Two years ago, my hometown of Brainerd had another mega-project (mega for us, anyway) emerge from the bureaucracy, fully formed, with a clear path to have it funded and little to no public debate or even discussion. I wrote about it at the time and called on our city council to head it off before it was too late.
Is the City Council going to say no to $6.5 million dollars in state funding? They are not, especially when the airport manager says “we’re not going to make that deadline,” a Fire Marshal mandate the airport has known about for years, without the one plan currently on the table.
Is the City Council going to turn their backs on millions of dollars of state funding secured by our legislators? Unless they want to lose their credibility for the next bonding bill request, they will take the money (after some superficial grandstanding), provide the required matching funds and issue a press release thanking Representatives Ward and Radinovich as well as Senator Ruud for their service to the area.
Is the City Council going to resist a project that BLAEDC has called “critical…to the economic growth of our community”? Will the Council reject the calls of the Chamber to create a “two-mile stretch that now becomes prime real estate for commercial development”? For a city desperately needing economic growth, are we going to say no to the potential – realistic or not – of 20 new jobs by 2017. Even at the price of $380,000 per potential job, as the airport manager said, they are “jobs our community needs.”
So the City Council will be handed this neatly wrapped project with every short term incentive to say yes. When the public is finally asked to weigh in, it will be at a tightly scripted and superficial public hearing. We’ve all been here before.
This is a bad project and the City Council should stop it before the point of no return.
This pushback to my remarks was sadly predictable: We need to work with our regional partners to do this project. It will create jobs. It will create economic development. It's not going to cost us anything. Why, Chuck, are you so negative?
I've presented this project to cities across the country as a contrast to the Strong Towns Neighborhoods First approach of making incremental investments in our core neighborhoods. My city's process -- like most we see cities use -- is bureaucracy-initiated, funding-oriented, out of scale and has only superficial public input. The Neighborhoods First approach, in contrast, starts with observing the struggles real people experience, attempts to address those with the smallest and quickest intervention possible and then builds incrementally on successes.
As I pointed out last week to some public officials in Olympia, WA: When a new CEO takes over a struggling company, they don't typically attempt a massive, transformational project, at least not the successful ones. They tend to get back to basics and focus on doing the little things right. Only when they've got the day-to-day down do they look for the big thing. For cities, focusing on the little things can not only fix our budgets, but simultaneously improve the lives of our residents.
After decades of the mega-project attempts at transformation, almost all American cities have a long period of basics they need to do in order to right the fiscal ship.
Of course, that's not what we're going to do here today. Last month, the city council in Brainerd approved the plans and specifications for the airport project and authorized the project engineer to move forward. As I predicted in 2014, the it's-not-going-to-cost-us-anything notion was not true and a massive obligation is soon to be assumed without anything resembling a public debate, let alone a financial analysis.
Right now, the engineer's cost estimate for project area one is $8 million, Hedlund said, and the total project cost for all four project segments is $9 million. The financing costs of the project will be about $1.4 million, he said.
"Depending on how the bids come in, it appears the city will be responsible for at a minimum, the interest costs," Hedlund said.
At the low end, let's assume that the city takes on just the interest costs of $1.4 million. The questions that will be asked and answered will revolve around where the money will come from, if that is fair and, if the city council suddenly gets really rigorous, what is the backup in the (likely) event that fee revenue doesn't cover the costs?
Here are a more sophisticated set of questions cities in this situation should be asking instead:
- We are looking at spending $1.4 million as a yes or no question, but what else could we do with this money? Would those things more closely align with our real priorities?
- What do we estimate this investment will create in new revenue to the city over the next two decades? What other costs (police, fire, infrastructure, etc.) are associated with obtaining those revenue streams? Does this make any financial sense?
- What long term obligations are we assuming by agreeing to this project? We obviously now must maintain all this new pipe, but what else are we committing future councils to?
- Beyond getting the project built -- which is the objective of those promoting it -- what does success look like for the city? Is it an increase in the tax base? Is it a number of new jobs? What is success and how will we know we've achieved it? What are those measurements and who is doing the measuring/reporting?
- In addition to committing this money and building this project, are there other things we need to do to ensure success? Are we prepared to do these things? Will future councils find it easy or difficult to continue to do these things?
- What is failure -- what is the worst-case outcome once this project is completed -- and how would that impact us? In other words, what is our potential downside risk, how likely is that to happen and what steps can we take to avoid it?
- At this point in the process, are there any other options still open to us besides a simple "yes" or "no" to moving ahead with this one approach? How do those other options compare to our current upside potential (success) and downside risk (failure)?
And, of course, the biggest question elected officials need to ask: What else is the bureaucracy working on? What am I going to be forced to vote on in the future, with little or no public input, despite having more pressing needs that are actually a higher priority?
Don't get mad at the staff. They're just working in their silos in the system of incentives that has been set up for them. You want a different outcome? Change that system. Make it downward responsive -- focused primarily on your constituents and their needs -- instead of upward focused, oriented to prioritize actions based on the funding streams coming from Washington DC and the state capitol.
The amazing thing here is to step back and realize that this entire chain of events, from special legislation to extra sales taxes to now a multi-million dollar project, all came about from a memo from the state fire marshal. The butterfly flaps its wings and, while we could have responded in many other ways, here we are with the hurricane of spending in a city with huge fiscal problems. That's a systems problem; we should treat it that way.
As a leader, you untangle systems problems by asking better questions.