot sooner than that, the discussion about solid waste in the city of Houston will be markedly different, but in a positive way. That service, I promise you, is going to improve. That's our mandate, that's our mission.

SPEAKER_01 0:12

From City Hall in downtown Houston. I know one bank inside the mayor's office. Welcome back this week. We've got a special guest with us. It's Public Works Director, Randy McGye. Randy, good morning. How are you doing? Good morning. I'm doing great. Thanks for being here to uh to be on this podcast with us, taking a look at the administration and all the work that's been going on. What I find really interesting about you, this is uh kind of a new title for you, you haven't been in this job very long, and you don't really have a background in engineering. How did you arrive at this post in public works and taking on this big endeavor in your life?

SPEAKER_00 0:46

You know, if you'd asked me at any point in my career if I thought this is a place I would be, I probably would have laughed at you. Um not even furthest from my mind, it just didn't even register whatsoever. You know, professionally I'm an attorney, um licensed attorney in the state of Texas. Of course, I went to law school here in Houston, at the University of Houston, a long time ago now. Uh, but I didn't go to practice law. I I'd always wanted to be a lawyer, really, to be in business. Um, had a very interesting fascination with how businesses worked and what they could do and what they produced and and and the whole structure of it. What they don't tell you in law school, of course, is when you get out of law school, you're gonna have to probably practice law until you can get some experience before you become attractive to businesses. And so uh through my career I meandered a little bit, did some really interesting things along the way, had an opportunity at a certain point to join really an up-and-coming legal services practice that later on I had the privilege of helping to grow into a nationwide uh insurer on the property and casualty side. And uh I was there for for quite some time and long enough to the point where uh it was I was ready to make a change and I got to retire. I got to retire really pretty early. And uh after retirement, you find yourself after those first few days where you say, Well, this is great, and then all of a sudden you say, Well, what am I gonna do now? Especially when you're young and you you know you've got a lot of energy and you want to do some stuff. So I started a uh uh executive coaching and leadership consultancy group, and that was a lot of fun, and I did that for a couple years, but I just had this itch. I had an itch where I felt like there was more I could offer, more that I could do, and I just started looking around. And by chance, and I think this is the story for anybody who's trying to figure out what do you want to be when you grow up, what do you want to do with your life, you've got to keep looking around, keep your eyes open. I came across a posting in public works, they were looking for a chief operating officer. That fit directly with my career path, my experience, things I'd done. What they were looking for in a COO at the time wasn't another engineer. It wasn't someone, frankly, with a highly technical background. They were looking for someone to that had good operations experience and could provide leadership. Fortunately, when Mayor Whitmeyer was sworn in, uh, he and I met and we found that there was just a lot of good synergy in what we both wanted to accomplish in public works. Without a doubt, there was so much low-hanging fruit that we could hit on right away to improve quality of life in the city. And that was something I saw when I first got to Houston in the first place. You know, the same things he campaigned about, which was our roads aren't very good, we need major investments in our infrastructure, some of these things just don't make sense. Those are the same things that I think as a regular Houstonian was crossing my mind before I got here. When I got here and you get to look under the hood a little bit, you get a little bit more excited, you say, Oh, maybe we can actually do something. And so we hit it off really well.

SPEAKER_01 3:50

So you were drawn really to the to the operational challenge of this, not nothing about public works or water pipes.

SPEAKER_00 3:56

You know, um, first I'll say this public works, Houston's public works agency, it's the largest accredited public works agency in the country by far. And it's a big deal. And it's not just in terms of the number of employees that have it, it's also the scope of work that we do. So I looked at it as a monumental challenge. I mean, what an exciting opportunity you could have to come in and make a difference on a really, really big scale. For me, that was that was something that was personally attractive. The opportunity to work with and coach and help develop other leaders, that was something that was super attractive. But if I could do that and I could improve the types of services that we see the city provide along the way, it's like the icing on the cake.

SPEAKER_01 4:39

Because that's the ultimate success measure of success for you is when the people are good, right? When the trash is getting picked up when the pipes aren't breaking and all that good stuff.

SPEAKER_00 4:46

I just call it delivery, right? We need to deliver. We've made commitments that here's our responsibilities, and this is what we think the public should be able to expect of us, and we need to deliver. And that's really what I think being a public servant is all about. If you step into this role, you know you're not stepping into it for the money. You know you're not stepping into it necessarily even for a work-life balance. You're stepping into it really because you want to make a difference. I think true public servants want to make a difference. That's why I'm here.

SPEAKER_01 5:13

So uh with that in mind, can you put into words the mountain of issues that were here when you arrived and kind of the the hurdles and challenges that you've faced in these last few years?

SPEAKER_00 5:27

I mean, it's all you got to do is look around. And and it and it sounds almost cliche to say that, but what's interesting about public works is public works is the one department in any city that touches every resident every single day. In one shape, form, or fashion. And that's certainly true here in Houston. If you get on our roads, public works has touched you. If you turn on your faucet, public works has touched you. Those are basic daily activities for people. So when you look at challenges, all you do have to do is look around and see where they're at. It's no mistake. I mean, the roads have been in rough shape for a long time. You know, Mayor Turner ran on a platform too of potholes. He wanted to fix potholes. Look, Houston's potholes program is the best in the country. I mean, we resolve 99% of uh resident reported pothole problems within the next business day. I mean, that's incredible. When I talk to my colleagues across the country and I say how fast we do it, they their at their question is how do you do that? There's a commitment and a dedication. Now there's also some resources to back that up. But potholes is, I always talk to people, I used to do some health coaching with folks, right? And we talked about weight and other things like that. We'd say oftentimes, sometimes your weight imbalances are symptoms. They're not the problem itself. We've got to figure out what the problem is. Potholes are symptoms, they're not the problem. What's going on with our streets that cause them to develop potholes? And that's great opportunities for our engineers to figure out what solutions are going to be and how do we implement things that will last a lot longer. So when I got here, the city was really good at taking a number of lane miles every year and repaving them. Well, that's good. But what do we do to make that last? In the last year, we've introduced a pavement preservation program where our asphalt streets that we have a lot of will now last us a lot longer than just two, three, four, five years. If you take care of your stuff, it's like my folks used to say, right? If you'll take care of it, it'll last you. And that's no different with our streets. Now there's there's challenges, of course, but that's up to us to be innovative and figure out how to solve that.

SPEAKER_01 7:35

You mentioned um public works touching a lot of different things, whether it's the streets we're driving on, the faucet that we're turning on, but now it's looking like solid waste is going to be part of that, right? Solid waste and public works coming together. What was important about that? Do we call it a merger? I guess what do we call it? And then what was important about that?

SPEAKER_00 7:52

No, the the the term we've traditionally used is a consolidation. Um many folks, if you go in the community, have a feeling, a distinct feeling, that there's too many departments at the city. And when we went through the Ernst Young efficiency assessment at the beginning of Mayor Whitmeyer's term, that was one of the things we discovered. We had more employees per capita than any other city. We had a whole lot of departments. But importantly, we had a whole lot of departments that were doing a lot of duplicative work. And any good business organization will tell you you're not going to really hit your stride until you can find the efficiencies in that process, until you can figure out how you can stretch dollars. One of the things I've said is despite the fact that we have what appears to be a really big operating budget in public works, billions of dollars worth, for a city our size, it's really not enough because there's so many things to do. But the challenge isn't, well, how do I find more money all the time? I mean, you want to do that. Sometimes the challenge is, but how do I use my money more wisely? Solid waste is a great opportunity there because we already work in tandem with them on so many things. You know, there are certain times when they need to go and handle an illegal dumping issue where they don't have the types of equipment, heavy equipment, that we have available in public work. So public work shows up with our equipment to help solve some of those problems. And on top of that, the confusion in the community plays into this as well. I can't tell you for the last year since becoming director, how often people reach out to me, hey, how come my trash hasn't been ticked up? So we already deal with a lot of those same issues, and we've had a great work in relationship with the Solid Waste Department up until now. But this is the next evolution of that. This is how you stretch dollars to make them go further. But even better, if you look at what we've done in public works over the last year in improving services, and and I'll say we still have a long ways to go, but we've turned around a whole lot of things, almost 180 degrees. If you look at the track record that we've established on this, solid waste is a wonderful opportunity to solve a real pain point. I mean, it's a real pain point when people say, Why is my trash still sitting out here? And they call, and someone responds and says, We were there today, we picked it up. Guess what? We've done some investigation, we know we can do better, and this is just a great opportunity for us to put some real muscle behind it.

SPEAKER_01 10:10

So you believe this will improve efficiency? This should make those deliverables even easier for the city to deliver to the people.

SPEAKER_00 10:17

Look, there's been there's been focus and discussion right now about this about a $5 administrative fee. I do want to talk about that. I'm telling you right now, this time next year, in fact, a whole lot sooner than that, the discussion about solid waste in the city of Houston will be markedly different, but in a positive way. That service, I promise you, is going to improve. That's our mandate, that's our mission. That service is absolutely going to improve. And there is there's a lot of low-hanging fruit from an operational perspective to solve that. One of the things that I think is very clear to not just this administration, but the whole city is we can't just keep throwing money at this problem. So this isn't necessarily a money issue. Okay? Solid waste is a hundred and fifteen million dollar operation. That number has ticked up steadily over the years. People would say the service hasn't proved as it has ticked up over the years. So it's not just throwing money at the problem. We've got to fix the operations too.

SPEAKER_01 11:13

But to be fair, more people, more trash. I just logically, I don't think that budget ever goes down.

SPEAKER_00 11:21

There are efficiencies to be had, I promise you that. Um I'm not convinced, frankly, that the $115 million we spend on solid waste today is what the true cost of that is. That that cost, if we do it right, if you deploy your teams the right way, if you have the right equipment out there that works, if you have all of your transfer stations operating, you lower things like the amount of overtime you have to use, you have crews that you use more effectively and more efficiently, you get things picked up faster, you don't have to do repeat tracks, all of a sudden that drives cost down. Now, I'm not saying it's gonna drive it down by half or or any percentage, right? But I'm confident that we could spend less if we did this better.

SPEAKER_01 12:01

If you do it, and and you'll and it looks like you're gonna have a chance with this consolidation and bringing these uh departments together.

SPEAKER_00 12:06

We look forward to it. Look, honestly, we're really excited about it.

SPEAKER_01 12:09

Yeah. Can you explain that fee, though? Let's talk about that because a lot of people have uh you know up in arms about a new fee. Nobody wants to pay more fees. My research is showing that we're one of the only, if not the only, big city in Texas that doesn't have a fee like that. I'm not saying that makes it right, but we have to do what we have to do. Can you explain what that fee goes to and when people are going to see it on their bills and take us through that?

SPEAKER_00 12:30

Yeah, you're absolutely right. So Houston is the only city that doesn't have some sort of fee associated with solid waste collection. Now, we conducted a study, I say we, the city, conducted a uh cost of service study for solid waste a little while ago. They engaged a firm of Burns and McDonald who are experts in solid waste cost of service studies. They looked at how many customers we have, they look at what it takes to pick it up, but they arrived at a number, roughly $25 per household per month, is what it takes to run the solid waste department. Now, that number, by the way, assumes that solid waste is running efficiently. So that goes back to my earlier point of I'm not so sure that we're doing everything that we can. In fact, I'm I'm sure we're not. We can do better. But it says about $25 is what it costs. Within that $25, one of the categories is the administration of it. So you've got back office staff, you've got uh you've got technology needs, you've got a number of different things that go just beyond sending someone out to pick up the trash and what what bakes into that. Of that $25, they said it's a little bit over $7 per household per month, is the administrative cost. So as we set this out, one of the things that was clear is state law requires us to charge something if solid waste becomes part of a municipal utility, which is which is what this move is all about. So we've got to meet state law requirements. Second, our bondholders who are part of that municipal utility and are are they really the investors in the utility, they have demands that make sure that we are meeting our obligations financially from a wise perspective. So there's got to be a fee associated with that. The mayor said when he launched the budget, he said, look, five dollars is not a garbage fee. No one's gonna pay just five dollars to say that's the garbage fee. Um it's an administrative fee. If it becomes more than five dollars, frankly, if it becomes more than seven dollars, that's when we start talking about what it is and what it isn't. But right now, that portion, $25 uh $5 out of $25 per month, really just covers some of the administration. And and that that brings in $24 million a year of revenue into the utility to cover that portion of it. So remember, $115 million operation, $24 million of revenue coming off that $5 fee, it's it covers the administrative part.

SPEAKER_01 14:49

And then going forward, the way things are funded, with the com combining public works and solid waste, there's another uh fee that's in there, the right-of-way rental fee, but I understand this is something that the utilities pla uh will be paying.

SPEAKER_00 15:03

That's right. All of the utilities in Texas, doesn't matter what city they're in, they pay to use that city's respective right-of-way. Here in Houston, it's the same thing. Center Point pays a franchise fee for doing so. ATT, the telecommunications companies, they all pay that. Uh Houston Water, which is our municipal utility, and we sometimes refer to it as the combined utility system, water and wastewater, does not pay such a fee. Um sometimes they don't even have to get permits to do some of the repairs that they've got to do because they're permits that have because their repairs that have to be done under exigent circumstances, right? We've got an emergency repair, we don't have time to go through a paperwork process to get it, we end up taking care of that on the back end typically. The water utility though occupies a significant portion of the right-of-way. In fact, if you look around at some of our street problems these days, nine times out of ten, when someone sees a void or a sinkhole starting to develop, it's because of a wastewater pipe that has collapsed. So this fee, which is going to be 5% of gross revenue that comes into the utility that gets paid back to the general fund, really is to compensate the general fund for the right of way which it owns, which are our streets. The general fund, the city, is what owns those streets. And this pays for the utility's right to occupy a portion of it for all sorts of various purposes. And we even have temporary versions of this. You know, if someone wants to have a special event at the Julie Edison Library, for instance, and they're going to put a valet lane out there, they're going to pay a fee to close down that portion of traffic mobility so that they can have a valet lane. So this isn't a new thing, by the way, just like our uh administrative fee on solid waste, this right-of-way fee, we're the last big city in the state to come to the table to do this. But it's a it's a great step in the right direction to help balance what has historically and for decades been a structurally imbalanced budget in the his in the city.

SPEAKER_01 17:02

Yeah. And and let me ask you this going forward, um, and and I do, I look forward to more conversations like this. I'm gonna get out to the some of the wastewater plants. We'll talk infrastructure, we got a lot, but kind of from the the high level here, do you have a broad vision for the future of, well, now it'll be solid waste under public works, under the Whitmeyer administration. What do you see long term?

SPEAKER_00 17:25

You know, at the end of the day, uh, and this is true when I first got here, the day before my first day at the city, I was sitting at a car dealership in a in a in a waiting area. And the news came on. And there was it was a public work crisis. And it was the sort of it was the sort of story that to be honest, I sat back and I asked myself, what are you about to get yourself into? You know, public works, when we get on the news, it's usually because there's a problem. We we don't tell a lot of good, we don't tell a lot of good news stories about public works, which is a shame because we do a lot of amazing things across the city all the time. You know, you want to talk about the fact that we're improving things. So far in the last 10 months, we've rehabilitated almost 750 lane miles of roadway in the city. You know, that's more than double the best the city ever did over a 15-month period previously. We're making some real strides, we're making real progress. The mayor talks about when he got here there was 1,900 active water main leaks at a time. We're down to about 100 today, and we're trending continually in the right direction, which is towards zero. You know, if there's a legacy to leave behind, the vision is that we tackled infrastructure not just because it was a political promise, but because it was the right thing to do, and it was because it's what the city deserves, but it's also because it's what makes the city run. If you don't pay close attention to your infrastructure, if you don't take care of those problems, it snowballs into all other aspects of public life. You want to talk about challenges that police and fire have to getting to places when they can't drive down certain streets because the streets are in bad condition? I mean, those are things it just ripples across the way. And so that's the vision, right? And solid waste is uh is a big part of that. You know, we know we've got a major illegal dumping problem in the city of Houston. That's gonna be a whole different challenge to tackle. But together, as we combine those resources, as we become efficient, as we make sure we're stretching dollars the right way, it becomes more opportunistic in the ways that we approach those challenges.

SPEAKER_01 19:30

And again, I mean, when this change happens, you haven't gotten a chance yet to sink your teeth into solid waste. You know, public works has been your focus, so now you get an opportunity. Any final message um you want to give to the to the city, to the people, to Houstonians about whether it's transparency, the work you're doing? Any final message about that?

SPEAKER_00 19:47

Look, my message is this, and it's always this the best is yet to come. I think we've done yeoman's work so far in getting things going in the right direction. And I I think people really do feel it. Sometimes they feel it in an interesting way, they they feel it because there's construction and there, there's a little bit of inconvenience. Guess what? That's a temporary pain point that's gonna get us to where we want to go, but the best is yet to come. We are so confident but excited about the amount and type of work that we're doing. We're doing more infrastructure work in the city of Houston than any other city in the country. Now, an important distinction is I'm not gonna say we're spending more than any other city in the country. There are some places that are spending way more on less infrastructure. That's actually a great testament back to the city that we're managing those contracts effectively and wisely, that we're stretching it out so that we can get more done. This is a premier place to be. I love Houston. I didn't grow up here like Davy Crockett. I got here as fast as I could. You and me both. And I I love this city, I love the people of this city. There's so much potential here. And people, corporations, individuals, families, they're discovering that. They get here and they love it too. We want to make sure that we're building a city that's worthy of their attention and worthy of their love too. And it's just such a tremendous privilege and honor to be part of that journey.

SPEAKER_01 21:07

Well, I've really enjoyed chatting with you today, Randy, and I look forward to future conversations. Thanks for joining us on 901 Bagby.

SPEAKER_00 21:13

Thank you.

SPEAKER_01 21:14

Good luck too.