Why Many Cities Have No Money
strongtowns.org
strongtowns.org
Granted it all comes with a slight adjustment to get used to some of the holdovers of life in the USSR, but when I lived in Seattle, it used to be if I missed the bus I had to wait ~30+ minutes for the next one home, and I needed to plan whether I'd take a side trip to get groceries or not, adding an additional mile or two to my walk home. Here it's nice to just be able to walk a few hundred meters at most to the nearest store for groceries.
If only planners, politicians and citizens would realise what they have given up just to make it convenient to drive.
As a 45 year old, it's one my examples of how my elders aren't infallible, don't always have good advice, and have made very poor choices that cannot be unwound except through great expense of time and money. Mistakes have consequences and they can (and will) last generations.
No. Most European countries have been working hard to improve their economy.
Sure, Florence is beautiful and lovable, but I personally like the possibility to also drive to a commercial center, buy what I need for a few days, drive back home and park my car in a closed garage conveniently connected to my apartment via a lift, or my house via a door.
Why? That sounds like hell. If I had to drive everywhere for everything I'd go mad.
https://www.theguardian.com/cities/2015/jul/29/how-groningen...
Mind you, whether or not Groningen is the most bike-friendly city in the Netherlands is largely irrelevant, all of our cities are so even if it was it's not exceptional. It's kind of comparable to how we dominate in speed-skating[0] - from the outsider's point of view it's irrelevant who is the best.
[0] https://en.wikipedia.org/wiki/Netherlands_at_the_2014_Winter...
Before cars and before skyscrapers! The model of town you're talking about doesn't scale well.
when i travel to the cities in the developing countries in asia, and speak to the locals, there's always a sense that they look forward to building their city into something like sydney or singapore. the people elect mayors and governors that promise development towards that goal. most of time, it doesn't go anywhere. what i thought, but did not say, is that these smaller cities don't generate the same kind of revenue that pays for the kind of infrastructure, modern buildings, and diversity in imports that you see in the major cities. To try and pursue that without finding a way to increase the value and productivity of their economy is going to get you in the kind of trouble that you see a lot of these bankrupt towns in the US in.
I think you're discounting the affect that big box retailers have had on rural and small towns in the US. They're often given tax brakes and other incentives to build and then they park themselves right outside city/town limits to avoid any sales or property taxes. They then proceed to drive every small business in the town out of business. As shops close down, fewer people go into town which the impacts other shops and gradually the entire town shuts down. To add to it, the big box retailers will often have leased space in the front of their stores where small businesses that they don't directly compete with can take up space. These businesses were probably the remnants of what remained in town but moved to where the people are.
You can see this in many towns if you drive across the Midwest. You'll see a "Welcome to <town>" sign, then drive through an abandoned town, then you'll see a "Thanks for visiting <town>" and then a massive super store with a filled parking lot.
The old-style downtown shop simply can't handle large products in a reasonable way. Since it can't, people get used to shopping at places that can handle everything.
The exurban paradigm that is now standard even in very small towns is just incredibly costly, miles of pavement, huge parking lots that cause stormwater problems, for a very low density of tax base.
What's so surprising about it? You work (and produce) in the overcrowded center and then go back to a nice suburb for the evening.
Most of Europe is pretty walkable and it doesn't have that 'planned' look either.
I don't know anything about Bend, but speaking generally ...
There are many ways that markets are inefficient and flawed; I wouldn't assume they would yield a good result. For example, the barbershops may be incentivized to push the parking costs onto others. It may be that every business has that incentive, nobody wants to pay for other people's parking, and thus nobody makes the first move. In situations like that, people succeed by coordinating their activities through democratic government and laws.
People living in cities, elbow-to-elbow and sharing large numbers of resources (such as parking), may need to coordinate more than people in rural areas.
Also, as they say, don't tear down a fence until you know the reason for which it was built. It's like that odd, useless-looking bit of code in that old application - maybe do some research before you delete it.
Realistically speaking, the barber shop could only really push people to park:
* On the street. And you know what? That's fine. If the street was built to have parking, and people are parking there, it's not a problem. It might be more of a PITA for the clients. If it's too much of a PITA, the business may suffer. But that's how markets work.
* In some other business' parking spots: that can easily be solved by other means, rather than having city-wide laws covering all barbers in the city, some of which may cater to hipsters riding fixies who do not need car parking, and others who have elderly patrons who will not tolerate being forced to walk more than they absolutely have to.
I'm not a "markets solve all the problems kind of guy" because externalities are real things. But I feel that our cities are way too regulated. Zoning didn't even exist in Bend until 1947. Some of the first zoning regulations didn't come about until the early 20th century in the rest of the US.
How would we react if there were a "planning commission" that dictated how much of each kind of restaurant (Vietnamese, Mexican, Burgers, etc..) at what kind of price point could exist in a city? Zoning should be to keep truly noxious things away from where people live, not to keep duplexes away from single family homes, or barber shops outside of residential areas.
Maybe there aren't enough street parking spots for all the businesses, and then the market fails: No business wants to spend on on-site parking in order to free up parking for everyone else. The way to move forward is to come together and pass a law.
> Zoning didn't even exist in Bend until 1947. Some of the first zoning regulations didn't come about until the early 20th century in the rest of the US.
I'm not sure that means anything either way. Baseball didn't become desegregated until 1947 either. Is there something suspect about advances or changes in society that are recent? Did humans live better before 1947?
> I feel that our cities are way too regulated.
With due respect, this is too easy to say without evidence, is too general to have much application, and it has become cliche to say it about everything. In what ways are they too regulated, and in what ways not regulated enough? Do you have anything to back it up? How much regulation is just right?
> How would we react if there were a "planning commission" that dictated how much of each kind of restaurant (Vietnamese, Mexican, Burgers, etc..) at what kind of price point could exist in a city?
Vote them out of office? Appear at the planning commission meeting? Organize restaurant owners and talk to elected representatives? Democracy is a proven, effective tool. Case in point: I haven't heard of your hypothetical extreme scenario happening.
When I was born, Bend was still a wood products industry town based around logging and the local mills. These days, it's trying to develop a high tech industry, and doing reasonably well at it for a small-ish town. Places need to adapt, and rigid zoning is probably detrimental to that adaptation. Markets take in everyone who lives, or wants to live in a place. Planning commissions, or even city councils, have just a few people with their own ideas of "how things should be".
In terms of how they're too regulated, sure:
http://marketurbanism.com/2016/09/06/shut-out-how-land-use-r...
https://www.washingtonpost.com/posteverything/wp/2016/10/04/...
https://www.nytimes.com/2016/07/04/business/how-anti-growth-...
https://www.washingtonpost.com/news/wonk/wp/2016/08/10/why-c...
And Exhibit A: the market for housing in the San Francisco Bay Area, which is completely batshit crazy because of the refusal to build housing.
Or it could be parking is a low value land use and little parking is truly optimum. Oftentimes when streets are closed to car traffic permanently there's a boost to business in dense cities.
Many cities don't have parking minimums and they have minimal parking but yet function well. Manhattan for instance is like that.
I lived in Japan and I don't think auto centric Okinawa where I lived had Parking minimums. It had less parking, but from what I recall more private paid lots and higher utilization (no seas of unused parking because a random bureaucrat decided malls needed exactly 2.5 spaces per 1000 square feet).
>Did humans live better before 1947?
In some ways, yes. There were obviously planning failures, but mostly zoning was put in place to exclude the poor and minorities without passing an explicit ban. Just build a place they can never afford and it'll be all great, or so they thought.
IIRC a majority of wealth inequality is due to housing costs. These zoning laws prop up the cost of housing and make it more and more difficult for the young to buy.
Used to be you'd have like a 5 or 10 year loan to buy a house, which might cost 3x the average salary. Not anymore.
>Do you have anything to back it up?
You can compare US zoning with that of other nations and compare cost of housing, transportation, and other metrics.
I think you'll find that on many metrics we do quite poorly.
Also: mobility is decreasing as the cost of housing has increased, which in turn has GDP growth ramifications as workers cannot seek out the highest paying jobs.
This is why some countries like Japan handle zoning at the national level.
>Vote them out of office
Good thing in many cities these planning guys are unelected. Voting out, say, the mayor or city councilman is also ineffective as a majority would be needed.
Incentive wise it's in each district's best interest to ban new housing as that gives land owners more and more money as the population rises and chases the same housing stock.
Add in rent control and rent stabilization and a slim majority are incentivized to keep things as they are.
>Democracy is a proven, effective tool.
Democracy is effective at not rounding up dissidents in secret police raids, but in cases like this it breaks down. Zoning acts as a ban on people, and those people can never become voters, thus perpetuating the system.
Choosing the voters is almost as good as not having a vote at all.
I like to remind budding conservatives and libertarians that the free market is an ideal, not a mandate. The situation you describe is one that it perfect to be handled by the market. It's a cliche but it's also true that what matters is "Location, Location, Location". If you locate a business in an area where the people who would normally patronize it do not often travel or where they can't obtain adequate parking, that business will suffer.
That's a bizarre thing to say.
Construction in the suburbs is far more tightly regulated in the suburbs than in the city.
You could easily get the same thing out of a HOA in a city with fewer city-wide rules and regulations.
But that doesn't resolve the question of the supply of parking spaces - i.e., how many there should be. That only allocates the existing ones.
Also, it allocates them to those who can pay more; that's not always desirable. For example, should citizens' access to the grocery store be limited by their ability to pay for parking? To city hall?
You mean others who post "Parking for McDonald's only" on their spots and have a towing service visible?
There are problems that are not pragmatic for markets to solve without a bit of legal rigidity, but the whole "who will build the roads?" seems to stem from a lack of creativity and just overall contrarianism. "Who will build the interstate highway system" is a much more fair question, but I think cities would enjoy a nice efficiency boost from the decentralized, organic growth of a less bureaucratically-planned city (plus fewer budget problems).
Consider the infrastructure costs in the article: Less centralized, less planned cities would, I expect, create higher infrastructure costs as efficiencies of scale, standardization, reduced redundancy, and planning would be lost. Also, different parts of the city would try to dump costs on each other.
As I asked in another comment:
In what ways are they too regulated, and in what ways not regulated enough? ... How much regulation is just right? And: To which cities are you referring? What kinds of cities?
It's too easy to say, 'there's too much regulation'; it's cliche and doesn't really mean anything.
Isn't this just local city government with another name? Well, no. There are significant differences between a city government and an organization of private citizens. For one, it's illegal for Walmart to bribe voters; but a corporation would love to have Walmart 'bribe' its shareholders.
Since I assume the land value of neatly organized sections is higher than that of poorly organized sections, there would be an entire section of the economy that buys up individual plots of land, forms corporations out of them, and redevelops and resells the area.
Also, a common and essential part of the free market is failure and bankruptcy. What happens when parts of the city go bankrupt? What happens to the citizens there? What happens to the debt?
https://www.portlandoregon.gov/bps/article/420062
Paradoxically, during my brief time living in San Diego, the nicest (and most expensive) neighborhoods were generally the ones built before parking minimums, because they were actually pleasant to live in. Newer areas had plenty of parking but nothing to do that didn't involve driving.
After we ditched the planning and switched to market economy, suddenly developers (the ones that make buildings, not code) started building a lot of buildings without leaving a space for either green or parking spots. As a result in the newer parts of the cities we have a very crowded leaving space, cars are parking everywhere, there are few shops, schools are far away etc.
A parking spot is about 30 square meters. 300 square feet. My house is on a footprint of 900 square feet. When you add driveway length, you can see that my driveway takes up almost as much land as my house, and for homes with more than one parking spot in my area, it can take up more than the house.
For businesses, it's even worse. Look at a satellite image of any American suburban area, and start coloring in the parking spots, and you'll be appalled at how much space is taken up by these things.
Look, I know about the problems with car-centric development (I've been a researcher on (urban) land use for over 15 years now). What I'm saying is that the argument the GP tried to make, how Europe is an example of better solutions with less regulations, is wrong. (A) because we don't have better solutions (just different outcomes, the jury's out on whether it's 'better') and (B) because we have just as much regulation.
Those are generally driveways in the US, and are private property: you park your car there, it'll get towed in short order.
Parking minimums are not a thing in large areas of Italy, where I lived. I once lived in an apartment downtown and there was no parking spot included: we walked 20 minutes to a place where we could park. If we had wanted to pay something, we probably could have found a spot that was closer. This is the market at work: we were not forced to pay for parking we didn't really need (we used the car rarely at that point in our lives).
I mean, you'll have to agree with me that if you're holding up Italy of all places as an example where few regulations (and/or lax enforcement) lead to good outcomes, you're really stretching the criteria of what can be considered 'good outcomes'...
The pattern that I've observed in my area (East Germany) is that towns have grown by merging with the hamlets and villages around them. So you can have a rapid succession of relatively loose areas with small houses and businesses (the former village centers) interspersed with large prefab apartment blocks (like those that were built in large numbers in GDR times) in the gaps between the villages.
The only major pattern change after the reunification was the emergence of a lot of small shopping malls that bundle a portion of the shops in each district into one place (usually at an intersection of large streets and tram lines).
In contrast, American cities look more like one big blob that grew out into the vast, empty space surrounding it. Since there wasn't any structure to hold onto, everything turned out much more uniform.
http://www.chron.com/news/houston-texas/houston/article/Weir...
http://marketurbanism.com/2016/06/02/houston-beautiful-yet-p...
But that city also has massive sprawl, so it's kind of tough to point at as an example for more coastal folks. Certain areas may showcase how things could be, but it's still a very car-centric city.
Those businesses don't pay for the parking themselves. The tax payer pays for those parking spots. That's the entire point of street parking, city run parking lots, and the like. Public parking isn't market controlled it's state subsidized. That's why it's called 'public' parking.
Public spots (street parking) might get used by customers of a barber, or by local residents, or by another business. This might prove frustrating to customers of the barber who demand easy parking, and they'll go to another barber who does provide more reserved, non-public parking. Or maybe not! Maybe different barbers have different clientele.
This is something the barber shop ought to be able to decide.
I don't think that's actually true; certain types of developments are required to include parking as part of the development (e.g., strip malls), but the individual businesses, either in those developments or not, are rarely required to have their own parking.
In the US, things get separated out into giant apartment complexes where everyone rents, and single family home districts, where people lose their shit at the mere whiff of a duplex being built.
There are plenty of condo buildings that are owner owned and also rented out! It's just that the USA has plenty of buildings designed for rentals, which is more about the American market than zoning (residential is residential).
The US is "more planned" in the sense that zoning laws are more strict. More lenient policies in many countries in Europe have more thought put into them, but end up being less strict because that's the way to build nicer cities the way people want them.
It's like drugs, and prostitution, and all of the many things that seem so trendy to want to 'free' from government these days. On paper, the ideas look fantastic and efficient. That is, until a 24-hour strip club / pot dispensary opens across from your kid's elementary school.
Government sucks because it is by nature design by committee. It's inefficient and ugly. Yet, what's the alternative? Maybe AI at some point, but until then we have either collaborative government or authoritative.
But back to the article. One thing overlooked is the pressure on city officials from developers to get rezoning rules waived. And, there's often a lot of corruption in that process, also. For instance, most cities know that residential units cost more in services than other units. And, usually the taxes are structured (too low) such that the residential tax is insufficient to pay for the supplied services. The city planners know this and they account for it in their zoning plans. But, the developers later pressure cities to allow rapid expansion of residential. And, ultimately the plans become broken by too many new units.
Some people don't want free markets to be a force in their lives - pushing up against their personal preferences. And, those people have as valid of a position as those that do, particularly when in a community of like minded people. It's ironic that libertarian minded people try to wash away this fact - some communities want central planning and zoning, and others don't.
People fail to see the basic premise that you cant really have both, plenty of parking and lower rents. They go hand in hand.
Proof: Palm Bay, FL (got parking and low rent, and even has tech jobs -- but no subway or major-league sports)
Personally, I find the 5-8 story setups of cities like Paris, Barcelona or Rome much more appealing - enough density to make all the good things like walkability and local cafes happen, but no blocked out sun (Like in NYC) or need to climb to 20th floor when the elevator gives out for the nth time.
I like the idea of 5-6 story buildings and know we need higher density housing, but past experiences make we want to live in a 2-story (semi-)detached house with enough garden to keep the neighbours at a distance.
But apartments made since 2000 have had excellent sound-proofing. Absolutely silent from neighbors. Only reason not to live in a new flat with walking distance from services is if you really like gardening.
Early modern housing schemes (of which Berlin has quite a few really interesting examples, e.g. the Siemensstadt developments to the north of Siemensdamm subway stop) were a great response to how those traditional patterns sufferered from overcrowding back when they supported much higher density than today. Unfortunately, that style developed into something very ugly when it was ruthlessly scaled vertically a few decades later.
That's not at all in the league of the 1-3 millions inhabitants cities you quoted. Paris is a nightmare to live in and people want to flea from it. There used to be close to 3 millions inhabitants and it is now down to slightly over 2 millions.
The population density is basically identical between these areas, but I can't imagine why anyone would want to live in a low-rise area.
(Incidentally, the reason we have low-rise areas is because the city has an absurdly long list of "sight cones" to protect views of the local mountains.)
As you scale from town to city, it is too easy for this discipline to break down. Whereas in my town, the town manager has to put up a pretty strong argument to justify hiring another employee or buying a piece of expensive equipment, in a medium to large city I, as a taxpayer, don't have any visibility let alone say, in any such expenditure.
Fiscal discipline comes mainly from individuals not wanting to spend their hard-earned money - unless going so is necessary to keep things in their current working order. Once these spending decisions are made by nameless bureaucrats, that personal discipline is lost.
The article is saying that mostly-suburb cities are not sustainable. They cost more to build and maintain over the long term than the majority of cities can recoup in taxes. That has little to do with employees, they are mostly talking about straight-line capital costs to dig up the streets and install new sewer lines. Even worse is that many cities grew in a relatively small post-war boom so a lot of that infrastructure will need replacing at the same time.
Towns don't typically provide all of water, sewer, storm sewer, and other such services... they might provide water. They can also just dig up everyone's yard to replace what infrastructure they do have because things are more spread out (lost of "wasted" land between the house and road) and far fewer people are disrupted (that also means projects can be done at a slower pace). They also have a much sparser police and fire department, far fewer parks, etc.
So how can we make cities have the same fiscal discipline of towns? We'd have to reverse the land-grab of the cities. Have them split into fiscal units the same size as my town (20K people). Have the managers have to come ask those residence to approve their budget.
Same issue with schools. Why does the Pittsburgh city school district spend the same per pupil as the suburbs, but the such worse results? Lack of fiscal discipline.
The white flight to the suburbs in the 60s is largely responsible for that, creating a negative feedback loop that we haven't been able to break even now. Anyways, it isn't always about fiscal discipline, often the answer is much more obvious than that. Suburbs basically outsourced poverty to the cities.
I'm not saying it's all bad, but it could be much better.
Yeah this. I never liked the "one huge park for everyone in the city" approach. I think the Chicago-style "many parks" approach is superior. In my neighborhood I have four parks within walking distance, seven or eight if you include school playlots.
>So they don't feel incentives to care for that space, and they don't.
Trash gets picked up quickly in the parks. I do feel a sense of ownership with the closest parks and get pissed when I see trash and promptly pick it up. I think smaller localized spaces do a good job of fighting the 'tragedy of the commons' we see with larger spaces. When something belongs to 'everyone' it really belongs to no one. Sorry but that's just human nature and one of the many reasons communism failed.
Not to mention, a lot of those Soviet towns are little more than endless ugly apartment blocks. The idea of a home with a unique design or a single family home with its own yard didn't fit in with the engineer led design of 'everyone lives in efficient boxes.' I find towns like that to be depressing and ugly. I'd rather trade some efficiency for beauty and livability. Top-down approaches get praised by geeks, but ultimately are simply worse than bottom-up approaches many American cities developed from. I'd much rather live in chaotic NYC, LA, or Chicago than 'ultraplanned' cities in Russia or China. Considering how many people we have dying to immigrate here, I suspect wanting those types of lifestyles reflects something in human nature.
Didn't work. You need a car for everything. The roads are flooded with cars. The city expanded and a great part of the habitants live very far from the place they work, so it takes a long time to go home.
Once this happens the crime rate goes up, the area feels unsafe to 'normal' people, and anyone who can do so gets the hell out of there. The area turns into a slum and is basically impossible to 'fix' without redeveloping it.
I'd guess that in Russia, one of two things happens. Either Russia's wealth distribution is even enough under communism that the rot never sets in, or in practice they're just as much of a slum as the American ones and we're just seeing a romanticized view.
those apartments we not bought, but privatized after Soviet Union collapse, where people get apartments for "free" after approx. 10 years working on a factory or so...
so in new projects, which are sold for money with mortgage rates at 12% annually there's no people that have "nothing to lose", people that have "nothing to lose" are widespread, living in apartments their parents got in Soviet Union
As a counterpoint, consider India and most of Asia. Poor areas are dirty and have little infrastructure, but they don't feel unsafe. I occasionally shop in Dharavi and don't feel unsafe at all.
[1] I believe that lots of strung out drug addicts make an area feel unsafe even if they don't harm anyone.
This concentration of people required more services both because of the sheer higher concentration of people and because of the lack of private money to backstop gaps. At the same time, those areas received less services/investment precisely because the people who lived there were not powerful. This gap of services lead to increased crime due to factors such as lack of opportunity, increased drug abuse due to hopelessness, worse education options, etc.
The gap widened and got worse until it became untenable to maintain (and in some cases the land became too valuable) and political power was used to disperse the public housing population.
Your comparison of Dharavi to the situation in American public housing projects is fallacious because it draws the equivalency based on Dharavi's dirtiness while ignoring how incredibly dissimilar the places are.
[1] http://in.reuters.com/article/india-landrights-slum-idINKCN1...
This can be the situation in places with centrally managed economies like North Korea today. Obviously, they are also very safe (from the regular criminal behaviour point of view).
Also strung out drug addicts are likely to be driven to theft.
Early efforts were mixed income, small and in desirable locations. They were also by many measures very successful. That model was moved away from because it eroded the power base of the political leaders of the day and for straight up racist reasons.
Its also largely a myth that the large block, low income model was ever seen as likely to succeed. Public housing experts and advocates at the time anticipated the disastrous results that came about.
Guess what, US lacks those for what would mostly be called political lobbying reasons. Including light rail and underground rail.
Rail is comparatively cheap to maintain compared to roads due to much higher passenger density and construction details. Even a tunnel is cheaper to maintain (not build) than a properly drained, pothole free and soft road.
The buildings here aren't that big (I went to Kiev a couple of years ago and was surprised how much taller they are) so there is usually just about enough space between the buildings to fit all the cars in. New buildings almost exclusively have underground parking, which is nice to recover the green space.
My point being, you make it sound like every town in the USSR was like that whereas in reality what you're describing sounds like a "unicorn" situation that was rarely encountered in reality. Walkability was about the only thing Soviet urban planning had going for it. Ironically, these days I live in US suburbia within walking distance of a pool, elementary/middle/high school, and a convenience store. And woods too: we pretty regularly see deer in our back yard.
http://pora-valit.livejournal.com/4740340.html it mostly looks like this
It was fine up until the 50-s and then worse and worse with each year (even now)
However, most of Russian cities have half of year of virtually winter, with temperature near or below zero celsius.
This pretty much makes such apartment blocks torturous/unlivable due to chilling winds if you don't have a car. And if you do, keep in mind that they're not built for that, so lack of parking and congestion are your new friends.
The thing that fascinates me is that it feels like a forgone conclusion that infrastructure costs cannot be made cheaper. Have we really hit the most cost effective, cheapest, most sustainable method of laying/replacing sewer/gas/water lines and roads?
There's no innovation left at all when it comes to making pipes that are more easily replaceable without digging the entire road up? There's no brilliant ideas left at all on how to 'pave' roads so they're smooth enough in a way that costs less money, or lasts way longer? Heck, while we're talking improvements maybe we should have a way to pave a road such that we don't have such massive runoff and its more resilient to minor settling underneath without opening large potholes.
I do wonder whether the shit really hitting the fan, and massive chunks of the population having their roads smashed back to gravel might shake a few new ideas out.
The puzzle they have is trying to fix a corrupt system. Merely replacing "evil car streets" with "progressive bicycle paths" will not fix anything, they'll just be a followup article about how horrible it is that the replacement cost of the bicycle path infrastructure curiously remains the same $32B because that's what the politically active re-election campaign donor contractors require.
The predicament, as a whole, is that we cannot afford them.
Infrastructure quality is, like so many things, directly proportionate to investment. You can trade off future maintenance by spending more initially, or vice versa, but you can't magically reduce both at the same time while providing the same level of service.
This is precisely the same problem as Terry Pratchett talked about in the boots theory of economics: http://www.goodreads.com/quotes/72745-the-reason-that-the-ri...
The problem is that the level of economic productivity supported by (for example) a strip mall is so low that it cannot support the ongoing maintenance of the infrastructure that is required to allow it to exist. This is also true for many suburban homes and office buildings.
You must either extract more productive value from the same land area and population, reduce service quality, or invest massive quantities of capital in maintenance cost reduction, which has virtually the same effect as either of the previous.
Umm is that really true ? Maybe it is I just don't see why this would be - if anything I would guess spending more would lead to more expensive maintenance as well
> but you can't magically reduce both at the same time while providing the same level of service.
Not magic - innovation.
Of course, asphalt is cheaper and easier to put down, so there is always the temptation to go ahead and build the asphalt road now and take credit for it in front of voters while leaving the problem of maintaining those roads for the next person in office.
if anything I would guess spending more would lead to
more expensive maintenance as well
Of course, not all more expensive products last longer, so careful attention to value for money is a must.
> Umm is that really true ?
Maybe not universally, but often, yes. E.g., you can build using more expensive materials that will last longer/are more resistant to environmental decay.
> Not magic - innovation.
Innovation is great, but in most cases requires new upfront expenses that have already been covered for existing solutions. We already have a fairly good amount of infrastructure for producing infrastructure, so usually innovation is one of the ways you can spend more upfront to reduce long term maintenance.
Sort of. I'm not convinced their infrastructure pricing is accurate at all. I fully believe infrastructure has a higher cost in the suburbs, and that we aren't fully saving for/planning for those costs. But the numbers this article uses are insanely too high, to the point that it feels like an outright lie.
Strongtowns claims it costs more money to maintain the infrastructure for a single-family home (on average), than the average house would cost to build from scratch using retail pricing today (including land + construction of the house, and all of the related road/water/power/sewer infrastructure).
The StrongTown estimate seems to claim it's replacing infrastructure "once a generation" (30 years?), but is charging enough money to rip-and-replace every piece of all infrastructure 6 times per generation. Which is really high -- no one does that, there wouldn't usually be any need to do so.
Or to put it another way, StrongTowns is claiming that infrastructure maintenance alone costs the same as leveling the entire neighborhood and rebuilding it all from scratch at retail pricing every 30 years. Which is just outlandish -- if infrastructure actually was that expensive, 90% of these suburban houses never could have been built in the first place, even if financed using subsidy or debt.
This doesn't seem that surprising to me. Replacing existing utilities in place is far more expensive than laying them in the first place because you have to do it without cutting off everyone's access to water/electricity/whatever while you do it. Plus you have to work around other infrastructure and houses and dig up roads etc. And it's difficult to coordinate utility replacements so you do this stuff once for gas and later for water and again for the sewer.
On top of all that, infrastructure is just terribly expensive. Price out laying a driveway. Now imagine scaling it up by maybe 10x just for the section of road in front of your house.
Sure, but it's not 6X more expensive in the suburbs. Water / Gas lines, for instance, are often under sidewalks or yards now so you don't have to dig up the road to replace them.
> because you have to do it without cutting off everyone's access to water/electricity/whatever while you do it
You don't have to. When utility work gets done in the suburbs, people often just lose water / electricity / gas / whatever for the 24-48 hours while they do it, and just have to deal with it.
(We're talking about sprawl -- stuff done cheap, by definition. This is not the complex operation that replacing water lines in Manhattan would be).
> On top of all that, infrastructure is just terribly expensive. Price out laying a driveway.
Here are some actual average costs for street construction from the State of Michigan - https://www.michigan.gov/documents/Vol2-40UIP16SubDevCosts-Y...
Even after adjusting for inflation, it's only about 2X the cost of a driveway, not 10x.
And that's my problem with the article. It seems they took the actual cost of infrastructure, "imagined scaling it up maybe 10x", and then claimed a crisis using their imaginary costs. Real infrastructure costs, while high, are simply not anywhere near as high as they are claiming.
Sometimes. Digging up sidewalks and yards is also expensive, regardless.
> You don't have to. When utility work gets done in the suburbs, people often just lose water / electricity / gas / whatever for the 24-48 hours while they do it, and just have to deal with it.
I've never been anywhere that 48 hours without electricity or water was considered acceptable for maintenance. In my experience, most maintenance is done during business hours with the expectation that people have utilities when they get ready in the morning and when they get home.
24 hours without a major utility is generally considered an emergency and crews are driving in from other states to help.
> Even after adjusting for inflation, it's only about 2X the cost of a driveway, not 10x.
You're probably right that the 10x number isn't accurate, since I completely made it up. It's still a lot of money and the cost to replace is always higher than the cost to build in the first place (with perhaps the exception of cost for grading).
> And that's my problem with the article. It seems they took the actual cost of infrastructure, "imagined scaling it up maybe 10x", and then claimed a crisis using their imaginary costs. Real infrastructure costs, while high, are simply not anywhere near as high as they are claiming.
I feel like you're nitpicking their claims without providing any alternative data or a compelling reason why their numbers don't make sense. You're asserting that they arbitrarily scaled up costs but you've not shown that they did so. The author is a civil engineer and a PE and a city planner so there's some weight behind his claims. You're asserting that his numbers are lies because you don't like them.
I'm not sure where your "6 times per generation" replacement claim is coming from, either.
> In my area, as in others I've read of, they're smashing paved roads into gravel roads as the paved are too expensive.
How much traffic do these roads get? How dense is the population in the area?
Cities generally act not only as trading hubs providing services to the region surrounding them, they also act as tax revenue sweeteners due to higher concentration of high income residents. Ie. they have positive externalities for the region, province or nation.
While I'm certain there would be a level of corruption in city administration, it seems to be incredibly short sighted to force cities to fund infrastructure through only property taxes and such without funding from income tax the province/nation collects as what happens in other parts of the world.
In America, many cities get some revenues like that as well.
Many cities levy their own income or sales taxes, in addition to the state income/sales taxes. (NYC has a 2.9-3.6% income tax itself, Seattle has a 2.7% sales tax itself, many small cities in the Midwest have their own income taxes, etc)
Cities typically also get some amount of revenue back from state taxes -- although it has unfortunately become common for some state governments to take city/road/school funding to cover spending in other places.
https://granolashotgun.com/2016/08/31/a-thousand-hidden-subs...
It's great to be able to spend (or at least commit) tomorrow's dollars today and then be long gone by the time the bill comes due.
With regards to CalPERS specifically, it was covered here two weeks ago: https://news.ycombinator.com/item?id=13287078 and from that article:
"For every $100 the city paid a police officer in 2016, it had to pay an additional $71 to CalPERS to fund payments to current and future retirees."
That approach brings in another set of problems, but it's worth mentioning.
It's managed by the city, so I'm not sure if it hits the general fund, but it is a tax specifically for those things.
A generation is what, 25 years? If you expect to replace all roads/electricity poles/sewers etc every 25 years you seriously need to look a quality. For this I feel this whole article is off.
> Humans are predisposed to highly value pleasure today and to deeply discount future pain
This is not true. One of the best test for predicting a child success is seeing if they will defer a treat now for more treats later. Many people have the sacrifice now for a better future instinct.
This article seems to make some vastly incorrect assumptions. Personally I think where cities are overspending 3 things could really help.
1) Making asset sales/tenders/expenditure very public and show comparable cost ratios. E.g. cost per km of sewer
2) Bringing more work back in-house. I feel this 'privatise everything is better' mentality is simply not true and does things that leads to infrastructure that needs replacement every 25 years and cost blowouts.
3) If you are going to privatise services price them on points of quality that you can enforce. E.g. Rather than jails getting a straight fee, they should get a small per convict allowance but a generous bonus for each released convict that spends 5 years crime free after release.
Isn't that the typical depreciation schedule for infrastructural assets? I've seen some useful life tables used by accountants and 25 years seems to be a typical mark. Maybe 30 years, but rarely 50.
Heavily traffic roads will need replacing at least every 30 years. But in my college down, they had side streets made of brick that has lasted over 80 years.
Things like water mains and sewerage pipes have a lifetime of 100 years or more. A lot of the systems are now due up for replacement for the first time and it will cost a lot. But it won't have to be done again again in our lifetimes.
I think this is one of the main drivers in favoring cheap and punishing quality. I agree with 2 and 3, though I'd argue that private jails are one of the things that should be bought back in house.
The problem comes with evaluating quality. There are issues with over-valuing cheapness, but there are equally issues with using high-cost as an indicator of quality too.
It would mean that only big companies could take on these projects (because they'd only be making 50% of their money right away), but they could still subcontract out to smaller companies and pay them 100%.
Surely, any intelligent child would factor in the rate of interest (additional treats earned per unit of time) and bond price (how many treats are sacrificed right now) before making their decision. Automatically saying yes to more treats later is analogous to not caring whether you earn 0.1% interest or 10%, and that's certainly not intelligent.
Promising more treats later in exchange for treats now is exactly what a bond is, and any wise investor would factor in rate of interest/coupon rate.
Although a different take on it is provided by [1], which suggests that the marshmallow test is not always testing for the ability to defer reward, but for the ability/will to obey instructions/please authority figures. I consider the post well worth reading.
[1]: http://hotelconcierge.tumblr.com/post/113360634364/the-stanf...
Like many of us, my mind was instantly drawn to how the incentives would be gamed, but you know what? The current incentives are already gamed. We all read about the judge who got kickbacks for sending kids to a juvenile detention facility, etc.
Let's build our incentives in the opposite direction. A certain percentage of dishonest people will game the system. But many, and probably most, will actually work towards the idea. And nothing is accomplished perfectly in one pass, there will be reform and accountability.
Compare the wages of the average city employee with the average non union tax payer.
Now you see why this insoluble problem has emerged over the past 30 years or so.
One year contracts. No signing bonus AT ALL (why reward strikers), so a one month strike costs ~~8% of your annual wage, 2 months ~~17% etc.
Why should these people get more than the tax payers? They are not more skilled.
They are in power or in the union.
Look at how much teachers wages have made books and equipment a vanishingly small % of their budget and how much they force the taxpayers to pay them.
These factors wrecked Detroit. They will wreck Chicago and all other cities as union wage and pension demands take so much money that people move away. Newark died this way years ago.
Self-serving hand-wringing about corruption in politics does nothing to solve this problem. It’s just an excuse to justify not doing anything.
Are there no ways to make it happen? Maybe propose to switch it gradually over a long period of time? Or would that end just as poorly?
There are incremental solutions towards this, such as "split level" property tax in which the rates for land can be shaded upward. Pennsylvania has had this for decades.
But when you implement them, plan to see the special interests make their case. For instance, a recent proposal to implement LVT in Hartford, CT:[0]
> "We do have an important parcel," said Cheryl Chase, general counsel at Hartford-based Chase Enterprises. "We are developers. If we think there is a project to be built, we would build it."
> Chase, which developed downtown's Gold Building and two other downtown skyscrapers in the 1970s and 1980s, owns the parking lot where the Parkview Hilton stood until it was demolished in 1990.
One would think 26 years would be quite enough time to find a suitable use for a valuable downtown parcel, but this parking lot owner disagrees...
[0] http://www.courant.com/community/hartford/hc-hartford-downto...
It can be done. Where I live, the 'state-level' government survived going to an election with an explicit policy of replacing 'stamp duty' (a tax on the value of property sales) with a land value tax increase. Actually, they've survived two so far. They approached it exactly as you supposed: the tax will be phased in over something like 10 years.
FWIW, the two 'political' lessons I got out of it were:
(a) Surprisingly, builders' associations (and the like) should theoretically be very supportive of a switch to LVT, particularly if it's replacing property value taxes (which tax the total value of land and improvements, rather than just the unimproved value of land). They were supportive in our case at any rate. Because a LVT results in high-value land being put to its most productive use (e.g. 'land-banking' becomes profit negative, it incentivises inner-city redevelopment etc.), it means more business for builders (and this would be sustained in the long-run).
(b) Special measures have to be taken to protect people on fixed incomes who occupy high-value land (i.e. pensioners/retirees still living in the family home). This is partially for political reasons: the most effective way to 'negatively campaign' on the issue is to talk about how the LVT will force granny out of the family home. But there are also legitimate fairness concerns too: people who happen to own high-value land during a switch-over will suffer a 'windfall loss'. Although there's a perfectly reasonable counter-argument to this (IMHO), it's way too complex to be politically useful (and far too long to go into here).
I think one approach could be a sort of 'reverse mortgage until death' transitional arrangment: anyone on a retirement pension (or whatever reasonable criteria) prior to the LVT becoming 'official policy' would only have to pay some manageable proportion of the total land-tax due each year. The rest would accrue as a liability against the person's property, to be collected either at time of sale (which would now be voluntary), or from their estate (i.e. when they die). Obviously it would have to be carefully worded, but I think it's a fair compromise that the public could understand.
The downside to this (or any other 'transitional arrangment') is that it would delay some of the economic efficiency gains from a LVT: namely, the efficient reallocation of land (i.e. a retired couple would otherwise have an incentive to 'downsize' from their mostly empty 5 bedroom house to a townhouse or apartment, allowing a family currently crammed into a 2 bedroom flat to move somewhere more appropriately sized).
On the purely 'heartless economic side', it's such a great tax because:
- It's one of the few taxes that results in a more efficient allocation of resources (most other 'large' taxes usually generate some amount of dead-weight loss e.g. income tax, company tax etc.)
- It's a very stable tax base, as the base is completely immobile (you can't live in the US from a property located in India) and the tax is very difficult to avoid (it's pretty difficult to hide a large block of land or sneak it off to a tax haven somewhere). Also, if the rate is set so that it only taxes 'land rents' (unearned profits that accrue to landholders, in the form of higher land prices, due to improved amenities in the surrounding area), then it can actually increase economically activity due to the improved allocative efficiency discussed above. Again, most other taxes do the opposite (excluding Pigovian taxes, most commonly known as 'sin' taxes).
- LVTs are also a 'cycle-neutral' tax. Property taxes and stamp duties, on the other-hand, are pro-cyclical (i.e. when the economy is booming, tax receipts rise considerably, and when the economy is in recession, tax receipts fall). In practice, I think this results in boom-bust cycles that have much higher peaks and much lower troughs, simply because politicians will spend the money if it's there, but seem to be highly averse to taking on debt (so pro-cyclical taxes mean the economy is more overheated during boom-times, and more depressed during busts because of the contraction in government spending).
- [This is my own crazy opinion that other LVT proponents may very well disagree with] I think LVTs would improve macroeconomic-stability and increase economic productivity in the long-run. So much private capital investment gets poured into totally unproductive property speculation; capital that could otherwise be put towards some productive use (e.g. business investment via loans of equities etc.). And if you look at the past-century of economic history, you'll notice that an alarming number of recessions and depressions occurred because speculative bubbles in property markets popped (the 1890s depression, for example). Although speculative bubbles can form for other reasons, my view is that rising land prices are one of the primary triggers of property market speculation (or, at the very least, these rising land prices cause speculation to be more intense and prolonged).
So yer. LVT.
It's becoming more clear to me that we should be thinking about proportions, not arithmetic. Money is a construct, so hard numbers like the size of the money supply and debt are meaningless. It makes more sense to imagine the median global income as being a unit of 1 (per day, per year, it doesn't matter) and then measure individual assets and debts against that. Americans get a score of 5 ($50k median household income), 5 billion people in the world get a score of 1 or less as they earn under $10,000 per year. Millionaires ($100k per year or more) get a score of 10, billionaires get a score of 10,000, etc.
Yes yes there are taxes and expenses but the orders of magnitude remain the same. Dealing at the abstraction level allows seeing patterns that aren't normally visible. The biggest anomaly is the level of work people are willing to maintain while getting paid substantially less than a small minority. The other one is why is so much work nonproductive, for example why do people pay half a billion dollars for a TODO website when 3% of the population can grow all the world's food? It's like there is so much wealth in a few hands that it doesn't know where to go except to try to expand itself. Wouldn't it make more sense to invest that money to automate the other industries to get to a 3% level and let the other 97% of the population work in research or health or space travel, anything really? Solving problems once and for all so that we can have both money and time (actual wealth) rather than having to choose one (phantom wealth). For real solutions to these seemingly intractable problems I highly recommend looking into modern monetary theory (MMT):
http://neweconomicperspectives.org/2013/03/what-is-modern-mo...
https://en.wikipedia.org/wiki/Modern_Monetary_Theory
http://heteconomist.com/modern-monetary-theory-is-relevant-t...
> Also IMHO there is far too much investment in construction, when buildings are already sitting idle.
Unfortunately all the idle buildings are in the wrong places. LVT, plus tax credits for reclaimed materials would at least move them to where they can do the most good.
That said, you don't want all land being elevated to its highest use, including sub-marginal land. That's why enacting a floor to how low a land tax could be makes sense-- it would serve to protect wilderness.
"They are the ones with a very dominant urban core, where the urban fabric overwhelms the horizontal, auto-oriented stuff. I'm not saying these places won't struggle for the same reasons Lafayette will, but I suspect their decline/contraction will be less pronounced, less a defining characteristic.
NYC, Boston, San Francisco, Vancouver, maybe Chicago.... I'm not an expert on this scale of a place by any means so I could be very wrong but they don't seem to have the same underlying forces as a Lafayette (or even a Detroit or Memphis) where 80%+ of their infrastructure serves unproductive land use patterns. Might be 20-40% in these places."
It doesn't really matter where you are, politics state that money is going mostly to people and not into the ground.
San Francisco, where I live, has loads of revenue and a citizenry which approves every single bond measure on the ballot. And we certainly shouldn't be on his list. Infrastructure issues here are never addressed until they hit a crisis level.
Just the other day there was news about how our seawall which contains our entire financial district is in horrible condition[1], and there's "no funding" and the usual blarble about the Feds bailing us out. Is any other city program going to be cut a dime to fix the seawall? No. From a political standpoint it makes more sense to let the city flood than it does to cut off any short-term political gain.
[1]https://www.hoodline.com/2017/01/as-earthquake-threat-to-sea...
Also, the weather sucks.
Source: Moved out and now want to go back.
But a blanket statement like that about Chicago is very surprising given all of the negative things about its situation (unbelievable gun violence, for one).
Also I can never get over the hilariously bad 75-year lease of its parking meters where they got $1B up front in exchange for eschewing massive amounts of ongoing revenue (the lessees have made $650M+ in revenue in 6 years while sapping the populace dry). Now Chicago actually has to lose money and pay Abu Dhabi any time they want to shut down a street for maintenance or public festivals. Fantastic!
Road resurfacing is pretty good where I am, but oddly is largely a function of how effective the alderman for your ward is, since a lot of the cost typically comes out of their budget.
The real problems with the city IMHO are massive unfunded pension liabilities and a huge segregation problem between the north/south sides.
The city pursued an agenda of low taxes by leaning heavily on subsidies paid by large-scale developers directly to the city. This was something very much embodied by the city's long-time mayor McCallion (https://en.wikipedia.org/wiki/Hazel_McCallion) who was something of a titan in her time and governed over the city from 1978 to 2014 with little political opposition.
The idea was that they'd build infrastructure to last 30-40 years and then figure out what to do later. Not surprisingly "later" came around all too soon and they were left scrambling.
The mayor pivoted from producing more sprawl, which just doubles down on the problem, to inviting developers to densify portions of the city, building codos and office towers. Through development fees they'd try and work their way out of a jam without having to massively increase taxes for everyone.
It looks like this strategy has so far worked, but it's not without risk. It's dependent on passing the buck to the typically younger crowd that's buying condos. They're paying for sewer replacements in those older neighborhoods that apparently never paid their fair share in taxes. Who will bail them out when their time comes? Hopefully the increased density makes it more cost-effective to do that.
There's a number of things working in favor of the city, like they're close to Toronto, so the're an ideal commuter hub, plus the regional airport is there, so there's a large buisness hub built out around it. Without that tax base and proximity to another city they'd likely be doomed. Nobody would ever want condos there.
If you're looking for those cities, look for suburbs built near major US cities that can leverage their location. Any that are on their own are ultimately doomed unless they dramatically re-work how they plan their urban layout. Low-density housing will strangle a lot of small cities to death.
Honestly it should be illegal for municipalities to collect less in taxes than they need to maintain their infrastructure in the long haul. They should be factoring in 60-year replacement costs and collecting money towards that in the decades leading up to a major overhaul. A change in the accounting rules to include this sort of depreciation as an expense that must be balanced out with revneue could go one step towards that, factoring in replacement costs and so on.
http://www.thefiscaltimes.com/2017/01/09/How-Strong-Are-Your...
[1] http://taxfoundation.org/article/federal-spending-received-d...
One quibble I have with the article though is that suburban communities did not start out as luxuries or inventions of convenience. Suburban growth was actually promoted by the federal government with tax incentives in response to the threat of nuclear war. The idea was to spread populations out away from the cities, where a single bomb could kill millions. Shawn Otto's book The War on Science covers this development in great detail, which I've clipped here:
Property developers (along with car dealerships) are by far the strongest advocacy groups in many areas. It's not totally surprising that they've managed to capture the local government and push them towards counterproductive development that ends up being a massive subsidy from the taxpayers.
There's probably some bias to what they know, and all we've allowed (zoning) is single family homes, strip malls and that kind of thing, so there is that, but if more were allowed, it'd probably end up being built, sooner or later.
Practically every person who sits on our city council is involved with real estate--either sales or development. It is rotten to the core because of their conflicts of interest.
This is one area where I think that people can move the needle some. The issues are not partisan in the way that so many others are, and I think there's a growing movement interested in doing things differently, that's more financially and environmentally sustainable.
Perhaps an explosion in infrastructure maintenance costs will cause a new wave of municipal bankruptcies within the next few years but so far it's just not happening.
The bankruptcies are not happening, because a lot of the infrastructure can withstand 50 or a bunch more years. It has been built in say 50s - 70s so never had to be completely overhauled.
In EU, the problems with replacing infrastructure built in 1940s have already hit a few times, but it was better planned after the war.
http://www.strongtowns.org/journal/2017/1/10/poor-neighborho...
-EngrStudent
That being said, I always look to get the best value for my dollars, and the way folks run government around here, it is rarely worth it to feed the beast anymore than I have to.
Just compare London (horizontal) to any vertical city. London feels like so much better place to live. Low traffic (in comparison to vertical cities), parks everywhere etc. - you feel like you can breathe, not cramped in concrete walls.
Like schools, local public safety and other core government functions in incorporated cities are provided by municipal government.
Broken streets and infrastructure are expensive, but engineers always overstate the costs of maintenance and replacement when they are waving the tin cup around. The acute problem is that opex is driven by police and fire salaries, pensions and workers compensation. Take those numbers and divide by 3 or 4 to get a realistic number, especially for things like water pipes that have very long service lives.
The more fundamental problem is that post-war America focused investment and tax bad growth on towns and other places outside of cities, and left the costs in the cities. If the average suburban/exurban community requires 1 police/fire visit per 100 household, and urban environment requires 15-20 per 100 households.
http://www.strongtowns.org/journal/2017/1/10/poor-neighborho...
I like how the author says that sprawl isn't the problem, the problem is that new developments are large scale, single-purpose, and with no room for improvement or addition.
The graph/map showing how downtown and poorer areas bring in more tax is what did it though. Even just thinking about ploughing in the winter makes it pretty clear that winding suburbian roadscapes are costing the city a lot more than we pay them. That's without mentioning schools, fire halls, garbage collection, etc.
I guess one of the more difficult issues is convincing North Americans that they don't need a private single-family house, large yard, 2+ cars, etc.
The amount of road surface a tall, mixed-use building requires per occupant is dramatically less than what a detached single family home does, but the latter road needs more maintenance than what the taxes on that single-family home provide for.
That's very self-evident. What matters is that density means costs rise at a slower rate than income and because density tends to raise prices (the area is more desirable all else equal).
Most of the cost of installing water pipes is in digging up the street and paying people to lay the pipes. By comparison putting in a small pipe costs the same as a huge one. Suburbs need small pipes spread over a larger distance to reach X people. High-rises need large pipes over a much smaller distance to reach the same number of people. Even if you assume property values per person were identical and taxes identical the dense area has a massive cost advantage.
Often, that reason is "there's a strong market preference for density, but supply is artificially restricted by parking minimums and zoning regulations put in place by property owners who wish to maximize the value of their asset"
No one is arguing that there should only be green blocks - clearly some of the profits that make those blocks profitable come from the spending of people who live in areas that are red. So long as the net outcome is green then everything works out.
When you build endless sprawling suburbs that cost more to maintain than the tax base can raise from the businesses that serve them then you have a recipe for long term decline.
A moderate-sized city of 50000 people might put 1500 people at the main high school on graduation day. Aside from high school events like that, and the normal daily high school operation (also 1500 people), it's super-rare to get a real crowd. If you also exclude middle schools and elementary schools, crowd sizes probably top out around 100. That would be the crowd at a significant employer. In case you were thinking of night life and entertainment, that might get up to a few dozen people.
It's peaceful. It's very peaceful.
Dear my. Americans will often need vehicles with negative weight. Does buoyancy count, or would a helium balloon just be more weight? (can you deduct the weight of displaced air?)
At least in case of San Bernandino that was the case.
Here's an example - It's 1/1/1985 and the rate on the 10 year treasury note is 11.65% (yes, that was the real rate), so our city was able to get a rate of, say, 12%. They issue a 10 year bond for $5 million to build a school and some road maintenance. They make the required coupon payments (usually semi-annually) using tax revenues - and that amounts to $600,000 each year. They keep doing that until just before the principal comes due in full on 1/1/1995. The idiots running the city haven't saved the 5 million required to pay off the principal so what do they do? Well they take a look at the market and see that the 10 year treasury note is now 7.19% so they can get around 7.5%. So they issue a new bond for $5 million for another 10 years and now only have to pay $375,000 in interest coupons every year. But they are still collecting 600k at the given tax rates which leaves them 225k in the green. So they can either spend that every year or they can use that as the coupon payment on an addition $3 million bond and they get it right now! Even if some scrupulous treasurer or township board member were to say that they should just spend the 225k and not take on any additional debt, someone will point out to them that over 10 years that's $2.25 million and here they get to instead use that money to spend a total of $3 million - these guys feel like they are making money taking on debt. And as long as interest rates keep going down and they don't need to repay principal, it all works so they agree. Now 1/1/2005 rolls around - they owe $8 million but rates are 4.5% so they can get 4.75%. So they rollover the $8 million for a yearly coupon of 380k. They also use the remaining 220k to open up a new bond for ~$4.6 million (4,631,578.95 to be precise) - and now they can still pay the same 600k in interest that they have been for decades but they have an outstanding debt issuance of $12.6 million.
Now, if you are still reading this far and fully grasp the horror of the above, you can begin to understand one of the many reasons rates can't go too far up anytime soon. We have been Japan'ed, and this is just part of the reason of how it happened. Also, I want to point out that in the above example no increase in the tax rate is needed to help pay for this, even without population growth at all. Tack on population growth, productivity and technological progress, as well as the increase of the money supply by the federal reserve over that time period and in real terms it becomes even less. Now think about how much your taxes have increased on a percentage basis over the same period on the state and municipal levels and it should become clear just how horribly mismanaged everything has been for quite some time. Rates can't really go much further south so even if they hold constant and never increase...all of our broke ass cities and towns will only be able to refinance at the same rate (best case scenario). This means they can't increase expenditure at all for anything unless they make taxes sky high to support the spending. The free money game is over.
Here is a clue: defined benefit pensions
The reality is cities are insolvent because of decades of tax breaks for businesses and the stagnant wages of the middle class.
The model of development that gets us out of this mess probably is one of much greater density + changes in accounting practices.
Really Narrow Streets
Unfortunately most North American local government has a savagely visceral hatred of that idea.
Full disclosure I stole this idea from [0].
[0] http://www.newworldeconomics.com/archives/2006/032606.htm
Surely it would help, then? The entire point of the article is that local governments built infrastructure that isn't worth paying for, and paid too much for it, because of bad planning/misaligned incentives.
If towns were fully privatised then there'd be no assumption of government bailouts, and towns that overbuilt would go bankrupt and be abandoned/eventually bulldozed. In practice governments are rarely willing to let that happen. Even in the case of Detroit it was bailed out.
If I had to sum it up, it might be something like 'traditional development patterns', akin to what you saw in pre-WWII cities in the US, and much of Europe. More walking, and biking. There's a lot to like for a lefty like me.
Yes, wages are stagnant. Why is that? Taxes too high perhaps?
Real estate developers and real estate agents run most cities. They are always looking out for their own interests and damn the future consequences. The biggest problem with real estate people is their average IQ is so low.
Maybe, but urban densification is a very left wing thing.
Psychologists call this temporal discounting. Humans are
predisposed to highly value pleasure today and to deeply
discount future pain, especially the more distant it is.
In the private sphere a similar phenomenon (if not conceptually identical at some level of abstraction) more often encountered is pollution. Or in Silicon Valley think of "technical debt". Both of these are costs that private actors accrue and that, because they do not need to internalize them immediately, are discounted inaccurately because of the temporal bias of the agents. In both cases, when the private actor eventually goes belly-up, other actors (public and private) are often left holding the bag to clean up the mess. And thus the original private actor has effectively imposed a hidden cost on others, intentionally or unintentionally, producing globally suboptimal results.
It's easy to see how an enormous network of pavement and pipes could be created and then left to rot and blight the environment by both private and public entities. Detroit is a prime example of both.
It's worth pointing out that like phenomena described by prospect theory, this temporal bias likely evolved as a heuristic device. Nothing in the future is certain--not even in probabilistic terms--and so it's not possible to foresee and accurately price all future costs today. There's no obvious alternative to the bias as a general matter, only in specific circumstances.
At the end of the day, to aliens arriving on planet earth and watching the machinations of our civilization, distinctions between private and public would really be quite artificial and perhaps not even the most informative axis on which to bifurcate our economy. Both private and public actors are subject to market forces, just like both boats and airplanes are subject to gravity. The normative mechanisms we choose in our attempts to optimize how actors respond to preferences and to internalize costs are different, but rarely singular--it's always some mix of policy and currency, among other things. The so-called "free market" approach is hardly, if ever, the best answer alone.
Cities seem extremely poor paying for infrastructure based on performance. Water supplies should be paid for uptime, percent of the population they deliver water to, and quality of the water. Road companies should be paid by lanes * miles * years they last (according to some quality metric for common road failure methods). Bridges similar. If someone builds a building for the city they should be paid by the usable square foot and an incentive for delivery time.
I'm sorry but this kind of calculation is, I believe, the real reason infrastructure in America is suffering. If only 10% of my property tax is going to infrastructure then I don't need to pay 6 times as much, I just need my local government to cut the crap and spend 60% of my property tax on infrastructure. I understand that means less government jobs but we are already kidding ourselves if we think it's a good idea to grow government to reduce unemployment.
There's not way around it; people are paying much less for infrastructure than they should be. Sorry to you but that's the price of civilization.
FYI, the vast majority of Florida houses are concrete block, and metal roofs seem to be gaining popularity. There is no reason a home should be vulnerable to fire, mold, or termites. Sadly there has been a decline in popularity for metal kitchen cabinets. We wouldn't need to be so obsessed with sprinklers and smoke alarms if we built things right.
Salaries and buildings are expensive.
These numbers are public. Dive in.
Sprawl is hard to sustain. We should let some paved roads turn to dirt, and encourage fewer dense places to live. (Or you can live far out, but no paved roads, and no fire trucks)