11/23/2010

Fleeing Civic Debt

Posted by MJ

I have recently come across an article that once once again says something that I have "thought" for a long time but have never been able to explain well.

...Why is this happening? One big reason cities tend to fall into decline is that they accumulate huge unfunded liabilities, and those liabilities attach to the territory, not the people. This lets one generation of residents rack up huge future bills, then skip town to leave the next generation or those not lucky enough to get out with the bill. It’s the equivalent of being able run up a huge balance on the civic credit card, then pawn the bill off on someone else.
Imagine if you will if your house worked this way. Your mortgage, your credit card debt, etc. all happened to be chargeable not to you, but to whomever was living in your house. If you simply stopped paying and moved elsewhere, you’d be relieved of all those debts. Sounds ridiculous, doesn’t it? But that’s exactly how municipal debt and unfunded liabilities work. It is a huge incentive for politicians and residents to vote for immediate gratification with the bill – infrastructure costs, pensions, redevelopment costs, or what have you – pushed out 25-30 years. Then these people or their children simply move to a greenfield and start the process over again.
I suspect this, perhaps more than any other force, is what drives urban and suburban abandonment in favor of newer towns...
It is a pertinent subject as we come off the most recent budget process and hear the voices explain that newer places "just do it better". It's always easy to do better when you grow off of somewhere with the liabilities and have yet to reach the peak of your own.

It's also good insight into why an older city will never demolish and parking lot pave its way to success. The numbers are against the city competing against cheap green fields and lower newer cost structures. For cities that have survived or turned around it has come from embracing their urban infrastructure and walkability potential. Unfortunately places like Lockport still contain outdated zoning codes that do the opposite. They promote development of a second rate ‘burb instead of a first class city/village.

UPDATE:

This also reminded me of a favorite quote of mine: "In America we don't solve our problems, we just move away from them."

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