> The way this happened is pretty simple. At Strong Towns, we call it the Growth Ponzi Scheme. Through a combination of federal incentives, state programs and private capital, cities were able to rapidly grow by expanding horizontally. This provided the local government with the immediate revenues that come from new growth -- permit fees, utility fees, property tax increases, sales tax -- and, in exchange, the city takes on the long term responsibility of servicing and maintaining all the new infrastructure. The money comes in handy in the present while the future obligation is, well....a long time in the future.
This is the lens through which Strong Towns views the country's cities. It's a useful model that explains a great deal. It's also falsifiable.
The growth Ponzi scheme hypothesis says that the source of America's infrastructure problems is subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure. The outcome is always the same: infrastructure that can't be maintained because its costs were never accounted for.
The Strong Towns website is chock full of examples, and Lafayette LA is just one. At this point if you live in any US city it seems pretty likely that you'll find a Growth Ponzi at work.
Also, that 3D map should scare the liver out of local politicians.
> subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure
The same thing is happening right now with EU grant money given for "development" to some of its Eastern European members. Lots of mayors and local officials use that money for grand local infrastructure projects for which they won't have any reasonable money to maintain even in the near future (let alone 30 to 50 years from now), because we have a numerically declining tax-base that is getting older and older (I live in one of those Eastern European countries).
But mentioning that issue gets you labeled as a person "against progress" or an anti-European (or worse, a Russian shill who doesn't trust the European project). We have a saying in Romanian that roughly translates as: "you should stretch out only as much as your blanket allows you to", i.e. one should only consume the resources he/she thinks are reasonably available to him/her, but right at this moment we are "stretching out" further than the bed itself and getting out of the bedroom altogether.
And the world does prove it false. If you look at municipal budgets infrastructure is usually around 10%. There isn't one out there that spends a majority of their budget on infrastructure. The expensive things are cops and schools and fire and other labor intensive services.
The municipalities that have gone bankrupt the issue has almost always been an inability to pay pensions. With the other ones caused by financial fraud and/or mismanagement.
For the life of me I can't understand why people keep posting this Strongtowns nonsense. Their core hypothesis is easily probable wrong and they post the silliest numbers. Like this one pegs Lafayette's infrastructure replacement at 32 billion. Yet Lafayette's entire budget is only 0.6 billion. Since they haven't spent the entire budget for last 50+ years on infrastructure that 32 billion is obviously nonsense.
> The way this happened is pretty simple. At Strong Towns, we call it the Growth Ponzi Scheme. Through a combination of federal incentives, state programs and private capital, cities were able to rapidly grow by expanding horizontally. This provided the local government with the immediate revenues that come from new growth -- permit fees, utility fees, property tax increases, sales tax -- and, in exchange, the city takes on the long term responsibility of servicing and maintaining all the new infrastructure. The money comes in handy in the present while the future obligation is, well....a long time in the future.
Believe me or not, this to an even bigger extend plagues China.
I think more than half of major cities in China are fully consciously running a Ponzi scheme with their own land leases, as they have really no other revenue source to sustain them long term, and this is why they are ready to go to any extremes to do this.
Effectively, private loans are financing municipalities through overpriced land leases. Everybody who ever dealt with real estate in China will tell that land auctions are rigged using every trick imaginable.
Isn’t the reason those few districts have big “profits” because they are the central business district where all the people from the outlying areas with big “losses” come in to work and shop?
This feels like looking at a company by division and deciding that R&D and HR a make huge losses and all the profits are in sales.
the source of America's infrastructure problems is subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure
That doesn't follow from your quote. The quote says that the problem is that those subsidies were used for horizontal development (i.e. sprawl), which rapidly expanded the infrastructure. You are correct that future maintenance wasn't budgeted, but if the city had expanded vertically (i.e. denser urban cores), the infrastructure costs wouldn't have risen quite so dramatically.
While I agree with the strong towns assesment overrall, I think this analysis may rely on some assumptions on the distribution of wealth and tax revenue within a population. Ultimately the "once per generation expense" in all of these towns was funded once per generation in the past. This money came from the federal government, and not the local tax payer - ultimately with the federal government taking on long-term debt to fund it.
While this seems like a ponzi scheme of perpetual growth, there is nothing that would prevent the federal government ( or the local government ) from repeating this exercise to rebuild the infrastructure. If we can't redo this exercise it means that
- The balance of payments in the economy is not well calibrated on a generational scale, profitable economic activity is not attributed on a local scale with free cash flows diverted elsewhere by rentiers/global financial flows e.g. a factory in annaheim california sees all profits recognized in Delaware/Ireland. The federal government/central bank may have more capability to provide local governments with finances than we would expect in such a scenario by rebalancing payments.
- The current US city landscape has real long-term economic costs that drain capital on unprofitable activities, immediate pivots in city planning are required to avoid economic fallout.
I suspect a little bit of all three options are at play, but I would be curious for more exploration on items 1&2. A great irony of the modern world is that the City of Flynn borders several pipe manufacturers.
Building new stuff while never taking into account maintenance costs happens in computer programming, too. At least in some places I've worked, they have more to maintain than people or time to maintain it, but there's always someone with a budget and an idea.
I saw a road in my neighborhood go from trenches along the road to full storm drains and sidewalks, for seemingly zero reason but to let the existing owners appraise their homes for $10k more. The trenches were fine in practice and never spilled over even in the worst storms. This suburb of 15 thousand people is currently millions of dollars in the hole doling out shortsighted handouts like this, and there are thousands of suburbs just like this one.
> Infrastructure that can't be maintained because its costs were never accounted for.
I like that you used the phrase "accounted for". It implies in my mind that the politicians doling out the cash did not monitor how that cash was used.
In management-speak, it's the classic phrase "delegation without follow-up to abdictation"
I initially thought about it in terms of accountability "the lower levels should have wrote down their expenses, their decisions, and sent it upward for review" but then I thought "why would most people do that if the people at top aren't mandating the record-keeping, let alone looking at it?" The higher levels didn't attach real strings to the funds and only kept abreast of developments by looking at the end results. Which were positive and attractive, but camouflaged very real deficiencies in the system that produced it.
This has been understood since at least the 1950s, when the Interstate system was 90% subsidized by the Federal government, but maintenance was a local responsibility.
> The growth Ponzi scheme hypothesis says that the source of America's infrastructure problems is subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure.
This is pretty clearly false; the main cause of infrastructure maintenance neglect is that politicians, like many leaders in other fields, get more career boost from new projects than making sure existing things are maintained. That's true from top to bottom.
There's policy contributions (e.g., California Prop. 13 makes local jurisdictions dependent on development fees and other growth-related revenue because property taxes are limited to a low nominal level and decline in real terms as property is held because of the limitations on assessed value increases to significantly below the historical average rate of inflation), but new-project subsidies aren't a root cause but a symptom of the cause which would exist even without the subsidies.
Isn't it ironic that people constantly charge corporations with short-term thinking as some failure of capitalism, when the real disaster is the local government?
Here's another one. In Seattle, the city has seen enormous growth in tax revenue, far outpacing population growth. But the money just seems to disappear. Where it's going are public employee pensions, which were enacted long ago by politicians to garner the support of the unions. But the math on these is unsustainable and a looming crisis, but the politicians couldn't care less as the bill was far into the future and the election was just around the corner.
Yet again an article about how it costs $X to do something with infrastructure but no explanation for why it costs $X. Until everyone starts asking "why?" and then addressing the resulting answers (commonly: kickbacks, overregulation, collusion in bidding, and simple "match the budget" bids) this issue will continue with every aspect of government-run service.
In Toronto, Canada a simple renovation of a subway stations entrance (painting, tile, basic refresh) can take several years. All the while they will rope off large sections or shut down escalators for months while there is ZERO work being done.
There was a Subway station called Runnymede that took about 5-7 years and when completely you couldn't tell they did anything. I am sure it cost 10's of millions of dollars and could have been completely started and finished by a private contractor in a couple months.
The city has never been manage properly because there are no consequences to the ineptness of the Politicians and bureaucracy that run it. You could complain (a lawyer friend did) and they basically either ignore or make up some story how difficult it is to lay 200 sq/ft of tile and clean an escalator...These things take years of hard work and planning....
Surprised the city doesn't come crashing down under it's own weight of dysfunction but they seem to prop it up by the endless tax or fee increases.
There’s plenty of reasons beyond corruption. Repaving a mile of third avenue in Seattle costs a lot more than a mile of downtown Wendell, Idaho which will cost a lot more than chip sealing a mile of dirt road just two miles away from the center of Wendell. Salaries are more expensive in big cities. The job is more complex as the amount of infrastructure beneath the road surface, which requires ongoing access, so lots of man holes. Repaving in a dense urban center requires removing the old pavement, in a rural setting it’ll just be piled on top until it’s been layered four or five times.
The classic example of this is the 580/880 intersection replacement in Oakland/Alameda. It's a crucial intersection for the East Bay so when a tank truck caused a fire that collapsed it, the tender issued provided a massive bonus for each day ahead of projected schedule you achieved.
The winner completed it far faster than similar projects, and under projected budget, taking it all in from the bonus. Every day he was slow, he lost money. So the incentives were great, and the winning contractor did a great job. So we have the construction technology and we have the policy technology.
But similar projects frequently take forever. Why is that? We know how to make them fast, cheap, and good, clearly. We know how to set up the incentives on a per-task basis so we will do that as well. So I suspect it is because they actually aren't crucial. So you sell the buyer (the populace) on the price tag based on the supposed importance, but you actually do the work on the real importance. The gap between the two allows for profit for politically connected contractors like Tutor Perini and also for make-work for powerful groups like construction unions. What we don't know is how to set up the incentives such that good per-task incentives will be put in place.
In fact, I'd say that the true importance of any slow project is likely very low. In California, the following projects should not have started:
* CA HSR
* SF Central Line
During their lifetimes they will not yield positive economic utility.
Don't forget no incentive to be efficient or innovate better techniques / technologies on the part of both the city as a whole and individual employees. Government is the least accountable of all organizations and therefore the least effective at any given task.
It's interesting that so many of the responses mention the high costs of infrastructure upkeep is due to the density and complexity of the built environment in which is exists. The article however is pushing for denser development so there is less infrastructure to maintain. Interesting balance between the two opposing development patterns, both of which appear to lead to high maintenance costs.
The general principle is that we haven't figured out yet how to deal with monopolist markets (in other words, situations where there is no market). Competitive markets lead to high efficiency but there are many situations, often public projects, where there's no competition.
But how they get the money and from who is a factor too.
This always happens when real property is taxed rather than commerce, and the amount of land available for development is limited or fixed.
To start with all land is taxed according to its initial assessment, after that revenues can not increase without raising rates and/or further developing parcels to increase their taxable value.
Both of which are unsustainable in the face of any inflation at all.
Each of which have their staunch supporters at odds with the other.
If only rate increases are considered, rate increases will have to outpace inflation or the taxing authority will go bankrupt.
The taxing authority can not be allowed to fail especially since the original purpose of this type tax is for the taxpayer to go bankrupt before the nobility does.
Eventually the _landowner_ will be assessed more tax than the land itself brings in, and will require _owners_ having outsized wealth from other sources, often only multigenerational prosperity will be sufficient.
At the other extreme where revenue growth comes only from further property development, pressure is greatest on undeveloped properties having the biggest upside potential.
New infrastructure is built at the expense of the old, spread more widely, and naturally not yet having future inflated maintenance costs incurred.
Little hand-waving is needed when a tax payer & collector are all prospering over the deal in the short term and there is some plausibility to behave as if future prosperity for all taxpayers will increase at the rate enjoyed by those involved with the development. Surely making costly things easier by then.
Inflation makes it impossible to know for sure anyway.
Mix and match these growing costs across citizenry which is not becoming more prosperous, and eventually there is no discretionary wealth except among the few who overcame the inflationary toll.
Taxing commerce instead of property allows revenue to grow at the rate of real prosperity unlimited. With the risk that revenue will drop when prosperity drops, or the authority will go bankrupt at the same time as the general citizenry in such a case.
Not a realistic risk since the authority will have enough credit to delay its own bankruptcy until after the majority of the citizens are ruined.
I guess the point of view about what kind of tax could ideally fund infrastructure indefinitely depends on whether you are a lowly taxable subject or a high-born guv'nor.
> The median house in Lafayette costs roughly $150,000. A family living in this house would currently pay about $1,500 per year in taxes to the local government of which 10%, approximately $150, goes to maintenance of infrastructure [...] To maintain just the roads and drainage systems that have already been built, the family in that median house would need to have their taxes increase by $3,300 per year.
As best I can tell, the author was saying that Lafayette is spending only $150 / ($3300 + $150) =~ 4% of what it needs to spend to maintain its roads and drainage systems. That seems implausible. I wonder whether he has made an odd assumption: "currently, 10% of taxes go to maintenance of infrastructure; thus, if we increase taxes by $3,300, only 10% of the increase will go to maintenance of infrastructure." That odd reasoning might account for his "need to have their taxes increase by $3,300 per year" claim.
It can happend when towns grow quickly and the city sell the parcels for a significant amount of money.
In Denmark parcels are often sold for $50-100.000 in popular areas. This gives the town a significant amount of one-shot money.
If they use that one-shot money for running expenses rather than investments (in e.g. subways), then the town will go bankrupt when there are no new buyers of parcels.
He's talking about accruals based accounting. I'm no accountant, but memory suggests that means adding something similar to [cost of asset / life of asset] to the annual maintenance cost.
Although it is still implausible, it is certainly possible to miss 95% of the cost if they spend very little on monthly maintenance (ie, under-maintain). Then at some point in the near future, the road will need to be ripped up and replaced. Not cheap.
The article said about 10% of taxes goes to maintenance of infrastructure. I'm fairly sure that percentage is fixed.
That would be $150 + $330=$480 not $3,450.
That would make the current percentage 150/(330+150) = ~31% not ~4%.
In my experience, it's because people in the middle of nowhere are allowed to vote on infrastructure projects. They claim they don't want "their tax dollars" to pay for "them city slickers." The important bit they conveniently leave out is that cities majorly subsidize rural living through taxes.
All of our major systems: from infrastructure to employment to graduate work, is built on the assumption of eternal exponential growth. All of these past infrastructure decisions would've been fine if we continued to have exponential economic and population growth. More taxes/funding would come in and there'd be new money to continue to grow forever. Except it can't grow forever. Eric Weinstein coined the phrase "Embedded Growth Obligation" (EGO) to describe this phenomenon.
>"An embedded growth obligation is how fast a structure has to grow in order to maintain its honest positions," Weinstein says. "If you have a situation in which you have trial lawyers and they're supported by various associates, and the associates all want to become partners and trial lawyers themselves, then what you have is a situation where the law firm has to grow at a very fast clip if all those people are going to be satisfied with their job decisions. Well, very quickly that ability to grow runs out, and then people want to know, "Why am I stuck in a position going nowhere?"
This was a good explanation of why US cities will never be able to cover their infrastructure maintenance costs.
The town I live in recently completed a $20mil sewer treatment plant and is in the process of beginning a $2mil+ project to replace the water lines.
It has approx. 1,600 residents, although the neighboring town is a customer of our sewer plant and they supply our drinking water (even though we are on the river).
I believe, as an investor of municipal bonds, the tax liability is eliminated, so this may be a reason this type of investment is ‘pushed’.
Why don't we just stop building all this infrastructure, and move to a micro-community or individual model?
My parents' farm is on a well and septic, and a dirt road. Water purification is done with a UV filter. The infrastructure costs are almost nil.
We are in an age now where houses don't even need to be on the power grid -- a set of solar panels and a lithium battery makes traditional power distribution obsolete.
If it costs a typical suburban house $10k a year to maintain infrastructure, that's outrageous. Move to individually or community based infrastructure.
Hot take: Its mostly just car infrastructure thats the cause of the problem. We spent way too much money for a large car-centric transport network that doesn't scale. Stop subsidizing and prioritizing cars as a primary form of transit and you fix most of the issues.
A lot of the initial taxation and allocation discussion seems likes somewhat of a red herring. The starting point is near the end, IMO: The cost of infrastructure maintenance is $8k-$10k per home.
Is this true? How variable is this between cities? How determined is it? Could it be less, how, etc.?
IDK if this number is normal or out of line, but I think this needs to be the starting point. My uneducated opinion is that it seems high.
One difference between here and the States is that most of our tax money goes to the equivalent of city and state, and only a small percentage to the national government.
I remember after the Northridge earthquake in 94 destroyed a section of Interstate 10 in Los Angeles. The state awarded the repair contract to a company with the stipulation of penalties of 200k/day after a certain amount of time, or a bonus a 200k/day if they finished before scheduled. https://www.planacademy.com/construction-project-acceleratio...
Maybe because middle class left to suburbs leaving mostly ghettos in the cities thus depriving them of them main source of income, the property tax?
In this case, the problem will fix itself, because suburbs are the Cold War creation, they can be seen as a compulsory wartime measure. Provided that relationship with China will not reach Cold War standoff levels, they will cease to exist by themselves, because modern people really don't want to live in them.
I suspect they can keep up and they just will have to in the future. Right now you can see it in taxes for old established cities in the NE have higher taxes than growing states in the South. I saw that NY pays more for retired cops than it does for those working today - that isn't true for Miami/Phoenix/Dallas or other fast growing cities, but will be.
Cities could procure significant funds by assessing developers for long term maintenance costs. For example, it should be possible to estimate how many new housing units would require an additional fire station and the cost to build it. Then prorate that cost to each house. Same applies to libraries, parks, court houses and so on. Developers would tack the additional assessment on to the price of the house and that in turn might slow demand and growth.
Corruption is most definitely a factor, maybe not universal, but I have seen it. In my city a developer got approval for the first stage of new houses, about 130, and the county planning agency gave approval for the second stage conditional upon the developer building a bridge to allevate traffic. After the first stage was complete the county commissioners voted to pick up the cost of the bridge and the only explanation was the developer did not have the funds and the commissioners thought the second stage housing would be be an economic benefit to the community.
So basically these cities need to reduce their infrastructure to the point it's maintainable again. That could work for roads. It's not much fun, but in Russia often houses don't have an asphalted roads next to them. but perhaps it wouldn't work for pipes, because of hygiene reasons. Perhaps owners can be made to pay for at least some of those pipes through fees for the homeowners association rather than taxes. That way the excess is off the city balance sheet. Houses that are too far away from central infrastructure would just be vacated eventually. Maybe in time more efficient cost sharing appartments would replace these.
[+] [-] aazaa|5 years ago|reply
This is the lens through which Strong Towns views the country's cities. It's a useful model that explains a great deal. It's also falsifiable.
The growth Ponzi scheme hypothesis says that the source of America's infrastructure problems is subsidies from higher levels of governments (e.g., federal) to lower levels (e.g., cities) for infrastructure. The outcome is always the same: infrastructure that can't be maintained because its costs were never accounted for.
The Strong Towns website is chock full of examples, and Lafayette LA is just one. At this point if you live in any US city it seems pretty likely that you'll find a Growth Ponzi at work.
Also, that 3D map should scare the liver out of local politicians.
[+] [-] paganel|5 years ago|reply
The same thing is happening right now with EU grant money given for "development" to some of its Eastern European members. Lots of mayors and local officials use that money for grand local infrastructure projects for which they won't have any reasonable money to maintain even in the near future (let alone 30 to 50 years from now), because we have a numerically declining tax-base that is getting older and older (I live in one of those Eastern European countries).
But mentioning that issue gets you labeled as a person "against progress" or an anti-European (or worse, a Russian shill who doesn't trust the European project). We have a saying in Romanian that roughly translates as: "you should stretch out only as much as your blanket allows you to", i.e. one should only consume the resources he/she thinks are reasonably available to him/her, but right at this moment we are "stretching out" further than the bed itself and getting out of the bedroom altogether.
[+] [-] treis|5 years ago|reply
And the world does prove it false. If you look at municipal budgets infrastructure is usually around 10%. There isn't one out there that spends a majority of their budget on infrastructure. The expensive things are cops and schools and fire and other labor intensive services.
The municipalities that have gone bankrupt the issue has almost always been an inability to pay pensions. With the other ones caused by financial fraud and/or mismanagement.
For the life of me I can't understand why people keep posting this Strongtowns nonsense. Their core hypothesis is easily probable wrong and they post the silliest numbers. Like this one pegs Lafayette's infrastructure replacement at 32 billion. Yet Lafayette's entire budget is only 0.6 billion. Since they haven't spent the entire budget for last 50+ years on infrastructure that 32 billion is obviously nonsense.
[+] [-] baybal2|5 years ago|reply
Believe me or not, this to an even bigger extend plagues China.
I think more than half of major cities in China are fully consciously running a Ponzi scheme with their own land leases, as they have really no other revenue source to sustain them long term, and this is why they are ready to go to any extremes to do this.
Effectively, private loans are financing municipalities through overpriced land leases. Everybody who ever dealt with real estate in China will tell that land auctions are rigged using every trick imaginable.
[+] [-] hmahncke|5 years ago|reply
This feels like looking at a company by division and deciding that R&D and HR a make huge losses and all the profits are in sales.
[+] [-] tremon|5 years ago|reply
That doesn't follow from your quote. The quote says that the problem is that those subsidies were used for horizontal development (i.e. sprawl), which rapidly expanded the infrastructure. You are correct that future maintenance wasn't budgeted, but if the city had expanded vertically (i.e. denser urban cores), the infrastructure costs wouldn't have risen quite so dramatically.
[+] [-] lumost|5 years ago|reply
While this seems like a ponzi scheme of perpetual growth, there is nothing that would prevent the federal government ( or the local government ) from repeating this exercise to rebuild the infrastructure. If we can't redo this exercise it means that
- Despite economic growth, the cost of replacing existing infrastructure is higher than it was a generation ago e.g. Cost disease: https://en.wikipedia.org/wiki/Baumol%27s_cost_disease
- The balance of payments in the economy is not well calibrated on a generational scale, profitable economic activity is not attributed on a local scale with free cash flows diverted elsewhere by rentiers/global financial flows e.g. a factory in annaheim california sees all profits recognized in Delaware/Ireland. The federal government/central bank may have more capability to provide local governments with finances than we would expect in such a scenario by rebalancing payments.
- The current US city landscape has real long-term economic costs that drain capital on unprofitable activities, immediate pivots in city planning are required to avoid economic fallout.
I suspect a little bit of all three options are at play, but I would be curious for more exploration on items 1&2. A great irony of the modern world is that the City of Flynn borders several pipe manufacturers.
[+] [-] cratermoon|5 years ago|reply
[+] [-] wasdfff|5 years ago|reply
[+] [-] hitekker|5 years ago|reply
I like that you used the phrase "accounted for". It implies in my mind that the politicians doling out the cash did not monitor how that cash was used.
In management-speak, it's the classic phrase "delegation without follow-up to abdictation"
I initially thought about it in terms of accountability "the lower levels should have wrote down their expenses, their decisions, and sent it upward for review" but then I thought "why would most people do that if the people at top aren't mandating the record-keeping, let alone looking at it?" The higher levels didn't attach real strings to the funds and only kept abreast of developments by looking at the end results. Which were positive and attractive, but camouflaged very real deficiencies in the system that produced it.
It's plain irresponsibility.
[+] [-] JJMcJ|5 years ago|reply
[+] [-] dragonwriter|5 years ago|reply
This is pretty clearly false; the main cause of infrastructure maintenance neglect is that politicians, like many leaders in other fields, get more career boost from new projects than making sure existing things are maintained. That's true from top to bottom.
There's policy contributions (e.g., California Prop. 13 makes local jurisdictions dependent on development fees and other growth-related revenue because property taxes are limited to a low nominal level and decline in real terms as property is held because of the limitations on assessed value increases to significantly below the historical average rate of inflation), but new-project subsidies aren't a root cause but a symptom of the cause which would exist even without the subsidies.
[+] [-] WalterBright|5 years ago|reply
Here's another one. In Seattle, the city has seen enormous growth in tax revenue, far outpacing population growth. But the money just seems to disappear. Where it's going are public employee pensions, which were enacted long ago by politicians to garner the support of the unions. But the math on these is unsustainable and a looming crisis, but the politicians couldn't care less as the bill was far into the future and the election was just around the corner.
[+] [-] daniellarusso|5 years ago|reply
Municipal bonds are almost like student loans in the US.
[+] [-] rayiner|5 years ago|reply
[+] [-] redtexture|5 years ago|reply
Wake up to the developer perspective.
[+] [-] jimmygrapes|5 years ago|reply
[+] [-] hourislate|5 years ago|reply
There was a Subway station called Runnymede that took about 5-7 years and when completely you couldn't tell they did anything. I am sure it cost 10's of millions of dollars and could have been completely started and finished by a private contractor in a couple months.
The city has never been manage properly because there are no consequences to the ineptness of the Politicians and bureaucracy that run it. You could complain (a lawyer friend did) and they basically either ignore or make up some story how difficult it is to lay 200 sq/ft of tile and clean an escalator...These things take years of hard work and planning....
Surprised the city doesn't come crashing down under it's own weight of dysfunction but they seem to prop it up by the endless tax or fee increases.
[+] [-] wang_li|5 years ago|reply
[+] [-] Spooky23|5 years ago|reply
The answer is always the same for local governments. ~70% of expenditure is for operations, and 60% of that is for cops and fire.
[+] [-] renewiltord|5 years ago|reply
The winner completed it far faster than similar projects, and under projected budget, taking it all in from the bonus. Every day he was slow, he lost money. So the incentives were great, and the winning contractor did a great job. So we have the construction technology and we have the policy technology.
But similar projects frequently take forever. Why is that? We know how to make them fast, cheap, and good, clearly. We know how to set up the incentives on a per-task basis so we will do that as well. So I suspect it is because they actually aren't crucial. So you sell the buyer (the populace) on the price tag based on the supposed importance, but you actually do the work on the real importance. The gap between the two allows for profit for politically connected contractors like Tutor Perini and also for make-work for powerful groups like construction unions. What we don't know is how to set up the incentives such that good per-task incentives will be put in place.
In fact, I'd say that the true importance of any slow project is likely very low. In California, the following projects should not have started:
* CA HSR
* SF Central Line
During their lifetimes they will not yield positive economic utility.
[+] [-] ItsJason|5 years ago|reply
[+] [-] rbg246|5 years ago|reply
[+] [-] KingOfCoders|5 years ago|reply
Sum($Z) >> Sum($Y) with $X paid for my subsidies.
[+] [-] haram_masala|5 years ago|reply
[+] [-] koheripbal|5 years ago|reply
We need construction robots.
[+] [-] Mountain_Skies|5 years ago|reply
[+] [-] RivieraKid|5 years ago|reply
[+] [-] fuzzfactor|5 years ago|reply
But how they get the money and from who is a factor too.
This always happens when real property is taxed rather than commerce, and the amount of land available for development is limited or fixed.
To start with all land is taxed according to its initial assessment, after that revenues can not increase without raising rates and/or further developing parcels to increase their taxable value.
Both of which are unsustainable in the face of any inflation at all.
Each of which have their staunch supporters at odds with the other.
If only rate increases are considered, rate increases will have to outpace inflation or the taxing authority will go bankrupt.
The taxing authority can not be allowed to fail especially since the original purpose of this type tax is for the taxpayer to go bankrupt before the nobility does.
Eventually the _landowner_ will be assessed more tax than the land itself brings in, and will require _owners_ having outsized wealth from other sources, often only multigenerational prosperity will be sufficient.
At the other extreme where revenue growth comes only from further property development, pressure is greatest on undeveloped properties having the biggest upside potential.
New infrastructure is built at the expense of the old, spread more widely, and naturally not yet having future inflated maintenance costs incurred.
Little hand-waving is needed when a tax payer & collector are all prospering over the deal in the short term and there is some plausibility to behave as if future prosperity for all taxpayers will increase at the rate enjoyed by those involved with the development. Surely making costly things easier by then.
Inflation makes it impossible to know for sure anyway.
Mix and match these growing costs across citizenry which is not becoming more prosperous, and eventually there is no discretionary wealth except among the few who overcame the inflationary toll.
Taxing commerce instead of property allows revenue to grow at the rate of real prosperity unlimited. With the risk that revenue will drop when prosperity drops, or the authority will go bankrupt at the same time as the general citizenry in such a case.
Not a realistic risk since the authority will have enough credit to delay its own bankruptcy until after the majority of the citizens are ruined.
I guess the point of view about what kind of tax could ideally fund infrastructure indefinitely depends on whether you are a lowly taxable subject or a high-born guv'nor.
[+] [-] jbullock35|5 years ago|reply
As best I can tell, the author was saying that Lafayette is spending only $150 / ($3300 + $150) =~ 4% of what it needs to spend to maintain its roads and drainage systems. That seems implausible. I wonder whether he has made an odd assumption: "currently, 10% of taxes go to maintenance of infrastructure; thus, if we increase taxes by $3,300, only 10% of the increase will go to maintenance of infrastructure." That odd reasoning might account for his "need to have their taxes increase by $3,300 per year" claim.
[+] [-] silvestrov|5 years ago|reply
In Denmark parcels are often sold for $50-100.000 in popular areas. This gives the town a significant amount of one-shot money.
If they use that one-shot money for running expenses rather than investments (in e.g. subways), then the town will go bankrupt when there are no new buyers of parcels.
It's somewhat like a ponzi scheme.
[+] [-] roenxi|5 years ago|reply
Although it is still implausible, it is certainly possible to miss 95% of the cost if they spend very little on monthly maintenance (ie, under-maintain). Then at some point in the near future, the road will need to be ripped up and replaced. Not cheap.
[+] [-] IncRnd|5 years ago|reply
That would make the current percentage 150/(330+150) = ~31% not ~4%.
[+] [-] seattle_spring|5 years ago|reply
[+] [-] Consultant32452|5 years ago|reply
>"An embedded growth obligation is how fast a structure has to grow in order to maintain its honest positions," Weinstein says. "If you have a situation in which you have trial lawyers and they're supported by various associates, and the associates all want to become partners and trial lawyers themselves, then what you have is a situation where the law firm has to grow at a very fast clip if all those people are going to be satisfied with their job decisions. Well, very quickly that ability to grow runs out, and then people want to know, "Why am I stuck in a position going nowhere?"
https://bigthink.com/culture-religion/eric-weinstein-intelle...
[+] [-] daniellarusso|5 years ago|reply
The town I live in recently completed a $20mil sewer treatment plant and is in the process of beginning a $2mil+ project to replace the water lines.
It has approx. 1,600 residents, although the neighboring town is a customer of our sewer plant and they supply our drinking water (even though we are on the river).
I believe, as an investor of municipal bonds, the tax liability is eliminated, so this may be a reason this type of investment is ‘pushed’.
[+] [-] justanotherc|5 years ago|reply
My parents' farm is on a well and septic, and a dirt road. Water purification is done with a UV filter. The infrastructure costs are almost nil.
We are in an age now where houses don't even need to be on the power grid -- a set of solar panels and a lithium battery makes traditional power distribution obsolete.
If it costs a typical suburban house $10k a year to maintain infrastructure, that's outrageous. Move to individually or community based infrastructure.
[+] [-] ohples|5 years ago|reply
[+] [-] narag|5 years ago|reply
https://www.strongtowns.org/journal/2017/1/10/poor-neighborh...
And in this one, a link to another interesting explanation:
https://www.strongtowns.org/curbside-chat-1/2015/12/14/ameri...
[+] [-] mwkaufma|5 years ago|reply
[+] [-] netcan|5 years ago|reply
Is this true? How variable is this between cities? How determined is it? Could it be less, how, etc.?
IDK if this number is normal or out of line, but I think this needs to be the starting point. My uneducated opinion is that it seems high.
[+] [-] 082349872349872|5 years ago|reply
[+] [-] guidedlight|5 years ago|reply
(1) borrow to fund infrastructure spending; and focus that into new local jobs and economic activity
(2) A boosted economy will allow higher taxes to be collected
(3) Better infrastructure will attract investment
But in this scenario, politicians will skip step 2 because it's unpopular; and the cycle will continue in a future generation.
[+] [-] vondur|5 years ago|reply
[+] [-] blurbleblurble|5 years ago|reply
And how many human-hours a month do people in Lafayette twiddle away on corporate busywork so they can pay that interest?
[+] [-] anovikov|5 years ago|reply
In this case, the problem will fix itself, because suburbs are the Cold War creation, they can be seen as a compulsory wartime measure. Provided that relationship with China will not reach Cold War standoff levels, they will cease to exist by themselves, because modern people really don't want to live in them.
[+] [-] x87678r|5 years ago|reply
[+] [-] textman|5 years ago|reply
Corruption is most definitely a factor, maybe not universal, but I have seen it. In my city a developer got approval for the first stage of new houses, about 130, and the county planning agency gave approval for the second stage conditional upon the developer building a bridge to allevate traffic. After the first stage was complete the county commissioners voted to pick up the cost of the bridge and the only explanation was the developer did not have the funds and the commissioners thought the second stage housing would be be an economic benefit to the community.
[+] [-] gumby|5 years ago|reply
Why does infrastructure seem to work in Western Europe? Even little towns in Germany have good roads, water, electricity etc.
[+] [-] timwaagh|5 years ago|reply