The Poison Gift

A few years ago I worked on a permit for a new golf course. During the process, I became aware that the company building the course was negotiating to purchase properties neighboring the course. One, in particular, was a story worth noting.

It was a middle-aged woman, single, with a couple of kids. She owned a few acres of land and upon it was a house that, in an urban area or an area with higher construction standards, could potentially have been condemned. Tarpaper shack would be an apt description. The house was actually a liability to the property because anyone purchasing it would have had to also spend the money tearing that structure down.

I was reliably told that she was offered double what the property was assessed at, yet refused to sell. I found it amazing that she would not take the money until I heard her reasoning. She indicated that the price offered, while generous, was not even half of what would be needed for her to go and buy a new house. If she did that, she would need to take a different job working more hours (the tarpaper shack was paid for) and that would mean less time with her kids which, as the only caregiver, was near impossible.

What appeared to me to be an opportunity of a lifetime would have been a golden noose around her neck. In exchange for a nice, modern home she didn't really need (or value), she would have to give up time raising her kids, something she did need (and value). The house still stands, now with my admiration.

Imagine you were a family struggling to make ends meet, perhaps with some moderate envy of "the Jones". Now imagine that the government came to you and made you this deal: At the same mortgage you have now, you would be given a 10,000 square-foot mansion complete with multiple swimming pools, a kitchen for each day of the week, a theatre and all the amenities you dreamed about while watching "cribs". Your ultimate fantasy home, and all with the same mortgage. The government would pay the difference.

The only catch is that you have to maintain the mansion. 

It is a no-brainer until you get to that "minor" catch. Just the property tax alone is double what your current mortgage is. Even if you didn't hire someone to clean all 27 bathrooms and instead did it yourself, let alone the lawn maintenance, pool maintenance, etc...there is no way you could afford this.

Now you could take the deal, move in, enjoy the pools and the immaculate landscaping for a while until it all started to deteriorate. You could pick the part of the estate that you liked the most and maintain that section only, letter the others decline faster. You could get two or three jobs, although that would not give you much time to enjoy your new digs. Or you could even get into the rental business, renting out parts of the home that you aren't using (not the business you planned to be in, but you need the money).

You get the point: the poison gift would destroy you, enslave you, change you into something you never wanted to be, or all three. The woman on the golf course looks all the wiser.

Unfortunately, hundreds (or perhaps thousands, if you count state subsidies) of small towns all across the country receive the poison gift each year. In just one example, the Department of Agriculture subsidizes water and sanitary sewer infrastructure for small towns, sometimes paying up to 95% of the cost. The primary criteria for judging the project is not efficiency or even need, it is income level. 

All the town has to do is maintain that pipe once it is in. 

When "maintaining" includes day-to-day operations, it can be a huge challenge for a small town. When "maintaining" includes repair and ultimately replacement, it is an impossibility. The town is (a) forced to seek government subsidy to repair and maintain the system (see entry on Government Bubble or Government Bubble, Continued), (b) forced into the Small Town Ponzi Scheme, (c) forced to allow the system to deteriorate or (d) forced into a combination of all of these.

It is nearly impossible for a small town to say no to the poison gift. Those that understand who they are and confidently seek to be Strong Towns can either find a way to decline or find a way to use the gift to move the town closer to long-term financial solvency.