Wednesday
Sep172014

Roads and Debt

With all the talk of how to pay for a five year road plan, nobody seems to be willing to publicly acknowledge the obvious: Brainerd has more roads to fix and maintain than it has tax base to pay for them. This isn't a taxing problem and it isn't a spending problem. It is an insolvency problem, one that debt can only make worse.

There is no budget solution to this problem that will allow us to continue as we have, only rational ways to respond. When you are insolvent, here are the most obvious things to do:

1. Stop building new roads. Stop annexing more land. The growth theories that justified expanding College Drive - the latest in a long line of such projects - are not working. After decades of road building, you can drive through town in no time, but the tax base necessary to support all these miles of asphalt isn't there. All that land hastily annexed gave the city a quick infusion of cash but also brought enormous long term maintenance obligations. Nobody ever did the math to determine whether or not these transactions made sense; we just chased the growth. These are mistakes we need to stop repeating (see upcoming airport utility project).

2. Take stock of how difficult the situation actually is. A city that already owes millions, is obligated to make millions in debt payments each year and is looking to spend many millions more on roads over the next few years (all while struggling with structural deficits) should be able to answer some simple questions.

How many total miles of roads, streets, sidewalks and curb do we have in our inventory? What is the current condition of each segment? When will each road need to be reconstructed? What is the estimated cost of that reconstruction? What is the annual revenue stream needed to meet these obligations? When will cash flow problems present?

It is unimaginable to be considering a five year, multi-million dollar spending plan without this basic financial information. Public officials should be demanding it.

3. Prioritize basic maintenance. How can we be considering building anything else when we can't maintain what we already have, when we are not doing the low cost maintenance items that keep things from falling apart? Annual crack sealing should be the highest priority since it is relatively low cost and extends the pavement life years, even decades. Chip sealing should come right after. Only after our base maintenance responsibilities are completed should we even be considering reconstruction, expansion or constructing new road segments.

4. Prioritize the city's most financially productive neighborhoods. Basic financial analysis reveals that Brainerd's historic neighborhoods - the downtown and the areas immediately surrounding it - produce the greatest tax revenue per acre in all of Crow Wing County. This is true despite a lack of investment there by both the city and the county. This city council can go a long way towards addressing their stated priorities of fiscal stewardship and neighborhood investments by focusing their remaining capital spending on these core areas.

5. Start doing the little things. We need to start doing what we can with the limited resources we have. We can't afford to build wide roads and huge bridges, but we can sweep sidewalks, repaint faded crosswalks, plant boulevard trees and stripe streets for better bike mobility. These are quality of life investments that are shown to significantly improve property values as well. While not flashy, they are affordable and easy to accomplish. Let's get out there and do them.

The city just had its bond rating downgraded. It should be shocking to everyone to hear that there are people at city hall considering taking on more debt for yet more roads. We are one dip back into recession away from having local government aid reductions back on the table at the state capitol. Those debt payments that we are struggling with today would crush us without the state's ongoing assistance. We are more fragile than our leaders appear to appreciate. It is time for a sober analysis of where we stand followed by a course correction that makes better use of our limited resources. 

Thursday
Jul242014

The cost of auto orientation

This was originally posted on our main site at www.StrongTowns.org as an update to a prior series. 

The Taco John’s versus the “old and blighted” story is one of the most compelling that we share in our Curbside Chat. Here you have two blocks that are identical in every way, except one: the pattern of development. They are the same size, the same shape, abut the same thoroughfare, adjoin the same neighborhood and have the same amount of public infrastructure investment. Only a block separates them and so it is truly an apples-to-apples comparison.

The old and blighted block is a remnant of the incremental, historical development pattern. It represents one of the first increments of growth that cities experienced on their periphery; a small investment in a pop up box. This is the cheapest, credible investment that someone could have made in a commercial property here in my hometown back in 1920. In their comprehensive plan, the city has indicated that this block is a redevelopment opportunity that would, to use their language, ultimately become “auto oriented”.

This is exactly what happened two blocks, which used to look like the “old and blighted” block but now contains a new Taco John’s. Definitely auto-oriented with a large off-street parking lot, two drive through lanes, a large sign and a setback/orientation consistent with highway development. If we are to believe the city’s planning documents, this entire corridor will someday transform into a collection of buildings of similar design and orientation.

It is the math that makes this such a compelling story. While we are predisposed to favor the new over the old, and we discount the value of those “blighted” properties, looking at the numbers sets us straight. In this case, that run down block that the city and others would like to see replaced is actually 41% more valuable than the brand new Taco John’s. In a property tax system like we have here in Brainerd, that means the city gets 41% more taxes from the old and blighted block than it is getting from the exact same sized block with the brand new drive through restaurant. (And in a sales tax system, the difference is likely to be the same, although the perverse incentives of such systems tend to dominate).

In the investment world, that would be called an opportunity. We can see in that old and blighted block an asset that is clearly undervalued by the current paradigm. The city discounts that asset and works to undermine it in favor of the auto oriented asset that they value more. This is true even though the latter returns less, and that is completely ignoring the cost of the 26 years’ worth of tax subsidy (yes, you read that correctly). This city invested 26 years of subsidy payments to get a property that, in the year 2033, will pay substantially less than what it replaced.

And that assumes the drive through restaurant holds its value. Let’s examine that assumption.

The original analysis of the Taco John’s block versus the “old and blighted” block used property valuation data publicly available from the Crow Wing County Assessor. This is the value that is used to compute the amount of tax these properties pay to the city (before removing the subsidy, in the case of the Taco John’s). We did the analysis in 2011 using the numbers posted at that time. Three years later, they have been updated to reflect changes in the market. Here’s what we now find.

There are eleven properties on the “old and blighted” block. In the three years since we last looked, five of them have lost value while six of them have increased in value. The net is a $32,000 decline, which is a 3% loss from the starting value. Given the market conditions, that’s a pretty stable block.

That stability is in sharp contrast to what has happened at the Taco John’s. In that same period of time, it has lost $184,700 in value, a full 23%. The prospects for success in the year 2033 aren’t looking that great at the moment.

And it should be noted that, even if there were no tax subsidy to the Taco John’s, the city would be collecting 79% more taxes from that old, run down, blighted block than they are collecting from the shiny new investment up the street that they worked so hard to get.

This is not an anomaly. The traditional development pattern – the way our ancestors, worldwide, built places for thousands of years – has enormous financial productivity and resiliency. This approach creates more real wealth for the community, pays more taxes per foot and holds its value in good times and in bad far better than anything we’ve built in our new, auto-oriented experiment.

And thus the opportunity. How much more valuable could that “old and blighted” block be – and remember, it is already outperforming its competition – how much more valuable could it be if we actually played to its strengths? What if the highway out of in front of it didn’t make it terrorizing to park there? What if we slowed down those cars and made it so people could cross it on foot or bike? What if there were some shade trees for people who walked the block and went to these businesses? What if the lighting were scaled for people and not a highway interchange? What if it was easy and comfortable for the people from the adjacent neighborhood to walk or bike here? What if there was a bike rack? What if we swept the sidewalk?

Instead of systematically devaluing our city, instead of spending our money on things thataren’t paying back, there are a ton of small, affordable things that could be done to improve the value of our asset that are already outperforming other assets we are spending millions on. These opportunities are everywhere, we just need to start seeing them.

Thursday
Jul172014

I'm sick of lame

Is this all we can come up with for a solution to trampled grass? Just pave it all? Is this all the better we can do here in Brainerd? I hope not.I posted this photo of the “improvements” to the BHS south entrance to my Facebook feed. Amid the general disgust with what has been done (seriously – just pave it all?), a few people thought I was “nit picking” and that the pavement was necessary due to the high number of students getting on and off the bus here.

Two things. First, we need a lot more nit picking. It is attention to this kind of detail, stuff that isn’t expensive to do right but is simply horrible when done wrong, that separates good places from great. This says to the world, “we don’t really care.”

We do, though. We care a lot about our community. It is pride in the community that should make us all disgusted with this, make us insist that we do better. That we pay attention to details.

Second, we have more imagination that this. “Just pave it all” is what a lame school does. A great school identifies the problem (students trampling the grass) and then comes up with an approach that solves it with class. We’re capable of this. We can do it better using less money, we just don’t demand it of ourselves. We just accept lame. To do otherwise is “nit picking”, and we don’t want to be accused of that.

Let’s get this right. If people are interested in fixing this, I’m volunteering to (a) design a solution for this problem that we can take some pride in and (b) work to get it funded. If twenty of you in this city will step up and help me, I’ll do it.

I’m sick of lame. Who is with me?

-Chuck Marohn, Jr.

Wednesday
Jul092014

Five to Three

The most successful small towns are the ones that can see beyond their borders, understand how the world is changing and position themselves for that change. The small towns that become ghost towns stay locked in their thinking, irrationally believing that “what always worked” will always work, that we only need to keep doing what we are doing and things will work out.

The chance to fix South Sixth Street presents an opportunity to discuss the future of Brainerd. Will we be a city that frivolously throws away its wealth and its potential simply because we can’t see another way? The answer will be “yes” if we allow the common mentality expressed in a recent letter to the editor prevail.

Here’s that letter in its entirety (in italics) with an alternative way of thinking about this.

Planning is in the process to rebuild South Sixth Street. The powers to be want to eliminate two traffic lanes and make it a two lane street with bike lanes. Does this sound idiotic to you?

No, it sounds really intelligent. Surprisingly so, actually. South Sixth doesn’t have anywhere near enough traffic to justify five lanes – not even three, actually -- but I expected Mn/DOT and city officials to simply put them back that way. I’m heartened that other ideas are part of the conversation.

The street is just fine in its present configuration;

Just fine for whom? For the taxpayers that would be asked to pay for an additional two lanes of unneeded asphalt? For the homeowners and businesses along the street that aren’t allowed to park in this unused space yet must suffer speeding traffic feet outside their front doors? It certainly isn’t fine for anyone who lives or pays taxes in Brainerd.

Two lanes would cause considerable traffic congestion, but as always it seems the bicyclists want to turn our city into their own little world.

Let me be clear: there is no traffic congestion in Brainerd. None. Zero. Not even on the Fourth of July is there real traffic congestion in Brainerd. If you want to see traffic congestion, visit Atlanta or Houston. We never experience anything near traffic congestion in the city of Brainerd. Never.

So why do people – including our local cadre of engineers – talk frequently about traffic congestion? What they are talking about is not congestion but delay. We have lots of artificial delay, but it is caused by traffic signals, not too many cars in too little space. The signals cause cars to bunch and give the brief illusion of congestion. If you watch for this phenomenon, it will become obvious to you very quickly.

On South Sixth, however, going from five lanes to three would actually reduce this illusion of congestion. The spacing is too great today, the area needed to cross too wide. Eliminating the lane would make traffic flow better, if that is your only concern.

As for bicyclists….try biking once through Brainerd and then comment on how it is a cyclist's “own little world.” On bike and on foot, most of Brainerd is a dangerous and despotic place.

It seems they have convinced the powers to be to start by making a bike Lane on Willow Street with no consideration given to the residential parking on this street. There is not enough parking the way it is when services are being held at St. Andrew’s Church (and yes they also need to increase the size of their parking lot).

The entire controversy over Willow Street was in “consideration” of the parking. What were all the meetings about? And it would be a wonderful day in local Catholicism if St. Andrew’s Church had to increase its parking lot due to high attendance. We might get there – I’m a parishioner – but it hasn’t happened yet.

What the bike riders do not realize is that the residents of this street are assessed for the upgrade of their street.

This is not true for South Sixth, which is a state highway, and I’m pretty sure it wasn’t true for Willow, which is a state aid route.

Also state gas tax money is applied to the upgrade. Does this sound fair? The bike riders pay no gas tax and are not assessed for this street.

It is actually state and federal money, some of which is gas tax and a major percentage of which comes from general tax revenue and deficit spending, which bikers and non-bikers everywhere both pay. This doesn’t sound fair – why should we be taxing everyone in the nation to pay for a very local road project – but it has nothing to do with biking. Bikers may not pay a gas tax, but they also do no damage to the roadway.

I would suggest that if the city deems it necessary to build these bike lanes that they institute immediate bike licensing at a high enough rate to cover the cost of these bike lanes (or trails) and remove the burden from the taxpayers.

I’ll gladly go for this if we do the same thing for automobiles. If we did that, driving in Brainerd – its most socialized and subsidized activity – would quickly come to an end and bike sales would go through the roof.

Enough is enough stop the spending and bonding; who is going to pay for all of this? Elect new council people and mayor; return no incumbent to office.

And finally….two statements where I find common ground with the author, although for very different reasons. The city of Brainerd is going broke. We don’t have the money to pay for all of this, but “all of this” is a place where we spend millions on automobile infrastructure, destroy our tax base in the process, gamble on auto-oriented growth out on the periphery of the community and refuse to do the little things that would actually benefit residents and businesses.

We definitely need a new direction. Keeping five lanes on South Sixth is not that.

Wednesday
Jul022014

Follow the Money

Ojibwe Road, a trail carrying 1,500 cars per day, is proposed to be improved using federal/state transportation funding. (Image from Google.)proposed local road project that has both a traditional engineering approach and a vocal and well-organized opposition subtly reveals what drives most bad design decisions: the funding source.

At issue is five miles of rural roadway in an unorganized portion of Crow Wing County. The roadways are not major collectors – they serve only 1,500 cars per day – and have no regional significance. They are, in essence, local roadways; the first and last few miles of a trip that these, primarily lake-property owners, would use to get somewhere. The fact that this is a county roadway is an historical and geographic quirk, not a representation of its function or usefulness.

In a region where there are many serious and ongoing safety issues on county-administered roadways –- particularly pedestrian safety within the city of Brainerd -- the safety record of these roadways is not in question.

“…there has never been a fatality nor a pedestrian involved in a crash. In the last six years, they reported eight crashes and most of those involving deer.”

In fact, the opposition to the project makes a compelling case that the proposed improvements would make the roads more dangerous.

"In addition, the road would be re-constructed employing a forgiving design which by intent allows for driver error, but actually fosters higher speeds and driver inattention," the residents' letter stated. "These higher speeds and driver inattention would be occurring within inches of the pedestrian walkway. It is the opinion of other experts and the property owners that a pedestrian being struck will be inevitable. Moreover, studies have shown that with the speeds associated with forgiving design highways, the likelihood of pedestrian fatalities increases dramatically. ... The real irony is the very scenic beauty that brings the pedestrians to the roadway; the county engineer will destroy with his plan."

As someone who would be considered by most to be an expert on these issues, I would concur with that quote. Forgiving design is for highways. This rural roadway is clearly not a highway. Using forgiving design principles in this place – widening, straightening and flattening the roadway and adding clear zones on each side – would give drivers a false sense of security, encourage higher speeds and make the roadway more dangerous.

That is not how the project engineer sees it. Indicating that he must use “minimum standards,” he indicated that simply reconstructing the roadway with its currently grade and alignment is not an option.

“Knowingly allowing a simple overlay without addressing known design deficiencies, including pedestrian accommodations, is indeed irresponsible, if not negligent."

And later in the same article:

"I want to be proactive before somebody gets hurt on a road that has blind spots, sharp curves."

So what precisely are we talking about here? What is the substantive design difference between a roadway that would be deemed safe by the “minimum standard” and a roadway that would be irresponsible and negligent to construct? The answer seems to be removing trees and adding four feet of pavement to each side of the road.

Today, the road has 11-foot lanes and no paved shoulder. The minimum acceptable proposal from the county would keep the 11-foot lanes, clear trees back from the edge of the roadway – enhance the clear zone, in technical speak -- and then add a four foot paved shoulder on each side of the roadway. That’s it. That’s the supposed difference between safe and dangerous.

You might be scratching your head at this point. Clearing the trees back and adding a shoulder – regardless of how minimal -- will certainly speed up the little bit of traffic that travels these roadways. Amid this faster-moving traffic, how does a four foot shoulder become a “pedestrian accommodation”? Is there any research to show that a four foot shoulder – people walking single file on the edge of a now highway-designed corridor – is safer for anyone on foot?

And is this epic struggle – which, according to the article has forced prior county engineers to avoid dealing with the roadways altogether – really over some trees and a few feet of pavement?

Nope. The emphasis is added by me in the following quote from the same article.

"This configuration represents a total pavement width increase of 8 feet," Bray stated. "It is the minimum that I am willing to accept given the current and projected roadway conditions. It also represents the minimum design thresholds required to maintain eligibility for funding from sources other than county property taxes."

The Federal Highway Trust Fund -- gas tax revenues plus deficit spending -- is incapable of funding our transportation systems without significant reform.Let me spell this out as clearly as possible: If the roadways are reconstructed to the “minimum standards” allowed by state/federal funding sources, then state and federal money can be used to pay for this local access road (a glorified trail) that winds through the lakes and woods of central Minnesota and serves a bunch of lake homes miles from town. If the roadways are simply replaced with the alignment and grade they currently have, they would not meet state/federal standards and the cost for the project would come entirely out of the county’s budget.

All the talk about safety, pedestrian accommodations, blind spots, deficiencies, etc… is a red herring for the real issue: who is going to pay for this.

While I’m sympathetic to the technical argument of the property owners against applying forgiving design principles, it should be noted that they are not being asked to pay to fix this roadway. Their taxes come nowhere near covering the cost. So the question really is, are the state/federal taxpayers going to subsidize their roadway or are rest of the county’s residents -- particularly those in Brainerd -- going to?

Those are two terrible options.