When Charlotte and its regional planning body withdrew support for a $4.3 billion widening of Interstate 77, North Carolina lawmakers responded by threatening a $60 million penalty and a funding cutoff. Host Carlee Alm-LaBar is joined by Patrick Kennedy, whose Atlas of Inner-City Highway Impacts documents highway damage across 142 cities, and John Reuter, the newly named Executive Director of Strong Towns, to break down the sunk cost trap, the real math behind highway "assets," and why the local officials who pushed back may have saved far more than they spent.
Hello, and welcome to Up Zone. My name is Carlee Alm-LaBar, and this is a podcast from Strong Towns, where we take a current news story about cities and use it to explore deeper concepts about how our cities work and what we can do to make them work better. With me today I have John Reuter and Patrick Kennedy.
As you may have heard earlier this week, John Reuter is the new incoming Executive Director for Strong Towns. In the course of today's show, we'll talk a little bit about his background and why he's particularly relevant for today's episode. We also have with us Patrick Kennedy, the founder of the Human Ecosystem and American Dream City, a startup urban design consultancy and think tank focused on human-scale places, proximity, upward mobility, policy research, design, intervention, and development implementation. He sits on the board of directors for Dallas Area Rapid Transit, where he chairs the development committee, and teaches in the Master of Sustainable Urban Development program at SMU. A lot of us are familiar with Patrick's work — he's been on several podcasts before. John and Patrick, welcome to Up Zone. Thanks for coming today.
Hi, pleasure to be here.
Thank you, Carlee. I have to set something straight here.
Oh, please.
I don't know that I have that great of credentials to be on this conversation. I just snuck my way on so I could hang out with Patrick. This was all just a scheme so that I could talk highways with Patrick and dive more into this thing. I apologize, but it's just an elaborate ruse.
I think I'm right there with you, John. I'm pretty starstruck myself. So today we're going to be talking about a transportation story out of North Carolina that appeared in Business North Carolina. State lawmakers are considering legislation that would penalize Charlotte-area governments financially after local officials withdrew their support for a planned interstate widening — Interstate 77 — which would have covered an area from Uptown Charlotte to the South Carolina state line in a really fast-growing area of the state.
The original design was going to add two toll lanes in each direction, and the overall project was estimated at about $4.3 billion. As you might expect, local opposition grew — neighborhood groups, local government activists eventually came together — and Charlotte, Mecklenburg County, and several suburban communities moved to rescind their support for the project. Now state lawmakers are looking to respond by making those local governments potentially pay back the North Carolina Department of Transportation for costs already spent planning the project. These costs could total up to about $60 million to cover engineering work, planning work, and environmental studies.
The proposed amendment would apply to any regional road planning group that takes what the bill calls "unilateral action" to abandon a project that is part of the state transportation improvement program — what some of our listeners may know as the STIP. If the bill passes, the local governments could be required to reimburse the state and lose future funding until they do so. We have quite an interesting turn of events in interstate development. Who better to talk to than Patrick and John? I'd love to get your first thoughts. Patrick, what did you think when you read this article?
I had not heard this news until you sent me the article, and frankly, it's good news — even though the state is threatening punitive damages to the city. When I started getting some publicity and media attention on the Atlas of Inner-City Highway Impacts, Charlotte reached out to me, both the city and the planning commission. The planning commission had me speak about the Atlas and also talk about I-77 specifically.
In that talk — we had some bad AV and Zoom issues, and a local group ended up stepping in and we re-recorded it to pass around — I basically talked about all the damage that highways had done to cities, particularly in Charlotte, and how the map of the highways overlapped with the redlined neighborhoods, as they always tend to do. I pointed out that in the southern half of the city — the wealthy white part — there are no highways. So the broader question was: if there are no highways there, do we actually need them?
I compared Charlotte to Austin, because they were talking about double-decking I-77 through downtown. Austin had already double-decked a highway, and now Austin wants to make that highway 20 lanes — but no amount of widening was ever going to help them. That was kind of the key thesis from the Atlas of Inner-City Highway Impacts: highways through the center of your city will either fail as transportation if you still have a viable urban economy, or they'll fail your economy, as they've done throughout many Rust Belt towns. The broader message was: you don't need to widen this. You should probably consider tolling what you already have until you basically toll away the demand for it. You also have all these weird little loops and stubs of highways in your downtown, and you should focus on getting rid of those first. I don't know what kind of effect I had, but I was happy to give that talk, and if it had any small part in helping the city of Charlotte and their MPO rescind support, then that's great.
Wow, I didn't even know that part of the story. I'm even more glad to have your thoughts on it. How about you, John? When you saw the article, what were your first thoughts — as a former city council person, we should say?
Yes, and one that fought a highway project through our little town of 8,000 people in North Idaho. I like Patrick's approach — all good vibes here — but I was pissed when I read it. Here we have a city finally doing the right thing, standing up to protect themselves, and by the way, actually saving the state money here by not having this go through. They're actually increasing their tax base — as we learned from the Atlas Patrick put together — which shows the harm these unnecessary, overly wide roads can do to communities and how they dampen economic value. The state's response is to slap basically a $60 million fine on them for this.
When they should be thanking them — shaking their hand and saying, "Thank you very much. We really appreciate that you just saved us billions of dollars over the years to come, that we won't have to replace, that the city will actually take care of this and make it work in a functional way."
My second thought — and I'm curious your take on this, Patrick — is that $60 million is probably a good deal to not have that highway. If they wanted to remove it later, I would think it would cost way more. When I think about how much it actually costs to get rid of these things once they're built, on one hand I'm outraged about the $60 million. On the other hand, if you're the city, don't second-guess yourself now. That is a steal to not have this thing. Am I thinking about that the right way?
I think so. They probably do not have $60 million lying around to just hand over to the state, but at the same time, state and federal highway money is not money well spent for cities. That gets at the fundamental tension between the incentive structures of a state DOT and a local city. The local city has to worry primarily about moving people around on local trips — the day-to-day trips — whereas the state generally doesn't care about that. In fact, the local economy is congestion to the state, and it gets in the way of what they're trying to do. That is fundamentally why those highways don't belong in the center of cities.
Stop there for a second. What do you mean by that? I think I know what you mean — that congestion is actually the economy — but we're so conditioned to think of congestion as a bad thing. I remember when I was on that small-town city council, almost a couple of decades ago now, we lowered our level-of-service requirement. They always want to have A-level service, which means nobody ever stops for anything. We decided we were fine with D-level service through our downtown — we were fine with people stopping. Tell me why I was so smart to do that.
You're a genius. I actually give talks on this. I have slides showing an engineer's Level of Service A — a big, wide, empty street with no other cars in the way, no threat of hitting another car, nothing slowing you down. But an economist's Level of Service A is lots of people out on the street. They may or may not be in cars, but they're stopping, talking to people, sitting at cafes. It's the local trips that end up getting in the way.
What I find interesting when researching the history of the interstate system is that Eisenhower's advisors knew they shouldn't be mixing local traffic with interstate traffic. They did the calculations and showed the highways would have to be over 40 lanes to accommodate all that mixing of traffic — because local traffic just gets in the way of interstate commerce. That's why they argued these highways didn't belong in the center of cities. But ultimately it was the traffic engineers who said, "No, we can solve these problems. We can use all this federal money to solve all the world's problems," and so they went ahead and plowed these roads right through the center of cities.
What we see is that they've either destroyed economies by wiping out 10 to 20 percent of the tax base of cities, or the traffic just fails — because people making those day-to-day trips are competing for the same confined space as every long-haul truck trying to get through the city.
What I'm curious about is how you both thought about the sunk cost element of this when you read the article. At Strong Towns, we sometimes talk about zombie projects — projects that get drawn on a map and then become almost impossible to get rid of. Wouldn't it be more ideal if we were not spending the $4.3 billion? How is $60 million the point at which the state says, "We're far enough in that we have to build the $4.3 billion roadway"? That just seemed a little extreme on its face from a scale standpoint. I'm curious if either of you had a reaction to that.
If I were the city of Charlotte, I would push back not just on the fine itself, but say: okay, state, what if we abandon that right-of-way through the city and split the revenue from selling that land for development? You actually turn a highway into productive tax base. I don't know exactly what that land is worth in Charlotte, but I'm sure it's worth several billion. That would more than pay off the penalty the state is trying to impose.
Ultimately, to get where John's coming from — he was pissed off about it — the state's job was to prove up the need for the road and the expansion within the city, and the MPO said no. The state didn't do its job. That's on them.
This is a trap we fall into. Obviously, there's the sunk cost fallacy — the common idea that if we've already started, we might as well finish. That's especially true of transportation projects. We see this happen all the time. Once something is "shovel ready," it's like, let's go build the thing. And often shovel-ready projects — we've talked about this many times — are just projects nobody wanted to build, and that's why they're ready: they got stopped before they actually got built. Yet we still go and build them.
I think it's because we just don't recognize that a road is not inherently good in itself. We even see this show up in our balance sheets, where we record roads as assets — which is just crazy. They are clearly liabilities, not assets. But that thinking flows throughout this whole conversation, where the state is saying, "You are turning down an asset. You are turning down a gift of billions of dollars." The state is also trying to shake them and say, "What's wrong with you? Why are you turning down billions of dollars?" What they don't get is that, no, it's the exact opposite — Charlotte is turning down costs of billions of dollars, turning down lost revenue of billions of dollars, turning down lost opportunities.
And further devaluation of their private property, which cities should be seeing as their asset — the productive real estate. I think you're getting at the exact point I was thinking when I read the article. Both the Democrat and the Republican in that House or Senate committee were basically pleading with the city, "Please rethink this, let us redesign it." It's so frustrating to me that one of the few things that's truly bipartisan in this country is the belief that all infrastructure spending is good infrastructure spending. That drives me insane — and it's what drives me to do this work.
Absolutely. I thought the legislation's use of the phrase "unilateral action" was such an interesting contrast. At Strong Towns, we think a lot about subsidiarity and keeping decisions as local as possible, and here's the state coming in with legislation saying you can't make these decisions without the DOT or some other state body, otherwise you're subject to penalties.
I think this conversation goes back to the federal public good that Eisenhower was trying to serve, combined with the lived experience of local communities. The question of who gets a say, what's the state's role in setting transportation priorities, and what's the local role — how they interact and overlap — is still a little bit challenging for communities to navigate. I'm curious, Patrick, your thoughts.
I'm guessing based on my experience that the city's action did very little initially, because the city has very little power there. The state has the funding. It's their road, their property — they can expand it and acquire the property if they need to. It's when the MPO acted that things changed, because the MPO is where the federal funds flow through. That was the legal barrier the state hit.
I completely agree that local transportation should be a local decision, and that gets back to the same fundamental tension: putting an interstate through the center of cities is going to cause that kind of conflict, and it's going to continue to do so. All over the country, local cities usually get bulldozed — literally, figuratively, and politically — by state power and by MPO power. I'm shocked that Charlotte's MPO acted this way, because MPOs are typically structured to disfavor urban communities, since there's so much more voting power in the broader suburban areas. I'm flabbergasted that Charlotte's MPO actually acted in the interest of the local city.
Is it really true, though, that it's actually in the region's benefit to push this highway through here? It doesn't seem like it actually is.
I don't know how many members are on their MPO voting board — probably 30 or 40 or so — but there are probably a lot of suburban, ex-urban types who see it and say, "Oh, that's my cut-through. That's how I get to the Charlotte or the Carolina Panthers game. That's convenient for me. I don't care what happens to the surrounding neighborhood, as long as I can get in and get out." That tends to be the broader political calculus when the equation is stacked against urban cities.
There's a real "I may use it once a year, but it's convenient for me, so it's good" mentality. Unfortunately, our car-centric infrastructure has created this incredible selfishness in our logic — the idea that even if I use it only once, I'm expecting free-flowing traffic and a free parking space at the end of the trip, and I don't care what inconvenience that causes to the local economy.
I don't think there's a broader understanding yet that if we actually had a stronger urban core and a stronger tax base, that's much better for the broader region. Those dots aren't connected — or people don't care to connect them. Here in Dallas, we're struggling with our downtown right now for exactly this reason. We've got one of the tightest highway loops taking up some of the most valuable land in the state.
Starting with the financials and the financial impacts — the Strong Towns way — is to start with the math. But I also think about what else is being given up in a cultural sense. How much life and activity, how many cool restaurants and businesses and services aren't there when we run highways through the middle of cities? How much are they driving up housing costs for the entire region by stopping the housing that could be built in those places? How much are we losing out on arts and civic activities that could occupy those spaces — even some parkland, places to actually go and have a nice afternoon?
The tax base and economic activity matter beyond the edge of the city too. Our cities are often the roots of our state economies, and when we tie the arm of our cities behind their back — or really kneecap them — and then expect them to keep being the economic engine, it flies in the face of everyone's interest. Everyone ends up poorer off financially from what would come out of it, but also poorer off civically in terms of opportunities for connection, and socially in terms of places to gather and hang out.
We fall into so much fear around our cities — the idea that it's too busy, it's too crowded, nobody goes there anymore. We convince ourselves that activity is bad. But when we actually go and experience it, it's so exciting. I'm in Boston right now, with the World Cup, and all of Scotland has apparently come to Boston. The city is excited, people are alive, they're loving this energy, and trying to figure out how to capture it and keep it going.
We see the same thing happen in the few places where people have actually removed a highway — that activity springs up, that joy springs up. And we know the reverse too: from Robert Moses onward, a highway going through the middle of a community shuts all that down, ends that vitality, and it has a huge financial cost but also a huge social cost.
Bringing up the World Cup is timely, because I'm here in Dallas, and we've got the most games of any host city. There's a new game every three days, so there are two new countries rolling through every couple of days with 70,000 visitors. Eventually that World Cup is going to stop, and we won't have 70,000 people visiting anymore. We need to replace those same 70,000 visitors with 70,000 housing units in and around our downtown to achieve that same kind of joy and serendipity — people spending money, getting along, having a grand time meeting each other. It's been so much fun, much better than I ever imagined it could be, because everybody's just having such a good time.
John, I wanted to ask you from the perspective of building on Patrick's idea that this article made him happy, and building on the Strong Towns bottom-up philosophy — the article describes a city council acting first, then the county getting involved, and now they're coming up against the state. If we have a local listener who's fighting a highway project in their community, how would you talk to them about the progress you see in something like this, even with the obstacles still ahead as we work these types of issues from the bottom up?
First, we've referenced it today, but I really want to call out the Atlas that Patrick created. It covers highways all across the country and does the math on what economic power would be unleashed if you removed them. Is that a fair summary, Patrick? How would you describe the Atlas in broad terms?
It's basically a giant research project documenting the tax base removed from local cities because of highway right-of-ways through the center of cities — the life-cycle cost of that infrastructure and the associated car dependence — and the redevelopment potential of those highway right-of-ways within a one- and three-mile radius of downtowns for 142 cities.
So 142 cities — your city might be in there. Even if it's not, this is a whole set of case studies you can bring to city hall, that you can show to people: here are 142 times this was run, and every single time, here are the results. This is worth paying attention to.
I also just want to emphasize the heroism in this story — how this city and this MPO acted is genuinely heroic. I would encourage people to show up and be their own local heroes. Yes, that means elected officials, but it also means citizens coming forward. These are winnable fights, and this fight is clearly not over yet. They're going to keep facing pressure, so I'm rooting for those heroes to hold strong and keep up this battle. If you live in this area, you should be contacting them and saying thank you, and let's keep going.
The role for all of us is to figure out how to generate more of those folks, and that really does come from strong community support to push back on the default way of building things. I think there are two things you can bring into that fight: one, the knowledge from the Atlas — here's why this is a bad idea, and here's the math that backs it up. Two, since we have a little soccer theme today with the World Cup — we believe we can win. We need our communities to believe they can take on these juggernauts and win, because they can. It's going to be hard. Hopefully Charlotte will pull it off. These are not unwinnable battles.
To be successful long-term, this is going to have to be a bottom-up and a top-down approach. Yes, we have to arm as many local leaders as possible and connect them so they know they're not alone. But you also need to be calling your representatives and senators in Washington, because they're looking to pass another transportation bill — the current one's expiring this year — and they're making it bigger and worse than ever. Until we cut off that faucet, this is still going to be an almost impossible fight almost everywhere, because every other elected official sees a ribbon-cutting, thinks the next expansion will solve all their problems, and sees every dollar as jobs in their city — even though it's all a temporary jobs program at this point, since every highway has a return on investment that's basically negative.
As you point out, it's actually an anti-jobs program. You get the short-term jobs by destroying the long-term jobs. These highways are not just a failed jobs program — they're a job destruction program. They're not just destroying jobs broadly; they're destroying the construction jobs that would go and build all those buildings along these corridors, that would do the development, that would then lead to redevelopment. There is plenty of work for people who want to build things in our society. We don't need this irresponsible highway system to create those jobs. There's a lot of stuff we could be building instead — stuff that actually has a lot more value, would probably be more expensive to build, and would create more activity for workers.
One thing to note: we will certainly place in the show notes the link to the Atlas, as well as to our recent Mission Accomplished paper, which says that as this federal transportation bill comes up for renewal, we have to think about it differently. We can't just keep doing the same thing if we want what's best for our communities.
I'm curious whether the toll road element of this adds any interesting twists. You could argue that the primary users of that facility would have been local folks, and they were essentially going to pay for most of the road with toll revenues. Does that strengthen the municipalities' case to advocate for their citizens, or does it really change anything?
Tolling issues in the center of cities tends to generate quite a stir from an equity standpoint — and it's a complicated one. I would argue that all highways in the center of cities should be tolled, as a way to manage demand and keep them from getting overly congested. That's also a way to suppress demand so that eventually you no longer need them — push the traffic volume down so low that the local street network can actually handle it.
That said, state DOTs in Texas were at a point for a long time where they thought they could effectively finance highway expansions endlessly by adding managed toll lanes. But those lanes tend to produce so little revenue that they don't actually meet expectations, and then somebody is on the hook for the rest of the bond payment — and those bills usually end up on the locals.
I don't know the specifics of Charlotte's situation, so it's a complicated issue politically. If a highway runs through a low-income area, it doesn't make sense to charge those residents to get around, especially when it's bypass traffic making their lives worse locally — and they can actually get around on the local street network, as long as the highway hasn't disconnected all their roads, which it tends to do as well. We have to use tolls in a smart way: not as a way to keep the machine growing, but as a way to reduce demand on those facilities.
The real virtue of the toll in this case, I think, was that it made clear how expensive this project was. People realized, "Wait, having this road built means it's going to cost me this much more," and it clearly was not worth it to them to spend that money for this expansion. So people started to actually do the math, whereas usually it's just "here's a free highway" and people think, "A free highway, that's great."
Anything that creates a feedback loop — that the road is not actually free, that there is a real cost to building this thing — helps people come together and say, "We don't need this," whereas if it were just free, you wouldn't necessarily have seen the opposition come together. I don't think the solution is to toll everything, and Patrick makes a good case for where tolls make sense and where they may not. But it does make the case that we have to figure out how to break through to communities and elected officials at every level about the true actual cost of these things, and stop hiding it — whether in money from some higher level of government, in debt, or in whatever mechanism keeps us from dealing with the actual ongoing and long-term costs of these incredibly wasteful projects.
Here's a terrible irony I discovered when researching the background for the Atlas. Eisenhower's initial plan was to finance the interstate system through user fees. Through various studies, they realized that only the highways going to the center of cities would generate enough revenue to pay for themselves — it wouldn't cover the full cost of the entire interstate system. So they had to find a different way.
Ironically, it was the fiscal conservatives in Congress who turned down the user fees and wanted a trust fund instead. Rather than bonding it and having one overall budget, they created the trust fund, and it just kept going and going. It's still filling up to this day, even though we talk about it running out, and we've supplemented it from the general fund over and over again. The fact that it keeps filling with gas taxes, rubber taxes, and everything else that goes into it has led to the overbuilding of the entire system.
That's terrible.
I wonder, too — there was part of me, when trying to put a sunny face on the article, that was happy to have the state push back and ask for their money back, for the same reason you just described, John: we're actually now talking about what these things cost. The reading of the article made it sound certainly punitive in nature, but are we finally at a point where the costs of these things are starting to impact whether or not they happen? Or is this kind of just a political fight, and we shouldn't read more hope into it than that?
I think we should take hope in what the local people did, but no — I think the state is just a bad actor here. I don't think we should put any sparkle on that or try to make it look better than it is. What they are doing is disgusting. They're coming after the community, not just by fighting about the particular highway, but by trying to come up with punitive measures to punish them for standing up for their citizens.
This is not some combat between ideological political people. It's one group of people — locally — taking into consideration the facts on the ground, looking at reality, and saying, "This doesn't make any sense. Let's stop." And another side saying, "How dare you question what we do? How dare you question the system? How dare you question the way we've done things for four decades?" You can see and hear the attitude in how they respond with incredulity and cruelty — actually trying to punish and bully, with no —
— more maintenance dollars to the city.
Right, it's ridiculous. I'm not willing to overly demonize here, because I know it comes from a place of wanting this highway and genuinely believing highways are good. But I want to be clear: the state is acting badly.
I'll do some demonizing, because when you look at the highway networks of nearly 150 cities, you start to see certain bad actors emerge at the statewide level, and North Carolina — NCDOT — I would put them easily in the top five of worst in the country. Look at any one of their cities — Greensboro, Winston-Salem, Durham, Asheville — they're all wildly overbuilt in terms of highway infrastructure. If anybody's curious about the others at the top of my list, Ohio and Missouri are also uniquely bad.
Something to look up in your Atlas. Well, gentlemen, before we go to the Down Zone — any concluding thoughts on what stuck out to you in this piece, or advice for cities and local folks who are fighting the good fight?
We may have said it all here. I would just say: keep on doing what you can to build strong towns. That's what we always say, and I do think it's true. These are winnable fights.
When you organize any kind of events to educate — whether fundraisers for local council members or otherwise — make them social events, so it doesn't feel like homework. It has to be fun. You're making friends, you're spreading the word. People like to be involved that way — actually getting together, getting to know each other, learning from each other. That's how you create a movement.
That's great. Well, before we go, we always close with the Down Zone. I'm going to start with John, since he's been a regular guest on Up Zone before. What's one thing, John, that you're reading, listening to, or watching that you want to share with our listeners?
I'm very excited, because one of my nephews has become a very avid reader, and I just shared with him the book Dealing with Dragons, from the 1990s when I was growing up. It's part of one of my favorite fantasy series, The Enchanted Forest Chronicles. He devoured the first book and is already into the second — I just gave it to him earlier this week. It's just so exciting to share things you love with other people and watch them pick it up. He devoured that book the same way I devoured Patrick's Atlas. There's my connection back to the topic. My recommendation for eight to twelve year olds: Dealing with Dragons.
That's great. Patrick?
I don't know if this is going to humanize me in any way, but since creating the Atlas, I ended up with a giant database of cities full of proprietary data, and I was trying to figure out what to do with all of it. So the next project I'm working on, sort of on the side, is called Downtown Vital Signs. It's basically a data visualization platform to compare any of the going-on 150 cities across specific data points shown visually — general downtown health factors, housing market data, mobility and transportation data, sustainability data, and then one category I'm calling Good Bones, which is essentially the underlying infrastructure. It's intended to be a predictive measure of whether you have the right things in place: if you just implement XYZ, you'll be on your way to revitalizing your downtown. That's the next thing I'm going to be launching here soon.
I want to change my recommendation to that.
Yes, I want access to that as soon as it's ready. That sounds amazing. Thank you for sharing that. I have to go with something you both brought up earlier in the show. Today we are recording this episode on the day of the US's second World Cup game.
Are you a soccer fan?
So excited to watch. I've been following all the stories of the cultural exchanges. I'm not in a big city like Boston or Dallas, but reading and seeing how people celebrate has been a really exciting experience. I'm enjoying it from Louisiana.
Not even FIFA or the US government could ruin this experience.
All right. Well, thank you both, John and Patrick, for joining us on today's episode of Up Zone. On behalf of all of us at Strong Towns, please take care of yourself and your places.
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.