Travel season is back in full swing here, the long summer months of thinking, writing and spending time with family now replaced by airline queues, hotel rooms and road trips. We were in Ponderay, Idaho last week and after a short 48 hours home I found myself in Minneapolis to speak to a group of municipal bond analysts (that was utterly fascinating) and then at an event to add some Strong Towns vibe to Railvolution (podcast to come – I hope). Wednesday I flew to Texas to speak Thursday at a regional gathering in Fredericksburg, a surprisingly amazing little town. I love sharing this messages and remarked to our team here that the audiences continue to grow in size and enthusiasm in a way that continues to amaze me. Let’s all keep pushing; we have a lot of momentum now.
Enjoy the week’s news.
The ITR Commission Company, which leased the Indiana Toll Road for 75 years for the sum of $3.8 billion, filed bankruptcy this week kicking off a heated debate over the merits of privatization. While I’m not advocating for privatizing public infrastructure (especially in the irresponsible way in which this one was done), I think the antagonists are, once again, missing the key lesson. We shouldn’t be wringing our hands about this bankruptcy as much as we should be about the fact that even a private company, with tremendous profit motive, can’t run a high-demand road without becoming insolvent. Are the opponents of privatization suggesting the government would do better or are they suggesting that it doesn’t matter whether revenues exceed expenses (which is, in accounting terms, a “profit”)? Either way, this conversation is missing the mark.
Joe Bock, who is running against Walorski, held a news conference Monday afternoon, and warned against the privatization of public assets.
Development of infrastructure is the “fundamental role of government,” Bock said.
“The idea to turn that over to a private consortium is one that ought to be questioned,” he said.
On October 7 I will be releasing a Kindle short titled A World Class Transportation System that outlines how the state and federal governments can actually help cities become stronger by changing their transportation policy. The short will be free to new members – another good reason to join up, if you haven’t already. I haven’t had a chance to read the Pew Charitable Trusts’ new report Intergovernmental Challenges to Surface Transportation (hope it is more exciting than the title) but I did find this report on it out of Texas to be a funny reaction, especially the whining that they are not getting enough money from the feds.
“Our region is not constrained by oceans, rivers, mountains or lakes like so many transit cities are. So we’re allowed to sprawl as far and fast as we can,” said Gary Thomas, DART president and executive director. “Then when people move outward, they expect someone to come out and provide that transportation. They don’t want to raise taxes, and yet they don’t want to pay tolls.”
And the United States is not the only one dealing with insolvent transportation funding schemes and the ongoing inability to make good on all of last generation’s promises. In British Columbia some people are complaining about ferry prices, which are massively subsidized. Have no fear, the easy and obvious solution to all revenue shortages is now on the table. People hate taxes, but they love slots, a tax for those that are bad at math.
B.C. Minister of Transportation and Infrastructure Todd Stone said some ferries are switching to cheaper fuels like LNG, which should lower costs, and gambling is being tested on some routes as a way to increase revenues.
Earlier this year I suggested that road diets should be an obsession of every city in the country. CityLab wrote an article explaining exactly what a road diet is and included that quote. Nice job.
The result was a much safer road. In small urban areas (say, populations around 17,000, with traffic volumes up to 12,000 cars a day), post-road diet crashes dropped about 47 percent. In larger metros (with populations around 269,000 and up to 24,000 daily cars), the crash reduction was roughly 19 percent. The combined estimate from all the best studies predicted that accidents would decline 29 percent, on average, after a four-to-three-lane road diet—DOT's reported figure.
So what happens when you get a city staff that does the hard work to get some solid numbers on how deep the financial hole really is? And what happens when that hole is really, really deep. Well, if that city is Irving, Texas – a place that I’ve been told has practically become a punch line in the state – then you do the same thing you’ve always done: lower taxes.
The new city manager has warned that Irving could face shortfalls of tens of millions of dollars within a few years unless it finds a way to raise cash or cut costs, even as the city needs to spend more on basic maintenance.
The council hired Chris Hillman based largely on his success as a long-range financial planner. But as members prepare to vote on a budget and tax rate Thursday, many are disputing his projections and instead moving to cut the city’s cash flow.
Shunning staff’s gloomy estimates for her own, Mayor Beth Van Duyne is rallying for a tax cut. And the council has already undercut plans for a big hike in utility rates, which staffers say could spook bond raters and put the water system’s health at the mercy of rain clouds.
Our friend Nate Hood took on a local nuisance this week. I applaud him and will reiterate that, while the Minneapolis/St. Paul regional governance is – in my opinion – the largest facilitator of the worst of the worst land use practices in the state, and even if they wanted to do the right thing, the nature of their large, bureaucratic and highly political organization – again, in my opinion – precludes them from being able to, continuing to bash them along conspiracy theory lines is beneath us. We need a more intelligent public discourse.
I may be jumping to conclusions, but I think it is fair to say that you've found your base. That being, a group of like-minded souls following you precisely because you'll give them exactly what they want. You write to the blood-thirsty hyenas as if they are caged and starving, and you're tossing them a freshly cut steak.
You also know how to strike a chord with the opposition. You do this by twisting admittedly overused planning industry buzzwords and placing them within quotations. "Sustainability". "Equity". This is how you express mockery onto the subjects without having to address the root issue. These words have, without question, been greenwashed and co-opted. But, when you examine the heart of these concepts, they're things we as a society should genuinely care about; and more importantly, they are neither left nor right.
An interesting article in the Financial Times that examines the correlation between recessions, banking crisis and the mortgage markets. The takeaway is that, post WW II, housing has become the market driver and over extension of mortgage credit a key indicator of bank stress. This Ponzi scheme is going to be really, really hard to unwind without a lot of pain.
The vast majority of US mortgages made since the crisis have been guaranteed and securitised by government agencies, while many of the resulting bonds have been purchased by the Federal Reserve and will probably be held to maturity. For better or worse, the US residential lending market has effectively been socialised.
It has seemed lately that the frequency of trains outside the office window has decreased of late. This week I found out that my hunch had some basis. Interesting interconnectivity issues.
No, Minnesota Power is idling these generators for three months because the railroad isn’t delivering enough coal. Railroads are crazy busy— carrying oil from North Dakota for one thing— and the delays are driving their customers nuts.
Al Rudeck is the vice president of strategy and planning for Minnesota Power. The Burlington Northern Santa Fe railroad has delivered the utility’s coal for decades. I asked him: Has this kind of thing happened before?
"This is unprecedented," he said. "We’ve never had to shut our units off because we can’t get the coal we need. This year they’ve had a lot of challenges on the rail system, in terms of congestion, weather, and a lot of business."
Strong Towns has now reached China. I would love to do a Curbside Chat there. The article is really fascinating and have me a lot of insight on the ways that our message is being heard and applied. I’m even more optimistic than before.
China’s recently announced revised budget law that now allows cities to issue bonds and requires local governments to be more transparent, including reporting on debt obligations by LGFVs, is anticipated to bring about increased fiscal discipline. But to ensure that fiscal changes happen, governments need to rethink the function that they serve in terms of generating economic growth and making cities stronger.
Strong Towns is not a political or a partisan organization. We don’t align with any party and our membership reflects a very broad spectrum of political affiliation. With that being said, I found this article on why Democrats and Republicans don’t get along to be quite interesting.
American politics is fundamentally rational. Republicans are uncompromising because compromise tends to expand the scope of government. Democrats are willing to make deep concessions because policy moves in a generally liberal direction. Republicans have a clearer message about government because their message about government is fundamentally popular. Democrats talk more about policy because what they have to say about policy is fundamentally popular.
The data also explains why Democratic and Republicans have so much trouble understanding each other. Democrats tend to project their preference for policymaking onto the Republican Party — and then respond with anger and confusion when Republicans don't seem interested in making a deal. Republicans tend to assume the Democratic Party is more ideological than it is, and so see various policy initiatives as part of an ideological effort to remake America along more socialistic lines.
Finally this week, we are all inundated with the click bait lists of photos that seems to be 80%+ of what is now on Facebook, but I wanted to share this one because it was recommended by a friend and struck me in a special way. I hope you enjoy.
Off on a short family holiday this weekend but we’ll be back here Monday. See you then. In the meantime, you can pre-order my upcoming Kindle short or just become a member of Strong Towns and we’ll send it you for free.