This week I am fortunate to have been invited by the City of Memphis to learn about their city and to share some ideas and strategies with them for building a Strong Town. There is an article in the local paper that you can read here previewing the visit. If you are in the Memphis area, there will be a public Curbside Chat this Wednesday at 5:30 PM, at Ducks Unlimited, 1 Waterfowl Place. We'll not only talk Growth Ponzi Scheme but focus specifically on strategies for Memphis. Hope to see you there.
I'm in the process of reading Charles Murray's new book, Coming Apart: The State of White America, 1960-2010. In the introductory chapter, Murray explains why the focus on "white" America (as a reference point to demonstrate dramatic changes in class, with the degree of change being the primary focus) and makes this statement about his book that resonated with me:
As with all books on policy, this one will eventually discuss how we might change course. But discussing solutions is secondary to this book, just as understanding causes is secondary. The important thing is to look unblinkingly at the nature of the problem.
This is what the majority of the Curbside Chat is; an unblinking look at the nature of the financial problems created by the Suburban Experiment. It is critically important that we confront the reality that our development pattern -- seen by many as the source of our prosperity and greatness -- is actually at the root of our decline. I know that "unblinking" can sometimes be difficult for people. For an account from San Diego, read Howard Blackson's latest piece on Placemakers, which includes this:
With his very honest, stark, and poignant perspective, Chuck deconstructed our nation’s infrastructure maintenance deficiencies and compared our current pattern of development to a bonafide Ponzi scheme. For example, California needs an additional $37 billion per year just to maintain our existing highway system. Like experiencing Springsteen’s “Nebraska” or Boston’s City Hall for the first time, Chuck’s message weighed heavily on the audience as he painted a bleak picture for our economic, social and cultural landscape.
Personally, I felt as if our city had been diagnosed with a terminal disease and while we had complained for years about the obvious degradation of our neighborhoods, we had consciously feigned ignorance of the actual ramifications… until it was too late.
The Curbside Chat presentation does include a discussion of what we call "rational responses" -- steps we can start to take to respond to the crisis we find ourselves in. It is a cursory discussion -- the companion booklet has a lot more to say on this -- made so because, while there is so much to do, the Chat can only go on for so long. And I really don't feel like I can skip over any of that unblinking part.
As the Strong Towns movement continues to mature, we seem to be in need of, if not the silver bullet (a concept of gimmickry I categorically reject), then some conceptual strategies to help public officials pivot from their current course to one that builds their financial resiliency. To that end, we offer the following:
Our system of development has an incredible about of inertia. Here in Memphis they recently approved a long term transportation plan that is projected to spend $10 billion, $8 billion of which is reportedly for new capacity. Those projects are working their way through the system, from initial design to right-of-way acquisition to final design, bidding and then construction. This process takes a long time. While it is happening, the market starts to anticipate the changes, purchasing property and making investments to capitalize on the improvements. All of this creates a situation that is very hard to stop.
But stop we must.
In nearly every situation I have encountered, local officials should place an immediate freeze on new capital improvement projects until they can do a full return-on-investment analysis. This is a really difficult first step, but a necessary one. This is a New Economy.
At the end of the railroad expansion era (think Long Depression of the 1870's), privately-held railroads didn't go on building more unproductive lines just because they were part of their plan. They had to react more quickly to the dramatic change going on around them and so they scrapped those plans, sometimes halfway through building a line. Our local governments need to be bold and do the same. Continuing to make unproductive investments with scarce public resources is an approach we simply can't afford.
2. Take stock.
Every community needs what we call a REAL Capital Improvements Plan. What most communities have for a CIP is a wish list of projects they are looking to do. These projects become the focal point for public officials and the yardstick by which "progress" is defined, even though they are simply a manifestation of the system's inertia.
Instead of a wish list of projects, here is what a real CIP contains:
- A list of all infrastructure that a community is obligated to obtain.
- An estimate of the remaining useful life of that infrastructure.
- An estimate of the cost of repairs when that useful life is concluded.
- The corresponding value created or served by the improvement.
For that fourth component, this is relatively simple to compute for underground infrastructure. For transportation systems, there needs to be a delineation of streets (where value capture can be measured) and roads (where traditional measures of mobility enhancements may come into play). As a default STROADS should be counted as streets unless there is a plan to close access and increase travel speeds.
Once the community has this list together -- which, when you stop and think of it, is an obvious baseline analysis that every responsible city that is planning to spend millions should already have (but rarely do) -- you can compare the financial obligations the city has to the revenue stream available to the community. At this point, the idea of expansion will become ludicrous. This is why "stop" was the first step; at this point you'll be glad you did.
3. Start triage.
The Red Cross pioneered the difficult concept of triage on the battlefield. They developed objective criteria that assisted medics in making the most difficult choice a person can ever make when confronted with enormous problems but limited resources: a decision on who lives and who dies. While we face nothing of this magnitude at the local level, we nonetheless have some really difficult choices.
I'm not going to pretend to know what the value system we should apply is. I suspect it will be different based on regional values and preferences. As a start, let me suggest the following:
- Projects that have a positive REAL return on investment. Projects where the city gets back more cash than is invested should be a no-brainer. (Note: Don't use the fraud of modern engineering economics to determine ROI. Insist on a real measurement of cash in and cash out.)
- Projects where the value of the adjacent tax base can be improved during the next life cycle so that the segment of infrastructure eventually becomes self-sustaining.
- Projects that provide critical, high-capacity connections between the places served in #1 and #2.
Ultimately, a successful project list will identify high value projects that the public will invest in as well as others that rely on value capture for their financing and yet others that will need some type of user charge, downsizing, privatization or even abandonment.
4. Commit to always add value.
Once we're back to doing projects, there is a simple mantra that needs to be part of the conversation for every dollar spent on capital improvements: Always Add Value. Especially for cities that get their money from property taxes, every project needs to be analyzed for ways to improve the adjacent tax base. And don't be fooled into thinking we're talking about ways to get that WalMart or drive through restaurant. Those are not high productivity returns. What we're talking about, for the next generation at least, is going to be reactivating lost value.
In the New Economy, capital spending needs to result in increased capturable value. It is okay to have other objectives as well -- social justice, reducing congestion, job creation, etc... -- but it is not difficult to make sure that your projects Always Add Value.
5. Reorient your systems.
Finally, to sustain these efforts, local government needs to reorient itself. For sixty years, local systems have coalesced around inducing growth and perpetuating the suburban development pattern. All departments of government have seemingly been oriented in support of this objective. Reorienting these complex systems is going to take leadership, focus and time.
The local engineering department needs to change from an objective of moving automobiles to one of Always Add Value.
The planning department needs to change from an objective of obsessing over parking, setbacks and green space to one of Always Add Value.
The housing authority, the parks department, the transit service, etc., etc., etc.... all need to adopt the mantra Always Add Value.
Our From the Mayor's Office series spells out, using a speech from a fictional mayor to his fictional staff, how each department can accomplish this transition.
- Part 1: City Engineer, City Planner
- Part 2: Economic Development Director, Parks and Recreation Director, Housing Rehabilitation Agency Director, Transit Coordinator
- Part 3: Public Safety Coordinator, Public Utilities Supervisor, Maintenance Supervisor, School District Superintendent, Religious Leader, Council of Local Non-Profits, State Legislator
Remember: leadership, focus and time. Change is difficult, especially in government where a new idea is often seen as a threat to existing staff and programs. There is an entire generation of good, decent, hard working public servants that experienced that initial success from the Suburban Experiment (we call it the Illusion of Prosperity). It is natural for them to be resistant to change.
But change we must. Leadership, focus and time will help you create a system of local government that is obsessed with creating and sustaining value for residents. This is how places will prosper in the New Economy.
This is how you can build a Strong Town.
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