Chuck Marohn  0:00  

Hey everybody. This is Chuck Marohn. Welcome back to whatever this winds up to be, Strong Towns Podcast, Strong Towns video. I do these things periodically where Joe and I get to chat and get to have conversations, and then Joe whips out the slide presentation and is like, "Dude, you got to see this." And I'm like, "Let's record this one, because I think people probably should see this." So this is just Joe and I having our normal, we're real good pals, chat, but I'm going to record it in case we want to use it.

Joe Minicozzi  0:40  

Some people have normal conversation. This is what we do, like, "Hey, let's talk about some crazy stuff."

Chuck Marohn  0:47  

By the way, not this Sunday, but the Sunday after is September 21. Do you know why that's important?

Joe Minicozzi  0:58  

Why?

Chuck Marohn  0:59  

Because one of the six songs on Guardians of the Galaxy is September. That happens to be one of my favorite songs and my favorite Guardian song, and they're just going to play it all day. So as many times as you and I can go on it, we're guaranteed to get September every time.

Joe Minicozzi  1:16  

Nice. Okay, that's a deep cut for those in the audience. For those who don't know, Chuck and I do like -- it's business, we talk about business-

Chuck Marohn  1:27  

Disney trip. Yeah, man, we talk business.

Joe Minicozzi  1:31  

Okay. So let's talk about my conspiracy search. So I've been working on, could you see my screen with the conspiracy guy? This is how people think of me in Asheville. So for those of you who are doing your work in your communities, think about this for a second, like I am a crazy person in Asheville, this is how I get treated.

Chuck Marohn  1:52  

I'm gonna say, I know you. You're a thoughtful, rational person, but there are times when you become that in Asheville, and I'm gonna give you the benefit of the doubt. I do in Brainerd as well. So

Joe Minicozzi  2:05  

Yeah. It's actually a shared, mutual, like when we first met each other, we both realized "We're not crazy people. We live with crazy people." So we did some work as volunteers -- not me, just like hundreds of people. We got involved. We redesigned a highway, started working with DOT. The contract gets let out, and then they do this design build change. This is the actual federal law called the ATC. To do a design build change, the design has to be equal to or better than the previous design. So taking a highway that we had in a trench and shooting it over the top of a local road that we're trying to redevelop, I would argue is not better. But they're saying, "Well, it's easier to build." It's like, okay, fine, but what are the ramifications?

Chuck Marohn  2:46  

One sec, we've got to back up just a sec. Since the day I met you, you've been working on this highway project in Asheville. Let's just say that I've seen some insane things in Asheville, like The Cut, where they took down a mountain to run a highway through the middle of it. So there's no end to insanity. This project had actually been somewhat resolved, where you had not a great option, but you had an at-grade option. It was EIS approved, like the whole thing, it's ready to go. They go out to contract, and now they're coming back to you and saying, what, "We're going to change the design to be something completely different"?

Joe Minicozzi  3:29  

Yeah, "We're going to be better." Okay, cool. Who's deciding that? So secondly, you can't conflict with agreed-upon decision making in the environmental entries. So if we've been through this before, and we all agreed not to do the highway in the air. Finally, it has to be in compliance with federal, state permitting and other legal requirements. So why is it, after you've made this design change, now you're going to be doing a NEPA revaluation. NEPA is closed. So by changing and doing NEPA, you're essentially admitting that you're violating that bottom law down there, because you're not in compliance with the FES. Secondly, we've got these press releases, with DOT agreeing to make the change in 2009.

Chuck Marohn  4:18  

But Joe, I know they agreed not to do the elevated highway, but the elevated highway is so cool, man. I mean, you get to design bridges, you get to design abutments, you get to build cool stuff. I mean, from the perspective of the engineers, elevated is just way better. It's just way more fun. I don't know why you didn't want that in the first place.

Joe Minicozzi  4:39  

So Chuck, if we let our plumbers design our house, your plumber is going to plumb the couch and call it a day. We don't need a whole other room to poop in. We don't need another door. It's cheaper to not have a door, right? But we need to know locally, "Okay, how many friends are we going to lose because no one's going to want to hang out in our toilet house? Are we going to need to scotch guard this?"

Chuck Marohn  5:02  

Whose house is this?

Joe Minicozzi  5:00  

I went into AI, and I said, "Make me a toilet couch." And it did it. And I was like, "Ooh, nice. Could you put some construction art on the wall?" And it did those construction art. And was like, "I want a green book." I asked for a green book on the coffee table. Anyway. So the EIS says we're supposed to know the impact. So I need to know how many friends we're gonna lose, that's our social impact. I need to know the cost of the Scotchgard. I also need to know the economic consequences to making a toilet couch in a house. Like, what's going to be the resale value of my house?

Chuck Marohn  5:25  

Your resale value's gonna go down a little bit, right.

Joe Minicozzi  5:31  

Yeah. So I need to know those impacts, right? So just tell me, but don't go off and make a toilet couch and tell me that this is a better solution. So I just want to leave this hanging in the air, because, hey audience, we're supposed to be talking about Airbnbs. But okay, so this is the Federal Register. So this is the federal law for I26 in Asheville. They have decided in June of 2023 -- so they closed the record right then -- and the final environmental impact statement of January 2020. So if you have an EIS that was decided in 2020 with all of the impacts in it, and then you made a decision in 2023, that our record is closed, how can you now go back and amend the record?

Chuck Marohn  6:25  

Because Joe, elevated is just more fun. I mean, man. I think what is crazy is that I would have the question of, like, why have an environmental review process if you're going to look at options, you're going to throw out options because it's not the best one, you're going to reach a decision, and then when you go to bid, the option you opted against is back on the table, it's the preferred one. What is the theater we're doing in environmental review that, in a sense, allows that to happen? That seems either absurd on its face or like there's some special nefariousness with the North Carolina system that produces this.

Joe Minicozzi  7:12  

I don't think North Carolina's alone. You and I run into all these people, the freeway fighters, the people in Texas that are doing this, in Austin, El Paso, Lafayette, Louisiana, Shreveport. It's a machine, right? So these are the drawings from 2008 where they took the highway from under Patton Avenue on the left and threw it over the top. And we're like, "Why the hell would we want to redevelop all that land on Patton Avenue and put a highway in front of it?" Like, that's dumb. It took us two years to get them to drop this, and never made it into the EIS. Yet here they are bringing it back. So I actually feel for the contractor, because the contractor is like, "Hey, I got this cool idea. Let's make a toilet couch." And somebody at DOT said, "Sure!"

Chuck Marohn  7:59  

"Great idea! Yeah, let's go. We always wanted to do that anyway.".

Joe Minicozzi  8:02  

So I have more of a problem with my government allowing this contractor to move forward against the laws. This is the North Carolina DOT. I am a resident of North Carolina. These are supposed to be my representatives in government. I'm pissed as a taxpayer.

Chuck Marohn  8:18  

Let me make a comment, and then I want you to react to it. I've watched what you've done here in slight bewilderment, because, to an extent that I'm just not, you're willing to delve into the details, into the nitty gritty. Look at the laws. Parse this all out. I feel like you are either masochistic in your, like, "I'm willing to undergo all this pain" in a way that I'm not, or you have a naive sense that justice will prevail or this system can work in this way. My take on it is, I just want to blow up the whole way this thing's funded. Let me put it this way: When the state DOT's can tap into endless streams of money, they're able to act endlessly stupid. To me, you can lay down in front of the bulldozer and be like, "All right, I'm gonna spend my time parsing environmental law here and there," but they have more resources for stupidity than you have time and capacity to fight it, even if you build a coalition. You brought up the 35 people in Austin. I love them. I think they're doing great work. I would never devote my life to that or spend my time on it because, kind of like the Shreveport thing. You fight a highway, you fight a highway, you fight a highway. You win. Five years later, the zombie's back, because there's just no limit to the stupid that they can spend money on. React to that, because I feel like I'm not giving you and other people who do this work enough respect.

Joe Minicozzi  8:18  

Wholeheartedly agree. If we look at this screen here, of my view. On one hand is you saying, "Throw the whole damn system out." At the other end of the spectrum are people that show up and they say, "We don't need cars." Okay, I'm sort of in the middle, which is like, "What's the damn law say, and are we following it?" As a former government employee, I hold that public trust in that position. So, peer to peer, I expect my government to behave a certain way. Because I did, right? So that's ethical.

Chuck Marohn  8:18  

Agreed, right.

Joe Minicozzi  9:50  

What's what's going on is an unethical behavior inside my government, and if they're being forced to do that, I want to know who's forcing them. I want some transparency. If they're incompetent, then fire them. But that's the only world I can live in right now, because that's our only legal reality. So until we get to you, which is, like, "The system doesn't work, throw it out and start it over." I agree. This is a timeline.

Chuck Marohn  11:15  

Yeah, I'm the radical, and you're the pragmatic oriented guy.

Joe Minicozzi  11:21  

I'm trapped in that position because I'm a taxpayer here. I agree with you at a national level, this needs to happen. But until that happens. I'm an urban designer, for crying out loud. I travel to other cities and try to help them make better urban design, and I'm watching DOT take a dump in my front yard. Of course I'm going to say something because I'm paying them to do it. I'm a taxpayer here. But, but also the reason why I'm involved in this is I got involved in 2003. There was a whole history of people before me that fought this project and try to work with DOT. Every single one of these red boxes in here. I'm doing this because the narrative is "These crazy Asheville hippies show up and fight the project," and it's like, that's not true. These are all NCDOT-caused delays. One of my favorite ones is in 2009, they released the draft EIS, and then it disappears, and we get a second draft EIS five years later. The reason why we got a second draft EIS is because the first one was so erroneous. They were plowing the highway into a black neighborhood called Burton Street, and if you read the EIS, they said, "Burton Street's cool." And I was just running around showing pictures of a sound wall going through their church. And I'm like, "How is this fair?" It was their bad work. So that's on them, that five year delay. That's a level of incompetence that, I'm sorry, there was some large engineering firms that work with DOT that were doing that document.  And you see this all the time. Let me show you the sound study.

Chuck Marohn  12:52  

Then I want to ask you about my project here, if you've seen any of it. I want to show you a couple things.

Joe Minicozzi  12:58  

So this is the sound study. They put a dot out there if they're affecting a property. So on the left here, you see this hotel and all the rooms that will be affected by the highway. There's a couple things I like about this that you're going to really enjoy. The sound wall is this kind of pink dotted line right here. Can you see that? Let's look at the key, "not likely noise barrier." They're basically going, "Yeah, we're not going to do it." Meanwhile, they're affecting our property, including that hotel, which is not cool. That hotel is not going to be able to sell rooms with this sound like there's a vacuum cleaner going 24/7. And they're basically stating this in the document. So as an economic person, I'm like, "Okay, what's the tax loss there?" Secondly, there is a hotel right here. Why is there a black dot? "Not noise sensitive." How can you have a hotel right here? Because they didn't read the map properly. Whoever did this report, sitting in Raleigh, didn't even look and see. This report was done in 2020. This hotel was built in 2015. It's been sitting there for five years. They just used an old aerial and just called it a day, just clocked it in. That's bad work.

Chuck Marohn  14:11  

Raleigh's a long ways away, Joe, you can't expect them to drive out there and look at that.

Joe Minicozzi  14:16  

It's so hard to get here yeah. On the left is the black neighborhood. And there's actually this great website, y'all can go look at it, with NCDOT and Burton Street. Now they're like honoring it is a "We talked to the the low-wealth black neighborhood, aren't we awesome?" Well, they were forced to do that. But here they are finally repairing that neighborhood, and you can see they've got a sound wall over here in orange. So you see these blue dots, these houses aren't going to be affected.

Chuck Marohn  14:39  

I love that it says in the key that the blue dots are impacted and benefited. "Congratulations, friends, you now get a freeway out your back friggin door. Yeah, you benefit."

Joe Minicozzi  14:54  

Oh even better. "You get to look at a 25 foot tall concrete wall. Aren't you awesome? What a great view." But here, check this out. On the left is a likely noise barrier, which still, I don't know if I can still trust you on that, let's give us some concrete answers here. Then on the east side of the highway, it's pink, a not likely noise barrier, so you see all these red dots. So I just went ahead and ran the economic consequences. The National Association of REALTORS says that you will lose 11.3% of your value with the sound of a highway. Cool. That wasn't hard. And then we just did a an analysis of taking all of the property values, hitting them with an 11.3% reduction. 50 years, we're gonna be living with this for 50 years. So just in this screen here, just these houses, we're looking at a $4.5 million loss of local taxes. That's about 120 school teachers that we're not getting because of what they're doing. That's the economic impact. Also, you'll note, they missed a bunch of houses. This house is missing. This house is missing. All of these houses are missing. It's like, do work, but do competent work. Give us the proper feedback.

Chuck Marohn  15:47  

Yeah. I mean, you're giving them a lot of benefit of the doubt. Because you and I both know that 11% is kind of a silly underestimate in the sense that this neighborhood would otherwise continue to thicken up, continue to grow, continue to get investment. All that will be stifled and gone away. Basically, what this will do is make sure that the neighborhood doesn't thrive. I think the 11% number is like an immediate impact. But the reality is that, over time, you know, you're getting nutrition, you're going to grow tall and strong. This neighborhood is not going to get nutrition. It's going to weaken and be feeble. The disparity will grow decade after decade after decade. It's just maddening.

Joe Minicozzi  17:04  

Okay, so we weren't supposed to be talking about this. We're supposed to be talking about Airbnbs.

Chuck Marohn  15:05  

No no, we're good. We're going to talk about that in a bit.

Joe Minicozzi  17:10  

Okay, what do you want to talk about now?

Chuck Marohn  17:11  

If you want to keep going with this, let's keep going.

Joe Minicozzi  17:15  

You want to go down that road with me. Pun intended. I'll stop sharing. You can take over this. There will be other stories for this, folks. I'm of the mindset that, at this point, I'm just going to sue them. Let's just take them to court. You've had your chance, and let's kind of work this out.

Chuck Marohn  17:36  

Let me show you something. You've been to Brainerd. I don't know if you remember Mills Fleet Farm and like the whole Baxter strip.

Joe Minicozzi  17:44  

Oh, yeah.

Chuck Marohn  17:45  

Okay. So this is the project they want to do.

Joe Minicozzi  17:48  

It was bumper to bumper. Traffic congestion was so rough over there. I mean, we had to spend three hours just getting to the Taco John's. It was crazy.

Chuck Marohn  17:57  

Yeah. No, we didn't. So this is configured to where the north-south highway is going left to right. That's highway 371. I think what is important about my part of the world is that in the winter, in February, there's like 60,000 people that live in the county. In the summer, it's over 200,000. So there are summer weekends where it gets really congested, particularly people going north and south there on 371, trying to get to lake cabins and all that. 210 is the highway that runs through the middle of Brainerd. That's the east-west highway. And they meet out here in Baxter. And right now they meet at grade. So there's a traffic signal, really dangerous intersection, because it's a highway coming in all directions. People get smashed there routinely. It's really bad. Just as like a history of Brainerd, I don't know if you've ever seen the Paul Bunyan amusement center. Does that ring a bell to you?

Joe Minicozzi  19:05  

I saw the big Paul Bunyan. I think I took my picture on him, in his lap. He was over at the Chamber of Commerce or something, right?

Chuck Marohn  19:11  

Okay, that's a different one.

Joe Minicozzi  19:13  

You got multiple Paul Bunyan's?

Chuck Marohn  19:14  

Oh yeah, we got multiple Paul Bunyans. So there was this thing called the Paul Bunyan Amusement Center, which was like a theme park of Paul Bunyan. They picked it up and they moved it out of town. So if you actually Google search for Paul Bunyan Land in Brainerd, Minnesota, you will still get it. They had, like, a Ferris wheel, a tilt a whirl, and a haunted house. I got to tell you. In the very early days of my wife and I, in like eighth grade, ninth grade, I was in a band, and the amusement park would hire us to play on Sunday night. And I would go early and this girl I liked, who's now my wife, we would ride the Ferris wheel and all that stuff together. It's pretty cool. Anyway, that used to be at that intersection of 210, and 371, and they moved it. The guy sold it because it was really valuable property, and they built Coles. So you've got Coles, Mills Fleet Farm, Taco Bell, a gas station, all this stuff. They got money. They being the state, but the county and the cities all jointly applied for this special money from this program called Corridors of Commerce. Just let that sink in for a minute of how dumb of a program that is. You can guess by the name, it's really dumb. They got $58 million to do the a new interchange there. The problem is, and I actually worked on this as a young engineer, because we were looking at interchanges years ago. If you look at this, you've got to go over the railroad tracks, and you've got to go over the highway, so you've got this long span, and because of the topography where you've outlined there, are you drawing?

Chuck Marohn  19:14  

Yeah, yes, this is all going to be non taxable.

Chuck Marohn  21:12  

It's non taxable today. It's all DOT propert. They've held on to this, because "Someday we're going to build an interchange." The problem is, if you build it like this at the elevations you need, by the time you come down, you are in the middle of Excelsior Road here. So in order to build it on a budget, you would have to close Excelsior. That was always the problem. That was the problem in the 90s, that was problem in the early 2000s. And Excelsior is where Kohl's is Mills, Fleet Farm is -- Mills Fleet Farm, by the way, is like a Minnesota Home Depot. This is the one I used to joke about, you could get lumber and guns and ammo and camouflage lingerie all in one store. Mills Fleet Farm was a huge presence at Baxter city hall in the city. They were a huge influence on the area. If they had built the interchange -- which, by the way, they could have done decades ago, it would have saved a lot of lives -- they would have had to close the intersection at Mills Fleet Farm. And to get to Mills Fleet Farm, you would had to drive up the road and back. That was just intolerable to them. So it never happened. Mills Fleet Farm now sold to an out-of-city, out-of-region entity, and now this is going to go forward. To deal with that, you can see they're extending the overpass through the intersection. So now you've got an under thing. To solve the traffic problem, they're creating five new roundabouts, and they're calling this the buttonhook. If you think about how to drive this-

Joe Minicozzi  22:56  

They should just stop at butt.

Chuck Marohn  22:59  

Yeah, no kidding. So if you think about how to drive this, it's really kind of complex. It's very confusing. Just tracing your fingers, like I'm trying to go here.

Joe Minicozzi  23:11  

Look at this retaining wall that they built right here, so you can't even get off that one loop.

Chuck Marohn  23:15  

Okay, these are 30 foot retaining walls. This is such an insane amount of earthwork, insane amount of dirt that you're moving around here and building. It really is nutty. Okay, so I started to vibe my inner Joe, and here's what I did. All of these roundabouts are designed to provide access. Like you could just build an interchange here and have it take care of the traffic flow, make safety better, reduce congestion, all that. The problem here is providing access to these big box stores and strip malls and gas stations and franchise drive-thru restaurants and all that. So essentially, if we take like a $58 million project, which is what this is, about $10 million of it, maybe, is building the interchange, and the rest of it is providing access. So 10s of millions of dollars extra so you can get to these places. I looked, and I said, "We're spending money to get direct access to these places. How much are these worth?" They're worth $40 million total. We are spending $58 million to provide access to $40 million worth of tax base that is not going to grow, is not going to change. The ordinances have locked into place what's there. It's not like Fleet Farm is going to try to add some housing or anything. This is just stagnant strip development along the highway. The value per acre, I'll let you guess, because you're the expert. What do you think the value per acre is for all of that stuff that gets access?

Joe Minicozzi  25:00  

Like $600,000 an acre, or something.

Chuck Marohn  25:03  

You're a little bit high. It's like $460,000. But it's in that range. At the same time, MinnDOT, the same state agency, is doing a project through the middle of Brainerd. They are going through what we would call Washington Street, what they would call highway 210. They're redoing it, and they're saying, "We're going to make it a complete street. We're going to make it walkable." What they're doing is they're eliminating all the on-street parking, so the businesses that are like the old historic-

Joe Minicozzi  25:37  

They don't have any parking.

Chuck Marohn  25:39  

No parking. They they're actually telling the businesses, "You have to make a door in the back." And the guy's like, "My entrance is in the front. In the back is like the bathroom and the boiler and all that." "No, no, you gotta do that." They're literally getting rid of all the parking. They are widening the sidewalks, but the way they're widening them is to eliminate the parking. It's five lanes through the middle of town. So you can imagine what that looks like. For 10 minutes in the morning, 10 minutes in the afternoon, it's a little bit busy, but otherwise, the traffic counts are what you would expect.

Joe Minicozzi  26:11  

Do the pedestrian trip counts warrant widening the sidewalk? I mean, it's not like your town is that huge. It's not Manhattan.

Chuck Marohn  26:18  

No man. Well, the thing is, nobody walks there now. I would say the sidewalks are narrow and the highway is fast and nasty to walk next to. The sidewalks will be wider, but the traffic flow will be faster, because what they're doing is closing a bunch of intersections. So imagine a gridded street, and you're the state, and you want traffic to flow more smoothly. You have a signal, and then you have six blocks and you have a signal, and then you have three blocks and you have a signal. They are closing the intersections in between or making them right-out so you can't cross or make any complex movements. I've stood out here, and there are lots of people who do, in February, when it's 25 below, and you gotta wait 90 seconds, two minutes, no matter what the traffic is, for your right to cross this five-lane thing. Anyway, I ran the value per acre on that corridor, on all the properties that have direct access. So I said it was $460,000 out in Baxter, where they're spending $58 million. Where they are literally trying to screw up the city, the value per acre is over $900,000 an acre. So you go from $460,000 an acre out on the edge to the financial productivity being 98% higher. Almost double what it is out on the edge, you've got in the core of the downtown. MinnDOT's approach in the downtown is to spend money making it worse. Out on the edge, it's to spend money subsidizing these corporate chains.

Joe Minicozzi  27:48  

So if you've got a grid and you've got these blocks, and then you take the grid and kind of break it so that you've got these longer distances between crossing points, then that pedestrian also has to walk. So you're you're telling me on one side of your mouth that you're making it a complete street, but you're making it way worse for a pedestrian because they have to go all the way down to the next intersection, cross, and come all the way back.

Chuck Marohn  28:10  

Everybody who tries to cross, walking on bike, in whatever way. And they'll say, "Well, we're widening out the sidewalks." Right now, there's a bridge over the Mississippi, and the sidewalk is narrow. When you drive across that, it's marked like 35 miles an hour-

Joe Minicozzi  28:25  

By the way, folks, the Mississippi up there is not the Mississippi that you're thinking about. It's just a little baby river up there. It's what, 30 feet?

Chuck Marohn  28:32  

It's so cute, isn't it? I remember the first time I saw the Mississippi in New Orleans, and I'm like, "What is that lake?" And they're like, "That's not a lake, that's the Mississippi River." Yeah, you could throw a softball across the Mississippi up here. It's like, two blocks from my house. It's a little river. When you cross it, the sidewalks were really narrow, and the traffic in there is built up a speed where the 85th percentile speed is going to be like, 45, 50 miles an hour. When you are five feet away from that, it is just frightening. It's really freaky. So they are widening that, and they're putting in a protective barrier on the side. That's a real huge improvement. But is it an improvement now to let you walk an extra three blocks to get to a place where you're allowed to cross and the traffic's going to be moving faster in between? It is an anti-urban city design, and you have an urban city. To me the juxtaposition of "We're going to spend 10s of millions of dollars subsidizing these corporate chains and crappy businesses that are really not good for the tax base out on the edge, because we got tons of money to that." And in the city, "You just got to take it in the shorts, because we need traffic to go through your city really quickly, regardless of the impact on jobs, small businesses, your tax base, your quality of life, any of that, we don't care. Traffic's got to move through quickly." It's my own kind of Joe madness here in Brainerd.

Joe Minicozzi  30:06  

Well, as author of "Confession of a Recovering Engineer," you know the profession. You see how the behavior operates. And then on top of that, we're dumping a bunch of money into that profession, and they're behaving as expected. Here's a question. If we remove the money, does that change the profession?

Chuck Marohn  30:25  

I mean, this has long been my argument. I think sometimes people mistake it for like an austerity argument, because I do say these are bad investments, our cities are going broke. I'm not an advocate for austerity. I don't look around and be like, "Whose food stamps can we take away?" I got this question earlier today. I was asking to give advice to a nonprofit, and my guess is their budget is like $200,000 or $300,000 a year right now. If you gave this nonprofit a $10 million donation, what should they do? My answer was, "I don't care what they do, whatever they do is going to be stupid." You're just not geared up to think rationally with that much money. I mean, Strong Towns this year has a $2.2 million budget. If you gave us $10 million, we would totally screw it up. Because I have all kinds of ideas of what we should do, but the reality is, it was the going from $50,000 to $100,000 that taught us a lot, going from $100,000 to a half million that taught us a lot, going from half a million to a million and a half. We had to shed things that were no longer effective. We had to consolidate. You have to actually think when resources are somewhat constrained. So if you enter an environment where there's no constraint on resources, you could just do stupid things and burn through it. When I look at our transportation system, these people have, in a sense, unlimited resources. And they act like they have unlimited resources, even though they technically don't. They act like it. And so they wind up doing things that are really mindless and stupid, like your project in Asheville, like, "Let's just do this." I called this the fever dream of the local engineering office. It is the absence of thinking critically. It's like, "All right, we've got lots of money. Let's try to solve everybody's problems by just throwing lots of money at it." I would love to gut these budgets, because I actually think that you would get way better projects and way better performance.

Joe Minicozzi  32:38  

And also, back to your your nonprofit point, as somebody that started a nonprofit to do all of this, you're totally dead on. What was different about ours is that we were nimble and very low funding. We only had $15,000 to start. We did most of it as volunteers, but we had to be scrappy. We had to fight and kind of learn the laws and learn the systems. We would have failed miserably if we just sat out here and said, "Highways are bad. We don't need cars." You know? If we just took that attitude, we'd have to go toe to toe with DOT forever and never win. But by being nimble and learning the laws and learning the process, we started playing the game differently. I told one of the activists -- and this is a joke that that'll play well in Minnesota. They're dealing with DOT in these gibberish meetings where DOT is talking about trip counts and TDM and all this other stuff. And I said, "You don't fight the hockey player on the ice. You wait for him out in the parking lot with a stick." They own that system. They know all the rules. They know they can wait you out. That's how their money system is set up. So I think for all of us that get involved, you have to be more scrappy, and that's the hard part. For your business and my business, we're scaling up at the same time, and we went through the similar issues that you did. It's like scaling is really complicated. You have to rethink yourself, and you can't take big jumps, or you do at your own risk.

Chuck Marohn  34:08  

Well, how many summers have we spent walking around a Disney theme park talking about, "How do I solve this problem?" "Oh, I dealt with that. Let me tell you what we did," and then vice versa, like, "Okay, I'm dealing with this problem now. How do we do it?" Because our organizations have grown, in a sense, in parallel to each other, me on a nonprofit side, you in a business sense. We're running very similar operations. We've had to deal with the same problems. You couldn't just go from toddler to adult without learning how to walk and how to talk and how to figure all this stuff out. You just can't.

Joe Minicozzi  34:50  

And you're going to bump your elbow, you're going to get a skinned knee. It's not easy. It's not going to be painless. You can't expect the world to just open for you that way.

Chuck Marohn  35:00  

I've watched this in multiple domains. Like in tech world, for decades now, there's just been money thrown at anybody with a good idea. I think anyone who's delved into that recognizes that you can overcome certain problems with money, but there are other problems where money is actually the obstacle. When you're reforming and changing things, or when things need reform and change, having abundant money is generally one of the big problems.

Joe Minicozzi  35:35  

I know some tech companies friends of mine that started with an incredible VC capital that I could only dream of, and they had a hard time once the rubber had to start meeting the road. They were so well capitalized that they couldn't get into the mindset of scrappy behavior. They have come around to that, but at what cost financially did they dwindle all those resources? And the VC capital wants its money back. Those people invest in you because they want to be paid back. It's harder when you're given that big check to turn that into revenue, unless you're really lucky. And there's a lot of luck involved in both our businesses.

Chuck Marohn  36:14  

There absolutely is. We've had people walk in the door at the right time and be generous with us in the right way, and that's been really helpful. But we also didn't take money, especially in the early days, that we could have because it was a distraction from what we were trying to do.

Joe Minicozzi  36:32  

Also in your world, VC are like donations that have strings attached. It's "Do this for me," and you have to ferret that out.

Chuck Marohn  36:42  

There's a lot of foundations that would love you to essentially be an extension of their staff. I think a lot of nonprofits get stuck in that because they need and want the money. Fortunately, at the time when we became the shiny object, we had enough focus and guidance and leadership, really -- and I'm not pointing to me. I'm pointing to our board and people who are pretty committed to what we're doing. We had that in place to be able to say no and to walk away from money that would have been really helpful, but also would have taken us off of our game. I wrote this thing years ago about how to fund local government, and how to fund regional DOTs and things like that. I was trying to draw Nassim Taleb, and I don't think people got it because I probably didn't explain it well. It's basically like, we should have a lower base level of funding. In other words, get people into scrappy mode. But then the the kind of randomness of, "Here's a little bit extra money for this," but without a lot of strings. I'm not explaining it well now, either. Let me make this example: If you gave the region $58 million and you said, "We want to improve traffic safety, we want to improve congestion, and we want to improve economic development," I can guarantee you the last thing we would do would be to build this. We would list out all the things that we could do, and there would be 100 things, and this would not make the list of 100. The only reason that this project is happening in this way is because of how the funding is bundled, and it is bundled in a way that makes us dumb. I'm not against spending $58 million. Again I'll say, I'm not an austerity guy. I'm not saying we need to cut government down to the bone. But I recognize that the money makes us dumb, and we could do so much more, so much better without this program.

Joe Minicozzi  38:50  

Our project is $2 billion.

Chuck Marohn  38:52  

You're not even cutting down the mountain this time.

Joe Minicozzi  38:58  

Well, we're coming close to screwing it up as bad. The contractor that's got the project did this other part of the highway through the next county over. I was talking to somebody who's been doing some research, and they found out that they got a bonus for meeting one of the hurdles, which was getting the project done on time. Well, you can just open up an old aerial and see that the project wasn't done in time. So how did they get this more than million dollar bonus for not doing the job properly? There's so much graft in systems. I think it was Ben Franklin that was concerned about a road system through the country. Have you ever talked to Vince Grant about this and all the fights about national transportation systems and that this is just a recipe for disaster?

Chuck Marohn  39:55  

Yeah, I have. Well, you and I are going to Florida together next week, and maybe we can just, in the last like 10 minutes here, talk about what we're going to chat about there. You invited me to do this, and I always say yes to everything you invite me to do, and then we get into it and I'm like, "Okay, this is going to be kind of crazy." We're going to chat about Airbnbs with a bunch of assessors. Is that what we're doing?

Joe Minicozzi  40:21  

For the home audience. God, Chuck, what was it, 2010 or 2011, 2009? I don't remember. We crashed an assessors conference.

Chuck Marohn  40:29  

Yeah we did. Find the picture, because I've got it.

Joe Minicozzi  40:33  

I think I started the slideshow with a picture of Ross Perot and Admiral. I forget his name. And a quote.

Chuck Marohn  40:40  

Oh yeah. "Who am I? Why am I here?" That was epic.

Joe Minicozzi  40:43  

Yeah, "Why am I here." The two of us were not assessors.

Chuck Marohn  40:49  

Are you ready for this?

Joe Minicozzi  40:51  

Oh, God, this is going to be scary.

Chuck Marohn  40:53  

No, this is young Chuck and Joe. You look good, man.

Joe Minicozzi  41:01  

I look so naive.

Chuck Marohn  41:02  

We were having fun.

Joe Minicozzi  41:05  

Yeah. You broke into that room or found a room in this hotel. We did a podcast. We went out in the street and stroaded. I laid in the street, you took pictures. We went in the barbecue place. We basically showed up at this assessor's conference and just threw a bunch of stuff at them, like, why does the world operate this way? In their defense, they actually agreed with us and engaged us in the conversation. Like "Oh, this is different."

Joe Minicozzi  41:28  

Oh yeah. They were delightful.

Joe Minicozzi  41:29  

Yeah. So back in 2021 we did all of this equity analysis, and one of the things that we discovered is that Airbnbs were being assessed as houses and not as hotel rooms. So I talked to my assessor about it, and he goes, "Well, it's a house." And I said, "Yeah, architecturally, yes, but it's use is a short term rental, which is a transient use, which is a hotel use." So when you look at a hotel, you don't call it an apartment building. It was like watching somebody dance on the head of a pin to win his own argument, and none of the laws support that. I actually do have an email from one of our county commissioners who had asked them the same thing, and he actually did run the numbers on doing it as commercial. So assessors know they could do this. If you just cross the state line and go to Gatlinburg, Tennessee, they tax them as hotel rooms. You go to Galveston, Texas, they do. So I reached out to the assessors organization. I'm like, "Why don't you guys having a uniform opinion on this? I could talk to any city planner on the planet and, to a person, they will say it's a hotel room. So how can we as practitioners understand its use, but the people who are supposed to understand land use economics don't?" I was talking with Justin Imers, who's one of the heads of research, and he's like, "That's a great question. You should write an article." So he invited me to write an article to their magazine, which is called Fair and Equitable. And rather than do that, I was like, "Let's just do a session, and we'll talk about it. We'll see how the assessors are." I think, you and I, our challenge is to to ask them to pick a side. Is it a house or is it a hotel room? But here we are 10 years into this Airbnb experiment, and it does affect housing. If I buy the house right next door to you, and know what the cash flow of Brainerd is, that there's a huge summer seasonal "let's go back to your old house out by the lake", not only could I cash flow all that income, I could show up to that house maybe once a year for a week, and then I get somebody else to pay the mortgage, and I get to depreciate any improvement I put on the property. So if I'm making money here at Urban3, I can get tax breaks for adding a porch onto your neighbor's house, and I'm getting income. How is that the same house as your house? So they're being taxed at the same level, even though my income is way up here.

Chuck Marohn  43:52  

And if I'm buying it with that business model, I can outbid you in a big way, because I'm just valuing it very differently. Especially when you get a traditional 30-year mortgage that's going to be bundled, securitized, wrapped up with everything else, there's an embedded assumption in mortgage-backed securities, when they go through that process, that they are actual people living in houses. The risk profile of an Airbnb is very different than a single-family home with someone living in it, and we've messed up our financial system to where they are, in a sense, treated as equivalent properties when they're not.

Joe Minicozzi  44:36  

But then, as an assessor, if I'm not looking at this, it's reasonable for me to assume that that's what the new market value is for that house. So your house gets assessed at what the market is paying for it. I'm not filtering out all the doctors from Minneapolis that are buying these houses and sitting on them. And that doctor in Minneapolis has a completely different income profile than somebody that lives in Brainerd.

Chuck Marohn  45:00  

That's a really good point. I do believe them, that fair and equitable is what they're trying to get to. It's not really fair to have my house taxed at a rate that assumes I'm going to be renting it out and doing all this stuff just because the neighboring property was purchased with that assumption.

Joe Minicozzi  45:17  

One assessor asked me, "Well, how would I know?" And I'm like, "Well, how do you know what a strip mall makes? How do you know what a restaurant makes? You just basically assign a reasonable value and let them argue and show you numbers that they don't make that money." So for the houses where you can just match the mailing address to some place in Minneapolis, you know that's not a Brainerd resident. So there's an assumption that that's a transient property. In most states, they have to pay occupancy tax or hotel tax or transient tax. So you know that money is coming out, the state has clearly identified that it's a retail purpose.

Chuck Marohn  45:52  

And if they give you access to that, you can actually back it out and actually determine what the cash flow would be.

Joe Minicozzi  45:58  

Yeah, we're doing a project in Tahoe, California, and they require permits. They actually know where these things are. So that's pretty easy. There's databases. Air DNA is a place you can get this data. We got ours from this gentleman, his name's Murray, around the New York City area, and he's got this website called Inside Airbnb, and he scrapes all of the income data. There's a house here in Asheville. It's making $180,000 a year in Airbnb income, and it's only valued at $330,000 of taxable value. So in three years, they can pay off that house. That's not reasonable. That's like a $1.2 million house.

Chuck Marohn  46:38  

Yeah, that's crazy. So I feel like you and I have done so much together, going out and presenting and talking to different groups. I think the thing that makes what you and I do unique is we always try to get at the psychological motivations of how people understand things and why they make decisions. So we've set this thing up that we're doing with the assessors in kind of a unique way to get at that dancing on the head of a pin. Let me put it in a motivated reasoning way: This is the way I've done it, so this is what I believe is the right way to do it. How do you get people who are stuck in that to think differently about it? Why don't you talk through what we're actually going to do? Because I think it's kind of fun.

Joe Minicozzi  47:25  

I reached out to you because of a session that you held at one of your think tank sessions where you challenged all of your cohort of colleagues and friends to an argument. I thought that would be fun for you, particularly because you're the author of a book on housing and housing issues, and this is clearly affecting housing pricing and housing availability, definitely in my market and probably out at the lakes in your market. It affects the ability for people to live in that environment. It also affects taxation. So, I've been talking to different assessors. I definitely have an opinion that they should be commercial. I'm totally unabashed about that. With my research, I'm willing to put that argument out there. Can we find an assessor that would find the counter argument? Let's put those two arguments out there. I turned it over to you, like, how would you handle this debate? Do you want to tell the audience what you're thinking?

Chuck Marohn  48:22  

I went and bought --  here, I've got a photo. This is the photo I texted you. This is me and my judges hat, robe, and gavel. What we did in that early debate -- actually that was developing some of the thoughts that went into "Confessions of a Recovering Engineer" -- is I would put arguments out in a presentation, and then both sides kind of attacked me. And I said, "To make my argument stronger, whoever can make the best argument, I'll award you a Mountain Dew." And whatever side had the most Mountain Dews, they got all the Mountain Dew. We're going to do something similar here, where I'm going to basically be the magistrate inviting a debate, and the idea is, let's get the best arguments out on both sides. Let's get them authentically out. I do think there are good counter arguments, and then let's just rip them apart. Let's give the best counter argument to the counter argument, and let's hear those out. We're going to have a vote at the beginning, and we're going to have a vote at the end, and we're going to see how much these assessors change their mind -- and really change their own minds. On my behalf, I will add good questions. You're going to add good insight and data. Then we're gonna see. At the end of the day, can we help these people maybe step back from their own position and see, at the very least, that there's another way to look at this?

Joe Minicozzi  49:51  

I could be wrong too. I don't know. Let's talk it through. It's clearly something in the marketplace. That's fine. It's going to be fun with that group as well. And also, full circle back to the DOT world, there are people inside DOT that are trying to do the right thing, but they're influenced because of the money that's swinging around that they're forced to do the thing that they don't want to do. For anybody that's driven between Asheville and Knoxville, there's this road I40 that goes through the Pigeon Gorge. Should never have done that. Every engineer is like, that is dumb. There are rock slides. In hurricane Helene, the whole half the highway disappeared. The river just took the highway away. Now they have to put a bunch of rocks in there. Well, that'll last for the next flood. The engineers didn't want it to go there, but somebody made a political decision, and now we're paying for it. Well, actually, we, the collective royal we of the United States, are paying for it because it's a federal highway. So in defense of the assessors, if they're being told by their county commissioners -- because the majority of county commissioners also own Airbnbs -- to not do this, I don't fault the assessor. We'll see how it ferrets out. I'm sure there's going to be some assessors that kind of insinuate some of that stuff, that there's politics involved. And it is. We're in a new world where a marketplace is affected because of a change in technology. It's so easy to rent out a house on Airbnb and VRBO.

Chuck Marohn  51:30  

Yeah. And here in my hometown, they've tried to shut it down. I've argued that I think it's a net good, but it's a net good if we treat it in the right way.

Joe Minicozzi  51:40  

Yeah, for what it is.

Chuck Marohn  51:41  

Yeah, I don't know is it would be a net good in like, Venice. I feel like there's an argument there. But in my place, it's really a way to help people build wealth in their community, in a place that's struggling. I think the dynamics are different in Asheville than downtown Brainerd, but you and I stay in Airbnbs all the time.

Joe Minicozzi  52:04  

Yeah, I'm not saying get rid of the use. Just tax it appropriately. Before you end this, do you know the book "Overbuilt: The High Costs and Low Rewards of U.S. Highway Construction" by Erick Guerra?

Chuck Marohn  52:13  

Which book, Joe, this book?

Joe Minicozzi  52:16  

That book. Have you gotten to this book?

Chuck Marohn  52:21  

I've been chatting with Erick, and we're going to do an interview here soon, which I'm kind of excited about. So maybe last question, have you seen the itinerary that I've set up for next weekend?

Joe Minicozzi  52:34  

No, I haven't.

Chuck Marohn  52:35  

That's okay. I'm glad you don't, because I've got fun, frivolity, good food, good rides. I can guarantee you we're going to go on Guardians of the Galaxy, and I guarantee you we're going to eat at good places. I actually have a three-day itinerary for us, and this will be a lot of fun.

Joe Minicozzi  52:56  

For those in the viewing audience, basically we spend an entire 12-hour period walking, walking, walking, talking, talking, talking. Chuck has an agenda. He's got it on his phone. He throws things at me. We spend 30 to 40 minutes in a line debating things. Then we have about five minutes of fun, screaming and yelling, and then we repeat the walk and the talk. It is fun. It's a blast. We cover a lot of territory. I really appreciate and enjoy my time doing this. It's a lot of fun.

Chuck Marohn  53:32  

It is fun. I've come up with some of the the best Strong Towns ideas ever in collaboration with people standing in lines at theme parks. It's a great way to have a meeting.

Joe Minicozzi  53:44  

You're stuck. Yeah, that's awesome. It's kind of funny, because other people could hear us, and I just wonder. At some point, you're gonna run into somebody that knows.

Chuck Marohn  53:55  

Oh, I have. We actually have a thing on the board where one of my board members has said, "I will know we've succeeded when someone on one of these things that we do recognizes you, Chuck, or one of us." Then, like six months later, I was out in California, and I was in line chatting with Norm, and someone said, "Are you Chuck Marohn?" And I'm like, "Oh my gosh. I'm glad it happened now and not when I was there with the board."

Joe Minicozzi  54:24  

We need to get you sunglasses and a fake beard or something.

Chuck Marohn  54:27  

Yeah, my kids always say, "Dad, are you famous?" Because you type in my name and I'm all over Google because I've written like 2 million words. And I'm like, "I'm famous in like, a really tiny niche of people. A really tiny niche." Same with you, Joe.

Joe Minicozzi  54:47  

Yeah, I'm like the David Byrne of the photocopier industry.

Chuck Marohn  54:52  

That's right. Yeah, you're a rock star.

Joe Minicozzi  54:54  

Those people recognize me. All right.

Chuck Marohn  54:56  

Okay, thanks.

Joe Minicozzi  54:57  

Thanks for doing this. Take care.

Chuck Marohn  54:59  

See you.

Norm Van Eeden Petersman  55:02  

This episode was produced by Strong Towns, a nonprofit movement for building financially resilient communities. If what you heard today matters to you, deepen your connection by becoming a Strong Towns member at strongtowns.org/membership.