Yesterday I delved a little into the question of whether we’ve really under-funded or under-built roads. Of course the standard reply is that roads still recover more costs than transit, and transit (run by the Met Council) is partially subsidized by drivers (via the motor vehicle sales tax, 40% of which is now dedicated to transit). This is seen as unfair – money that could or should be spent on improving roads, especially as Thrive 2040 looks to curtail further expansion. But our region is not just roads and transit. We rely on many other services provided at a regional level to go about our daily lives, and I think many would be surprised to see how the costs break down for them.
Fairness Goes the Other Way, Too
I’ve written before how urban roads receive a hidden subsidy that favors suburban drivers over core city financial health and livability. But that doesn’t pack the punch that bullying on the Met Council as a cash transfer to urban, transit-riding residents does. So what about other services the Met Council provides?
People see empty buses and farebox recovery ratios and can easily conclude “subsidy!”. But people can easily forget about the pipes under our streets and sewage treatment facilities in obscure places cost hundreds of millions of dollars to build, maintain, and operate each year.
It might come as a shock to many that Met Council’s Environmental Services (wastewater treatment) annual budget includes a pretty hefty amount of debt.. 43%!
That debt service pays for major capital projects like, you know, repairing and replacing major trunk sewer lines, building new treatment facilities, etc. Yes, some of those lines are in front of core city homes, but we know from research that they cost drastically less to serve:
Denser areas like Minneapolis save anywhere from one third to 50% of the costs of less dense areas typically found in suburban neighborhoods. This is right in line with other research showing roughly 50% cost savings for annual utility costs with marginal increases in average unit density (Tables 3, 6, and 7). Given the flat rate Sewer Availability Charge for new units (regardless of context or cost to serve) and usage fees that relate only to gallons (again, not cost to serve), it’s hard to not conclude there’s a massive cost transfer from the core cities to their suburbs here.
I’m not knocking the Met Council here, but what fiscal conservative would look at a wastewater treatment budget where nearly 50% is retiring debt and feel comfortable with the system of pipes under their street? Ignore the knee-jerk reaction to a hyper-dense, European lifestyle (if that’s not your thing, which is totally fine) for a second. A place like Annecy, France (pictured below) undoubtedly spends less per dwelling unit or per-capita on its streets, roads, water mains, and sewers than a place like Plymouth. You can’t escape geometry.
Let’s imagine we built our own slice of Annecy on, say, the Ford Plant redevelopment site. Would it be fair to charge them the same amount per-dwelling unit as a new single family home in Elko? What about an ADU in Minneapolis? Under the guise of fairness, the Met Council has cross-subsidized low-density land uses on the fringe with less impactful infill and usage rates from more urban areas.
To be clear, I fully support a regional body handling things like transit and sewage treatment. Having each municipality (or even county) run their own transit lines would be insane, as would avoiding cost savings of serving an optimal population per treatment facility with strong coordination. But that doesn’t mean we should say yes to every new interceptor line or treatment facility that costs far more to build and operate. The Met Council should be charging impact fees for new development in-line with impact to the regional system, and usage fees should reflect additional service and ongoing maintenance costs per dwelling unit rather than on a straight gallons-used share.
The same could be said for private utilities like Xcel Energy and Centerpoint Energy, who maintain electric and gas lines in service footprints that spread across our region – their costs are shared among all ratepayers just like the Met Council.
Now, I don’t believe for a second that if we shifted full costs to users that we’d see wholesale abandonment of the suburbs (and no, that’s not my goal). There are plenty of folks out there with enough wealth to weather the charges because they really do prefer a car-oriented lifestyle on larger lots, and that’s fine. But price signals matter. Let’s elevate the regional discussion away from distinct silos of land-use, transportation, and services and move toward charging users the full cost of their lifestyle choices (including transportation, utilities, and externalities).