Comment by scoofy
13 hours ago
When I say "trivially fix" I mean that, if the City/State wanted to fix the problem, they could.
>Re-zoning only works if there are developers who want to redevelop the land.
Developers very obviously want to redevelop the vast majority of LA. The marginal cost of a housing unit is vastly higher than the cost of building that unit. To raise long-term tax revenues, LA could not just legalize redevelopment. They could actually incentivize it.
>For existing neighborhoods this means buying dozens of SFH from people who don't want to move.
The people living in SFH don't want to move exactly because they're not generating enough tax revenue to keep the city afloat (mostly due to Prop 13). Eventually the city will start having to raise taxes very dramatically or declare bankruptcy. That's the entire message from Strong Towns.
The more we put it off, the bigger the impact will be. When your city is effectively long-run insolvent, but you have the ability to change that even if it's politically unpopular (and LA does), then it's "trivially" doable, it's just that people don't want to.
That's not the case in many other cities.
In other cities demand isn't there. People will just leave when taxes go up, and the town will declare bankruptcy. At that point, they will effectively lose most of their population, or people will just live without things like clean water. An example of this happening is Jackson Mississippi, where the water system failed, and the city didn't have the money to fix it. The ultimate solution was just a federal bailout, which is not sustainable if these types of crises become endemic: https://en.wikipedia.org/wiki/Jackson,_Mississippi_water_cri...
Every time I look at a city/county budget, the schools absolutely dwarf everything else (it's not quick to disentangle different levels of government, but roughly speaking, it seems like schools are usually roughly the same cost as all other services combined where I've looked), which makes it hard for me to take seriously the idea that it's infrastructure like roads and sewage specifically leading to unsustainable budgets. e.g. if I remember correctly, special ed programs cost more than roads when I looked at the previous metro I lived in's budget, and sewers were revenue neutral with a county sewer fee.
Strongtowns seems a bit motivated in their analysis, to put it mildly.
When you are looking at your city budget... you're probably looking at cash-based accounting:
https://www.investopedia.com/terms/c/cashaccounting.asp
This looks at current costs. The school is a cost every year, so every year that cost shows up on the budget. The problem is that road/water/sewer maintenance often doesn't show up on these budgets because these systems are usually built all at once. Because of this they usually also need to be replaced all at once. To see those costs before they happen, you need to use accrual accounting:
https://www.investopedia.com/terms/a/accrualaccounting.asp
The entire message from Strong Towns is exactly that because cities often use cash accounting instead of accrual accounting in their budgetary processes these lingering issues of deferred maintenance don't show up until they do, and when they do, those costs will simply be too large for the city to cover without very politically unpopular interventions.
Capital improvements don't need to be paid all at once; that's what financing is for. And debt service does appear on budgets. In any case, why are we to believe that e.g. $1B in maintenance that's been deferred for decades is "the" problem when the school budget is $500M/year?
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That’s absolutely untrue. The only reason companies track depreciation as they do is because it allows them to defer taxation. Public works projects are not paid out of current cash.
Strong Towns makes good arguments about certain things and are critical in a reasonable way of how civil engineering organizations rate the need for more civil engineering works. But the budget discussion makes zero sense.
The biggest expenses for county, city, town, village government are: schools, police & fire, Medicaid share in states that do that, and employee retirement and health. A small/midsize city spends 60% of its budget on police.
Capital projects are capitalized with bonds. Governments have the lowest bond expenses due to tax exemptions. Roadwork is not done in a cash basis. It’s bonded for 10-30 years depending on the job.
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Take a look at LA’s budget then, it’s literally all police and police liability payouts which are already hundreds of millions of dollars over the budget for them.
> The marginal cost of a housing unit is vastly higher than the cost of building that unit.
The cost of building a housing unit is rather out of control in LA right now, due to a number of factors. Some of those factors involve permitting, but some involve complexities of complying with building regulation, and there is also insufficient availability of contractors and insufficient availability of labor.
The demand is there: https://la.urbanize.city/post/plan-skyline-altering-tower-ab...
The point is that the vast majority of budgetary issues in LA could be solved by just legalizing, and streamlining the production of something as simple as three-story row housing like the kind that's normal in San Francisco (which has a surprisingly good long-term outlook despite their current budget woes).
It's not rocket science here. If you make it easy to build housing, the industry grow to meet demand. If you make it difficult, it will be dominated by a handful of major players who can navigate the process.
I recently reviewed a bid from a not-particularly-fancy contractor for nearly $1M to build ~1200 sq ft in an empty lot in Los Angeles. This isn’t just a planning permit probem.
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Plenty of labor and contractors other places in the US that could be brought in if someone was willing to offer stable work and pay. Even with the out-of-town bonus, many midwestern contractors and laborers would come out to near the same cost as locals because they were already making a fraction the wage out in the midwest.
But non-union construction is known to be unstable even outside construction's general boom-bust cycles and nobody is going to travel 1500 miles away without a contract guaranteeing they will have work/pay past the first 2 weeks. Too many workers have gotten burned being given great offers to travel for work only to get screwed over before they can recuperate their costs. Hell our own President is famous for screwing over construction companies and people just accept it as normal for the industry.
>The people living in SFH don't want to move exactly because they're not generating enough tax revenue to keep the city afloat
So the kernel of the argument is that 1) someone bought a single-family home and based on ground truth (property tax, cost of living, etc.) and 2) that property tax isn't sufficient to fund the city?
Can you really blame someone for not sacrificing his position under these circumstances? If I'm meeting my obligation, what do I stand to gain from leaving my house and moving into an apartment? That's saying "I need you to move so that someone else can take your property." It's not going to go over well.
Zoning changes would generally make your property more value as a baseline. Then you could either stay put, or you could elect to move elsewhere while redeveloping your original place. This is common in Australia.
A common zoning change here is based on street frontage for semi-detached homes - the new ones are still 3-4BR, just attached at the garage and with smaller yards. If development required 15m frontage, but then that changed to 12-13m, that would mobilise a lot of owners to take advantage, though obviously others can just stay as is if they prefer.
It usually happens that an $800k lot value becomes $1m, regardless of the state of the house. The owner can then demolish a decades old house, build two places for $600k, sell one as a new home for $800k-1m to finance the build (and costs of moving out during that phase), and end up in a new house themselves. Often they've sacrificed yard that they found annoying to maintain anyway.
The above can be adjusted where it's possible to build 3-4 on a block, or a larger development of apartments.
Zone changes typically allow change, not force it, surely? An owner can just keep their SFH and large yard if they prefer. What they can't always control and often vote against is the composition of their neighbourhood.
>Can you really blame someone for not sacrificing his position under these circumstances?
What? There is a structural deficit problem. The ship is sinking. Complaining about how "we shouldn't have to change anything about the ship" isn't really a reasonable argument. We live on this ship... we have every incentive to make sure it stays above water.
I still don't get it though. Am I right that the proposition is: voluntarily accept a lower quality of life, or we'll either take your property or let it the neighborhood go to pot until you decide to give it up? People are not going to accept that. Look at the fiasco at defunding the fire department. I'll just patch my own sidewalk. I'm not vacating so that the next guy gets a deal. There's plenty of land. Develop there. Why not?
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