# strong town math

Mark Pinsley

Hi,

So I am trying to understand the math that is used today versus the math that you are suggesting.

My understanding is that if I was building a new development. I would have to take a look at how the municipality currently spends money on roads and other infrastructure. I would then assume some kind of maintenance plan that would cover the new development. If we assume the new development will require new streets in 10 years, then the tax base from those houses multiplied by the % that the municipality spends each year on streets, tells you if the neighborhood can afford to be there, or if we need to increase the tax or if we shouldn't build at all

Do you believe that each homeowner should only pay for streets on which they drive? Or how do we account for streets that have no homes on them. Or other infrastructure that isn't supported by houses in front of them. Shouldn't we take all of the tax bases (new and old) to see if we can maintain the same number of years in between maintnenace.

In other words. lets assume we did the above calculation for just the infrastructure in front of my house and it looks like it take 79 years for pay back.

Then lets compare that to the full plan the municipality has, and lets assume (for grins) that it currently has a 10 year cycle where it fixes all of the streets. If the new neighborhood doesn't add to that cycle...meaning it doesn't take 10 years to 11 years, isn't that okay. I am not clear on some of this methods. You could argue that we should never have cul-de-sacs. Maybe that is true, but from a financial perspective, I am not sure it makes that much of a difference??

Also, let's assume you are building a ramp onto a highway. Well, a short ramp with a stop sign is much more economical than a long ramp that allows you to get into traffic more easily...but it seems like I would rather have the long ramp for safety purposes.

I read strongtowns and I am now going through the videos. I am just not understand the math when we look at the whole town (versus some small section) and how we should be making decisions based on that.

In the book, it kind of criticizes for building to the finished product. I think we got to this point because iterating has a number of problems as well. Neither have perfect outcomes. But if a developer can build 300 houses and fill them within a year (or faster), financially that seems okay. Now if we can not pay to maintain them, doesn't that mean our taxes are too low? Shouldn't the tax rate be set at the lowest rate possible that allows for proper maintenance of the infrastructure?

I am just looking for more clarity.

• Charles Marohn

There's a lot here. Let me try and answer two of your questions.

Do you believe that each homeowner should only pay for streets on which they drive?

This is the inverse of the question I think you should ask. The question I think you should ask: If the tax revenue from each homeowner isn't enough to even pay for their own street, what about all the other common streets that connect places or don't have homes? Where does the money to pay for those come from?

A cul-de-sac should be, from the community's standpoint, the most profitable of streets. The revenue from those homes should not only cover their own maintenance but also a portion (a sizeable portion) of the common infrastructure that allows the cul-de-sac to even exist in the first place. The fact that the cul-de-sac is running at a negative should have us wonder why we are even bothering? What good does it do all the other taxpayers in the community to build more and more of these? Financially, it does them no good at all.

.... if a developer can build 300 houses and fill them within a year (or faster), financially that seems okay. Now if we can not pay to maintain them, doesn't that mean our taxes are too low? Shouldn't the tax rate be set at the lowest rate possible that allows for proper maintenance of the infrastructure?

Yes, if we assume that the number of houses and the intensity of the infrastructure we are providing is the common good that we place in the highest value, then taxes are way too low. In Lafayette (LA), we calculated that the median home's taxes would need to increase by over 600%. If that's what people are willing to pay, then go ahead and do that and spend all of that extra revenue on maintenance.

If people aren't willing to pay dramatically higher taxes (and my experience is that they are not), then you have to confront the reality that the development pattern isn't solvent at current rates of taxation. That's basic math and there really isn't a third option. (I mean, you can borrow money or put off critical maintenance, which is what cities have done, but that is only buying time.)

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• Mark Pinsley

so in the case where

If people aren't willing to pay dramatically higher taxes (and my experience is that they are not), then you have to confront the reality that the development pattern isn't solvent at current rates of taxation. That's basic math and there really isn't a third option. (I mean, you can borrow money or put off critical maintenance, which is what cities have done, but that is only buying time.)

What are the options? If you stop development, then there is no new income. What is the path, it seems in this case, the only path is to start raising taxes slowly over time, or decide what you are not going to maintain at all, so that maintenance dollars can go towards a smaller number of projects??

Thanks

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• Charles Marohn

If you stop development, then there is no new income.

I'm not sure what good new income does you if it costs you more than you bring in. Actually, I am sure -- it's a horrible decision.

Look at this like a business (because cities are "municipal corporations" that have the same accounting restraints as a business that needs to have more revenues than expenses)....

We are losing money on Product X. The more we sell, the more we lose. You are saying that, if we stop selling new clients Product X, we won't have any new income. Okay, but you also won't be increasing your level of insolvency.

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• France Widmann

This will be a brief response, but I believe that we will never have a perfect building plan, the issue isn't one thing, but I think building preemptively is generally worse than incrementally. Yes, with incremental building we cannot grow as fast, yes it takes time to adopt the building types we need, and the infrastructure. However, this is far better than the nature of a build preemptively strategy, as cities are alive. There is no fully 100% accurate planning for what a city will do, we can infer based on the past, but the living nature and the lack of finite issues deter from making accurate judgements. If we just place down multiple hundreds of homes even if they're filled out we aren't accomplishing much for the city as a being. We are handicapping the city as a being, adding limbs where limbs naturally weren't going to form in the first place. The city will eventually adapt but at what cost.

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