Roads and Debt

This essay was posted over on our local site,

With all the talk of how to pay for a five year road plan, nobody seems to be willing to publicly acknowledge the obvious: Brainerd has more roads to fix and maintain than it has tax base to pay for them. This isn't a taxing problem and it isn't a spending problem. It is an insolvency problem, one that debt can only make worse.

There is no budget solution to this problem that will allow us to continue as we have, only rational ways to respond. When you are insolvent, here are the most obvious things to do:

1. Stop building new roads. Stop annexing more land. The growth theories that justified expanding College Drive - the latest in a long line of such projects - are not working. After decades of road building, you can drive through town in no time, but the tax base necessary to support all these miles of asphalt isn't there. All that land hastily annexed gave the city a quick infusion of cash but also brought enormous long term maintenance obligations. Nobody ever did the math to determine whether or not these transactions made sense; we just chased the growth. These are mistakes we need to stop repeating (see upcoming airport utility project).

2. Take stock of how difficult the situation actually is. A city that already owes millions, is obligated to make millions in debt payments each year and is looking to spend many millions more on roads over the next few years (all while struggling with structural deficits) should be able to answer some simple questions.

How many total miles of roads, streets, sidewalks and curb do we have in our inventory? What is the current condition of each segment? When will each road need to be reconstructed? What is the estimated cost of that reconstruction? What is the annual revenue stream needed to meet these obligations? When will cash flow problems present?

It is unimaginable to be considering a five year, multi-million dollar spending plan without this basic financial information. Public officials should be demanding it.

3. Prioritize basic maintenance. How can we be considering building anything else when we can't maintain what we already have, when we are not doing the low cost maintenance items that keep things from falling apart? Annual crack sealing should be the highest priority since it is relatively low cost and extends the pavement life years, even decades. Chip sealing should come right after. Only after our base maintenance responsibilities are completed should we even be considering reconstruction, expansion or constructing new road segments.

4. Prioritize the city's most financially productive neighborhoods. Basic financial analysis reveals that Brainerd's historic neighborhoods - the downtown and the areas immediately surrounding it - produce the greatest tax revenue per acre in all of Crow Wing County. This is true despite a lack of investment there by both the city and the county. This city council can go a long way towards addressing their stated priorities of fiscal stewardship and neighborhood investments by focusing their remaining capital spending on these core areas.

5. Start doing the little things. We need to start doing what we can with the limited resources we have. We can't afford to build wide roads and huge bridges, but we can sweep sidewalks, repaint faded crosswalks, plant boulevard trees and stripe streets for better bike mobility. These are quality of life investments that are shown to significantly improve property values as well. While not flashy, they are affordable and easy to accomplish. Let's get out there and do them.

The city just had its bond rating downgraded. It should be shocking to everyone to hear that there are people at city hall considering taking on more debt for yet more roads. We are one dip back into recession away from having local government aid reductions back on the table at the state capitol. Those debt payments that we are struggling with today would crush us without the state's ongoing assistance. We are more fragile than our leaders appear to appreciate. It is time for a sober analysis of where we stand followed by a course correction that makes better use of our limited resources.

Discussion Forum

Discussion Forum

As you are checking out the new website, there is one special place I want to direct you while I'm delivering an important message to our key supporters.

Curbside Chat Trailer

We have been working on a series of videos breaking the Curbside Chat presentation into smaller bites for people. The first two of those were first shown publicly at the National Gathering. Here is what we are calling the Curbside Chat Trailer, a good overview of the chat's core message.

This was put together by the incredibly talented Gracen Johnson whose voice you can hear along with mine. If you would like more of this and learn more about the entire enhanced chat project, we have created a special page for you.

National Gathering

National Gathering

Updates from this incredible event to follow this week. Welcome to the new website.

How To Justify Spending $8m On Something Nobody Wants

Imagine if the City of Minneapolis was given $8.7 million that could only be used on downtown pedestrian and/or transit projects. What would they do? The answer is: not a pedestrian bridge to be used during 10 sports games a year.

Investing Cheap Money

How can we best invest cheap money? With a Strong Towns approach to debt centered on true investments which pay a measurable return and legitimate cash flow in a city that understands its true balance sheet.

Domain Dependence

Whenever I talk about America’s reckless monetary policy, I’m inevitably told to stop. Stick to planning, Chuck is one of the nicer responses. You’re an idiot is another common one. Here’s another from Facebook last Friday:

I love all the planning and development stuff yall put out but the economics stuff is not at the same level.

Ouch. And that from someone whose Facebook page indicates he studied economics at TX State and the London School of Economics.

This phenomenon is called domain dependence. Domain dependence is the phenomenon that prompts people to adopt a different approach or worldview depending on the domain.

Friday News Digest

Just one week until the start of the National Gathering. The excitement is building around here as we put the final details in place. I looked at the attendee list and found my enthusiasm rising to eve greater heights. This is going to be a fantastic event. Hope to see you there.