Is the Infrastructure 'Time Bomb' Beginning to Blow?

Study Finds Low-Density Housing Can't Pay the Bills

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Jeff Schug is director of transportation services for McClure Engineering Co.

Mark Reiner is co-founder of Whole Infrastructure Systems for Resilient Development (WISRD).

Posted: Wednesday, October 26, 2016 2:37 pm

With infrastructure crumbling, and limited resources to repair and replace it, decisions about which projects have highest priority and how to pay for them loom large for many cities.

For years, experts have been warning that catastrophic failures in roads, bridges, dams, sewers and water mains are inevitable without dramatic increases in capital spending, and many believe the low-density suburban landscapes we've created over the past 50 years are rapidly becoming unsustainable as infrastructure repair costs begin to exceed the tax revenue generated by these neighborhoods.

At first glance, a neighborhood with fewer large homes valued at $600,000 to $900,000 might look more fiscally sustainable than a neighborhood with more modestly priced homes.

But Jeff Schug, director of transportation services for McClure Engineering, said a study his firm conducted in Norwalk, Iowa, (a suburb of Des Moines) suggests the opposite is true. In fact, a more expensive, less dense, development will find it much more difficult to generate enough property tax revenue for maintenance and replacement of its infrastructure over time, when compared to a high- or medium-density neighborhood of more modest homes.

“This really got me thinking about how suburbs are built and how they are going to be built going forward,” Schug said. “Sooner or later all this infrastructure needs to be replaced.”

Schug compared the taxable value and cost of infrastructure in a particular low-density residential development (1.3 units per acre) with that of a medium-density residential development (7.5 units per acre) in Norwalk.

His findings: It will take 100 years to collect enough property tax, currently levied for infrastructure, to replace water mains, sanitary sewers, storm sewers and streets, in the low-density neighborhood.

That's a problem because “infrastructure doesn’t last that long,” Schug said.

In the medium-density neighborhood, it will take only 50 years to raise the money. “That starts to get into the realm of reasonable,” he said.

Low-density residential suburbs with expansive homes, giant side yards and front yards are putting an unfair financial burden on cities, he said.

Medium-density residential areas with more affordable homes have a taxable value on a per-acre basis that is “roughly double the big residential neighborhoods,” he said. “Tax base matters and it’s always going to.”

The study also found that medium-density neighborhoods were more fiscally sustainable than a “convenience store, corporate headquarters or car dealership on a per acre basis.”

“I think overall, we need to take a look at how development is done,” he said. Assessments are politically a “non-starter,” so other ways to pay for replacement of infrastructure need to be found.

Many cities have aging infrastructure that Schug described as a ticking time bomb with no money to fix it.

“The bomb, I guess, is already starting to go off, and we can see the effects in Norwalk where we did the study to identify the cost of repairing and replacing the streets in the older neighborhoods, and the lack of funding the city has to address the problems,” Schug said.

He used his own neighborhood in Johnston, Iowa, as another example.

“Originally, I was interested in getting the city to extend sidewalks to our neighborhood because our sidewalks came to a dead end at the main street,” Schug said. “I was trying to make the case that our neighborhood was just as important as the high-dollar neighborhood up the street, which does have access to sidewalks. I was surprised to see that our neighborhood was so much more valuable on a per acre basis when compared to the neighborhood with the big-dollar homes.”

People tend to think, incorrectly, that very large homes and commercial development are the key to sustainable growth, Schug said.

“That is why I advocate looking at the value of a development based on the value per acre, or the value per dollar of infrastructure. There is only so much land available, and cities need to maximize their income from that land to operate the city,” he said.

The sustainable way to design and build neighborhoods “from a fiscal standpoint, is to make sure there will be money available to address the infrastructure replacement and repair in the future. I would not advocate that mixed use is best over another option. I would advocate that cities need to look at development from a financial basis to make sure they can operate on the level of revenue being provided from the property taxes available,” Schug said.

As the "ticking time bomb" begins to explode across America, many cities are struggling with where to begin. It is estimated that by 2020, $3.6 trillion will need to be invested in American infrastructure.

“Cities will take the onus of investment in infrastructure,” said Mark Reiner, co-founder of Whole Infrastructure Systems for Resilient Development (WISRD). “This is not an engineering issue. It is a governance issue.”

Reiner advises municipalities to conduct a complete analysis and "create a vulnerability-based critical path for priority capital projects.”

This starts by examining the existing condition of each asset and its potential for failure, its proximity to other critical assets (like water mains underneath streets), and any external threats such as natural disasters.

“I'm trying to recognize that while all systems contribute to a functioning city and need to work in order to be resilient, it is even more important to recognize that a city is a system of hierarchical interdependent systems when it comes to physical function. By capturing the dependence of some systems on other systems in a dependency framework, we can begin to identify vulnerabilities and develop a critical path to increased infrastructure resilience. Increasing the resilience of infrastructure is crucial to increasing the resilience of cities,” Reiner said.

When Reiner ranks infrastructure replacement needs, he uses the same color codes used by the Homeland Security alert system: red is critical, orange is approaching critical, yellow is OK and green is good.

The color map allows leaders to view the status of infrastructure at a glance and get a sense of infrastructure resiliency levels by sector. "It is also a way to measure improvements in infrastructure over time,” Reiner said. “It is a simple way to communicate infrastructure inventory to stakeholders.”

Converting data to information is part of the process.

“In a nutshell, data provide the basis for creating relevant information. Then, that information has to be put forth in a way that is understood by the client/stakeholder for knowledge to occur,” he said.

In Milwaukee, half of all water mains were installed before 1954; in Philadelphia, half were installed before 1930. Baltimore’s water mains are an average of 75 years old. Some water mains are wooden, from the Civil War era.

About 15 percent of the potable water available each year in the U.S., or 2 trillion gallons, is lost to water main breaks, according to Pew Research.

“Roads can have potholes, but roads by themselves can’t take out a water main. But a water main can blow out a road,” Reiner said.

That's one reason it's so important to replace infrastructure in the right order.

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