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Wednesday
Feb192014

A Conversation with a City Official

I've been pondering for two weeks now over a recent conversation I had with a city official. My local city is committing $18 million to attract a retail development - and I highly doubt they will make it back. This is the stereotypical "old economy" project - pay a ridiculous amount (millions!) of money in the hopes that it will generate jobs, sales, or housing.

As a Strong Towns advocate, two core beliefs of mine are;

  • We should not spend public money attracting or propping up handpicked private businesses. ("Target is looking at our city! Let's spend millions of dollars building roads and preparing utilities just because they're a well known brand!")
  • City spending should be seen as an investment. A city invests in itself by providing services and infrastructure, and that increases the value of the city, which generates greater tax revenue that covers the cost of the investment.

Often, no development (doing nothing) is better than bad development. Why would we want the promise of 500 new jobs, if the city will be worse off?

 

I've blurred the city official's name with xxxx because I don't wish to offend anybody.

My initial e-mail:

Dear Mayor, and others,

I came across the article on the Log Cabin Democrat titled "Council to consider $18 million infrastructure project" - http://thecabin.net/news/local/2014-02-01

I understand that the city is approaching some very serious revenue issues in the near future ( http://thecabin.net/news/local/2013-12-27-0 ) - and I feel that the proposed infrastructure is a very serious mistake with some very serious consequences for the city.

With every infrastructure project that we undertake, the very basic question we must ask ourselves is if the project is financially viable. Will the infrastructure project generate a return on the city's investment?

The proposed infrastructure project will cost the city $18 million. My first question I'd like to raise is - How long will it take before the city will get their initial $18 million investment back?

My second question concerns the ongoing obligations that the city will inherit by undertaking this project. The average lifespan of civic infrastructure is 20 years before it requires replacement. Not only are we paying for $18 million in infrastructure, but we're also inheriting the obligations of maintaining this - which (as a quick estimate) work out to be approximately $900,000 per year ($18 million divided by 20 years) - not accounting for inflation.

Will the proposed infrastructure, once built, either increase property values or generate enough extra sales - that the city will generate an additional $900,000 per year (not accounting for inflation or the initial construction costs) in tax revenue - to pay for the ongoing costs of this infrastructure?

My greatest fear is that we depending on the promise of future growth to pay for these obligations - despite modern subdivision developments being a burden on city infrastructure (and finances), and our falling sales tax revenue that indicates that in the near future we may no longer be able to rely on sales tax to fund the city's budget. (I really hope the answer is not to resort to issuing bonds - where not only are we concerned about the cost of our maintaining our infrastructure, but also furthering us down the path of municipal debt.)

As a resident that is concerned for the future of our city, I would love to see our city on a path to financial prosperity. But, I am deeply concerned that this infrastructure project will be a burden on the city that, in the few decades, will come back to bite us.

Sincerely,
Andrew Price

Their reply:

Andrew,

Thank you for your thoughtful email. It means a lot to us when any resident takes the time to share their thoughts, but knowing how respected and knowledgeable you are on planning and development topics gives your words a little extra weight.

Eighteen million dollars is a big sum, no doubt. I think if someone tells you they’re not at least a little bit nervous about spending that kind of money then they must not have a heartbeat. When choosing how to apply this investment, it’s important to consider the strategic goals of the project––the most pressing of which is getting Central Landing operational. But there are others...

This is a public project, and being such, its ROI is not necessarily financial.  Like you and I have discussed before, for example, a bus system won’t pay for itself. It’s a public service we provide, all the while knowing that it generates no significant financial return. We do it because it’s important in other ways.  The same is true with this Central Landing street project.

Having a regional scale destination such as this will complement the desired social and cultural lifestyles of a large segment of our population. A vast number of Conway residents, as well as residents from several other counties around us, love these sorts of shopping and dining destinations, and will frequent them with friends and family as a matter of choice. We believe that Central Landing will better provide for their quality of life. Providing the quality of life assets that our resident's desire is one of our greatest duties as public servants. (And this is true whether we, as leaders, agree with the public’s desires or not. Personally, I don’t care much about youth baseball, but I still think providing high quality ballparks is a wise investment.)

This street project will not only serve Central Landing, but the entirety of Conway drivers. One of our greatest challenges since the 1960s has been east/west access across the I-40 corridor. This project will provide that, reducing commuter volumes on Oak and Dave Ward Drive by some margin and guaranteeing another crossing option for all drivers. In the end, drivers will be able to navigate from Salem Road to Conway Commons along the Bruce corridor. Providing an efficient network of streets is another one of our principle duties.  (The traffic study is available. If you’d like to see it, please let me know.)

Thousands of service sector jobs will be created over the lifespan of Central Landing. This is important in a city with our age demographic. The local economic impact of all of those paychecks over all of those years is very substantial. We don’t want a single young college student taking a job at Little Rock mall or a Little Rock restaurant if we can help it. Working with the private sector to create employment opportunities is one of our primary roles in economic development.

And of course, when it does come down to direct, financial, return on investment, we will create a mountain of property and sales tax revenue where none currently exists. 

Will it be enough to pay off the $18m in a twenty or thirty year period? 

It doesn't matter. 

For the social, cultural, transportation, and employment reasons I mentioned above, I doesn't need to. (Although the economic impact analysis states it will come very close.)

I hope this helps you understand a bit more about the rationale behind this project, and behind every decision we make. Always here if you need anything.

xxxx

PS> I know you and I agree on a lot more than we disagree on when it comes to proper planning and development policy. Be sure, my thoughts on Central Landing and this street project in no way defies my love for urbanity nor my desire to see much greater investment in dense neighborhoods in the future. I think they’re both necessary in cities like Conway. 

My reply;

xxxx,

Thank you for your reply. I have a concern with;

 “The local economic impact of all of those paychecks over all of those years is very substantial.

 Will it be enough to pay off the $18m in a twenty or thirty year period?

 It doesn't matter.”

 I would argue otherwise. This is a difference in ideology, but please allow me to explain myself.

If you take a street, residential or downtown – everything the city invests in the street directly benefits the properties along the street, and should be done with the intention of making the street a ‘nicer place’, raising property/land values, and ideally generate a ROI for the city’s investment – otherwise I’d argue that the city is making the investment for the wrong reasons.

I wouldn’t promote transit as a charity service – but as another investment the city should make, enabling denser development, making the city much more financially productive. As we both know, a mixed-use 3 story building is substantially more productive (in terms of tax revenue per acre) than a single-use auto-oriented building.

We build roads and thoroughfares because we know it makes the regions it connects on either side much more productive and valuable when they’re able to connect to each other.

Likewise, we provide schooling, fire and police protection, and other services, because ultimately, it’s an investment that makes our city a more attractive place to live and work – without those services, the value of our city would significantly diminish. People and businesses would move out, tax revenue would fall.

At the end of a day, a city ultimately needs to generate a profit. By profit, I merely mean our expected revenue should exceed our investment for every action we undertake. Without this, we’d accumulate debt. Even a charity, such as a church or an orphanage, needs to operate a profit otherwise they will accumulate debt and eventually close their doors.

I’m not arguing that building a new road is bad, but we should do so diligently.

This is why this part scares me;

“The local economic impact of all of those paychecks over all of those years is very substantial.

Will it be enough to pay off the $18m in a twenty or thirty year period?

It doesn't matter.”

If we treat all investments like this – if every subdivision we build, every outlet mall, office campus, or factory we attract – we operate at a loss – we spend more than we expect to make back from it – in the effort to attract more residents, make more sales, or create more jobs – but we never expect to make a return on our investment – at what point does it matter? At the end of the day – if none of our investments ever make a return for the city (enough to pay for itself and the obligations we inherit to maintain it) – will not our city eventually go broke?

(I really hope the answer is not ‘let’s issue bonds’, then when they mature ‘let’s issue more bonds to pay back those bonds!’)

Making our city financially sustainable should be at the core of our mission - that may be our greatest ideological difference.

Andrew

 Their reply:

Great points you’ve made below, Andrew.  To me it’s clear that we agree on a lot more than we don’t.  

Please know that government is not is the business of turning profit.  If we did,our taxpayers would be quite angry at us. That profit would be their money, not ours.  Taxpayers want to know that we’re applying their money in a way that balances the level of service we provide to the level of demand they generate. This is why government institutions use zero-based budgeting: expenses are tied to revenue directly, line-by-line, across all accounts––general, capital, debt service, fiduciary, etc.  There is no budgeted space for “profit.”**  There never will be, unless it’s in the form of what’s called “fund balance,” which is the difference between assets and liabilities. (aka, equity)

We are a customer service organization only. That’s the whole purpose of government—to provide collective-level services that are not possible at the individual level. The streets project that will serve both Central Landing and the city at large will do that. Is it debt? Yes, but it’s debt that is long-term and secure, just like the healthy debt of a home mortgage.

One of these days, I hope Conway is putting these tens of millions into a dense, high-output landscape, complemented by services and infrastructure that are far more efficient than what we’ve been building for the last fifty years. But alas, we’re just not there today. Culturally, socially, politically, financially, and professionally, we’re just not there yet. But we’re making strides in places like The Village at Hendrix, downtown, and soon, Markham and Donaghey.  In the meantime, we must acknowledge what is possible and where the biggest ROI does exist, and today, that’s Central Landing.

Thanks again for your input. I look forward to reading your next blog.

xxxx

**Enterprise accounts will permit profit, but they’re a completely different beast and cannot, by law, be used to support something like this street project.

 

My reply:

I think we’re misunderstanding profit. By profit – I mean that at the end of the day the money coming in needs to be greater than the money going out. Otherwise we’re creating debt. It’s essential to basic accounting – otherwise, even the most philanthropic charity will one day run out of money.

I agree that our city should not be attempting to ‘get rich’ and that any money we do receive, we should plan to reinvest in our city. Very much like a charity would do. (Also, most charities, knowing they have future obligations will store a little extra money away, so when the day comes to meet their obligations, they can do so and stay solvent.)

“Is it debt? Yes, but it’s debt that is long-term and secure, just like the healthy debt of a home mortgage.”

With all debt, we need to make sure we have plans to repay it. If I took out a mortgage I can’t afford to repay, I’d eventually bankrupt myself.

 “Will it be enough to pay off the $18m in a twenty or thirty year period?

 It doesn't matter.”

 Because it is “long-term and secure” - are were merely kicking the bucket down the road? What will we do when the bill is due? This comes back to the question from my previous email;

“If we treat all investments like this – if every subdivision we build, every outlet mall, office campus, or factory we attract – we operate at a loss – we spend more than we expect to make back from it – in the effort to attract more residents, make more sales, or create more jobs – but we never expect to make a return on our investment – at what point does it matter? At the end of the day – if none of our investments ever make a return for the city (enough to pay for itself and the obligations we inherit to maintain it) – will not our city eventually go broke?” 

Andrew

Their reply:

Andrew, 

This will be my last email to you as I have a mountain of other work to which I must attend.  I will lay it our very clearly according to your questions and assertions.  You’re welcomed to call me with further questions.

You said, “...at the end of the day the money coming in needs to be greater than the money going out.”

And, "we spend more than we expect to make back from it.”

And, "if none of our investments ever make a return for the city (enough to pay for itself and the obligations we inherit to maintain it) – will not our city eventually go broke?”

In these three lines, you’re recognizing only two options for us:

1.) That we end up with extra money at the end of the project, or

2.) That we end up in deficit which will lead us to bankruptcy at some point.

What you’re failing to recognize is a third option, which we actually aim to achieve, and which actually has two possible end states:

3a.) That we break even, and revenues match costs exactly. (Zero-based budgeting.)

3b.) That we don’t break even on the given program/project/policy, but that we can justify it because of the service it provides the community. (See "the Fire Dept.”)

And 3b above is okay because , 1) service is what we do, period. And, 2) those justifiable shortages in one department or project can always be made up for by other sources of revenue.  State law requires they be. (And it still adheres to our system of zero-based budgeting.)

Option 3a is what will be used on this streets project, which brings me to your next point...

You said, “Because it is 'long-term and secure' - are were merely kicking the bucket down the road? What will we do when the bill is due? 

There is no bucket-kicking, Andrew. The revenue stream that pays for this $18m project is already in place. It’s up to City Council to decide how to attach it to this project, but the money is there and will be allocated for the exact period of time it needs to be to pay for this project––to the penny.  We are not permitted to “bucket-kick” any deficit. Not once. We’re not even allowed to create a deficit.  Again, state law denies us that ability.  

That said, we are permitted to carry debt. Debt service is omnipresent and necessary in personal, business, and government budgeting. It’s part of the process and as long as it’s justified and matched to a dedicated revenue stream, there is nothing to fear. The City of Conway will carry some form of debt as long as it stands as an institution. Guaranteed.

My friend, this is just how government accounting works. I honor all your knowledge about land-use and planning, but I encourage you to dig more deeply into city management and finance topics in order to further your understanding of how our budgeting system and designated revenue streams affect the prioritization of projects, the methodology of their execution, the politics of local will, and ultimately, the landscape of our city. 

I also believe that for all your fiscal-conservative-based passion and concern in this series of emails, what you’re really upset about is Central Landing itself. You’re upset that we’re even partnering to build this sort of low-density, low-efficiency, disposable set of boxes when we could be investing this money in far more powerful forms of urbanity.  

If my hunch is correct, then I’ll go ahead and say it: you’re right.  We should be.

But we’re not. 

Right now, this is what opportunity looks like. It’s not ideal, but it will be a benefit to our area.

Stay passionate for this stuff, my friend. It’s people like you that keep momentum in the grand flywheel of change.  

Always a pleasure to chat with you.  Have a great day.

xxxx

He's a great guy with good intentions, but I am having trouble understanding what he is seeing that I don't.

The conclusion I got from the conversation was this; 

  • Our sales tax revenue (which makes up the majority of the city's revenue) is falling, so we are scrambling to attract a big retail development to pop this revenue source back up.
  • But - our goal isn't to make enough money back to cover the cost of what the city is spending - cancling out the point above (since our city will be financially worse off - spending money and not making it back.) This makes the argument of spending money to attract retail to prop up sales tax moot.

Honestly, I don't think anyone is doing anything wrong. The council members voting on it are just normal folks that are thinking "Oh! Dillards is coming to town! I like to shop at Dillards!" An economist in the city does a study and thinks "It will create sales tax revenue and jobs!" The engineer thinks "We need to widen this road and build a roundabout!" And the city treasurer thinks "We can afford that - if we issue bonds!" So, the city gets together and tells them "We want you in our town! We'll do anything to make it happen! Tax subsidies? Infrastructure?"

Indivdually, everyone is doing there job and they're acting rationally with what they know. It's the system, and how it all comes together, that I believe is broken.

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Reader Comments (14)

This is a great exchange Andrew. As someone who used to work in City Government I can see both sides of this very clearly. There are a lot of angles to address here, but I want to focus on one theme.

First off, in a sense you are having an ideological dispute, but I wouldn't phrase it that way as it will limit the receptiveness of the other party. But in another sense, it's not ideological, it's more life a debate over the physics of municipal finance. Essentially, the City staffer gets hung up on the idea that projects should be/could be net revenue positive to the city (might be helpful to showcase some examples, like the creation of Boston's back bay neighborhood--it's definitely possible!). I think it might help him to make the point that you don't expect everything the city does to be immediately, directly net positive (maybe they are if you include positive externalities, but whatever). The point is that enough of them have to be that they can pay for the charity work that the city does. An municipal debt can be a good thing, if it's put forward toward an investment that will create value (we carry a lot of debt in my private real estate development firm, but we use it to buy buildings, renovate, improve, and release them, creating more value for us, our tenants, the bank, investors, and the local businesses themselves). The challenge (and big danger) is figuring out where the line between operations and maintenance and investment is. The more stuff we have to maintain, the harder it will be to pay for new stuff to generate new investment while still paying for all of the old stuff.

Then there's the sort of magical thinking "revenue sources will be provided, because they must be provided." Not sure how to address that...

If we're going to make more headway here perhaps we are going to need to learn more about existing structures of municipal finance so that we can frame debates in concepts and terms that city administrators and elected officials can better understand (and to avoid the "we understand this, and you don't" dodge). I know Krugman doesn't get a lot of love in this world, but I'm reading a heavy econ book by him and several others about urban economics (economics as if space mattered). It's quite interesting and powerful (even if a lot o the math is over my head for the moment).

Perhaps there's an opportunity for a more comprehensive primer on municipal finance and economics in Strongtown's future...

February 19, 2014 | Unregistered Commenterrecoveringplanner

A value capture tax scheme would really help governments calculate whether a specific investment is worthwhile or not.

February 19, 2014 | Unregistered CommenterBen Douds

Very decent gentleman to continue the level and demeanor of the conversation. You both were making your points.

I think in the real world of City Government there is a strong need for ribbon and big scissors moments and who doesn't want to be Santa Claus! Look at all the people you make happy!

People with other peoples money and 'vision' can do a lot of damage. They can also do a lot of good if we could get more involvement in the community, engage the population and look at the long term ramifications of our actions.

February 19, 2014 | Unregistered CommenterRick Smith

This is a great exchange, and can serve as a useful tool to understand how projects are justified in the eyes of those making the decisions.

In my city, Olympia WA, we're about to undertake a Community Renewal Area process that will pit the Downtown Neighborhood, of which I am President, which has a pretty clear idea where the problems lie and what needs to be addressed first, and a certain city council member who wants to use it to develop a large "legacy project" in an area that does need some attention, but isn't on most people's short lists of areas to address in our Downtown.

As a former Planning Commissioner I feel like I've heard every justification under the sun for sprawl and excessive infrastructure projects - the worst of which being the "this is the only development we can attract" argument. It grates my skull.

February 19, 2014 | Unregistered CommenterRob Richards

"This is just how government accounting works."
As if accounting is somehow different for government than for everyone else. It's not,

February 19, 2014 | Unregistered CommenterCindy

We've done work in some communities that maintain "reserve accounts" for rainy day situations like a precipitous drop in retail sales that usually follow a re/de-pression, natural disaster, or whatever. One could liken that account to basically being a parking spot for the "profit" tantamount to sound fiscal management. I don't understand why a city wouldn't want to have that within their budget. Heck, I have a reserve account in my business. I'm sure the city of Conway has had some hard times at some point that it can learn from.

Reserves are prudent, and given the fact that cities don't disappear that quickly, one would think that a simple look at history would show them that they'd better make a reserve. What city hasn't experienced a recession that robbed them of estimated retail income or a real estate collapse that blew their property valuation and dented their property tax revenue estimates? Its become a 5-10 year practice to go through this.

I also have a problem with his/her comment about the bus system. Did they run the math to come to that conclusion that it is indeed upside down?

February 19, 2014 | Unregistered CommenterJoe Minicozzi

What you’re failing to recognize is a third option, which we actually aim to achieve, and which actually has two possible end states:

3a.) That we break even, and revenues match costs exactly. (Zero-based budgeting.)

3b.) That we don’t break even on the given program/project/policy, but that we can justify it because of the service it provides the community. (See "the Fire Dept.”)

This is the part of the argument that is the most strange to me. It states that the projected additional revenue for the city over the design life is $18 million - I don't know if that is true but if it is fair enough. But the odd thing that it implies is that if the projected additional revenue were instead $25 million then you should aim to increase the cost of the project to make up this difference and eliminate the net financial gain.

February 19, 2014 | Unregistered CommenterMatt Taylor

Thanks for sharing this Andrew. Here in north Texas, I find myself having this exact conversation in different cities almost weekly. Reading your example was somewhat therapeutic and motivating at the same time. You're lucky to have a council member that understands as much as the one in this email does. Most are nowhere near that far along...

The underlying challenge to all of this (in my opinion) is that it's difficult to identify a person on the municipal side who is responsible for the long-term resilience of a community. When times are good, grounbreaking events are held and plaques are made, and when things start to go south, elected officials step down and staff move to a newer shinier place to help them grow. Citizens and local businesses care, so tapping into their passion and equipping them with the facts so they can force change is worth exploring. Intervention/demonstration efforts like Neighborhoods First, Team Better Block, etc are great, but many times people have to rogue to do it. Meanwhile, most engineers, planners and developers continue to do the same old crud because that's what the elected officials and staff want and will pay for.

All that said, I think we're close. We need to keep providing real, fact-based examples and using tools like what Joe Minnicozi's been doing to help educate everyone. If the Strong Towns guys could develop some financial modeling tools and analysis that digs into pros, cons and opportunities to improve different municipal finance models (property tax, sales tax, impact fees, etc) that would be helpful too. I'm sure all of us on the Strong Towns network could provide plenty of examples.

We just had Chuck in town a few weeks ago to do a few curbside chats and that's created some good momentum for us. My colleaugues and I will be blogging about some of our experiences on our site at www.verdunity.com and engaging in the discussion on the ST network as well. I'm excited to be part of this network. Together, we'll get there!

February 19, 2014 | Unregistered CommenterKevin Shepherd

There definitely seems to be a disconnect when it comes to what the government's role should be. I've heard the argument "I don't think cities should be making money" argument from lots of people, and that seriously pollutes the discourse. If a municipality takes in more money in taxes than they spend, then as some of mentioned it should either go into a contingency fund for a rainy day, or it can be returned to the citizens in the form of a rebate or tax break in the next fiscal period. Regardless, if the city is going to implement some "public service" type initiatives that don't pay for themselves, then the city has to do other things that do pay for themselves, and then some, to cover the losses of those other programs. Many people seem to think that the government should only provide losing services, but as has been mentioned over and over, that just leads to debt and ultimately municipal bankruptcy.

The general notion that I subscribe to, and which I think mostly aligns with the Strong Towns ethos is that government's role is to provide services to citizens whose costs cannot be DIRECTLY recouped. If those costs could be covered directly, then that's something that would be handled by a private company instead. Those costs do have to be recouped eventually, and governments have worked that way for a long time. It's difficult to account for, and that makes it easy for the system to fail, which is exactly what we're seeing now. Most people seem to assume though, like I said before, that services must be provided even if their costs can't be recouped at all. This doesn't work in the long term.

I think to understand this it's important to look at some broad but very simple examples of how government recoups costs indirectly. Note that some of these things span different levels of government too, where some things can't be captured locally but do accrue at the state or federal level. One example is sanitation, whether that's providing clean water, sewers, or garbage collection. When the government protects citizens from unhealthy conditions that cause illness, injury, or death, it recaptures those costs because people can work longer so there's more income to tax. Businesses are more profitable because they have more productive workers and they don't have to pay as much for sick leave. This all leads to more taxes, ideally more than the cost of the subsidy to the water and sewer departments and trash collection companies. Even trash collection alone which helps prevent illegal dumping and litter improves property values and thus property taxes.

Another example, and an important one is education. Schools are one of the biggest costs to municipalities, but again, creating a well-educated population means they get better jobs, are more entrepreneurial, and will ultimately make a lot more money than if they were poor. This means not only do they have a lot more income to tax, but they buy more stuff to tax, and they also support other jobs that bring in tax revenue as well to pay for their schooling. A well-educated population is also less prone to crime as well. Speaking of which, police and fire protection is also quite expensive, but the alternative is losing businesses and residents to crime and buildings burning down. When that happens you have less business, fewer residents, lower property values, and thus less tax revenue.

I could go on, but I think this is the core of the Strong Towns message. Ultimately even if these projects or services don't directly pay for themselves, they have to be paid back somehow. Chuck and everyone else harps on the suburban development pattern a lot because pretty much everything costs more than the taxes it generates in that paradigm. The system has finite limits where costs and benefits cross and ultimately it becomes untenable. Yet many people think that they're entitled to all these public services no matter what they cost, because they still personally benefit from them. The Huntington, WV podcast was a chilling example of that sort of thinking. It's basically internalizing the benefits and externalizing the costs. That simply doesn't work.

February 19, 2014 | Unregistered CommenterJeffrey Jakucyk

It "doesn't matter" if government revenues don't cover government expenses because taxes can always be raised and debt can always be issued. Until the whole house of cards topples -- see Detroit.

Elected officials depend on Ponzi scheme financing like they're mainlining narcotics. In the short term they're generating jobs, growing the tax base, building buildings and infrastructure, and looking mucho important as they Get Things Done.

In the long term if the city goes bust, who cares. The elected officials who created the situation are long gone.

February 19, 2014 | Unregistered CommenterJerimiad

Andrew,

To me it seems the city planner is discussing only the initial $18 million.

"There is no bucket-kicking, Andrew. The revenue stream that pays for this $18m project is already in place. It’s up to City Council to decide how to attach it to this project, but the money is there and will be allocated for the exact period of time it needs to be to pay for this project––to the penny. We are not permitted to “bucket-kick” any deficit. Not once. We’re not even allowed to create a deficit. Again, state law denies us that ability."

I used to think along similar lines. The "a-ha!" moment for me came while reading Chuck Marohn's ponzi scheme blog posts. Paying for the infrastructure isn't a large one-off cost, it's a large recurring cost that has to be made every 20-30 years.

For the city planner there is no deficit as the initial $18 million isn't borrowed money. However he fails to recognise the construction of the new infrastructure will create an unfunded obligation that will come due in 20 years time, and then every 20 years after if the infrastructure is to remain in place.

Congratulations to both of you though for carrying out a very reasonable, civil and engaged conversation about the future of your city.

February 19, 2014 | Unregistered CommenterJim Hampson

It seems like he is getting hung up on the idea of a project resulting in "profit". As he says, not all city services are immediately profitable, like fire departments, but these are explicitly and indefinitely funded by existing taxes, and the costs of not having them would be higher than the costs of having them (i.e. they pay for themselves by the taxes levied on increased property values). Can he demonstrate that this is the case for this project? Are the added lanes of traffic (which presumably spur some sort of increased property values) worth the cost, and particularly the ongoing obligation costs? If not, what existing streets or programs are you pulling money from to pay for the ongoing obligation?

February 20, 2014 | Unregistered CommenterAdam O.

Interesting conversation. Thank you for posting. The local official seems to be genuine and is going above in beyond in explaining and debating his position. That's great. But it seems like he/she never going to change his/her underlying assumptions about growth.

The answer is organizing locally and running strongtowns advocates for local positions. I'm convinced of that. In my hometown I and others spent 3 years as advocates for local land use issues. Had many exchanges just like this with local officials respectfully agreeing to disagree. Win or lose this is how you you truly get the message into civic discourse.

There comes a point when you just know your banging your head against a wall. <u>"this is just how government accounting works."</u>.... that's an impasse.

At that point you have to get skin in the game or find someone willing to with like minded beliefs and support them. You can win elections on the strongtowns message. Yes, it's alot of work. But it's the only way to really effect change when dealing with well intentioned folks who are just set in certain ways.

February 21, 2014 | Unregistered CommenterRon Beitler

The whole "government accounting" argument reminds me of this exchange from The Simpsons:

Homer and Bart go to a grease recycling plant to sell the grease they got from cooking (and throwing away) a lot of bacon.
Homer Simpson: Okay, boy. This is where all the hard work, sacrifice, and painful scaldings pay off.
Employee: Four pounds of grease... that comes to... sixty-three cents.
Homer Simpson: Woo-hoo!
Bart Simpson: Dad, all that bacon cost twenty-seven dollars.
Homer Simpson: Yeah, but your mom paid for that!
Bart Simpson: But doesn't she get her money from you?
Homer Simpson: And I get my money from grease! What's the problem?

February 21, 2014 | Unregistered CommenterJeffrey Jakucyk
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