Friday News Digest

I'm from Minnesota. We can count the number of truly hot days each year using our fingers. For this reason, and because I'm financially-prudent (did someone say "cheap"?), I opted not to install air conditioning in our home. While Steve Mouzon of the Original Green would be proud (I understand he shuns A.C. in Miami, which to me is akin to shunning heat here in January, but more power to him for walking the talk), it is those handful of days each summer that can become a tad unbearable. Actually, the days I can handle -- it is the hot, muggy nights that really wear me down. I won't complain too much because I almost had to turn the furnace on last month. Yep, that's Minnesota, where every conversation begins with a comment on the weather.

Kinda hot out dere, eh? Enjoy the news.

• Okay. The Better Block team is officially the coolest group out there today. I'm going to be in Dallas next month and I really need to meet these guys. This week they made the case that a complete street creates greater revenue potential. Check out the photos that go along with the article. Their genius is that realization that, yes folks, it is really that easy.

An assumption often made is that our roads are paid for by gas taxes. The reality is that none of our residential and non-highway/interstate roads are covered at all by gas taxes…it’s soley property taxes. To make matters worse, when business opportunity erodes in an area, we typically raise taxes to continue maintenance which pushes business away and creates an undue burden on residents to fill in the void. The money we’d save by reclaiming portions of the streets for businesses and people would go far to helping our city’s balance sheet. Fewer potholes to fill while increased area business tax revenue would help cover the costs of pedestrian amenities like lighting, watering trees, et cetera.

• The notion that a highway should somehow change when it reaches a small town is a concept lost on the engineering profession. The conventional approach is that the highway doesn't change to match the town, the town changes to match the highway. After two generations of this mindset we find ourselves not only with huge safety problems but we have gutted the tax base of our small towns and buried our DOT's in maintenance obligations.  The Rural Blog writes about one set of engineers that are starting to see things differently. Starting.

Those five lanes were reduced to three, with bike lanes added to either side of the road. Two years later, continuous sidewalks were added to allow pedestrians to move between downtown shops. Sycamore trees were planted to show cars this was a neighborhood, not merely the intersection of Highways 299 and 96. Traffic slowed further, which legally allowed the speed limit to be lowered to 35 miles per hour. Pedestrian crosswalks were drawn. A community downtown was created.

• In the time I've been writing this blog, not only has Kaid Benfield become a friend and mentor, but his writing -- which I had not been exposed to before (my ignorance) -- has continued to inform and inspire me. His posting this week on "The Pursuit of Happiness" has added to my reading list and given me even more to think about.

“One of the great, but often unmentioned, causes of both happiness and misery is the quality of our environment:  the kind of walls, chairs, buildings and streets we’re surrounded by.

“And yet a concern for architecture and design is too often described as frivolous, even self-indulgent. The Architecture of Happiness starts from the idea that where we are heavily influences who we can be - and argues that it is architecture’s task to stand as an eloquent reminder of our full potential.

• Another writer I admire is my Minnesota Iron Range friend and peer, Aaron Brown. This past week he wrote about his mixed emotions with the "progress" of tearing down his Depression-era school and replacing it with a modern facility. He beautifully captures the mixed emotions felt through so much of America.

The old building was once a stand-alone school. The classrooms where I attended my English and social studies classes had cloakrooms and back offices which used to serve administrative functions. From one of these rooms I can recall Mr. Hadash fishing out a dog-eared copy of "The Grapes of Wrath," telling me to keep it because I "needed it." I still have that book. I still need it. I also remember Mr. Haapala lending me "The Red Badge of Courage" from his back room, telling me to return it because Stephen Crane wrote it in three weeks and I ought to be able to read it even faster.

• Last week in the news digest we ran a graph of the Shiller Index of home values. I was made aware this week of this instructive video where this graph is modeled using a first-person roller coaster. The end, where the coaster just climbs and climbs and climbs to the peak of the housing market in 2006 demonstrates just how far from any "normal" we went (and just how far our correction still has to go).

• Speaking of housing, there was a report out of Dayton, Ohio, that some banks are considering giving away homes in order to cut their losses. Banks would get a tax write-off for their "donation" and cities or community groups would get properties. It is truly telling to consider that some of our housing is worth no more than a charitable write-off. This may be an early anomaly, but the economic rationale behind this decision is likely to become more widespread in the coming months and years.

Negotiating for an exit strategy from the mortgage meltdown, representatives for a foreclosed properties servicer that works with major banks met Monday with Dayton city officials to discuss the abandoned properties.

How the early discussions will shake out is unknown, but a potential outcome includes transferring some properties clogging up bank balance sheets to a land bank or some other public entity, a move that occurred earlier this year in Chicago.

• The lack of mobility of homeowners is creating a situation where the suburbs are aging in place while their youth -- the only group in America right now besides the ultra-rich with true mobility -- are leaving for better opportunities elsewhere. While this is an interesting social phenomenon in and of itself, the implications for maintaining the suburban development pattern are significant. All of this deferred maintenance is coming due at the same time families are coming to grips with the fact that their homes were not worth as much as they believed, their retirement is not as secure as they thought and their prospects for renewing their communities are fleeting.

People think of the suburbs as a place full of kids, soccer games and minivans, but this is changing fast. People like to stay in the places they know, and as the kids move away the parents are staying. The density of people per acre is dropping fast, as is the need for schools and soccer pitches, while the need for senior services is going to dramatically increase.

• Did I mention that deferred maintenance bill now coming due? Here is a quick look at Wisconsin's bridges. For the record, and my intuition tells me that Wisconsin is in far better shape than most of the rest of the country.

Goldberg’s biggest fear isn’t necessarily the condition of bridges but what will happen if funding continues to decline.

“In fiscal terms, it’s a death spiral,” he said. “Things are not looking terribly promising. There is this budget-cutting fever at the moment, and even though there is a pretty broad consensus that transportation is important, Congress hasn’t been terribly supportive.”

He said federal lawmakers are discussing a two-year stopgap that would continue funding at current levels. The hope is by 2013, the economy will be in better shape to withstand an increase in transportation maintenance funds, he said.

• A while back we ran a piece on child safety and car seats (Do we really care about children? - April 18, 2011). In that piece I had quoted economist Steve Levitt of Freakonomics fame about the use of child seats. Since this entire line of thought began as a disagreement with my wife, it is fair to question whether I am still trying to win the argument. Nonetheless, I was made aware of a video of Levitt talking about the subject and wanted to pass that along. (PS - His insights bolster my argument.)

• The Federal Reserve has ended its Quantitative Easing program -- the creation of new money used to purchase U.S. debt. In a potential preview of what is to come, a tiny $35 billion bond issuance this past week was weakly received by the market. When countries, institutions and individuals do not buy our debt, interest rates must rise to attract enough buyers. The sum of $35 billion may seem like a lot to you and me, but compared to the $1.5 trillion of new debt we take on this year and the $2+ trillion of prior debt we roll over, it truly is tiny. Keep an eye on this because America cannot afford to pay a higher interest rate on our $14.5 trillion adjustable rate mortgage.

The U.S. government sold $35 billion worth of five-year debt on Tuesday in its weakest auction for such bonds in a year, which could raise worries the market has become too expensive after a long rally.

It was also the second auction in as many days to attract weak demand, which could put pressure on the U.S. Treasury if this proves to be a sign that investors are fretting about budget problems in the United States.

• Finally, I have not had a chance to read this article on How to Create a Job, but it was sent to me by someone who knows how and, in my skimming through it, looks worthy of our time. I'll come back to it this weekend, but wanted to make sure and share it with everyone now as well.

Be safe and have an enjoyable Independence Day celebration. Go Twins!

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