A Complete Guide To The Ponzi Scheme That Is Suburban America


suburbs

Suburban America is a Ponzi scheme.

A report out today from Strong Towns makes this bold claim.

It argues that city planners, like Bernie Madoff, swapped long-term obligations for short-term cash to expand at an unsustainable rate, developing land they could never afford to maintain.

Strong Towns backs up this argument with case studies of a series of doomed municipal projects.

Publicly funded roads will bankrupt municipal budgets

A small, rural road is paved, with the costs of the surfacing project split evenly between the property owners and the city.

Strong Towns asked: Based on the taxes being paid by the property owners along this road, how long will it take the city to recoup its 50% contribution.

The answer: 37 years. The road is only expected to last 20 to 25 years.

Click here for this case study.

A tax-based funding system will not work

A suburban road is in disrepair and needs to be resurfaced. The small project involves repair of the existing paved surface and the installation of new asphalt. The total project cost was $354,000.

Strong Towns asked: Based on the taxes being paid by the property owners along this road, how long will it take for the city to recoup the cost of this project.

The answer: 79 years, and only if the city adjusts its budget higher for capital improvements, in other words, it would immediately need to raise taxes 46%.

Click here for the case study.

'Free roads' are a myth

A group of high-value lake properties petition the city to take over their road. They agree to pay the entire cost to build the road -- a little more than $25,000 per lot -- in exchange for the city agreeing to assume the maintenance. As one city official said, "A free road!"

Strong Towns asked: How much is the repair cost estimated to be after one life cycle and how does that compare to the amount of revenue from these properties over that same period?

The answer: It will cost an estimated $154,000 to fix the road in 25 years, but the city will only collect $79,000 over that period for road repair. To make the numbers balance, an immediate 25% tax increase is necessary along with annual increases of 3% with all of the added revenue going for road maintenance.

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Source: http://feedproxy.google.com/~r/businessinsider/~3/bbpnbI2pTN0/suburban-america-ponzi-scheme-case-study-2011-10

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