Another Growth Ponzi Scheme

Jake Krohn is an amateur urbanist living in Fergus Falls, MN. He blogs sporadically at Basement Office but enjoys grilling pizza and hanging out with family, friends, and neighbors in his front yard much more.

My hometown of  9,000 8,500 7,400 in North Dakota is going through what appears to be the beginning of the unwinding of the Ponzi scheme that is alluded to so often on these pages.  I don't live there anymore, but I'm still close and have family ties back to the area, so I try and keep up with what's going on. A common thread is emerging in their handling of infrastructure, maintenance, and finance that I thought Strong Towners would find interesting. Indulge me if you will and listen to my story.

Back in 2010, our main street, which doubles as the end of a state highway before it crosses into Minnesota, was rebuilt at the cost of $10.8 million for about 0.8 miles of road. The work included underground utilities and "street enhancements" and the end result was a fine piece of engineering if you're fond of placing runways right in the middle of your town.  I lived there at the time and wrote a couple of letters criticizing the project, but you can't stop a train by standing in front of it and the project went through.

Near the end of that construction process, our mayor made a comment during a budget discussion that got my ears ringing:

Sturdevant said although the city's population is decreasing, the infrastructure is still expanding and needs to be maintained.

"I hear that 'the population is down, why aren't we cutting people?' Well, we have more miles of street to take care of, more miles of water lines, of sewer lines, and we ought to keep that in mind, too," he said.

Strong Town radars should be going off everywhere. Mine certainly did, and it prompted this letter wherein I called out this line of thought using Strong Towns methodology, which I was just beginning to get into at that time. The criticism was close enough to its mark to prompt a curiously indirect yet direct response the following week in a piece with the helpful title "Infrastructure Maintenance Necessary."  While the basic message was spot-on ("You can't put off maintenance"), the larger picture was missed and reads like a primer on how not to build a Strong Town. 

Jump ahead to early June of this year when I received a phone call from my father, who still lives in my childhood home, questioning the assessments that were placed on him and his 14 neighbors that live along a 500' cul-du-sac in the 1960s-era part of town. Everyone was being presented with a plan for street and underground improvements that would have a total cost of about $324,000 and would be paid for almost entirely with $315,000 in assessments -- 97% of the total project cost.

This didn't go over well with a single family on the street, and I helped direct my father to various pieces of Strong Towns literature, especially the podcasts, articles, and videos on assessments, in an effort to point out the blatant misuse (and possibly illegal application) of the assessment process. It's still an ongoing battle, and one that I hope to draw future Strong Towns ideas into. (Feel free to contribute your two cents in the comments.) 

Soon thereafter, the unwinding continued. After the city showed its hand in relying heavily on assessments to fund this and other improvements, there was further Council discussion dealing with a proposed increase in the restaurant tax under the doublespeak title of the "Community Enhancement Fund." 

With the city already utilizing a 2 percent sales tax, along with the 5 percent state sales tax, the citywide sales tax increase is at its max. In order to gain additional funds, cities are able to place taxes on lodging, restaurants and liquor.

"We've had great success leveraging our sales tax dollars," said City Council President Alisa Mitskog. "We are tapped out. Nobody wants another tax, we are just trying to be creative."

And saying "I told you so" has never felt quite so sweet:

The preservation and maintenance of Wahpeton's main street, following the $10.3 million reconstruction project and the care for the Wahpeton Community Center, Volunteer Park, shared use paths and other public areas in Wahpeton will also receive funding from the proposed tax.

"The (federal government) helped fund it, but when they left town; they left town, said Wahpeton mayor Jim Sturdevant. "The responsibility of maintaining all that stuff on Dakota Avenue, like any other project, is our responsibility."

With sales taxes already capped out at the maximum amount, where to place the financial burden of these improvement costs and financial needs is unclear.

"We can't do any more special assessments," Mitskog said. "We are open to ideas on how to pay for this...We're not singling out just the restaurants."

That this wasn't of much concern to anyone two years ago boggles the mind. But it is not surprising, as it's all to easy to fall into a trap where one assumes that the future is going to continue to be an extension of the immediate past. It's the safest way to proceed, and small-town leadership isn't anything if not safe.

Now, one should not misread this story as a screed penned by an anti-government, anti-tax crusader. Quite the opposite. I have a spouse that is on a (not this) city's payroll and I believe that good governance and good systems are worth paying for. But it is with much gratitude to Chuck and the rest of the Strong Towns crew that I am able to use their framework and vocabulary to analyze and critique the dealings in my corner of the world and share it with you via this guest post.

Taking a long view and recognizing how a lot of little pieces fit together into a larger coherent narrative is so important, and I think this story is a piece of validation for a line of thought -- Strong Towns -- that is one of the most compelling out there today.