We need to do the math, even on “small” projects
strongtowns.org
strongtowns.org
I’m not sure there is an opportunity to fix this - I’ve spent a lot of time thinking about this now and modeling it out - by building a better construction company: most of the problem is, instead, essentially political.
Elected officials unfortunately don't have that much incentive to hire the "cheapest" company as the debt will be incurred over the next 100 years while they will be long gone.
They probably hire the company that they feel will give them the least amount of trouble, which is the easiest to navigate or that will do something for them in exchange. It's the "not my money" issue at play.
The reality of most construction projects? You don't need them. You're not going to get better with them and you're not going to get worse without them.
A stretch of road is past its shelf life and scheduled to be repaved. The city does some analysis, and estimates the cost for that mile of road to be 1M^1. Then they put out a Request for Bids for contractors to do the work, lowest bidder wins. Corrupting the auction is how things fail.
The simplest corruption is to leak sealed bids so that you know how much to bid. Remember, this isn't a vickery auction, bidders are paid what they bid and no more. If you want to maximize your profits, all else being equal you want to bid one dollar less than the 2nd best bid. If you were going to bid 800k, someone who informs you the second highest bid is 900k is worth 100k. Sending them a bribe for that tip will still leave you ahead, and the city behind. And if you repeat this, eventually that 2nd bidder is discouraged enough to leave the market, or at least stop participating in Corrupt City IFBs. Which raises the cost per mile even higher.
The other method is to disqualify competitors and proposals. Contracts often give a measure of leeway to officials disqualify bids. Or, to advise a bidder to change their proposal before they get disqualified. Or you can just write the work to be done in such a way that only one bidder could feasibly win.
^1 I really don't know the costs here, just examples.
0: https://en.wikipedia.org/wiki/MacArthur_Maze#2007_I-580_East...
This portion of the street is 60' wide (including sidewalks) and 285' long. That's 17,100 sqft or just shy of 2/5 acre. The cost? $10-13mm! I can't believe that taking out the asphalt, replacing it with concrete, and then adding lighting and plants should cost that much. It's outrageous.
In my hometown, the city spent $3M to make a single right-turn lane approximately 20-feet longer.
This is a city that went from a population of 60k down to 15k. And the population is still contracting rapidly. There is no traffic, and there never will be. And worse, there is no income! And there's zero growth potential.
Unsurprisingly, at least last year, it was the city with the highest municipal debt per capita. Combine that with the fact the HH income is very low, and the population is shrinking, and it's a disaster.
I find it ironic this is a deeply republican city that constantly talks about the need to cut spending.
I'll begin by saying I have no aversion to debt whatsoever as a private individual or for an incorporated business. I own several rental properties, I'm probably more indebted than most.
The thing about debt in general though, is that it makes the bad decisions a lot worse. And I think when you design a political system, you have to think about both the best outcomes possible, as well as the worst. Bad things happen. People make mistakes. Calculation errors occur. I'd gladly take a bargain where I could trade 5% of the upside for 50% of the downside.
What I've realized is that most municipal governments are run by people of fairly average intelligence and drive. There just isn't a lot of incentive to kick the apple cart. They want to go home at 5, they're going to see the owner of the construction company whose project they dump on in the grocery store, etc. This is actually a feature, I don't really want too much innovation in how my government does things, I'd rather go with the tried and true for things like road design and water pipes, than something like the BART where they used a novel track gauge, and we're still paying for it 30 years later.
I just think avoiding municipal debt can curtail some of the worst outcomes. It forces cities to save up for maintenance and really make hard choices about what gets maintained and what doesn't, and it also prevents can-kicking to later generations. You might not get a high-speed rail project, or a major bridge, without debt, but I wonder whether we'll ever get high-speed rail in California at all, after spending billions of dollars already [1] on it without anyone having taken a single trip.
[1] https://www.govtech.com/fs/transportation/California-High-Sp...
One variation I've heard would be for cities and states to not be allowed to issue debt, that only the federal government could do that. It would mean the local units of government (which actually run and fund most things) would have to operate on a balanced budget, and would provide a lot of robustness in the system relative to what we have now. If they needed a one-time bailout for some reason (natural disaster etc) the federal government could give funds to the local area, potentially issuing debt if necessary.
Of course that doesn't provide any protection against federal debt binging... so I'm not sure how you'd square that. You don't really want to prohibit the federal government from taking on debt - for example, the largest debt the US ever accumulated was to fight and win WW2. But maybe there are strings you can attach.
One such string that makes a lot of sense to me is the idea that you should never allow debt for operating expenses or maintenance. You would think that would be obvious and you wouldn't actually need a policy to enforce that outcome, but unfortunately it's common practice today to just issue bonds if you can't afford to maintain your municipal services.
The reality is that, today, the federal government gets the lion's share of attention but the bulk of day-to-day stuff (roads, schools, police, utilities eg water) are run by state and local governments. BUT--and this is an important caveat--SOME (not a lot, but some) money for this is provided by the federal government through about 20 different mechanisms including federal block grants for education, federal highway funding, and other mechanisms.
It's actually quite complicated, but to a first approximation, most local things are operated locally, financed mostly locally, but the federal government does kick in (fund) a little on certain things, in a way that's fairly haphazard and subject to the whims of politics, than any sort of tradition-driven or constitutional way.
Incidentally, this is part of why the US's COVID response has been literally "all over the map". It's mostly in the hands of the states and you're seeing how 50 different political cultures deal with this crisis.
A lot of my views come from operating perhaps the lowest level of "government" possible: a large HOA. Our CC&Rs prohibit entering into any contract (including debt) lasting more than a year. It works for us because the entire place is run by volunteers, many of them nonspecialists, who could do a lot of damage getting us into, say, a 10-year contract with Comcast that was too expensive, not negotiated well, etc.
I think we expect our politicians to be superheroes. This might be borderline reasonable for large, well-funded federal agencies like the Federal Reserve, BLS, BEA, etc who can attract large numbers of truly great people, and pay them well. It's not reasonable to expect someone like Tim Geithner or Ben Bernake (a Princeton economics PhD) to run the finances of a small city or HOA. You're going to get part-time volunteers who know how to balance their checkbooks. Expecting these people to be perfectly rational decision-makers without formal accounting training, let alone knowing how to think carefully about how to analyze NPV, cashflows, and long-term liabilities, in the face of all kinds of local small-ball politics (e.g. trying to help their friend win a contract, or a personal vendetta against someone's project) is laughably far from realistic.
You could tie the debt to revenue. I think this happens often, but not often enough. You'll see "bond measures" on the ballet. "Raise sales tax by X, to pay for the bond X for purpose Z." I think this works, though you don't want to run every spending measure by the public. Maybe some of them can be more automatically applied, or within the discretion of the local council. But the key is the tie between future revenues and future expenditure.
> you should never allow debt for operating expenses or maintenance
Except these are perhaps the most important expenses. Maybe this requires something like automatic state-receivership or some other loss of local autonomy. Or the shortfall is picked up the state under some set of rules (something like state-wide municipal operational insurance, where in times of surplus everyone is kicking-in)
Especially on Juneteeth.
Plenty of ways to cheat, but is still a decent yardstick.
In the UK local government is heavily restricted in what they can do. My parish council gets to mow the grass and paint the village hall. As far as I can see that's about the limit of their abilities.
The downside is some larger municipalities like Manchester or Birmingham have traditionally been ignored by London based politicians and civil servants.
One thing you definitely DON'T want is a California-style "we can spend with majority but raising taxes requires a 2/3 supermajority". That has produced some truly horrific outcomes in government and needs to be repealed. https://www.westerncity.com/article/californias-two-thirds-l...
http://publicworks.cuyahogacounty.us/en-US/Future-Amazon-Sit...
Was it bid out? Did you put in a bid?
The recent rebuild of a section of the Bay Bridge took 11 years and went 2,500% over budget. Whereas the original entire bridge was built in 5 years, ahead of schedule and under budget.
And something I just came across: SF allegedly had 6 Salesforce subscriptions at $1M/YR, and not even using them[1].
Given stuff like that, I worry you're right, it may hardly matter how much better a construction company is.
1. https://twitter.com/michelletandler/status/12734043395669934...
Edit: This is a HN faux pas however, please don't downvote the person above, they added to the discussion. I suspect that may be a common objection and I'm glad to be able to clarify it.
Who defines "similar"?
Is a study performed in Texas similar to one performed in California? Is a study performed on land that drains into the municipal water supply similar to one performed on land that doesn't? Are two studies performed near each other location 10 years apart "similar" if new laws have come into existence, or a local species has been declared endangered in the meantime?
No matter how obvious the matter might seem, people will still disagree. And the people spending money can always come up with justifications.
...or if the study was not read by those who ordered it that is a pretty clear case.
How do you prove that those who ordered it did not read the study? And what if they did not read the study, but instead read a summary of it prepared by someone qualified who did read the study?
A court of law.
> Is a study performed in Texas similar to one performed in California? Is a study performed on land that drains into the municipal water supply similar to one performed on land that doesn't? Are two studies performed near each other location 10 years apart "similar" if new laws have come into existence, or a local species has been declared endangered in the meantime?
I don't have the answer to these questions but I wager that we can find experts who do. Presumably firms exist that do hundreds or thousands of studies annually, those firms could testify how they would bid such a project. What the cost structure typically looks like.
> How do you prove that those who ordered it did not read the study?
A government employee could send a email to the effect that the report was not considered that is later discovered. Alternatively, a whistle-blower may clandestinely gather evidence in order to collect the bounty for themselves.
> And what if they did not read the study, but instead read a summary of it prepared by someone qualified who did read the study?
That seems like a reasonable use of funds.
This isn't going to catch every case, the purpose is to provide a natural check to government corruption and waste. Discoveries made by this system may lead to the judicial branch investigating those who made these choices. The FBI could use these tips to target sting operations. The voting public may use this information to decide whom they are going to elect, and the best part is it's free.
If you think these projects are overpriced now, you can’t imagine how expensive they’ll be when every private citizen has been armed with legislation that lets them take the city to court in an attempt to win these cases. Every project will need a team of lawyers and auditors to check that absolutely everything in the project is beyond reproach. It’s just insane how much things would blow up.
In fact https://www.brookings.edu/wp-content/uploads/2019/07/2019-07... argues that most of the increase in construction costs since the 1960s can be attributed to an increasing role for "citizen voices". I have to believe that increasing the power of citizens to impact the process will only make it worse.
Humans are unfailingly creative. I don't know how they'd game the system you set up, but I assure you they will!
The original Bay Bridge also had 28 fatalities during its construction. Imagine that happening today!
https://www.latimes.com/sports/story/2020-06-12/attorney-for...
The other aspect of it is general workplace safety regulations which have expanded over the years as well. When budgeting a project, you need to consider both, however. And workers also benefit from both. For example, the restriction on the use of asbestos in building insulation was brought in to reduce the health hazards of living or working in such a building but the construction workers handling the asbestos are clearly the most at-risk group which benefits from the regulation.
Source: I worked on a deployed aircraft carrier, one of the most dangerous workplaces in the world.
In large-scale construction, safety needs to be built into every aspect of planning and execution of the project. That can add large costs.
What’s the reason for this?
Some of it is depending on how high up you are something can bounce pretty far, possibly outside the barricaded area. The term used is ALARP- As Low As Reasonably Practicable. The trade off is, when someone's working really high up you can make everyone else stay inside but this wouldn't really be productive so you barricade off directly under where the work is going to take place and where you could anticipate something bouncing too, then do everything to still prevent dropping something. I mentioned with the tools, everything needs to be secured, so for example if I'm removing a CCTV camera, I need to attach some form of attachment to the camera before un-bolting it. Of course it's still not possible to secure the nuts or bolts holding the equipment in place so move slowly, pay close attention to every move made. If something does get dropped, there is more paperwork to do and everyone in the company is notified. They calculate what the potential harm to someone is [1].
[1] https://www.preventdrops.com/safety-regulations/understandin...
And surely after 80 years of improvements in technology, materials, process, etc we have the ability to build in less time AND have no deaths?
I don’t think this follows. MRI machines save lives. MRI machines did not exist a century ago. MRI machines have made healthcare more expensive, not less.
I think the same could apply to buildings with new materials and construction methods.
I agree with your point generally though. It reminds me of the “websites got slower faster than computers got faster, thanks to computers” argument.
We could save so much money if we didn't focus so much effort on minimizing construction impact to existing traffic. We would rather take a longer, slower, more painful bleed of the public purse, than cheaply ripping the bandaid off and dealing with a 15 minute longer commute for a few months.
But no company pays me for my commute time. If I take an extra hour commute I don't get that 15 bucks. And that commute time does not go onto GDP either. It's hard to argue the economy lost the time I was doing nothing productive.
And if we really want to take it to the extreme, if it costs the country 15 bucks each hour people are not paid to work, but could have been doing something useful, Avengers Endgame must have cost the country more than it made in ticket sales. Thanos' final revenge:-)
I suppose that's true if you believe that things without a price are worth nothing.
Truly, it's a mystery why people spend time with their families and friends instead of working another job. Such a waste of time.
Presumably on average you work an hour's less overtime/day while the diversion is in place, or maybe you quit your job and take a less productive one that's in decent commuting range, or so on.
> And if we really want to take it to the extreme, if it costs the country 15 bucks each hour people are not paid to work, but could have been doing something useful, Avengers Endgame must have cost the country more than it made in ticket sales. Thanos' final revenge:-)
I mean it's certainly worth thinking about how much time you're putting into things like movies and whether that's worth it to you. If something that takes 1 hour and costs $45 is more fun than something that takes 3 hours and costs $15, you might well be better off doing the former.
Is there a word for when you actually agree with a reductio ad absurdem? Because man, what a waste of time movies like that are.
Pretty much anyone paid to show up in a windowless van and do some task is paid (or their boss is paid) by billable hour. Anything that decreased the ratio of billable hours to hours worked is going to mean they need to charge you more. Obviously it might amortize out to only be pennies on the dollar but when you start adding a pennies on the dollar sized inefficiency to the economy of an entire region it's gonna hurt.
Imagine if you made the day 5min shorter for 50% of the population. That's what crappy transportation infrastructure does (be it car, rail or otherwise).
What happens in real life is that people largely don't just stick to their same behavior and suffer like lemmings. They time shift a little bit. They find a different route. It's not magic, it's just a complex system adapting to a change in conditions.
"Dollar value of time saved" calculations are a common distraction peddled by lazy engineers who can't actually make the numbers for their project make sense and instead need to dupe the public into supporting a project they want to do.
To use an analogy from heart surgery:
Fixing a car is easy.
Fixing a running car is hard.
There comes a point at which starting from scratch is better than trying to fix the original mess. Which in our business means the company goes out of business and is replaced by something new.
Another large issue is government bureaucracy. The process for proposing projects, winning bids, and being able to start work is a very long process which incurs increased staffing costs due to the time it takes to navigate red tape. This is one reason that government projects cost so much.
Not quite the same construction - this is widening a motorway - but an order of magnitude more expensive - £30M per mile in 2006 money.
https://www.theguardian.com/society/2006/dec/13/guardiansoci...
Numbers can vary quite a bit but 1m of road costs about 10000 euro [1] in Germany. So this seems cheap in comparison. Mind you the quality is also quite a bit better. I never understand the complaints about investment in infrastructure and having to pay for it in taxes. I'm generally glad to pay taxes and get a functioning society. But then again the country I live in also does not spend as much on military as the next 6 or 7 next countries combined. Funnily enough the same people who complain about taxes for the road in front of their house hardly ever complain about that.
[1] https://www.google.com/url?q=https://rp-online.de/nrw/landes...
In the US, this is largely due to the perception (right or wrong) of budget bloat and cronyism on taxpayer-funded projects. Those projects have a reputation for cost overruns and generally being more expensive than comparable private projects.
In the case of the article, the road is not affordable. The writer isn't advocating for not paying taxes. The writer is advocating for not taking on projects you can never net on. That doesn't sound unreasonable.
Too little information. If 1m is length, what is the width? where is the road located?
If it's a two-way superwide highway in the middle of a big city, sandwiched between a similarly sized winding overpass, and an underpass, and the cost includes the overhead on the city's economy for shutting down that part of the highway for the given duration, we might be having a conversation.
Depending on curves, it would be rated between 120 km/h and ~200 km/h (though anything above 130 km/h seem to be declared as "no limit", deferring to the motorist's judgement).
If that's speed or cost or if it's really only 100x doesn't matter.
This is a fundamental superiority Chinese society has, and I don't see the US switching to a pro construction stance anytime soon!
~18 workers died and hundreds were injured building the HK bridge to Macau and the Mainland which opened in 2018.
It's about a bias towards building things and taking action.
Construction in the US bordering on a "Vetocracy". Everyone and their NIMBY uncle can oppose anything being done. So what little gets done happens after many years and at great cost.
No one said to uncritically accept anything. In fact, the hidden assumption is usually to uncritically accept that anything the U.S. does is the best.
I simply implied that to attempt to stay ahead, one needs to not blatantly dismiss and discredit what others do, but this is unfortunately very common place in the U.S., whether it regards China or any other country.
I have visited China. Whether there's propaganda or not, it doesn't explain away the amount of nice roads, trains, subways, etc. and the efficiencies of these systems. Coming back to the U.S. felt like stepping back decades when it comes to transportation aside from a few things. China does not magically transport people via smoke and mirrors. They are actually doing it.
In my city, it's taken decades to build mere single digit miles worth of above ground train track, and it's still not done. Propaganda on either side does not magically explain away the disparity.
The real danger today doesn't lie in authoritarianism but in a lack of state capacity. Decades of fearmongering have led the US and significants chunks of Europe to a point where governments can't provide cotton swabs during a pandemic and can't build housing in their cities.
Yes, it does lie in authoritarianism, and that (“lack of state capacity”) is literally always the defense of authoritarianism, especially from those who like to pretend to be merely reluctant supporters rather than ideological devotees.
> . Decades of fearmongering have led the US and significants chunks of Europe to a point where governments can't provide cotton swabs during a pandemic
I'm not going to talk about Europe, but there is absolutely not a “state capacity” problem produced by “decades of fearmongering” I the US of that kind. Both the material capacity and the administrative capacity for the federal executive to direct that material capacity with no effective veto points exists. The present federal executive deliberately choose to apply that power in the worst possible way, withholding it from practical and useful supplies, preventing subordinate authorities from acquiring supplies they had located despite the lack of federal cooperation, and applying federal production mandates to prevent major disease spreading centers (meat packing plants with major outbreaks) from being closed to constrain the spread of the disease.
One can turn this around trivially. Vague allusions to tyranny are always made to justify present-day dysfunction, without any clear expanation of how concrete steps actually lead to said tyranny. It usually just resembles a sort of vague, primal fear of authority.
And on the second point, the US doesn't just have implementation problems. It also altogether lacks power. One reason why construction is so expensive is simply the extreme difficulty to overrule local interests when it comes to acquiring land, and related the threat of litigation.
That's a structural issue, not just a sort of temporary failure. The reason Europe can build rail at one fourth the cost per mile is (among other reasons), that local homeowners don't rule supreme. Just look at California to see what a mess it is.
uhh, source for this? Efficiency measured how? dollars per building? man-hours per building?
I think it was someone reasonably credible on Twitter, not too long ago.
https://aeon.co/essays/what-chinese-corner-cutting-reveals-a...
From an economic perspective it might look more efficient, yes.
The decision to build something is a straightforward yes/no one that does not get dragged through various permitting instances for years and decades only to probably be denied eventually.
China isn't even a poor country anymore. It's middle income, and is losing jobs to poorer countries these days.
If it's just complete BS, does that matter?
Its in the same hilarious inefficiency ballpark as medical. Both are built on the foundations of what should be a public service being parasitized from all sides by regulatory capture.
Not so sure about that.
Filling pot holes? Sure, and they already do that in-house. But building roads must be far less common.
At $1.5/.32 miles, they would be spending $881K per day on road replacement. If a county run crew could cut 10% of this cost out, and 50% of that was used for labor, they could employ 198 people at 80k per year on average. A paver capable of paving 1000 feet of 24 foot wide road per day costs approximately 60k. Assuming 10% of cost savings went towards capital equipment, they could purchase 52 such pavers per year. For a more reasonable but still quite liberal budget of $1 million per year of capital equipment financing and maintenance payments and salaries of $200k for 40 employees, that 10% cost savings would allow the county to pocket $22 Million per year.
Even if the streets were spaced on average 1 mile apart, that would still be 100 feet per day, and the 10% cost reduction would be $3 million per year.
This does not include new construction or regular maintenance of roads, nonetheless other construction projects.
Only very small or sparsely populated counties should have any trouble justifying the expense of an in-house construction crew.
It usually takes longer too. They replaced a pipe in the street in front of my parents house and it took them one month to complete the job, whereas contractors typically take less than a week start to finish for that length of road.
Right now there isn't much incentive for multiple contractors to setup and be efficient in a given town - heavy equipment is expensive to move, so the TAM of any given construction crew is likely limited to a 1 county radius. Based on the math in this thread it's unlikely that many towns need more than 1-2 crews, and the incentive is minimal for that crew to negotiate a fair price.
In the example where there is a public crew for most work the contractor always needs to underbid the public crew, and the city/town has influence on the costs of the public crew as there are no middle men and capex can be amortized over long periods. Most public projects in the US lack this "price ceiling".
Well, the mayor's family member/Buddy who owns the roadworks business who needs their cut, then his family member/Buddy who owns the flagging company needs their cut and Buddy who owns the asphalt production company and so on. Then, work needs to be done as cheaply as possible, with as many corners cut as possible to ensure maximum profit possible for everyone getting their cut. Then the developers will swim around on their mountain of cocaine and money until it runs out and so the cycle goes.
This is how every developer i've ever subcontracted for has operated.
I think a significant cause of this kind of thing is the use of cost-plus EPCM contractors. Sure it's easy to throw a requirements spec and some money at them and have them take care of everything, but ultimately they earn their crust by spending your money. Suddenly, mysteriously, more meetings are essential, more paperwork is required, and more overhead created in every dimension.
This is in Sweden so YMMV, but we were quoted $80K per mile and these people got told $1.5 million for just over a quarter mile?
The financial system is founded on financial insanity. The idea that one should keep taking out new credit cards to pay off your the ones - Except that this is happening on a global scale.
- the population has grown a lot. The demand is way higher, but the offer is propotionally smaller.
- competition is disapearing. Big companies are buying or killing the small builders more and more. They set the prices. They have overhead. They can lobby or corrupt.
- we have more requirements than before. Safety. Going green. Labor laws. This is not free. We are only paying them now because the infra from decades ago was still holding.
- complexity has increased. There are more electricity cables, more water and evacuation pipes, internet cables, gaz pipes, etc.
- price of material has increased. The demand is global now. 3 billions of Asians need roads too.
- administrative burden is higher. This has unexpected costs. Not to mentions insurances and the risk of being sued.
- people are not ready to work as much, and for as little money as before. In my grandma's time, there were plenty of people living very simply, in homes with the bare minimum, working 60 hours a week for a ridiculously small pay. They don't show you that in the movies about "the good old times".
- we have less skilled people than before in those industries compared to the technical level it needs now. Because of our failing education system, the disapearence of parallel ways of learning (you could become good at a trade without going to college 80 years ago) and the lack of respect we show to manual workers, the ones remaining to do the job are often not that good. But the requirements are higher than before.
- we are used to automation. We have machines doing everything for us. Mechanized processes are expensive if not on a mass scale. There are many things that could be made cheaper, but it would require more skill (and painful work conditions) to do them without those tools. Also, while we are getting better at doing hight tech stuff, we are losing knowledge for the mondain tasks.
- it compounds. Industries don't exist in a vaccum. They depend of each other. If machine maintenance, food making and traning people also suffer from the all those same problems, it will affect the building industries situation and hence, prices.
While smart spending is important, it's hard to see street paving as something which threatens to bankrupt this municipality.
[0] https://mckinneytexas.opengov.com/transparency#/1687/account...
You have been misled. The US does not spend a crazy or obscene amount of money on the police.
Government spending is a combination of local + county + state + federal. Local governments are not the primary source of funding for health or education. That’s not a bad thing. The fact that city budgets are dominated by police (and fire) has everything to do with tiers of government responsibility and nothing to do with “how much money is spent on police”.
https://cdn.vox-cdn.com/thumbor/KnMdz38JG76qNjLfF3mv3YrIJM0=...
A similar thing often happens in software -- Product Managers are given scope to build projects of a certain size, but rarely does the business commit to keeping a certain percentage of engineers on to maintain the project forever. So the project decays and the customers eventually walk away. But the Product person has already moved on to other things so they're no longer accountable for the long term picture....
Just some musings, not really sure how widespread/factual it is or solutions...
That is, the cost to "switch out" one version of software for another is effectively zero, so if makes sense to "maintain" the product in perpetuity.
For a road and other capital expenditures with heavy dependencies, your "lifecycle" is
As few changes as possible; and then, all of it changes.
It would be interesting to see usage figures. Twenty five years ago creating a new Word document would be an almost daily occurrence for me. Now it is a rarity.
I have a sense that one day it will just disappear and nobody will notice.
As you say, infrastructure (and all physical capital) depreciates, so some amount of savings must be allocated towards replenishing it. Any leftover savings can be invested into more physical capital (be it tractors, roads, computers), which creates economic growth. However, if you assume that there are diminishing returns to physical capital, then eventually the capital required to replenish depreciation will be equal to the entire income saved (total income less consumption) by an economy. At this point, known as the "steady-state", economic growth falls to 0.
If you are interested in knowing more about the Solow-Swan model I'd recommend these introductory youtube videos [2]. The first three in the playlist in particular outline the basics pretty well.
It must be noted that the Solow-Swan model is quite a simple model and it doesn't completely explain how economies work. For example, the role of human capital (education) and technological advances aren't fully captured. However, it is useful for understanding some of the factors that drive economic growth, particularly in the cases of post-war Germany and Japan or modern day China.
[1]: https://en.wikipedia.org/wiki/Solow%E2%80%93Swan_model
[2]: https://www.youtube.com/playlist?list=PL-uRhZ_p-BM6L_I3IHvE8...
1. https://www.google.com/maps/@39.9093916,-82.9996459,3a,75y,1...
What Seattle is doing now (making a lot of streets limited-access) is way better for pedestrians than a slow, expensive, abortive sidewalk-building-and-street-reconstructing campaign.
Author should be thankful to not need the ADA compliance.
However, regardless, if you cannot pay for ADA compliant sidewalks with existing tax revenue, then paying for them piecemeal using unsustainable bonds seems like it's only pushing the problem out.
If the street were made to be one-way instead of two-way, could it be narrower, leaving room for the sidewalk AND the ditches? Also, it isn't clear from his description, but maybe that would eliminate the need for "additional utilities improvements due to [the sidewalk and widening]".
It would inconvenience the residents on that street and motorists who pass through. But presumably that's better than bankruptcy.
Or here's an even crazier idea: Could the underground drainage be avoided if the city annexed a strip of land from the adjacent properties? That would surely piss them off, but if it were implemented city-wide, as part of a "we're all in this together" kind of campaign to revitalize the city without going bankrupt, maybe it would be more palatable. At least it might seem more "fair" if everyone loses a little land, rather than only some streets. And if owners were compensated monetarily, heck, some might even like it.
This one might not even be that crazy. Utility easements on private property that are large and greatly restrict what the owner can do with the land are fairly common. Your idea seems along those same lines.
“ Jones told the Pioneer that when he was newly hired as city manager, he thought the better alternative would have been to create an underpass at the “Five Corners” where Mission Boulevard, Foothill Boulevard and Jackson Street meet. However this would have almost doubled the project cost and the city was already under pressure to use state funds to construct something, he said, before the funds are taken back and allocated to other cities.”
https://thepioneeronline.com/19812/showcase/hayward-loop-inf...
So, a wheelchair riding in the middle of the street? A car is just going to either drive slowly behind him, or pull over to let him pass. Pedestrians have absolute priority, provided they aren't intentionally hindering cars.
It frustrates me how people use this line to shame anyone who questions the costs of ADA compliance.
There’s a legitimate discussion as to whether it would be socially optimal for that money to be allocated elsewhere. $1.5M could go a long way towards education, community centers, internet infrastructure, or any other public project - and maybe it would go farther than improving wheelchair access on 0.32 miles of sidewalk in a low traffic residential area.
If there is no wheelchair access, how do you get those things to people in wheelchairs?
Cancel the upgrade, send some of the money to wheelchair users so they can buy a nicer wheelchair, a flag for it, hell a new tv, whatever they want; and everyone would be better off.
The takeaway is that ADA compliance only has value when it's consumed and despite a specific rule accessibility is actually a spectrum that can be balanced in a case by case basis.
Uneven at every driveway and too narrow to get around any obstacles (such as a trash can) make sidewalks like that a horrible experience when you're on wheels. Add in the narrow, quiet streets with slow traffic and the street is very appealing.
Technical ADA compliance doesn't make a good/useful experience.
The rules seem pretty simple and not expensive to implement if you are pouring the concrete anyway: https://legalbeagle.com/5561359-ada-standards-sidewalks.html
On the other hand, what I notice more often is a lack of ADA maintenance, after the initial construction might have been compliant. Back in the 80s, LA planted a lot of trees which seemed like a great idea. Today, we are no longer planting that type of tree because it has destroyed sidewalks all over town, making it impossible to travel if you needed ADA specifications to get around. When the city repairs the sidewalk, they don't cut down the newly formed 1' skateboard ramp at all, they just fill in the cracks crudely and quickly with asphalt, which pits in no time. I am stumbling and tripping on the sidewalk all of the time, and I don't even have any conditions affecting my mobility.
Potholes all over, lacking (or practically lacking) a footpath, drainage, or space for on-street parking.
Pine St looks like something I'd expect to find in a developing nation in South America or Asia, not a developed industrial nation like the USA.
This is the biggest oversight of all. It's painful to see new development with no sidewalks.
https://upload.wikimedia.org/wikipedia/commons/thumb/4/46/CS...
Eh, I don't know. Munroe in Ballarat is a residential road but doesn't have sidewalks or street parking either. I mean, the gutter is nicer, but that might be down to a soil/landscape difference. Pine St might have the better drainage because it's been built up so high from the ground.
https://www.google.com/maps/@-37.5573014,143.8142714,3a,75y,...
It's a lot more expensive to maintain "good" roads in climates that have wide temperature cycles throughout their seasons.
But there's no potholes in those pictures. Are you referring to others? Though there are really bad streets in some places. Generally seems to happen when the streets are not as needed as they were previously (e.g. urban decay where businesses and people left the area), and the city doesn't have good options about what to do with it.
Street parking and walkways are optional things anywhere depending on whether they're useful. More of a dependence on the population density. Really expensive subdivisions often lack them too.
I live in rural Australia, in a town with a population less than 20% of the town referenced in the post, and I regularly drive the the nearest town which has a population of 0.2% of the US town, and the road in the post look absolutely dilapidated to me.
Even the fixed up road, if I drove through that in my town, I would think "the council need to do something about that"
Your comment reminded me of playing GeoGuessr when it was first released, I remember being absolutely shocked at some of the random locations in the US, the streetview looked about like I would expect a town here with a population of 100 people to look, and the map would show it as being part of an urban sprawl, 50km from a city center.
McKinney is a town that has apparently undergone rapid expansion in the past 20-30 years and I'm willing to bet that Pine St was initially build well before McKinney reached its current population. If you believe that every single residential road needs to have a certain width and have sidewalks as a matter of course, I don't know that I can dissuade you, but I'm willing to bet that the residents on that road are not eager to give up a portion of their yards for a wider road and sidewalk and they almost certainly would rather that road not receive more traffic as a result of 'improvement'.
That said, there are definitely roads in Townsville Qld (your example of an Australian town that should have good infrastructure,) that look as 'bad' if not worse than Pine St: https://www.google.com/maps/@-19.3152528,146.8315158,3a,75y,...
The example was the rail development of the 2nd Ave subway line in Manhattan, but take almost any example of a large project.
Think about how, if the cost of our projects is 2-3x what it "should be", we are doing without 2/3-1/2 of the improvements to our physical world that we could otherwise achieve.
For some reason, it's a confluence of aging infrastructure, cost of displacing entrenched residents / businesses to make improvements, labor cost, insurance, etc.
What it also produces is a country that does not have a lot of practice in doing big, important infrastructure projects. Maybe once every 10 years. Compared to growing younger countries where they have major projects, say, every other month. And as a result, fewer experts are around to bid for such work, and also as a result, the cost of such projects goes up.
It's a big problem as a country ages and gets more expensive.
Some articles:
- https://www.nytimes.com/2017/12/28/nyregion/new-york-subway-...
- https://www.vox.com/policy-and-politics/2017/1/1/14112776/ne...
- https://pedestrianobservations.com/2018/05/07/why-is-second-...
And this article is not specifically on the problem of cost, but how replacing signals in the NYC subway has lessons like managing a massive software project:
- https://www.theatlantic.com/technology/archive/2015/11/why-d...
What about corruption e.g. ghost employees, inflated billing rates, intentional delays, knowingly letting things be done wrong according to a mistaken spec to bill more hours later, all done by a company owned by the mayor's cousin? Construction is famous for those kinds of things.
Our ignorance and unwillingness to take off the shelf solutions is what has driven up our costs. The patriotic label of 'american made' is regularly used to hide greed and waste. This LA times article (original la times link was dead, this is a mirror) talks about how an established french company offered to construct the project under budget, but officials dismissed them and opted to reinvent the wheel for massive costs along a political route, not an optimal one (1).
The contractor consultant model that we rely on for public works is designed to loot the public purse first, and improvements to public welfare take the back seat to maintaining the status quo of a car dominated way of life. If we were serious, calhsr would have been spooled up into an actual agency with its own labor and engineering pools, and not be this big resovour of public money being sucked dry by parasitic consultants who smelled the billions of dollars of chum we put in the water and convinced us explicitly not to try this in house (2).
Another example of compromised by design infrastructure is the expo line in LA. It takes 15 minutes for the train to travel two miles from USC to downtown LA, because the train runs at grade and is only this year being given signal priority at traffic lights, despite the line opening 8 years ago. Embarrassing to spend millions on a vehicle that can be beaten by someone in decent shape sprinting those two miles along the train tracks.
1. https://transdef.org/wp-content/uploads/High-speed-rail-offi...
2. https://www.latimes.com/local/california/la-me-california-hi...
This is far, far underestimating how many projects we lose.
If things were 3x cheaper, one could justify many more than 3x the projects, as there would be more return on investment and more willingness to fund additional projects.
That said, they don't seem to provide a lot of details and I've seen some wildly misleading numbers from Strongtowns. They're not to be trusted to provide objective numbers.
30 years of 1% inflation = 26% diminished buying power
30 years of 4% inflation = 70% diminished buying power
Perhaps it's because we socialize the cost since the paved road benefits more than the immediate houses on that block.
There's two explanations:
1. Previously, the streets were simply pavement and a ditch. Now they're being upgraded to pavement-sidewalk-internaldrainage-internet-power. It's more expensive and potentially unsustainable.
2. We can't afford it, b/c we're relying on all of these bonds. If _every_ block in the city requires a bond that the property tax from that block can't pay, eventually the banks will recognize that this city isn't a good debitor.
But furthermore, is this the best use of funds? Is adding a sidewalk worth 1.5m, when it could be spent elsewhere?
I wonder how the dynamic would change if all 'access roads' i.e. roads with homes on them, and not 'artery roads' had to be paid for by the local neighborhood.
1. The models for road funding and development were developed in the 1920s and 30s, were based on much denser areas (old towns) that paid a lot higher taxes per acre, and much simpler roads (which cost a lot less).
2. The models haven't been significantly updated or reconsidered since, even though the development patterns have been mandated by law to become much less dense, while street standards have also greatly increased, meaning much less tax base to support much more infrastructure.
3. This often pencils out in places that are growing because there are heavy state and federal subsides for "growth" projects where the up front capital cost is 80-100% paid for by non-local funds. That infrastructure works without maintenance for a while, and likely won't need heavy maintenance for 20-30 years, but at that point it'll need to be rebuilt at about the same cost adjusted for inflation as it cost to build.
In theory what should be happening is cities should be piling up money from taxes on these projects that were subsidized, so that when the maintenance bill comes due they have the funds to do the maintenance.
But in practice, the taxes that come in from "today's" new growth are used to pay for the maintenance on "yesterdays" old infrastructure that needs to be replaced.
Thus, things appear to "work" as long as steady growth continues and new tax income continues to be generated locally while the costs associated are funded from outside. But when growth slows down or stops, things quickly break down.
You can see this pattern of "rolling blight" all over the country, where so many of the older suburbs are falling apart with decaying infrastructure, and people who can are moving farther out to the "shiny and new" suburbs where everything is in good shape.
The problem is especially pernicious in the rust belt, where we have seen metro areas dramatically expand in surface area every decade even as their population has barely increased (or shrunk) since the 1950s.
This sounds like the utter lack of critical thinking which might result in a failing grade for a college term paper, so what gives? As in, what is the thinking with which sane people could justify using such models and/or approving estimates?
There's also the old adage of it being hard to get a person to see a problem when their job depends on them not seeing it. https://www.strongtowns.org/journal/2011/12/12/best-of-blog-...
We haven't always afforded paving streets in cities. Many cities started with dirt roads in a small settlement. As the settlement grows, the investment in roads (sometimes) begins to make sense. As that investment happens, you can see over time an increase in the quality of buildings and population density.
Perhaps you still disagree with it, but the point is that towns routinely make infrastructure improvements for which there is no cost socialization that makes the improvement worthwhile over the improvement's lifetime. You're right to suggest there is some benefit. In the example from the article, however, another street is used as the through street, so the benefit to people in other parts of the town from this road being improved is vanishingly small. It would not be worth however much their taxes would go up. You can also socialize across time through borrowing money, but in this case you would get 30 years worth of road for 35 years worth of money.
It's an interesting book, because it does not even suggest that socialized costs or central government planning are bad in themselves, only that the way we're socializing costs is setting up our towns for bankruptcy.
How many people need that road, i.e. how many people live on these 0.3 miles of road? It's not a through route, so it does not benefit much more people than that. How many people live on 0.3 miles of city streets lined with multi-story buildings? That makes all the difference in how the math works out.
This is the urban planning version of "works on my machine." Per the article, the project includes ADA compliant sidewalks.
However, if I take off my property owner hat and put on my taxpayer hat things start to look a lot different.
There's also a citizen hat. It doesn't focus on "what's in it for me." Citizens are what makes towns strong, not property owners. Not taxpayers.
> 1. Do nothing. Assume that you will be able to grow and borrow forever.
The Fed is buying individual corporate bonds now. The only thing keeping this American experiment afloat is borrowing forever.
I have developed a habit of hitting Esc when modal dialogs pop up on web pages as I'm scrolling down reading. I never want to sign up for the mailing list. The webinar. The sales pitch. Never.
But on sites hosted by Squarespace, Esc gets you into a login prompt, presumably for the site owners? Try it! Weird choice, Squarespace!
That said, this project in the blog post is a total upgrade of the street, what exists currently is two ditches, which are probably a mosquito spawning ground several months a year, and in the middle is asphalt on top of dirt which is a small step up from a dirt road. The end result of curbs, concrete road and ADA-compliant sidewalk is huge. People will want to move to this neighborhood after the upgrade goes in. With the bare strip of asphalt, the curb-appeal of the houses in this neighborhood is quite low.
Also also, concrete residential roads typically have a 40 year lifespan, not 30. My town could have easily ground down the top 1/2" of concrete road surface for a fraction of the price and gone another 10 years without any further maintenance.
> levy a one time charge against the individual properties
that is not how public infrastructure works, or should work
We pay property taxes and estiblish a government so the government assumes those costs and liabilities not the property owners
There are many communities that operate like the way you suggest, they are PRIVATE roads, not public roads.
The trade off for the property owner is they can not disallow members of the public access to that road, the property owner gives up this control because they no longer own, control or have any liability over the road however if you are going to place a lien on my property for the cost of the road then I better have more ownership interest and control over it
Locally we had a similar response to the idea of replacing pedestrian overpass bridges with regular crossings. Cost of maintaining the bridge and its accessibility are less important than those poor cars which may now have to stop on a red light.
Its a ponzi scheme. But with population growth pretty much constant for a century, this has worked in lots of towns. Now with the new norm being replacement (families have 2 or fewer children), the assumption is going to be challenged. The infrastructure-debt bubble may burst.
In the context of climate change, it is also better to favor investment in cities which are already well scarred by human activity, and have a lot of infrastructure and capital already in place, than to expand into or increase the existing environmental impacts on our natural and rural areas. In California, we've built to the edge of what is sensible given the fringes of civilization perennially burn to the ground.
Why is this being calculated based on the project area tax contribution only?
If however it's mostly a residential road, which it seems like it might be, then the scalability point being made by the other responses is probably closer to the truth.
And, the bonds in question will yield ~1.5% at today's rates. In other words, less than inflation. Meanwhile, McKinney has lowered property tax rates in response to higher appraisals (inflation is a major driver of increased appraisals on balance).
So, I take 2 issues with the article. First is the payback period, since property tax revenue only makes up 1/2 of the ex-services income and will increase with inflation. And second, with the idea that every area must cover its own expenses. In general commercial, high-dense and/or rich areas subsidize projects in other neighborhoods. You're going to be able to cherry-pick a project that can't be paid by its beneficiaries in every single city.
[1] https://www.mckinneytexas.org/ArchiveCenter/ViewFile/Item/22...
[author shows picture of a street so crowded with parked cars, even a single car cannot safely drive through without swerving]
The author has bad taste
but in the UK i find it harder to spot and wondered if anyone has pointers?