7 ms·

In the intro, it is stated that "literally five or less" cities do not have these monetary problems. I'm curious what those cities are, and why are they special

by leodeid 10y ago

In the intro, it is stated that "literally five or less" cities do not have these monetary problems. I'm curious what those cities are, and why are they special. If the answer isn't "they've always used accrual accounting", I don't buy that most cities are doomed due to accounting problems.

johnloeber 10y ago
I don't know which the cities are, but I'd guess they're among the wealthiest ones. Maybe you'll find this useful: https://en.wikipedia.org/wiki/List_of_U.S._metropolitan_areas_by_GDP https://en.wikipedia.org/wiki/List_of_U.S._metropolitan_area...
- milesskorpen 10y ago
  Probably wealthy + dense — I'd guess NYC, SF, Seattle, Chicago are on the list. Not sure what else would get up there.
  - nhebb 10y ago
    According to this ranking, Chicago and NYC are at the bottom: http://www.thefiscaltimes.com/2017/01/09/How-Strong-Are-Your-Citys-Finances-116-US-Cities-Ranked http://www.thefiscaltimes.com/2017/01/09/How-Strong-Are-Your...
    - milesskorpen 10y ago
      The includes pensions, which are separate issues — the Strong Towns piece is basically looking at property tax annually / cost of maintaining infrastructure annually (and ignores deferments and the like)
whorleater 10y ago
Spitballing here, but I assume once cities with large enough density, e.g. skyscrapers, reach past a certain threshold, the amount of revenue as a result of high density overtakes the cost of horizontal expansion. Highly concentrated cities, such as NYC/LA/Chicago, are examples of these.
astrodust 10y ago
A local municipality here, Mississauga (https://en.wikipedia.org/wiki/Mississauga https://en.wikipedia.org/wiki/Mississauga) grew as a typical suburb does, relying on aggressive expansion of low-density housing, with a large portion of that growth being in the 1960-1990 era. The city pursued an agenda of low taxes by leaning heavily on subsidies paid by large-scale developers directly to the city. This was something very much embodied by the city's long-time mayor McCallion (https://en.wikipedia.org/wiki/Hazel_McCallion https://en.wikipedia.org/wiki/Hazel_McCallion) who was something of a titan in her time and governed over the city from 1978 to 2014 with little political opposition. The idea was that they'd build infrastructure to last 30-40 years and then figure out what to do later. Not surprisingly "later" came around all too soon and they were left scrambling. The mayor pivoted from producing more sprawl, which just doubles down on the problem, to inviting developers to densify portions of the city, building codos and office towers. Through development fees they'd try and work their way out of a jam without having to massively increase taxes for everyone. It looks like this strategy has so far worked, but it's not without risk. It's dependent on passing the buck to the typically younger crowd that's buying condos. They're paying for sewer replacements in those older neighborhoods that apparently never paid their fair share in taxes. Who will bail them out when their time comes? Hopefully the increased density makes it more cost-effective to do that. There's a number of things working in favor of the city, like they're close to Toronto, so the're an ideal commuter hub, plus the regional airport is there, so there's a large buisness hub built out around it. Without that tax base and proximity to another city they'd likely be doomed. Nobody would ever want condos there. If you're looking for those cities, look for suburbs built near major US cities that can leverage their location. Any that are on their own are ultimately doomed unless they dramatically re-work how they plan their urban layout. Low-density housing will strangle a lot of small cities to death. Honestly it should be illegal for municipalities to collect less in taxes than they need to maintain their infrastructure in the long haul. They should be factoring in 60-year replacement costs and collecting money towards that in the decades leading up to a major overhaul. A change in the accounting rules to include this sort of depreciation as an expense that must be balanced out with revneue could go one step towards that, factoring in replacement costs and so on.
gipp 10y ago
I think you may have misread the article; it seemed to me that blame was placed much more on political incentives to encourage outward, sparse suburban growth. The kind of growth which incurs enormously more infrastructure cost per capita. Not on accounting practices.
- wmf 10y ago
  Although there may be an argument that suburbs would never have been built if the infrastructure costs were front-loaded (e.g. >5% property tax).
otoburb 10y ago
The article author Charles Marohn addresses this question in the comments section. His entire comment response: "They are the ones with a very dominant urban core, where the urban fabric overwhelms the horizontal, auto-oriented stuff. I'm not saying these places won't struggle for the same reasons Lafayette will, but I suspect their decline/contraction will be less pronounced, less a defining characteristic. NYC, Boston, San Francisco, Vancouver, maybe Chicago.... I'm not an expert on this scale of a place by any means so I could be very wrong but they don't seem to have the same underlying forces as a Lafayette (or even a Detroit or Memphis) where 80%+ of their infrastructure serves unproductive land use patterns. Might be 20-40% in these places."
- gohrt 10y ago
  mm-hmm. https://cityroom.blogs.nytimes.com/2013/07/25/when-new-york-teetered-on-the-brink-of-bankruptcy/?_r=0 https://cityroom.blogs.nytimes.com/2013/07/25/when-new-york-...
- bbarn 10y ago
  The Author should spend time in Chicago. We've got ridiculous taxes on everything, general sales tax itself is almost 11% now, and nothing in this city works. The trains barely function close to on time, the streets are riddled with potholes, and the police are afraid of PR problems so much crime is escalating. Also, the weather sucks.
  - brianwawok 10y ago
    Chicago is fantastic. You should try a few other cities and report back. Source: Moved out and now want to go back.
    - arcticfox 10y ago
      Really? I mean, if you have money and can make sure you're in specific areas of the city enjoying specific things, I can see it being great. But a blanket statement like that about Chicago is very surprising given all of the negative things about its situation (unbelievable gun violence, for one). Also I can never get over the hilariously bad 75-year lease of its parking meters where they got $1B up front in exchange for eschewing massive amounts of ongoing revenue (the lessees have made $650M+ in revenue in 6 years while sapping the populace dry). Now Chicago actually has to lose money and pay Abu Dhabi any time they want to shut down a street for maintenance or public festivals. Fantastic!

by leodeid 10y ago

johnloeber 10y ago

I don't know which the cities are, but I'd guess they're among the wealthiest ones. Maybe you'll find this useful: https://en.wikipedia.org/wiki/List_of_U.S._metropolitan_areas_by_GDP https://en.wikipedia.org/wiki/List_of_U.S._metropolitan_area...

milesskorpen 10y ago
Probably wealthy + dense — I'd guess NYC, SF, Seattle, Chicago are on the list. Not sure what else would get up there.
- nhebb 10y ago
  According to this ranking, Chicago and NYC are at the bottom: http://www.thefiscaltimes.com/2017/01/09/How-Strong-Are-Your-Citys-Finances-116-US-Cities-Ranked http://www.thefiscaltimes.com/2017/01/09/How-Strong-Are-Your...
  - milesskorpen 10y ago
    The includes pensions, which are separate issues — the Strong Towns piece is basically looking at property tax annually / cost of maintaining infrastructure annually (and ignores deferments and the like)

whorleater 10y ago

Spitballing here, but I assume once cities with large enough density, e.g. skyscrapers, reach past a certain threshold, the amount of revenue as a result of high density overtakes the cost of horizontal expansion. Highly concentrated cities, such as NYC/LA/Chicago, are examples of these.

astrodust 10y ago

A local municipality here, Mississauga (https://en.wikipedia.org/wiki/Mississauga https://en.wikipedia.org/wiki/Mississauga) grew as a typical suburb does, relying on aggressive expansion of low-density housing, with a large portion of that growth being in the 1960-1990 era. The city pursued an agenda of low taxes by leaning heavily on subsidies paid by large-scale developers directly to the city. This was something very much embodied by the city's long-time mayor McCallion (https://en.wikipedia.org/wiki/Hazel_McCallion https://en.wikipedia.org/wiki/Hazel_McCallion) who was something of a titan in her time and governed over the city from 1978 to 2014 with little political opposition. The idea was that they'd build infrastructure to last 30-40 years and then figure out what to do later. Not surprisingly "later" came around all too soon and they were left scrambling. The mayor pivoted from producing more sprawl, which just doubles down on the problem, to inviting developers to densify portions of the city, building codos and office towers. Through development fees they'd try and work their way out of a jam without having to massively increase taxes for everyone. It looks like this strategy has so far worked, but it's not without risk. It's dependent on passing the buck to the typically younger crowd that's buying condos. They're paying for sewer replacements in those older neighborhoods that apparently never paid their fair share in taxes. Who will bail them out when their time comes? Hopefully the increased density makes it more cost-effective to do that. There's a number of things working in favor of the city, like they're close to Toronto, so the're an ideal commuter hub, plus the regional airport is there, so there's a large buisness hub built out around it. Without that tax base and proximity to another city they'd likely be doomed. Nobody would ever want condos there. If you're looking for those cities, look for suburbs built near major US cities that can leverage their location. Any that are on their own are ultimately doomed unless they dramatically re-work how they plan their urban layout. Low-density housing will strangle a lot of small cities to death. Honestly it should be illegal for municipalities to collect less in taxes than they need to maintain their infrastructure in the long haul. They should be factoring in 60-year replacement costs and collecting money towards that in the decades leading up to a major overhaul. A change in the accounting rules to include this sort of depreciation as an expense that must be balanced out with revneue could go one step towards that, factoring in replacement costs and so on.

gipp 10y ago

I think you may have misread the article; it seemed to me that blame was placed much more on political incentives to encourage outward, sparse suburban growth. The kind of growth which incurs enormously more infrastructure cost per capita. Not on accounting practices.

wmf 10y ago
Although there may be an argument that suburbs would never have been built if the infrastructure costs were front-loaded (e.g. >5% property tax).

otoburb 10y ago

The article author Charles Marohn addresses this question in the comments section. His entire comment response: "They are the ones with a very dominant urban core, where the urban fabric overwhelms the horizontal, auto-oriented stuff. I'm not saying these places won't struggle for the same reasons Lafayette will, but I suspect their decline/contraction will be less pronounced, less a defining characteristic. NYC, Boston, San Francisco, Vancouver, maybe Chicago.... I'm not an expert on this scale of a place by any means so I could be very wrong but they don't seem to have the same underlying forces as a Lafayette (or even a Detroit or Memphis) where 80%+ of their infrastructure serves unproductive land use patterns. Might be 20-40% in these places."

gohrt 10y ago
mm-hmm. https://cityroom.blogs.nytimes.com/2013/07/25/when-new-york-teetered-on-the-brink-of-bankruptcy/?_r=0 https://cityroom.blogs.nytimes.com/2013/07/25/when-new-york-...
bbarn 10y ago
The Author should spend time in Chicago. We've got ridiculous taxes on everything, general sales tax itself is almost 11% now, and nothing in this city works. The trains barely function close to on time, the streets are riddled with potholes, and the police are afraid of PR problems so much crime is escalating. Also, the weather sucks.
- brianwawok 10y ago
  Chicago is fantastic. You should try a few other cities and report back. Source: Moved out and now want to go back.
  - arcticfox 10y ago
    Really? I mean, if you have money and can make sure you're in specific areas of the city enjoying specific things, I can see it being great. But a blanket statement like that about Chicago is very surprising given all of the negative things about its situation (unbelievable gun violence, for one). Also I can never get over the hilariously bad 75-year lease of its parking meters where they got $1B up front in exchange for eschewing massive amounts of ongoing revenue (the lessees have made $650M+ in revenue in 6 years while sapping the populace dry). Now Chicago actually has to lose money and pay Abu Dhabi any time they want to shut down a street for maintenance or public festivals. Fantastic!