Originally Posted by steveosnyder
So I contacted our city councillors on the Public Works/Infrastructure committee regarding two things coming up at the next meeting... I figured I would include the forum in my ramblings and perhaps get some feedback.
I would love to hear some feedback; do you think it is reasonsable to fund these 2 projects with debt to the tune of $135k per year without the associated increase in revenue? To add, I received a reply from Councillor Swandel stating that the interest rates are low so we should build now while we can. I actually got a bit worried by that, wondering if he understands that it doesn't matter what the interest rate is if no return happens then revenue will have to increase some other way.
Holy shit, welcome to the club, Steveo! I never thought I'd see the day that anybody on this forum was interested in the concept of shit having to pay for itself...
Let me briefly weigh in on your question about whether it's reasonable. I think the answer is manifold, but the underlying point is generally made by Esquire: the city doesn't operate on a for-profit basis so it uses taxation to fund what cities provide. Things like traffic lights and other infrastructure are bought, used up, then sold off for scrap (what's known as residual value). The city should be properly doing life-cycle analysis to ensure that the tax base it brings in is sufficient to cover the costs of the new purchase at the end of the life cycle minus the residual value generated by the old scrap sold off. And, of course, ensuring that there's a slush fund that covers the costs of requests based on either safety or other variables for regional infrastructure that can't be covered by the existing local improvement programs. That's how businesses are run. Unless, of course, they're buying revenue generating equipment which has an internal rate of return that gives us its true value. That analysis takes into account the weighted average cost of capital (debt, equity), all associated cash flow growth rates and finally the rate at which money becomes less valuable - inflation. That's true analysis.
What the city does well, on the other hand, is destroy value hand over fist. The city is run by shit-throwing orangutans known as councilors who jump from their chair to their desk and post pictures on twitter during council meetings. Most of them would be considered failures and most of them aspire to other places where they can take selfies and blow hard about things they can't understand. Thomas Steen is a fucking councilor. Their only interests are to be reelected and they understand that most people in their wards don't consider the cost of things, so they give them things in exchange for votes. You can bet Devi Sharma heard long and hard about that intersection, so she gave it to them. Not coincidentally, in an election year. But of course the city doesn't give a fuck because they'll just raise taxes which is their way of paying for things. So when you ask them to do basic analysis to ensure that infrastructure funds are at the very least spent at the city's affordability rate and not just because debt is cheap, their answer is meaningless because they simply don't care. I get credit card offers all the time offering me 0% for the first six months. Is my best move to go and spend every last cent I can on worthless shit? But you also got a reply from Justin Swandel who is one foot out the door and who if you asked him in an actual committee meeting, would talk over you until you sat down.
But here's my question to you and everybody else on this board. If we're beginning to become pissed off about the general incompetence and fiscal neglect within the city, why is everybody so happy about another $225MM in infrastructure dedicated to a rapid transit line when nobody is able to give even the broadest answer as to its return? And that's not another $8K in annual debt service like we're talking above - that's $20MM. I keep hearing about the fewer axles argument, but I've yet to see anybody substantiate that. The city just locked in a 10% property tax increase on the entire city 4 months before an election in a pathetic act to attract 'progressive' votes and we're getting our noses out of joint because of a couple light standards?
I'm on your side, Steveo, but man, are we fucked...