> The way this happened is pretty simple. At Strong Towns, we call it the Growth Ponzi Scheme. Through a combination of federal incentives, state programs and private capital, cities were able to rapidly grow by expanding horizontally. This provided the local government with the immediate revenues that come from new growth -- permit fees, utility fees, property tax increases, sales tax -- and, in exchange, the city takes on the long term responsibility of servicing and maintaining all the new infrastructure. The money comes in handy in the present while the future obligation is, well....a long time in the future.
This is the lens through which Strong Towns views the country's cities. It's a useful model that explains a great deal. It's also falsifiable.
The growth Ponzi scheme hypothesis says that the source of America's infrastructure problems is subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure. The outcome is always the same: infrastructure that can't be maintained because its costs were never accounted for.
The Strong Towns website is chock full of examples, and Lafayette LA is just one. At this point if you live in any US city it seems pretty likely that you'll find a Growth Ponzi at work.
Also, that 3D map should scare the liver out of local politicians.
> subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure
The same thing is happening right now with EU grant money given for "development" to some of its Eastern European members. Lots of mayors and local officials use that money for grand local infrastructure projects for which they won't have any reasonable money to maintain even in the near future (let alone 30 to 50 years from now), because we have a numerically declining tax-base that is getting older and older (I live in one of those Eastern European countries).
But mentioning that issue gets you labeled as a person "against progress" or an anti-European (or worse, a Russian shill who doesn't trust the European project). We have a saying in Romanian that roughly translates as: "you should stretch out only as much as your blanket allows you to", i.e. one should only consume the resources he/she thinks are reasonably available to him/her, but right at this moment we are "stretching out" further than the bed itself and getting out of the bedroom altogether.
My wife is Estonian and she would disagree with you strongly.
How your government allocated the funds was your governments doing, but the money that was sent to Estonia has been invested and that’s what it has been... an investment.
Any investment that does not yield returns that cover its costs is failed.
Infrastructure facilitates so much of what makes up society that -not- having it can be much more costly than having it.
But in those cases it doesn’t it’s because government corruption or ineptitude has eaten you from the inside.
To be fair, in many cases the point of building the infrastructure is not to have the infrastructure in the end, but rather to give that EU money to the ruling elite.
Routing it through a company that pours a bunch of concrete is just the cost of keeping Brussels off your back and thus keeping the tap open.
All post-Communist nations tend to struggle with the idea of diligent upkeep / maintenance of publicly owned things. In fact, I would say that visibly older, but well maintained infrastructure is a great indicator of good governance.
The attitude is slowly getting better, but aging of our countries will probably exacerbate the problem again. It is not just disappearing tax-base, but disappearing skill-base that comes with the common job market. Like, finding a competent tradesman is visibly becoming harder. Why should they even stay in the country when they can earn more in Germany or the UK.
Without these funds the infrastructure would either be poor or non-existent, making it expensive or unrealistic to move goods and people around within a country like Poland.
When I emigrated to Poland in 2005 (from the US) driving between Krakow and Gdynia at never more than 15% over the speed limit of 90 km/h (the average speed everyone else is travelling at) (but often under 90 km/h due to many lorries on the road, tractors, accidents, people in elderly Fiats, elderly people in Peugeots/Fiats/Polonez/etc) with three 15 minute stops the driving time was about 10.5 to 11 hours. Now it's about 7 to 7.5 hours (two stops, not three, and usually driving right at the speed limit).
The change is because of the introduction of the proper A1 motorway. Two lanes each direction and, most places, rated for 140 km/h.
I should note that the "proper" A1 isn't yet complete. There's no A-class motorway between Krakow and Czestochowa though it's being built and should be complete in a few years.
Maintenance on the thousands of kilometers of motorways (and highways and smaller roads) will undoubtedly be a significant expense in the future. But those roads allow for a staggering quantity of goods (and people) to be moved about quickly, safely, and inexpensively (even accounting for tolls). I doubt that our current government is setting aside money for maintenance for all of that but the potential incompetence of today's government shouldn't be a reason not to do something that will have ripple effects for decades.
One of my thoughts is building infrastructure is a speculative bet. You hope that it generates enough economic benefit to pay for it's construction, maintenance, and eventual replacement. A thought is sometimes that bet fails. You end up with infrastructure that doesn't generate enough revenue to pay for it's maintenance or eventual replacement.
I feel like post war the US made a lot of extravagant speculative bets on infrastructure, particularly related to suburban housing development.
And the world does prove it false. If you look at municipal budgets infrastructure is usually around 10%. There isn't one out there that spends a majority of their budget on infrastructure. The expensive things are cops and schools and fire and other labor intensive services.
The municipalities that have gone bankrupt the issue has almost always been an inability to pay pensions. With the other ones caused by financial fraud and/or mismanagement.
For the life of me I can't understand why people keep posting this Strongtowns nonsense. Their core hypothesis is easily probable wrong and they post the silliest numbers. Like this one pegs Lafayette's infrastructure replacement at 32 billion. Yet Lafayette's entire budget is only 0.6 billion. Since they haven't spent the entire budget for last 50+ years on infrastructure that 32 billion is obviously nonsense.
I think you're misinterpreting both the numbers and the argument and then taking away a backwards conclusion from that misinterpretation.
> If you look at municipal budgets infrastructure is usually around 10%.
The article says exactly this.
> There isn't one out there that spends a majority of their budget on infrastructure.
So what you're saying is that the city doesn't spend what it would cost to actually keep up with maintenance. They're saying exactly the same thing. Unless you think that the city is pocketing billions in profits from unspent tax money (they aren't), it's hard to see how they could possibly spend more on infrastructure without majorly cutting other services and/or taxing more than the people can afford, which is the premise of the article.
> The expensive things are cops and schools and fire and other labor intensive services.
These costs scale most directly with population, not land area. You'd have these same expenses if the city were built such that the road infrastructure cost less to maintain, so pointing at them makes no sense.
> Like this one pegs Lafayette's infrastructure replacement at 32 billion. Yet Lafayette's entire budget is only 0.6 billion.
The article is about how Lafayette cannot keep up with maintenance because it would cost too much. Literally exactly the same thing as what you just said, and yet your conclusion is that they have it wrong? Why?
Yeah - I own a consulting company helping suppliers navigate the procurement process of state, local and federal procurement. None of these numbers check out and since it's municipal data it's all subject to a FOIA request.
This is my first article i've read by this company and it didn't really seem to have a conclusion besides spreading obviously false data.
Assume Lafayette's share of road miles is proportional to population, and you get around 3500 miles of roadway around Lafayette. Minimum paved road construction cost is ~$2M/mile, according to https://www.artba.org/about/faq/#:~:text=Construct%20a%20new....
So a very conservative road replacement estimate for Lafayette is about $7B, and that's just the roads. The Strongtowns figure may be off, but it's likely the right order of magnitude.
> The way this happened is pretty simple. At Strong Towns, we call it the Growth Ponzi Scheme. Through a combination of federal incentives, state programs and private capital, cities were able to rapidly grow by expanding horizontally. This provided the local government with the immediate revenues that come from new growth -- permit fees, utility fees, property tax increases, sales tax -- and, in exchange, the city takes on the long term responsibility of servicing and maintaining all the new infrastructure. The money comes in handy in the present while the future obligation is, well....a long time in the future.
Believe me or not, this to an even bigger extend plagues China.
I think more than half of major cities in China are fully consciously running a Ponzi scheme with their own land leases, as they have really no other revenue source to sustain them long term, and this is why they are ready to go to any extremes to do this.
Effectively, private loans are financing municipalities through overpriced land leases. Everybody who ever dealt with real estate in China will tell that land auctions are rigged using every trick imaginable.
Isn’t the reason those few districts have big “profits” because they are the central business district where all the people from the outlying areas with big “losses” come in to work and shop?
This feels like looking at a company by division and deciding that R&D and HR a make huge losses and all the profits are in sales.
The article discusses this in some detail. Some of the districts with high profits are “downtown” areas as you say. Some are “poor” or “bad” neighborhoods, contrary to your (and I suspect most people’s) intuition.
The article’s main thesis is that these poor areas have the best ROI for development.
In traditional cities people usually also live in the downtown.
The main issue is that free parking lots associated with big box stores are incredibly unproductive uses of land, and the tax value of the property reflects that.
the source of America's infrastructure problems is subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure
That doesn't follow from your quote. The quote says that the problem is that those subsidies were used for horizontal development (i.e. sprawl), which rapidly expanded the infrastructure. You are correct that future maintenance wasn't budgeted, but if the city had expanded vertically (i.e. denser urban cores), the infrastructure costs wouldn't have risen quite so dramatically.
How is this possible? Some of my planner colleagues will say it is density, but I've long rejected that simplistic
explanation. There is a lot more to it than a simple division problem.
He goes on to explain that the poorer areas tend to have smaller houses and narrower streets built on higher ground, all of which leads to lower maintenance costs. They were built with more frugality and risk aversion than the more affluent areas. This supports the thesis that Lafayette's predicament stems from extravagant infrastructure in affluent areas that wouldn't have been built without subsidies.
You are the only commenter quoting the horizontal development. So maybe my idea relates to you.
Are you familar with the concept of the Big O notation [1], which computer scientists use to (more or less) describe the "growth" of their algorithms? E.g. when you compare something that growth quadratically O(n²) to something that only growth linear O(n) you will see, that at some point the quadratically growth will grow faster as the linear growth. Forever! The linear growth will never win.
Comparing this to the horizontal sprawl of a city is easy. The area of a city is planar which is mathematically described as quadratic O(n²) but the average growth of the domestic product is just linear O(n). Assuming the maintainance cost of a planar sprawling city growth quadratic while the domestic product only growth linear then the costs will win over the income. Forever!
The conclusion is to limit the horizontal sprawl of a city to linear growth. This means every new house, street, rail road, pipe system, power line and so on must be build inside a diameter to the city's center with a distance which is logaritmic O(lg(n)) on average. The rest must growth vertically.
I think Manhattan provides a strong counterexample. The 2nd Ave subway line cost $2.5 billion per mile. The cost to add elevators at 70 stations is expected to be $5.5 billion. A lot of signaling equipment is from the 1930s.
While I agree with the strong towns assesment overrall, I think this analysis may rely on some assumptions on the distribution of wealth and tax revenue within a population. Ultimately the "once per generation expense" in all of these towns was funded once per generation in the past. This money came from the federal government, and not the local tax payer - ultimately with the federal government taking on long-term debt to fund it.
While this seems like a ponzi scheme of perpetual growth, there is nothing that would prevent the federal government ( or the local government ) from repeating this exercise to rebuild the infrastructure. If we can't redo this exercise it means that
- The balance of payments in the economy is not well calibrated on a generational scale, profitable economic activity is not attributed on a local scale with free cash flows diverted elsewhere by rentiers/global financial flows e.g. a factory in annaheim california sees all profits recognized in Delaware/Ireland. The federal government/central bank may have more capability to provide local governments with finances than we would expect in such a scenario by rebalancing payments.
- The current US city landscape has real long-term economic costs that drain capital on unprofitable activities, immediate pivots in city planning are required to avoid economic fallout.
I suspect a little bit of all three options are at play, but I would be curious for more exploration on items 1&2. A great irony of the modern world is that the City of Flynn borders several pipe manufacturers.
> This money came from the federal government, and not the local tax payer - ultimately with the federal government taking on long-term debt to fund it.
It did not, this is completely false. Federal government by and large didn't fund local roads and sewers. Federal government did often help with interstate highways and large water works, but those would be built just the same even with the Strong Towns preferred high density development model.
By the way, the money that federal government spends is not created out of thin air. It comes mostly from federal income tax, which is overwhelmingly paid by the people living in exactly the kind of suburbs Strong Towns hates.
Building new stuff while never taking into account maintenance costs happens in computer programming, too. At least in some places I've worked, they have more to maintain than people or time to maintain it, but there's always someone with a budget and an idea.
I saw a road in my neighborhood go from trenches along the road to full storm drains and sidewalks, for seemingly zero reason but to let the existing owners appraise their homes for $10k more. The trenches were fine in practice and never spilled over even in the worst storms. This suburb of 15 thousand people is currently millions of dollars in the hole doling out shortsighted handouts like this, and there are thousands of suburbs just like this one.
I’m not sure where you are, but I can’t imagine anywhere where sidewalks don’t make sense. Upkeep is orders of magnitudes cheaper than maintaining a street, and provides incentives for people to leave their cars behind, especially for shorter trips, further reducing wear and tear on roads.
Keeping roads in shape for multi-ton vehicles to barrel down them is expensive. Keeping them in shape for humans, not so much.
> Infrastructure that can't be maintained because its costs were never accounted for.
I like that you used the phrase "accounted for". It implies in my mind that the politicians doling out the cash did not monitor how that cash was used.
In management-speak, it's the classic phrase "delegation without follow-up to abdictation"
I initially thought about it in terms of accountability "the lower levels should have wrote down their expenses, their decisions, and sent it upward for review" but then I thought "why would most people do that if the people at top aren't mandating the record-keeping, let alone looking at it?" The higher levels didn't attach real strings to the funds and only kept abreast of developments by looking at the end results. Which were positive and attractive, but camouflaged very real deficiencies in the system that produced it.
This has been understood since at least the 1950s, when the Interstate system was 90% subsidized by the Federal government, but maintenance was a local responsibility.
> The growth Ponzi scheme hypothesis says that the source of America's infrastructure problems is subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure.
This is pretty clearly false; the main cause of infrastructure maintenance neglect is that politicians, like many leaders in other fields, get more career boost from new projects than making sure existing things are maintained. That's true from top to bottom.
There's policy contributions (e.g., California Prop. 13 makes local jurisdictions dependent on development fees and other growth-related revenue because property taxes are limited to a low nominal level and decline in real terms as property is held because of the limitations on assessed value increases to significantly below the historical average rate of inflation), but new-project subsidies aren't a root cause but a symptom of the cause which would exist even without the subsidies.
Isn't it ironic that people constantly charge corporations with short-term thinking as some failure of capitalism, when the real disaster is the local government?
Here's another one. In Seattle, the city has seen enormous growth in tax revenue, far outpacing population growth. But the money just seems to disappear. Where it's going are public employee pensions, which were enacted long ago by politicians to garner the support of the unions. But the math on these is unsustainable and a looming crisis, but the politicians couldn't care less as the bill was far into the future and the election was just around the corner.
I think the “public vs private” take is a false dichotomy. I think there is a decent amount of evidence to show this short-term biases are a general human problem
I think there is another article about a road being constructed for $30 mil or something absolutely crazy when it’s not needed at all (and the road would fall apart before they could repay the loan). The basic gist I got was: when loans become more available, things start getting constructed when they aren’t needed at all and costs balloon fast.
Like student loans, easier access means they can charge more.
Yet again an article about how it costs $X to do something with infrastructure but no explanation for why it costs $X. Until everyone starts asking "why?" and then addressing the resulting answers (commonly: kickbacks, overregulation, collusion in bidding, and simple "match the budget" bids) this issue will continue with every aspect of government-run service.
In Toronto, Canada a simple renovation of a subway stations entrance (painting, tile, basic refresh) can take several years. All the while they will rope off large sections or shut down escalators for months while there is ZERO work being done.
There was a Subway station called Runnymede that took about 5-7 years and when completely you couldn't tell they did anything. I am sure it cost 10's of millions of dollars and could have been completely started and finished by a private contractor in a couple months.
The city has never been manage properly because there are no consequences to the ineptness of the Politicians and bureaucracy that run it. You could complain (a lawyer friend did) and they basically either ignore or make up some story how difficult it is to lay 200 sq/ft of tile and clean an escalator...These things take years of hard work and planning....
Surprised the city doesn't come crashing down under it's own weight of dysfunction but they seem to prop it up by the endless tax or fee increases.
Escalator and elevator refurbishment projects are extremely lengthy because most of the replacement parts needed to overhaul old escalators/elevators are no longer stock items and need to be custom made. In the worst case, parts may need to be reverse-engineered, re-designed to be compatible with current materials and manufacturing processes, prototyped, tested, and made through limited-run production.
If an escalator/elevator is shut down for a few months (or years) due to refurbishment, it's because worn, but vital, parts of it have been removed for use as reference materials so replacements can be made. It is also possible that vital parts could be too worn for the escalator/elevator to operate safely until new parts have been made and installed.
I'll also point out that published information on the Runnymede project indicates that the current round of construction started at the end of 2018, involved the addition of three underground elevator shafts, and is expected to be completed at the end of 2020[0]. Unless you are referring to earlier work, your '5-7 year' timeline to 'clean an escalator' is a vast exaggeration.
I don’t know your qualifications, but I doubt you were involved in the project. When I hear people upset about infrastructure giving armchair estimates of how long it should take or how expensive it should be, I just hear the uninformed project manager being outraged at the software engineers’ estimates. “And when their work was done I toured the station/software and it looked exactly the same!”
I’m sure there’s bureaucratic inefficiency. But there’s always so much nonsense that gets appended to the criticism.
> In Toronto, Canada a simple renovation of a subway stations entrance (painting, tile, basic refresh) can take several years. All the while they will rope off large sections or shut down escalators for months while there is ZERO work being done.
This most likely happens because of insufficient government funding for maintenance.
Government budgets reset every year; governments can't take unspent program money at the end on one fiscal year and bank it for next year. There is no way to "save up" for big expenses aside from directly allocating sufficient funds in the funding legislation.
That sort of lump allocation is a lot easier to get for new work. The main reason is, new work has better optics--you go from nothing to something. Maintenance, unless it changes the cosmetics, looks about the same at the end as it did in the beginning. Boring! "What did we get for all that money??" citizens ask.
And maintenance is harder to budget for in a lump sum because you don't know how bad things are until you actually start the work. This is generally true of maintenance--anyone who has renovated an old home knows this. Until you open the wall, you don't know how much work needs to be done.
So what you do in government is start the maintenance projects you have at highest priority, find out how bad things are, and then do as much as you can with the budget you have. It it's not enough to complete an atomic unit of work, you just sit on partially-done work until more money becomes available.
And ironically, the irritation caused by unfinished work can help get you the money to finish the work.
If maintenance was properly budgeted, then the subway system could afford to do a full refresh all in one continuous go. Usually it's not, so usually they can't.
Canada is seriously declining. Have you seen grocery store prices lately?
Most of the housing in smaller cities is getting very old, built to very poor standards. Requiring constant maintenance. The owners often still stuck in 25 year mortgages, fixing houses that will fall apart in less time than that.
Many of Schools haven't been updated in decades, despite having asbestos insulation.
I visited a former Eastern Block country this past summer. New roads, infrastructure and buildings everywhere. Built to a much higher standard too.
Much better food in Restaurants too.
Thinking of moving back to Europe.
Considering the 300 billion deficit this year alone, declining credit ratting, higher taxes. The money for infrastructure will be hard to come by in the next decade.
There’s plenty of reasons beyond corruption. Repaving a mile of third avenue in Seattle costs a lot more than a mile of downtown Wendell, Idaho which will cost a lot more than chip sealing a mile of dirt road just two miles away from the center of Wendell. Salaries are more expensive in big cities. The job is more complex as the amount of infrastructure beneath the road surface, which requires ongoing access, so lots of man holes. Repaving in a dense urban center requires removing the old pavement, in a rural setting it’ll just be piled on top until it’s been layered four or five times.
There's an explainer (in the aether) comparing the cost of 1 mile of subway in misc locations.
Cost of land is a surprisingly high factor.
I'm generally against eminent domain. Because it's abused so easily and so often. But I would also like the option to build our way out of our messes.
Failing to make the real estate more affordable, maybe we'll innovate our way out. Some combination of telework, The Boring Company, and cheap personal transportation options.
And that 60% does not include defined benefit pension and retiree healthcare benefits that are understated or unstated because the government can use extra rosy assumptions and/or just skip saving money and then dump those expenses on future taxpayers.
Counties, corporations, charters, port authorities, states. I couldn't guess at all the structures and financing schemes that have been concocted.
For instance, Port Authority of NY and NJ builds, owns, and operates a massive amount of infrastructure. Completely apart from NYC. The Port Authority in my own region is its own separate nominally democratic fiefdom with its own powers to raise taxes, fees, etc.
This is the problem of politics in a nutshell. We tend to have strong opinions, as is out democratic duty. It's impossible (or very hard) to form opinions based on specifics. So we fall into tragically cliched thinking.
"The problem" is whatever the problem always is. Maybe its Capitalism. Maybe its "kickbacks, overregulation, collusion in bidding, and simple "match the budget" bids" It's probably whatever your worldview always points to.
The classic example of this is the 580/880 intersection replacement in Oakland/Alameda. It's a crucial intersection for the East Bay so when a tank truck caused a fire that collapsed it, the tender issued provided a massive bonus for each day ahead of projected schedule you achieved.
The winner completed it far faster than similar projects, and under projected budget, taking it all in from the bonus. Every day he was slow, he lost money. So the incentives were great, and the winning contractor did a great job. So we have the construction technology and we have the policy technology.
But similar projects frequently take forever. Why is that? We know how to make them fast, cheap, and good, clearly. We know how to set up the incentives on a per-task basis so we will do that as well. So I suspect it is because they actually aren't crucial. So you sell the buyer (the populace) on the price tag based on the supposed importance, but you actually do the work on the real importance. The gap between the two allows for profit for politically connected contractors like Tutor Perini and also for make-work for powerful groups like construction unions. What we don't know is how to set up the incentives such that good per-task incentives will be put in place.
In fact, I'd say that the true importance of any slow project is likely very low. In California, the following projects should not have started:
* CA HSR
* SF Central Line
During their lifetimes they will not yield positive economic utility.
Wouldn't an incentive to get it done quick encourage cutting corners? It's critical infrastructure, sure, but all the more reason it should be fixed properly AND quickly.
Don't forget no incentive to be efficient or innovate better techniques / technologies on the part of both the city as a whole and individual employees. Government is the least accountable of all organizations and therefore the least effective at any given task.
I'm not sure what DFW and TXDOT do right but they routinely bring projects in on time and on budget (if not under). Two large projects that come to mind is the HighFive and Grapevine Connector. Both were huge and the High Five made headlines for some new bridge making machine the contractor invented. Whatever they're doing it seems to be working.
Nobody doing critical infrastructure, public or private will be allowed to go under. Look at the privatised rail companies in the UK or the banks in 2008 for examples of this.
Competition and markets definitely do raise standards where that competition is fair and genuine and well regulated. Usually though, privatisation results in state awarded monopolies where little more gets done than before and costs rise because of the need to show a profit or bail out accrued losses because at the end of the day, the infrastructure has to keep running.
Maybe we can create a marketplace for bidding on infrastructure work job by job and maybe, it could be profitable for everyone. I’m not so sure though.
They have the opposite incentive. At a company (A good one), if you try something risky (New technology) and it doesn't 100% pan out, you can cut your losses. In a system with low level buyers managing the contract and alot of higher ups able to say 'no' you get this self defeating cycle. However, Elon was able to bully his way into contracts with his solution (Boring Company) cause:
A.) he's famous,
B.) He's protested to the GAO a number of times when he didn't get his way. (SpaceX, and original chicago build)
It’s much more complicated than that. If you’re interested, Alon Levy of Pedestrian Observations compares transit construction costs across countries, for example why some countries like Spain and South Korea can build subways for 1/10 the cost per mile of USA construction projects. It basically comes down to “no one tried to make this cheaper”. Culture and history seem to be the primary drivers, more than labor costs, unions, corruption, environmental regulations, NIMBYs, etc.
We have "construction robots" already. It's called foreign labour and no one in the West would dare suggest bringing them in for one-off large infrastructure projects regardless of how many cost-benefit-analyses you can get the smartest economists on Earth to produce, nor the willingness of the laborers to do it.
It's interesting that so many of the responses mention the high costs of infrastructure upkeep is due to the density and complexity of the built environment in which is exists. The article however is pushing for denser development so there is less infrastructure to maintain. Interesting balance between the two opposing development patterns, both of which appear to lead to high maintenance costs.
The general principle is that we haven't figured out yet how to deal with monopolist markets (in other words, situations where there is no market). Competitive markets lead to high efficiency but there are many situations, often public projects, where there's no competition.
But how they get the money and from who is a factor too.
This always happens when real property is taxed rather than commerce, and the amount of land available for development is limited or fixed.
To start with all land is taxed according to its initial assessment, after that revenues can not increase without raising rates and/or further developing parcels to increase their taxable value.
Both of which are unsustainable in the face of any inflation at all.
Each of which have their staunch supporters at odds with the other.
If only rate increases are considered, rate increases will have to outpace inflation or the taxing authority will go bankrupt.
The taxing authority can not be allowed to fail especially since the original purpose of this type tax is for the taxpayer to go bankrupt before the nobility does.
Eventually the _landowner_ will be assessed more tax than the land itself brings in, and will require _owners_ having outsized wealth from other sources, often only multigenerational prosperity will be sufficient.
At the other extreme where revenue growth comes only from further property development, pressure is greatest on undeveloped properties having the biggest upside potential.
New infrastructure is built at the expense of the old, spread more widely, and naturally not yet having future inflated maintenance costs incurred.
Little hand-waving is needed when a tax payer & collector are all prospering over the deal in the short term and there is some plausibility to behave as if future prosperity for all taxpayers will increase at the rate enjoyed by those involved with the development. Surely making costly things easier by then.
Inflation makes it impossible to know for sure anyway.
Mix and match these growing costs across citizenry which is not becoming more prosperous, and eventually there is no discretionary wealth except among the few who overcame the inflationary toll.
Taxing commerce instead of property allows revenue to grow at the rate of real prosperity unlimited. With the risk that revenue will drop when prosperity drops, or the authority will go bankrupt at the same time as the general citizenry in such a case.
Not a realistic risk since the authority will have enough credit to delay its own bankruptcy until after the majority of the citizens are ruined.
I guess the point of view about what kind of tax could ideally fund infrastructure indefinitely depends on whether you are a lowly taxable subject or a high-born guv'nor.
> The median house in Lafayette costs roughly $150,000. A family living in this house would currently pay about $1,500 per year in taxes to the local government of which 10%, approximately $150, goes to maintenance of infrastructure [...] To maintain just the roads and drainage systems that have already been built, the family in that median house would need to have their taxes increase by $3,300 per year.
As best I can tell, the author was saying that Lafayette is spending only $150 / ($3300 + $150) =~ 4% of what it needs to spend to maintain its roads and drainage systems. That seems implausible. I wonder whether he has made an odd assumption: "currently, 10% of taxes go to maintenance of infrastructure; thus, if we increase taxes by $3,300, only 10% of the increase will go to maintenance of infrastructure." That odd reasoning might account for his "need to have their taxes increase by $3,300 per year" claim.
It can happend when towns grow quickly and the city sell the parcels for a significant amount of money.
In Denmark parcels are often sold for $50-100.000 in popular areas. This gives the town a significant amount of one-shot money.
If they use that one-shot money for running expenses rather than investments (in e.g. subways), then the town will go bankrupt when there are no new buyers of parcels.
> If they use that one-shot money for running expenses rather than investments (in e.g. subways), then the town will go bankrupt when there are no new buyers of parcels.
This is what happened to Mississauga, Canada (a suburb of Toronto): for the last fifty years builders had to pay developer charges which was used to build the initial infrastructure.
However things were constructed in a typical North American, car-centric fashion. Now that most of the available land is covered in large-plot, low-density housing, they kind of realized the money train has reached its destination and they now have to maintain all of this infrastructure.
The same mayor (Hazel McCallion) was re-elected over and over for forty years, and so the same kind of thinking was perpetuated over that time period because no fresh thinking was introduced and things basically ran on inertia. She is often labelled the "Queen of Sprawl".
There are of course some plots left, and over the past few years they've been building medium-density townhomes, as well as more and more mid- and high-rise towers.
I'm from Germany, 50k seems pretty low for a plot of land. You already pay more like 100k already in the countryside. And then the commune doesn't really make a profit (if they didn't own the land beforehand).
He's talking about accruals based accounting. I'm no accountant, but memory suggests that means adding something similar to [cost of asset / life of asset] to the annual maintenance cost.
Although it is still implausible, it is certainly possible to miss 95% of the cost if they spend very little on monthly maintenance (ie, under-maintain). Then at some point in the near future, the road will need to be ripped up and replaced. Not cheap.
A lot worser. Years long the mobile-posse shouted: 'The roads are runned-down, off! We want you (the Gov) to repair'em!'. And the time came when the government started some infrastructure-programs repairing bridges and -roads (also railroads), but the people were 'unthankful' shouting: 'Now it takes a lot more time to [Insert:Object]-[1]. Under construction...everywhere! we do not like it!', 'Do something!' And a lot more happend to "home" (-;
[1]-[Object.List]: get home; to work, to the shopping center, the Kindergarden, bring the kids to school, find a parking lot... get our everyday stuff done. ^^
The article said about 10% of taxes goes to maintenance of infrastructure. I'm fairly sure that percentage is fixed.
That would be $150 + $330=$480 not $3,450.
That would make the current percentage 150/(330+150) = ~31% not ~4%.
if you assume tax revenue is spread amongst all the things that are needed, then this makes sense. Instead of X number of things getting fully funded, and then roads/sewer maintenance getting a pittance, everything is under funded to the same degree, but everything still gets a little bit of funding.
In my experience, it's because people in the middle of nowhere are allowed to vote on infrastructure projects. They claim they don't want "their tax dollars" to pay for "them city slickers." The important bit they conveniently leave out is that cities majorly subsidize rural living through taxes.
Local and State elections in the US are usually overwhelming dominated by larger cities and counties.
There is local representation but in many states legislative districts are allocated by population not geography so often areas with higher population density have more control.
And, State-wide elections, such as, Governor, Attorney General, state supreme court justices (where elected, such as, WA), initiatives, referendums, and so on, are often dominated by the high population centers.
It's my understanding that relatively few people live out in the boondocks. Is that an incorrect understanding? In a democratic system, how could such a small population be at fault for preventing infrastructure spending in population centers?
Is Chicago really that much worse than other similar cities like milwaukee or minneapolis? whenever I go to those (which, to be honest, isn't often) the streets don't seem _that_ much better.
Freezing temperatures, salt, snow plow usage, heavy vehicles and more road usage, and inability to fix properly due to heavy road usage would explain that.
All of our major systems: from infrastructure to employment to graduate work, is built on the assumption of eternal exponential growth. All of these past infrastructure decisions would've been fine if we continued to have exponential economic and population growth. More taxes/funding would come in and there'd be new money to continue to grow forever. Except it can't grow forever. Eric Weinstein coined the phrase "Embedded Growth Obligation" (EGO) to describe this phenomenon.
>"An embedded growth obligation is how fast a structure has to grow in order to maintain its honest positions," Weinstein says. "If you have a situation in which you have trial lawyers and they're supported by various associates, and the associates all want to become partners and trial lawyers themselves, then what you have is a situation where the law firm has to grow at a very fast clip if all those people are going to be satisfied with their job decisions. Well, very quickly that ability to grow runs out, and then people want to know, "Why am I stuck in a position going nowhere?"
I really don't think this is the case here. Cities like Lafayette are just plain inefficient, and the inefficiency scales with growth: the more growth you have, the more sprawl you have, which means the more expensive things are, which leads to more inefficiency. This is probably one of the forces constraining the growth of cities like this.
The problem with most of suburban America is that it's completely unsustainable. Almost all suburban cities in the US require a constant injection of Federal funds to maintain infrastructure. Most people don't realize this because it's really something politicians score brownie points for, hence the accounting subterfuge they engage in (as mentioned in the article), as do most small cities in the USA.
We have no idea how long this Federal subsidy will be maintain, making it difficult to plan for. So many Americans want this idyllic, unsustainable suburban life-style that no politician will keep their job if they try to "take it away" (read: address the issue). But the longer we wait to build more sustainable cities, the worse things will be during the inevitable implosion.
America needs to be building medium-density, car-adverse cities now. The country can't afford to continue subsidizing driving to the degree that it has post-WWII. If this doesn't happen, most of the country is going to enter a serious depression.
The trick here is the federal government invests in this infrastructure using debt/bonds. The expectation is that there will be a return on this investment. Jobs are created or whatever, there's future increased tax revenue. Now you have more money to maintain the old infrastructure and/or build new. The fact that in this case the debt is incurred is at the federal level doesn't change the system. It's expected to result in greater federal taxes in the future.
This was a good explanation of why US cities will never be able to cover their infrastructure maintenance costs.
The town I live in recently completed a $20mil sewer treatment plant and is in the process of beginning a $2mil+ project to replace the water lines.
It has approx. 1,600 residents, although the neighboring town is a customer of our sewer plant and they supply our drinking water (even though we are on the river).
I believe, as an investor of municipal bonds, the tax liability is eliminated, so this may be a reason this type of investment is ‘pushed’.
Municipal bonds are barely above the inflation rate. Split what 1,600 x2 = 3,200 ways a 6,250$ per person investment at those rates really isn’t that expensive. It’s roughly what everyone building a septic system would cost. Especially, if it’s sized with the expectation of any kind of growth.
>>> Especially, if it’s sized with the expectation of any kind of growth.
I don't think that most villages are growing. They're usually shrinking slowly as the old inhabitants die and the young leave to cities to find work. It's quite risky to go big and plan for growth when the taxpayer base is likely to shrink 10 years from now.
Why don't we just stop building all this infrastructure, and move to a micro-community or individual model?
My parents' farm is on a well and septic, and a dirt road. Water purification is done with a UV filter. The infrastructure costs are almost nil.
We are in an age now where houses don't even need to be on the power grid -- a set of solar panels and a lithium battery makes traditional power distribution obsolete.
If it costs a typical suburban house $10k a year to maintain infrastructure, that's outrageous. Move to individually or community based infrastructure.
I'm not talking about everyone moving to the country. I'm talking about localizing power/sewer/water infrastructure in medium density areas like suburbs. If you read the article you understand that its the suburban sprawl that is the expensive areas to maintain. High density downtown cores fund themselves just fine.
> My parents' farm is on a well and septic, and a dirt road. Water purification is done with a UV filter. The infrastructure costs are almost nil.
How well would such a thing scale, though, especially in a suburban/urban setting? IIRC sceptic systems need a certain amount/type of land to drain correctly, so that wouldn't work particularly well outside of relatively rural areas. Wells might not work beyond a certain population density due to insufficient groundwater recharge rate. And dirt roads still would require maintenance, especially if you want to support nontrivial traffic levels, not to mention relatively high-speed travel.
> Wells might not work beyond a certain population density due to insufficient groundwater recharge rate.
Isn't agricultural irrigation the largest source of groundwater depletion in places where it's an issue?
I believe basically all water here in Iowa is pulled from groundwater wells. I've never heard of it being something anyone was worried, but we also don't irrigate fields like they do in the Western states.
The main issue I hear about is people worrying about farm chemical runoff getting into the aquifers.
Yeah that's what I'm wondering... could decentralised water/power/sewer distribution scale? Like maybe not EVERYBODY has their own well/septic, but maybe every 5 houses or whatever share one?
I'm not sure this is practical. You can't have wells and septics at high density, though you could probably localize certain things more than they are now.
Cities, small towns and rural locals have different costs. Rural areas maintain more kms of road per home, for example. Power/Data lines also cost more per home. Maybe these won't be necessary in the future, but they are for now. Obsolete is a strong word, still.
Like you though, the $10k price tag seems high to me. Is it really this high for the right reasons?
But its not the high density that's expensive (the downtown core is actually the profit areas), its the medium density with sprawling suburbs that is what us so expensive to maintain for the very reason that localized infrastructure may work -- space between homes.
Is well water available at sufficient quantity and distribution for this to work? Lots of large population centers get their water from lakes or large rivers. If you disperse the population to the surrounding areas, is there enough ground water or small rivers nearby to sustain an ultra dispersed model? Or would you still need small scale infrastructure?
Similar question with dirt road - how long is the dirt road before it reaches a non-dirt road? How much traffic is on it? If you dispersed a major population center this way and still needed to deliver groceries and ship out garbage and septic, how quickly would any given segment go between needing to be regraded?
The 10k amount doesn't come about because they built a large community and infrastructure. It came because they built their large community in an unwise manner resulting in high infrastructure cost. While moving to individual or smaller communities reduces to possible scope of screwing up your planning, it doesn't reduce your ability to screw it up.
Because it's completely orthogonal to the original arguments. Infrastructure is more than sewer systems, roads for example. Moreover everyone moving to septic tanks is a non environmentally friendly solution, and where are you going to bring the waste when the tanks have to be emptied (they need to be pumped out regularly), who is going to pay for that infrastructure?
Let's not even start on the argument that not everyone can and wants to live on a farm. Also rural living is probably the most inefficient when it comes to infrastructure.
This is addressed in the article: federal programs promoting infrastructure growth provided the funds. Building new infrastructure generates lots of short-term income to a city in the form of sales tax, permit fees, etc. It's harder to plan for the ongoing maintenance for these projects.
Of course we should build less of it, but we can't unbuild what's already been built, and we can't account for city managers who aren't aware of this future problem.
If someone can solve the problem of the future being here, but being unevenly distributed...
Hot take: Its mostly just car infrastructure thats the cause of the problem. We spent way too much money for a large car-centric transport network that doesn't scale. Stop subsidizing and prioritizing cars as a primary form of transit and you fix most of the issues.
I worry that, culturally, we're too far gone. I, personally, hate driving in any place that's "downtown" by any measure. It's stressful, slow, the streets are never laid out in a sane way, etc. Kansas City, MO has a streetcar that runs north-south through a lot of the downtown area so that I can park in what city-dwellers assure me is "not downtown" right next to the northmost stop, then ride the streetcar to all of the attractions that are in the main night life district.
It definitely takes ~10-15 mins longer than if I just drove, but goodness it's just so much more enjoyable. I get to sit and look around at the city I'm in instead of focusing on driving.
I've dragged quite a few friends and family along and most people don't like it because:
1. it takes longer (have to wait for transport to arrive, it makes stops you don't need)
2. "iffy people" are on the streetcar
I laugh a bit at #2 because compared to almost any other non-car transport in the US I've ever seen, the occupants of the streetcar are just comically gentrified. Yeah there's one guy who's probably homeless, but everyone else is clearly out for a business dinner or a bunch of yuppies all dressed up to take the family out to dinner, and so on.
Thanks for bearing through me with this anecdote. But I hope it demonstrates two issues:
1. americans will put up with a lot if it makes their trip any amount shorter
2. americans vastly prefer to be annoyed and in control, versus less annoyed but not in control. e.g. they prefer car traffic where they're "in control" (can honk/drive aggressively?) vs waiting for public transport to arrive or waiting at stops they don't need
3. americans associate public transport with lower classes, the poor and homeless.
In my (US) city, they put in a bike lane along a street downtown with a lot of restaurants. It used to be a two-way street, now it's a one-way with a two-way bike lane taking up the rest.
People I work with argued that it was a bad idea because the restaurants would lose business because now there is less parking, and it just blows my mind that not being able to park directly in front of a restaurant is a deal breaker. Isn't the whole appeal of a city's downtown area to walk around a bit and look up at all the skyscrapers?
Your anecdote reminds me of my experience in Salt Lake City. When I lived and worked in SLC back during the mid and late 90s, light rail was being proposed, especially with 2002 Olympic Games bearing down. Politicians proposed a simple north-south grid with some east-west connections. Well, the residents were up in arms! How dare you take away our right to driving in heavy traffic on i15. Fast forward 18 years and light rail has been such a huge success in SLC, people have fought for a spur to come to their neighborhood. This is another example of an infrastructure project that was good for all, not just a few profiteering politicians and contractors. Say what you will, but those Mormons know how to manage their municipalities (no offense to people of the LDS Church).
Readit News
This is the lens through which Strong Towns views the country's cities. It's a useful model that explains a great deal. It's also falsifiable.
The growth Ponzi scheme hypothesis says that the source of America's infrastructure problems is subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure. The outcome is always the same: infrastructure that can't be maintained because its costs were never accounted for.
The Strong Towns website is chock full of examples, and Lafayette LA is just one. At this point if you live in any US city it seems pretty likely that you'll find a Growth Ponzi at work.
Also, that 3D map should scare the liver out of local politicians.
The same thing is happening right now with EU grant money given for "development" to some of its Eastern European members. Lots of mayors and local officials use that money for grand local infrastructure projects for which they won't have any reasonable money to maintain even in the near future (let alone 30 to 50 years from now), because we have a numerically declining tax-base that is getting older and older (I live in one of those Eastern European countries).
But mentioning that issue gets you labeled as a person "against progress" or an anti-European (or worse, a Russian shill who doesn't trust the European project). We have a saying in Romanian that roughly translates as: "you should stretch out only as much as your blanket allows you to", i.e. one should only consume the resources he/she thinks are reasonably available to him/her, but right at this moment we are "stretching out" further than the bed itself and getting out of the bedroom altogether.
How your government allocated the funds was your governments doing, but the money that was sent to Estonia has been invested and that’s what it has been... an investment.
Any investment that does not yield returns that cover its costs is failed.
Infrastructure facilitates so much of what makes up society that -not- having it can be much more costly than having it.
But in those cases it doesn’t it’s because government corruption or ineptitude has eaten you from the inside.
Routing it through a company that pours a bunch of concrete is just the cost of keeping Brussels off your back and thus keeping the tap open.
― Kurt Vonnegut, Hocus Pocus
All post-Communist nations tend to struggle with the idea of diligent upkeep / maintenance of publicly owned things. In fact, I would say that visibly older, but well maintained infrastructure is a great indicator of good governance.
The attitude is slowly getting better, but aging of our countries will probably exacerbate the problem again. It is not just disappearing tax-base, but disappearing skill-base that comes with the common job market. Like, finding a competent tradesman is visibly becoming harder. Why should they even stay in the country when they can earn more in Germany or the UK.
When I emigrated to Poland in 2005 (from the US) driving between Krakow and Gdynia at never more than 15% over the speed limit of 90 km/h (the average speed everyone else is travelling at) (but often under 90 km/h due to many lorries on the road, tractors, accidents, people in elderly Fiats, elderly people in Peugeots/Fiats/Polonez/etc) with three 15 minute stops the driving time was about 10.5 to 11 hours. Now it's about 7 to 7.5 hours (two stops, not three, and usually driving right at the speed limit).
The change is because of the introduction of the proper A1 motorway. Two lanes each direction and, most places, rated for 140 km/h.
I should note that the "proper" A1 isn't yet complete. There's no A-class motorway between Krakow and Czestochowa though it's being built and should be complete in a few years.
Maintenance on the thousands of kilometers of motorways (and highways and smaller roads) will undoubtedly be a significant expense in the future. But those roads allow for a staggering quantity of goods (and people) to be moved about quickly, safely, and inexpensively (even accounting for tolls). I doubt that our current government is setting aside money for maintenance for all of that but the potential incompetence of today's government shouldn't be a reason not to do something that will have ripple effects for decades.
I feel like post war the US made a lot of extravagant speculative bets on infrastructure, particularly related to suburban housing development.
And the world does prove it false. If you look at municipal budgets infrastructure is usually around 10%. There isn't one out there that spends a majority of their budget on infrastructure. The expensive things are cops and schools and fire and other labor intensive services.
The municipalities that have gone bankrupt the issue has almost always been an inability to pay pensions. With the other ones caused by financial fraud and/or mismanagement.
For the life of me I can't understand why people keep posting this Strongtowns nonsense. Their core hypothesis is easily probable wrong and they post the silliest numbers. Like this one pegs Lafayette's infrastructure replacement at 32 billion. Yet Lafayette's entire budget is only 0.6 billion. Since they haven't spent the entire budget for last 50+ years on infrastructure that 32 billion is obviously nonsense.
> If you look at municipal budgets infrastructure is usually around 10%.
The article says exactly this.
> There isn't one out there that spends a majority of their budget on infrastructure.
So what you're saying is that the city doesn't spend what it would cost to actually keep up with maintenance. They're saying exactly the same thing. Unless you think that the city is pocketing billions in profits from unspent tax money (they aren't), it's hard to see how they could possibly spend more on infrastructure without majorly cutting other services and/or taxing more than the people can afford, which is the premise of the article.
> The expensive things are cops and schools and fire and other labor intensive services.
These costs scale most directly with population, not land area. You'd have these same expenses if the city were built such that the road infrastructure cost less to maintain, so pointing at them makes no sense.
> Like this one pegs Lafayette's infrastructure replacement at 32 billion. Yet Lafayette's entire budget is only 0.6 billion.
The article is about how Lafayette cannot keep up with maintenance because it would cost too much. Literally exactly the same thing as what you just said, and yet your conclusion is that they have it wrong? Why?
This is my first article i've read by this company and it didn't really seem to have a conclusion besides spreading obviously false data.
Louisiana population 4.65M
Lafayette population 126k
Miles of road in Lousiana: 130k (https://blog.cubitplanning.com/2010/02/road-miles-by-state/)
Assume Lafayette's share of road miles is proportional to population, and you get around 3500 miles of roadway around Lafayette. Minimum paved road construction cost is ~$2M/mile, according to https://www.artba.org/about/faq/#:~:text=Construct%20a%20new....
So a very conservative road replacement estimate for Lafayette is about $7B, and that's just the roads. The Strongtowns figure may be off, but it's likely the right order of magnitude.
Believe me or not, this to an even bigger extend plagues China.
I think more than half of major cities in China are fully consciously running a Ponzi scheme with their own land leases, as they have really no other revenue source to sustain them long term, and this is why they are ready to go to any extremes to do this.
Effectively, private loans are financing municipalities through overpriced land leases. Everybody who ever dealt with real estate in China will tell that land auctions are rigged using every trick imaginable.
This feels like looking at a company by division and deciding that R&D and HR a make huge losses and all the profits are in sales.
The article’s main thesis is that these poor areas have the best ROI for development.
The main issue is that free parking lots associated with big box stores are incredibly unproductive uses of land, and the tax value of the property reflects that.
That doesn't follow from your quote. The quote says that the problem is that those subsidies were used for horizontal development (i.e. sprawl), which rapidly expanded the infrastructure. You are correct that future maintenance wasn't budgeted, but if the city had expanded vertically (i.e. denser urban cores), the infrastructure costs wouldn't have risen quite so dramatically.
[1] https://www.strongtowns.org/journal/2017/1/10/poor-neighborh...
Are you familar with the concept of the Big O notation [1], which computer scientists use to (more or less) describe the "growth" of their algorithms? E.g. when you compare something that growth quadratically O(n²) to something that only growth linear O(n) you will see, that at some point the quadratically growth will grow faster as the linear growth. Forever! The linear growth will never win.
Comparing this to the horizontal sprawl of a city is easy. The area of a city is planar which is mathematically described as quadratic O(n²) but the average growth of the domestic product is just linear O(n). Assuming the maintainance cost of a planar sprawling city growth quadratic while the domestic product only growth linear then the costs will win over the income. Forever!
The conclusion is to limit the horizontal sprawl of a city to linear growth. This means every new house, street, rail road, pipe system, power line and so on must be build inside a diameter to the city's center with a distance which is logaritmic O(lg(n)) on average. The rest must growth vertically.
[1] https://en.wikipedia.org/wiki/Big_O_notation [2] https://www.statista.com/graphic/1/268750/global-gross-domes...
While this seems like a ponzi scheme of perpetual growth, there is nothing that would prevent the federal government ( or the local government ) from repeating this exercise to rebuild the infrastructure. If we can't redo this exercise it means that
- Despite economic growth, the cost of replacing existing infrastructure is higher than it was a generation ago e.g. Cost disease: https://en.wikipedia.org/wiki/Baumol%27s_cost_disease
- The balance of payments in the economy is not well calibrated on a generational scale, profitable economic activity is not attributed on a local scale with free cash flows diverted elsewhere by rentiers/global financial flows e.g. a factory in annaheim california sees all profits recognized in Delaware/Ireland. The federal government/central bank may have more capability to provide local governments with finances than we would expect in such a scenario by rebalancing payments.
- The current US city landscape has real long-term economic costs that drain capital on unprofitable activities, immediate pivots in city planning are required to avoid economic fallout.
I suspect a little bit of all three options are at play, but I would be curious for more exploration on items 1&2. A great irony of the modern world is that the City of Flynn borders several pipe manufacturers.
It did not, this is completely false. Federal government by and large didn't fund local roads and sewers. Federal government did often help with interstate highways and large water works, but those would be built just the same even with the Strong Towns preferred high density development model.
By the way, the money that federal government spends is not created out of thin air. It comes mostly from federal income tax, which is overwhelmingly paid by the people living in exactly the kind of suburbs Strong Towns hates.
Keeping roads in shape for multi-ton vehicles to barrel down them is expensive. Keeping them in shape for humans, not so much.
I like that you used the phrase "accounted for". It implies in my mind that the politicians doling out the cash did not monitor how that cash was used.
In management-speak, it's the classic phrase "delegation without follow-up to abdictation"
I initially thought about it in terms of accountability "the lower levels should have wrote down their expenses, their decisions, and sent it upward for review" but then I thought "why would most people do that if the people at top aren't mandating the record-keeping, let alone looking at it?" The higher levels didn't attach real strings to the funds and only kept abreast of developments by looking at the end results. Which were positive and attractive, but camouflaged very real deficiencies in the system that produced it.
It's plain irresponsibility.
This is pretty clearly false; the main cause of infrastructure maintenance neglect is that politicians, like many leaders in other fields, get more career boost from new projects than making sure existing things are maintained. That's true from top to bottom.
There's policy contributions (e.g., California Prop. 13 makes local jurisdictions dependent on development fees and other growth-related revenue because property taxes are limited to a low nominal level and decline in real terms as property is held because of the limitations on assessed value increases to significantly below the historical average rate of inflation), but new-project subsidies aren't a root cause but a symptom of the cause which would exist even without the subsidies.
Here's another one. In Seattle, the city has seen enormous growth in tax revenue, far outpacing population growth. But the money just seems to disappear. Where it's going are public employee pensions, which were enacted long ago by politicians to garner the support of the unions. But the math on these is unsustainable and a looming crisis, but the politicians couldn't care less as the bill was far into the future and the election was just around the corner.
I think the “public vs private” take is a false dichotomy. I think there is a decent amount of evidence to show this short-term biases are a general human problem
Municipal bonds are almost like student loans in the US.
Like student loans, easier access means they can charge more.
Wake up to the developer perspective.
There was a Subway station called Runnymede that took about 5-7 years and when completely you couldn't tell they did anything. I am sure it cost 10's of millions of dollars and could have been completely started and finished by a private contractor in a couple months.
The city has never been manage properly because there are no consequences to the ineptness of the Politicians and bureaucracy that run it. You could complain (a lawyer friend did) and they basically either ignore or make up some story how difficult it is to lay 200 sq/ft of tile and clean an escalator...These things take years of hard work and planning....
Surprised the city doesn't come crashing down under it's own weight of dysfunction but they seem to prop it up by the endless tax or fee increases.
If an escalator/elevator is shut down for a few months (or years) due to refurbishment, it's because worn, but vital, parts of it have been removed for use as reference materials so replacements can be made. It is also possible that vital parts could be too worn for the escalator/elevator to operate safely until new parts have been made and installed.
I'll also point out that published information on the Runnymede project indicates that the current round of construction started at the end of 2018, involved the addition of three underground elevator shafts, and is expected to be completed at the end of 2020[0]. Unless you are referring to earlier work, your '5-7 year' timeline to 'clean an escalator' is a vast exaggeration.
[0] http://ttc.ca/Service_Advisories/Construction/Runnymede_EA.j...
I’m sure there’s bureaucratic inefficiency. But there’s always so much nonsense that gets appended to the criticism.
Drilling shafts and installing new elevator is a bit more than a "simple renovation" IMHO.
https://ttc.ca/Service_Advisories/Construction/Runnymede_EA....
And that assumes that they're not doing structural fixes for a station that was built >50 years ago (Line 2, B-D, opened in 1966).
* https://en.wikipedia.org/wiki/Line_2_Bloor–Danforth
This most likely happens because of insufficient government funding for maintenance.
Government budgets reset every year; governments can't take unspent program money at the end on one fiscal year and bank it for next year. There is no way to "save up" for big expenses aside from directly allocating sufficient funds in the funding legislation.
That sort of lump allocation is a lot easier to get for new work. The main reason is, new work has better optics--you go from nothing to something. Maintenance, unless it changes the cosmetics, looks about the same at the end as it did in the beginning. Boring! "What did we get for all that money??" citizens ask.
And maintenance is harder to budget for in a lump sum because you don't know how bad things are until you actually start the work. This is generally true of maintenance--anyone who has renovated an old home knows this. Until you open the wall, you don't know how much work needs to be done.
So what you do in government is start the maintenance projects you have at highest priority, find out how bad things are, and then do as much as you can with the budget you have. It it's not enough to complete an atomic unit of work, you just sit on partially-done work until more money becomes available.
And ironically, the irritation caused by unfinished work can help get you the money to finish the work.
If maintenance was properly budgeted, then the subway system could afford to do a full refresh all in one continuous go. Usually it's not, so usually they can't.
Most of the housing in smaller cities is getting very old, built to very poor standards. Requiring constant maintenance. The owners often still stuck in 25 year mortgages, fixing houses that will fall apart in less time than that.
Many of Schools haven't been updated in decades, despite having asbestos insulation.
I visited a former Eastern Block country this past summer. New roads, infrastructure and buildings everywhere. Built to a much higher standard too. Much better food in Restaurants too. Thinking of moving back to Europe.
Considering the 300 billion deficit this year alone, declining credit ratting, higher taxes. The money for infrastructure will be hard to come by in the next decade.
Cost of land is a surprisingly high factor.
I'm generally against eminent domain. Because it's abused so easily and so often. But I would also like the option to build our way out of our messes.
Failing to make the real estate more affordable, maybe we'll innovate our way out. Some combination of telework, The Boring Company, and cheap personal transportation options.
The answer is always the same for local governments. ~70% of expenditure is for operations, and 60% of that is for cops and fire.
Counties, corporations, charters, port authorities, states. I couldn't guess at all the structures and financing schemes that have been concocted.
For instance, Port Authority of NY and NJ builds, owns, and operates a massive amount of infrastructure. Completely apart from NYC. The Port Authority in my own region is its own separate nominally democratic fiefdom with its own powers to raise taxes, fees, etc.
"The problem" is whatever the problem always is. Maybe its Capitalism. Maybe its "kickbacks, overregulation, collusion in bidding, and simple "match the budget" bids" It's probably whatever your worldview always points to.
The winner completed it far faster than similar projects, and under projected budget, taking it all in from the bonus. Every day he was slow, he lost money. So the incentives were great, and the winning contractor did a great job. So we have the construction technology and we have the policy technology.
But similar projects frequently take forever. Why is that? We know how to make them fast, cheap, and good, clearly. We know how to set up the incentives on a per-task basis so we will do that as well. So I suspect it is because they actually aren't crucial. So you sell the buyer (the populace) on the price tag based on the supposed importance, but you actually do the work on the real importance. The gap between the two allows for profit for politically connected contractors like Tutor Perini and also for make-work for powerful groups like construction unions. What we don't know is how to set up the incentives such that good per-task incentives will be put in place.
In fact, I'd say that the true importance of any slow project is likely very low. In California, the following projects should not have started:
* CA HSR
* SF Central Line
During their lifetimes they will not yield positive economic utility.
Maybe we can create a marketplace for bidding on infrastructure work job by job and maybe, it could be profitable for everyone. I’m not so sure though.
Sum($Z) >> Sum($Y) with $X paid for my subsidies.
We need construction robots.
But how they get the money and from who is a factor too.
This always happens when real property is taxed rather than commerce, and the amount of land available for development is limited or fixed.
To start with all land is taxed according to its initial assessment, after that revenues can not increase without raising rates and/or further developing parcels to increase their taxable value.
Both of which are unsustainable in the face of any inflation at all.
Each of which have their staunch supporters at odds with the other.
If only rate increases are considered, rate increases will have to outpace inflation or the taxing authority will go bankrupt.
The taxing authority can not be allowed to fail especially since the original purpose of this type tax is for the taxpayer to go bankrupt before the nobility does.
Eventually the _landowner_ will be assessed more tax than the land itself brings in, and will require _owners_ having outsized wealth from other sources, often only multigenerational prosperity will be sufficient.
At the other extreme where revenue growth comes only from further property development, pressure is greatest on undeveloped properties having the biggest upside potential.
New infrastructure is built at the expense of the old, spread more widely, and naturally not yet having future inflated maintenance costs incurred.
Little hand-waving is needed when a tax payer & collector are all prospering over the deal in the short term and there is some plausibility to behave as if future prosperity for all taxpayers will increase at the rate enjoyed by those involved with the development. Surely making costly things easier by then.
Inflation makes it impossible to know for sure anyway.
Mix and match these growing costs across citizenry which is not becoming more prosperous, and eventually there is no discretionary wealth except among the few who overcame the inflationary toll.
Taxing commerce instead of property allows revenue to grow at the rate of real prosperity unlimited. With the risk that revenue will drop when prosperity drops, or the authority will go bankrupt at the same time as the general citizenry in such a case.
Not a realistic risk since the authority will have enough credit to delay its own bankruptcy until after the majority of the citizens are ruined.
I guess the point of view about what kind of tax could ideally fund infrastructure indefinitely depends on whether you are a lowly taxable subject or a high-born guv'nor.
As best I can tell, the author was saying that Lafayette is spending only $150 / ($3300 + $150) =~ 4% of what it needs to spend to maintain its roads and drainage systems. That seems implausible. I wonder whether he has made an odd assumption: "currently, 10% of taxes go to maintenance of infrastructure; thus, if we increase taxes by $3,300, only 10% of the increase will go to maintenance of infrastructure." That odd reasoning might account for his "need to have their taxes increase by $3,300 per year" claim.
In Denmark parcels are often sold for $50-100.000 in popular areas. This gives the town a significant amount of one-shot money.
If they use that one-shot money for running expenses rather than investments (in e.g. subways), then the town will go bankrupt when there are no new buyers of parcels.
It's somewhat like a ponzi scheme.
This is what happened to Mississauga, Canada (a suburb of Toronto): for the last fifty years builders had to pay developer charges which was used to build the initial infrastructure.
However things were constructed in a typical North American, car-centric fashion. Now that most of the available land is covered in large-plot, low-density housing, they kind of realized the money train has reached its destination and they now have to maintain all of this infrastructure.
The same mayor (Hazel McCallion) was re-elected over and over for forty years, and so the same kind of thinking was perpetuated over that time period because no fresh thinking was introduced and things basically ran on inertia. She is often labelled the "Queen of Sprawl".
* https://www.theglobeandmail.com/news/toronto/how-hazel-mccal...
* https://archive.is/DpKKp
There are of course some plots left, and over the past few years they've been building medium-density townhomes, as well as more and more mid- and high-rise towers.
* https://www.insauga.com/is-hazel-mccallion-wrong-on-this-hug...
* https://torontostoreys.com/issue-of-the-year-mississauga/
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Although it is still implausible, it is certainly possible to miss 95% of the cost if they spend very little on monthly maintenance (ie, under-maintain). Then at some point in the near future, the road will need to be ripped up and replaced. Not cheap.
[1]-[Object.List]: get home; to work, to the shopping center, the Kindergarden, bring the kids to school, find a parking lot... get our everyday stuff done. ^^
That would make the current percentage 150/(330+150) = ~31% not ~4%.
https://www.sfchronicle.com/crime/article/SF-corruption-scan...
https://www.sfchronicle.com/opinion/editorials/article/Edito...
https://www.kqed.org/news/11839531/report-corrupt-sf-officia...
https://la.curbed.com/2020/6/18/21279345/los-angeles-corrupt...
There is local representation but in many states legislative districts are allocated by population not geography so often areas with higher population density have more control.
And, State-wide elections, such as, Governor, Attorney General, state supreme court justices (where elected, such as, WA), initiatives, referendums, and so on, are often dominated by the high population centers.
California's 40 million people have the same representation in the senate as Wyoming's 580 thousand people.
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The majority of Americans live in suburbs. The majority of counties are rural. https://www.pewsocialtrends.org/2018/05/22/demographic-and-e...
>"An embedded growth obligation is how fast a structure has to grow in order to maintain its honest positions," Weinstein says. "If you have a situation in which you have trial lawyers and they're supported by various associates, and the associates all want to become partners and trial lawyers themselves, then what you have is a situation where the law firm has to grow at a very fast clip if all those people are going to be satisfied with their job decisions. Well, very quickly that ability to grow runs out, and then people want to know, "Why am I stuck in a position going nowhere?"
https://bigthink.com/culture-religion/eric-weinstein-intelle...
The problem with most of suburban America is that it's completely unsustainable. Almost all suburban cities in the US require a constant injection of Federal funds to maintain infrastructure. Most people don't realize this because it's really something politicians score brownie points for, hence the accounting subterfuge they engage in (as mentioned in the article), as do most small cities in the USA.
We have no idea how long this Federal subsidy will be maintain, making it difficult to plan for. So many Americans want this idyllic, unsustainable suburban life-style that no politician will keep their job if they try to "take it away" (read: address the issue). But the longer we wait to build more sustainable cities, the worse things will be during the inevitable implosion.
America needs to be building medium-density, car-adverse cities now. The country can't afford to continue subsidizing driving to the degree that it has post-WWII. If this doesn't happen, most of the country is going to enter a serious depression.
The town I live in recently completed a $20mil sewer treatment plant and is in the process of beginning a $2mil+ project to replace the water lines.
It has approx. 1,600 residents, although the neighboring town is a customer of our sewer plant and they supply our drinking water (even though we are on the river).
I believe, as an investor of municipal bonds, the tax liability is eliminated, so this may be a reason this type of investment is ‘pushed’.
I don't think that most villages are growing. They're usually shrinking slowly as the old inhabitants die and the young leave to cities to find work. It's quite risky to go big and plan for growth when the taxpayer base is likely to shrink 10 years from now.
Typically when building a septic system, it is one per household, not one per family member, though.
A family of four does not need 4 septic tanks.
My parents' farm is on a well and septic, and a dirt road. Water purification is done with a UV filter. The infrastructure costs are almost nil.
We are in an age now where houses don't even need to be on the power grid -- a set of solar panels and a lithium battery makes traditional power distribution obsolete.
If it costs a typical suburban house $10k a year to maintain infrastructure, that's outrageous. Move to individually or community based infrastructure.
How well would such a thing scale, though, especially in a suburban/urban setting? IIRC sceptic systems need a certain amount/type of land to drain correctly, so that wouldn't work particularly well outside of relatively rural areas. Wells might not work beyond a certain population density due to insufficient groundwater recharge rate. And dirt roads still would require maintenance, especially if you want to support nontrivial traffic levels, not to mention relatively high-speed travel.
Isn't agricultural irrigation the largest source of groundwater depletion in places where it's an issue?
I believe basically all water here in Iowa is pulled from groundwater wells. I've never heard of it being something anyone was worried, but we also don't irrigate fields like they do in the Western states.
The main issue I hear about is people worrying about farm chemical runoff getting into the aquifers.
Cities, small towns and rural locals have different costs. Rural areas maintain more kms of road per home, for example. Power/Data lines also cost more per home. Maybe these won't be necessary in the future, but they are for now. Obsolete is a strong word, still.
Like you though, the $10k price tag seems high to me. Is it really this high for the right reasons?
Similar question with dirt road - how long is the dirt road before it reaches a non-dirt road? How much traffic is on it? If you dispersed a major population center this way and still needed to deliver groceries and ship out garbage and septic, how quickly would any given segment go between needing to be regraded?
The 10k amount doesn't come about because they built a large community and infrastructure. It came because they built their large community in an unwise manner resulting in high infrastructure cost. While moving to individual or smaller communities reduces to possible scope of screwing up your planning, it doesn't reduce your ability to screw it up.
Seriously?
Let's not even start on the argument that not everyone can and wants to live on a farm. Also rural living is probably the most inefficient when it comes to infrastructure.
The farmer is notoriously running around the farm fixing shit in between tending to the crop because living off the grid is hard.
Of course we should build less of it, but we can't unbuild what's already been built, and we can't account for city managers who aren't aware of this future problem.
If someone can solve the problem of the future being here, but being unevenly distributed...
It definitely takes ~10-15 mins longer than if I just drove, but goodness it's just so much more enjoyable. I get to sit and look around at the city I'm in instead of focusing on driving.
I've dragged quite a few friends and family along and most people don't like it because: 1. it takes longer (have to wait for transport to arrive, it makes stops you don't need) 2. "iffy people" are on the streetcar
I laugh a bit at #2 because compared to almost any other non-car transport in the US I've ever seen, the occupants of the streetcar are just comically gentrified. Yeah there's one guy who's probably homeless, but everyone else is clearly out for a business dinner or a bunch of yuppies all dressed up to take the family out to dinner, and so on.
Thanks for bearing through me with this anecdote. But I hope it demonstrates two issues: 1. americans will put up with a lot if it makes their trip any amount shorter 2. americans vastly prefer to be annoyed and in control, versus less annoyed but not in control. e.g. they prefer car traffic where they're "in control" (can honk/drive aggressively?) vs waiting for public transport to arrive or waiting at stops they don't need 3. americans associate public transport with lower classes, the poor and homeless.
It'll take a lot of work to flip these around.
People I work with argued that it was a bad idea because the restaurants would lose business because now there is less parking, and it just blows my mind that not being able to park directly in front of a restaurant is a deal breaker. Isn't the whole appeal of a city's downtown area to walk around a bit and look up at all the skyscrapers?