Quote:
Originally Posted by 1ajs
go for it
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Feel free to ignore this post, but I respect all of your opinions, so I wouldn't mind some feedback.
Let’s say you are elected the director of a co-op that owns and operates a machine shop. In this machine shop you have the control, but operate under the recommendations of the General Manager. You have all sorts of machines; pretty much any machine people could want or need for any project.
In your co-op, people pay for their memberships yearly and the rate they pay is a portion of the value of the products they build with their machines. For brevity sake, we will call their membership dues a “tax”, the portion of the value of their products we will call the “mill rate”, and we will call the overall spending/operation of the shop and its members the “local economy”.
Now, let’s suppose your General Manager comes to you with a report on the current status of all your machines. Overall you are underfunded and your machines need about $360,000 to get back to full capacity. Along with this report, he brings you a recommendation to purchase a new drill press. The current one is over-capacity and hasn’t been overhauled in a while. The new drill press will be bigger and better for the local economy, and will only cost $6,389. In our current financial situation we can afford to pay around $1,389 and debt finance the rest – $5,000 – with the terms of the debt being $541 a year for 10 years.
After looking over the numbers you see that at the current mill rate the addition of the drill press would need to either add members or increase the value of the output of the current members by $85,000 to pay off the $541 a month. The problem is – your General Manager doesn’t even give you the predicted amount of growth you can expect from your new machine, so you are flying blind. You really have no way of gauging if you should purchase the new machine or not. So would you? Would you fly blind and approve the drill press without knowing if it will actually return money to you, or without the opportunity cost of investing in a different machine, or how long it will take to return that money, or even if it will return the money at all?
If you don’t understand this metaphor, please allow me to fill you in. Rename all the members as property owners with their projects being their property, the machines as streets, and the drill press in particular as the Molson Street/Panet Road widening project. You, as the director, represent the elected officials, your City Council, and the GM is the City Administration. Further, take all the numbers above and multiply them by 1,000.
The numbers say that with $5 Million of debt financing, the City will need to see an additional $85 Million of assessed residential value to break even as a direct result of the Molson/Panet widening, and that doesn’t include ongoing maintenance to the street nor growth that would have happened even without the proposed widening
While I have no problem with the City widening Molson/Panet, I drive that route at least once a week, I do have a problem with how they operate without thinking of the overall costs of these projects and if they will actually improve their ability to collect taxes. When we approve projects like this we can’t gauge how good (or bad) our investments actually are! How much will our Mill Rate have to go up if the project only adds $40 Million in assessed value instead of the $85 Million needed to break even?
It’s time to rethink how we measure our infrastructure investments. I, for one, would like to know that the investments I make in my City actually help it become more sustainable. When you don’t measure the results of your investment you have no idea if you made good choices or bad, and you will never learn from your mistakes. I also find it infuriating that the members of the City’s Committee for Infrastructure and Public Works approve these projects without any consideration of this kind. With a City that is currently sitting at a $360 Million dollar road infrastructure deficit, I would like them to look at the numbers a little more closely instead of approving projects they believe will get them reelected.
Steve Snyder is an urban design and municipal affairs enthusiast who writes on Winnipeg issues. Follow him on Twitter @steveosnyder.
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