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Infrastructure Whistle-Blowing

Neal Peirce / Aug 19 2011

For Release Sunday, August 21, 2011
© 2011 Washington Post Writers Group

Neal PeirceMaybe you’ve seen the headlines — “Engineers Warn Infrastructure Crumbling” — accompanied by stories saying it’s imperative we spend billions, sometimes trillions to fix America’s deteriorating roadways, bridges, water and sewer systems.

I’ve written some of those stories myself. And there’s no doubt — keeping public infrastructure in shape, like fixing leaks and keeping a house’s roof in decent condition, is the essence of common sense.

But which spending, and how? Especially on the roadways front, it’s time to think again, asserts Charles Marohn, a civil engineer and conservative Republican and founder of a “Strong Towns” website.

We built a massive interstate highway system — “and then built more,” Marohn asserts: “We poured money in highways, county roads and local streets. We have so much transportation infrastructure — a huge proportion of it with no productivity — that every level of government is now choking on maintenance costs.”

Quite often, Marohn contends, we maintain our “overbuilt” road network while virtually every other city and state service is being cut. Big dollar sums simply “feed strip development.” And on our superhighways, he argues, “We’ve spent trillions to save seconds in the first and last mile of each trip” — resulting in “the fake prosperity of a land use pattern that is bankrupting us, housing bubble and all.”

So when the American Society of Civil Engineers (ASCE) issued its latest report, arguing the United States needs to spend $1.7 trillion on highways and transit systems just by 2020 — doubling current budget projections — Marohn had a terse response. The demand, he said, was “self-serving,” a way to “open up the checkbook for our noble engineers.”

What’s more, Marohn insisted, several of ASCE’s projections of dire economic losses without massively increased spending were based on seriously flawed math.

So what should cities, towns and counties do in the face of radically reduced federal and state dollars for roads? Marohn has a harsh prescription: Focus on the roads you can actually build and maintain from your own resources.

Some localities are already there. Growing numbers of hard-pressed counties — in Michigan, Alabama, Pennsylvania and other states — are actually “depaving,” tearing up lightly-used asphalt rural roads and replacing them with gravel or other rough surfaces.

Other long-term, cost-saving strategies also exist for local governments. Examples: stop extending or improving roads for strip development. Focus on downtowns and neighborhood centers. Shift zoning to encourage mixed use instead of separated residential and commercial areas. And repeal sprawl inducements like minimum parking requirements for stores or apartment complexes.

The “Complete Streets” movement offers a promising model to make roads safer and “multi-use” friendly by redesigning them to be welcoming for everyone — walkers, cyclists, transit users, and motor vehicles. Even before the recession, my colleague Curtis Johnson noticed that in Minnesota, motorists faced with traffic congestion were finding ways to get closer to jobs and other places they need to be. Complete Streets could act as a magnet, conceivably accelerating the recently-reported decisions of some firms to desert their suburban office parks for more convenient in-town locations.

It’s true — costs for maintaining and replacing antiquated urban water and sewer systems may be even tougher to deal with. But like roadways, they can more easily be made cost-efficient in areas of concentrated rather than spread-out development.

The harsh fact, however, is that no matter how well we reform land use, America’s need for prompt infrastructure repair and replacement remains a massive challenge. The engineers’ figures may be exaggerated, but the bottom line need isn’t.

Fortunately, there’s a partial solution that doesn’t require massive new and compounding public debt. It would be creation of a national infrastructure bank able to draw on some of the enormous sums of capital now on the sidelines, currently unavailable to state and local governments, in pension, sovereign, private-equity, hedge, insurance and corporate funds.
Most nations have such an instrument, notes Michael Likosky, senior fellow at New York University’s Institute for Public Knowledge. And now there’s a congressional proposal for an American Infrastructure Financing Authority, introduced by Sens. John Kerry (D-Mass) and Kay Bailey Hutchison (R-Texas).

Granted a one-time $10 billion federal capital infusion, the bank would be able to extend loans and limited loan guarantees to projects short on immediate cash but able to pay for themselves over the long term. Examples would include energy, water or trash disposal plants that can collect user fees, or seaports that anticipates a revenue flow from goods passing through.

Critically important: the proposed bank would be limited to 50 percent of a project’s cost. Private investment would have to cover the rest. That single requirement would represent a giant step toward assurance of the clear cost effectiveness that’s so easily forgotten, or conveniently overlooked, by every player from congressional and state legislative committees to state highway departments and city councils.

It’s about time.


Neal Peirce’s e-mail is npeirce@citistates.com.

For reprints of Neal Peirce’s column, please contact Washington Post Permissions, c/o PARS International Corp., WPPermissions@parsintl.com, fax 212-221-9195. For newspaper syndication sales, Washington Post Writers Group, 202-334-5375, wpwgsales@washpost.com.

7 Comments

  1. Posted August 20, 2011 at 1:46 pm | Permalink

    Well said Sir. Thank you and I learned lots.

  2. Posted August 21, 2011 at 7:08 pm | Permalink

    Excellent article. Of course, infrastructure banks require that infrastructure projects generate revenues from which to repay their costs. A largely hidden source of revenue are the land values generated by well-designed and well-executed infrastructure projects.
    Typically, property taxes collect only 1% or 2% of such value, allowing most publicly-created land value to provide a windfall gain to a few well-situated landowners. Some jurisdictions have modernized their property taxes by reducing the tax rate on building values while increasing the tax rate on land values. This allows infrastructure projects to generate their own financing. It also makes construction, improvement and maintenance of buildings cheaper — helping generate jobs in these pursuits and making it easier for residents and businesses to afford the homes and shops that they need.
    For more info, see http://www.justeconomicsllc.com

  3. Neal Peirce
    Posted August 24, 2011 at 9:05 am | Permalink

    Rick Rybeck (comment above) is right on target about the expanded potentials of taxing land rather than buildings and other improvements. I encourage readers to check the link he provides.

  4. Zach Young
    Posted August 24, 2011 at 9:07 am | Permalink

    Mr. Rybeck is absolutely correct. Local governments invest in their cities by building infrastructure. The return on that investment is the increase in land values. This return on investment should be collected by the local government to finance these infrastructure projects and other programs. Instead it’s falling into the hands of a few landowners while cities and counties struggle to provide basic services. Unfortunately, the majority of the property tax reform being discussed in states is to simply reduce and replace the tax when the conversation should be to shift it off buildings and onto land and you point out.

    Another idea: why depend on the Federal Government to create an infrastructure bank when a group of local governments could create a regional bank. They could pool their resources and create their own line of credit. They could loan money to small businesses and invest in infrastructure projects. If they did this money would stay in the local economy instead being sent off to Wall Street banks.

  5. Chris Robbins
    Posted August 25, 2011 at 7:46 pm | Permalink

    The thing that annoys me is that politicians get funding by complaining about potholes and crumbling bridges, then when they get the money they build new roads to serve sprawl instead of fixing the old infrastructure.

  6. Posted August 26, 2011 at 2:38 pm | Permalink

    Yes I agree with the article. It is not only engineers though who are self-serving it is many consultants, urban designers, architects and others who follow the business rule ‘sell them what they want, not what they need’. Anyone who is in business as a consultant/contractor and I include enginners and other forementioned in this, will get no thanks for telling the truth about what is wanted in economic development or any element or urban development. What you will get is locked out of work in my experience. So what does this mean? I come back to local government needing to re-identify it’spurpose. I think it is trying to be everything to everyone and why/how is this driven? is it some politicians? A proud public sector, doing what it is supposed to, kicking stones out of the way, enabling development which is true, not following fashion or building huge train sets with a politicians name on it. There should be a law against politicians branding themselves on public property. Who gives a toss about them? ask most people in 5 years after they’ve left public office, no-one knows or cares. Naming of public infrastructure should be someone who has greatly contributed to the local community, this could be someone idiosyncratic and interesting. We need to get back to doing what we are paid to do. Getting results for our economies and communities – I include businesses in the word communities.

  7. Neal Peirce
    Posted September 1, 2011 at 4:01 pm | Permalink

    Comment from Bryant Powell
    Assistant City Manager
    City of Apache Junction

    From one in the trenches, thanks for bringing this issue to the forefront. Our community is certainly in the doing what you said,

    “So what should cities, towns, and counties do in the face of radically reduced federal and state dollars for roads? – “Focus on the roads you can actually build and maintain from our own resources. “

    As we budget each year, we must spend less than we bring in, and that is what we’ve done. What we’ve seen over the past three years is a substantial effort on our part to communicate and manage expectations in our community and of our City Council in all aspects of municipal governance. A big chore considering we are in the Phoenix suburban market where many communities grew so very quickly and it was almost addictive in nature if you know what I mean.

    We have no silver bullets. Yes, we’d love to bond street improvements (low interest rate and a contracting community hungry for work = more lane miles/$). But the reality is my city manager or I haven’t cracked the nut on how we will maintain them; for the one revenue stream we have will go back to repayment.

    An example – an arterial that we thought would be 5 lanes curb gutter and sidewalk will need to stay two lanes, no gutter or sidewalk for a time and that’s ok, because service levels based on our land-use plan are meeting community understanding of where we are with our budget. $$ coming will be < going out. It may means the street will be more busy but I would say good we are utilizing that capacity at a higher service level.

    Anyway, thanks for allowing us to have this perspective and thanks for letting me tell our story.