Second Life Cycle Blues
The Suburban Experiment creates an illusion of wealth early on, which makes it very seductive. As the city enters the second life cycle and all of the dispersed systems that came with the growth now need costly maintenance, the seductive illusion is slowly destroyed. Debt and a good deal of wishful thinking can allow a local government to kick the can down the road a while, but the final destination is ordained. Better to start building a strong town today and save your community the second life cycle blues.
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While, truly, no prophet is accepted in his hometown, it is with a (please forgive me) modest amount of smug amusement that I've watched Baxter, Minnesota, one of my twin hometowns, struggle with the second life cycle blues. My smugness (a personal failing, I know) is hopefully a forgivable reaction to decades of smugness from those associated with Baxter, they that believed their success was a result of their superior knowledge, intellect and skill. They did not realize they were taking credit for the light during their day in the sun.
A new road built six years ago in anticipation of growth that has yet to occur.Now a disclaimer: I was once one of them. I sneered at neighboring Brainerd -- the old, historic city built in the traditional style -- for their apparent ineptitude compared to our success. I helped to design STROADs, commercial developments and various residential subdivisions in the sincere belief that I was making Baxter a better place. We had the winning approach, the knowledge and standards for success all ready to be applied. When the highway through Brainerd was rerouted into Baxter and all of the national retail and restaurant chains came knocking, it vindicated our feeling of superiority.
I'll spare you my personal tale of how I came to question my own religion, but lets just say that, as with anyone who leaves a congregation, there is a certain feeling of resentment by those left behind. And distrust. I've given hundreds of speeches around the country explaining the illusion of wealth created during the first life cycle of auto-oriented growth, but only here in my hometown do people jeer, scoff and shake their heads when I speak. The Suburban Experiment is like a religion, with its own unassailable belief system and associated dogma. And, truly, you're never a prophet...
Last Friday I picked up the local paper and gave a little laugh at the headline: Baxter council ponders proposed pavement plan and price tag. I turned forty this year. While I remember the old gravel roads, empty fields and undeveloped forests, few younger than me will. And few of today's residents were even here back then. When I was born, the population was about 1,500 (I'd venture a large share were my relatives) while today it is over 7,600.
Most of that growth growth took place in the past twenty years, which means for my entire adult life, Baxter has enjoyed the Illusion of Wealth that comes with the first life cycle of new Suburban Experiment development. Developers pay for the infrastructure. Residents buy the homes and businesses buy the commercial properties. The costs get rolled into long term debt payments. The city spends little to nothing yet gets all of this tax revenue. All of a sudden they can upgrade parks, build trails, pave streets, construct a new city hall, add staff and provide a level of service (and a low rate of taxation) not to be found in old, neighboring Brainerd.
That is, until the second life cycle when all of that stuff gets old and needs to be fixed. Then things become a real bummer.
“Based on the results of the street evaluation, the estimated current pavement improvement need is $14,463,000 to bring every street segment to either newly reconstructed or maintained to a rating of nine or better,” the Bolton & Menk report stated. The rating comes from a Pavement Surface Evaluation and Rating (PASER) system with 10 being pavement in excellent condition.
The city has 81.2 miles of streets with 34.8 miles or nearly 43 percent with a PASER rating of five and six and 38.8 miles or 47.8 percent rated between seven and eight. Streets in the seven and eight category typically need crack rout and seal coating or patching. A road in the five and six rating condition may need a pavement overlay. A road with a rating of one may be 25 years old and likely for a recommendation for a full reconstruction.
For context, the $14.5 million price tag should be compared to the $5.4 million the city recovered last year in property tax (page 7). While Baxter has other revenues, they are generally encumbered (their sales tax was approved by the legislature and dedicated to retiring wastewater treatment debt while their sizable fees are transaction costs meant to cover actual operating expenses). If they are going to meet this obligation, it is going to be on the back of their property tax base.
If this weren't problematic enough, there is the compounding problem that happens when the second life cycle obligations are put off. What goes up fast also tends to then come down fast. Again from the story:
The Bolton & Menk report stated the total annual budget amount for street maintenance should be increased dramatically. The report contended doing nothing would result in pavement deterioration estimated to result in a pavement need of about $26.7 million by 2018.
Spend $14.4 million today. Put that off and in five years the number balloons to $26.7. Do I still have to convince any of you that this is a fragile approach?
Those that have been with us a while may remember last summer when Baxter's engineers reported their anticipation of enormous increases in traffic. Some of you may even remember back to 2010 when Baxter officials suggested their population would increase from 8,200 to 16,000 by 2030. Overlooking the fact that they are 7% short of where they thought their own population was in 2010, we can start to see how delusional thinking can turn to wishful thinking in just a few short years.
Baxter's future growth, as with any purely auto-oriented community's future growth, is predicated on being able to attract new residents (along with their first life cycle revenue) by offering low taxes and a high quality of life. What happens when taxes go up? Or what happens when services are trimmed back? How fragile is this house of cards?
Last week Detroit filed bankruptcy (or tried to). One of the recurring laments about Detroit is that people have left leaving too little population to sustain infrastructure systems design for a lot more. Detroit has 620 miles of what they call "major streets," streets they are currently maintaining, albeit under duress. Detroit's population is 706,585. Some simple math tells us that the average Detroit resident is financially supporting the maintenance of 5.1 feet of street, a burden they are not able to meet.
As reported, Baxter has 81.2 miles of street to maintain. Now the average Baxter resident is more affluent than the average Detroiter (though they also spend many multiples on housing and transportation), but with only 7,642 people, the typical Baxter resident is expected to sustain 56.1 feet of street. That is eleven times more than in Detroit.
Oh, but Baxter doesn't have the pension problems that Detroit has.
Services will be cut. Taxes will go up. That's the second life cycle blues. And in a self-reinforcing downward spiral, the things that once made Baxter officials look like geniuses will now make them look incompetent. Not only will those brand new strip malls that have been empty for six years not fill up but, as maintenance is deferred and things start to fall apart, the growth will continue to slow and move to the next hot place. They may try to reignite it with some aggressive subsidy scheme, but paying to lose money will only hasten the race to the bottom.
And, of course, without growth, this thing is over.
It should be noted here that neighboring Brainerd has also bought into the notion that the sun shines in Baxter because of the genius of their approach. Brainerd has tried for years to imitate Baxter, retrofitting the community for auto-exclusive travel, spending millions on shortcuts to Baxter's commercial areas, extending utilities to the remote reaches of the periphery of town and even trying to annex some of the distant highway frontage. We're trying hard here at Strong Towns to help Brainerd see that the sun is shining on them now, that they can put away the umbrella and embrace their walkable, bikable -- and financially very productive -- nature. We'll keep trying, but truly, you're never a prophet...
The Suburban Experiment creates an illusion of wealth early on, which makes it very seductive. As the city enters the second life cycle and all of the dispersed systems that came with the growth now need costly maintenance, the seductive illusion is slowly destroyed. Debt and a good deal of wishful thinking can allow a local government to kick the can down the road a while, but the final destination is ordained. Better to start building a strong town today and save your community the second life cycle blues.
I'm going to be in the office this entire week -- such a rarity -- so you'll be sure and find me over at the Strong Towns Network. If you've been trying to email me without success (my apologies), I'm much easier to get a hold of over there, as are a lot of the people you see posting here. Please join us.
And if you'd like more, check out my book, Thoughts on Building Strong Towns (Volume 1). It is a primer on the Strong Towns movement and an essential read for those wanting to get up to speed quickly.