More on the Infrastructure Cost Discussion

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

StreetUtilities_1

Streets with stack and pack housing are just so terrible, right?

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%!

MetCouncilESBudget

 

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:

 

SewerCostperService_Density

Effect of density on the minimum sewage system cost (amortized capital + operations) service at different service scales (units served) Costs are in 1997 Australian Dollars (source linked previously)

SewerCostperCapita_Density_ServiceSize

Colored curves are people per acre.

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.

Annecy

50,000 residents in 5.3 square miles.

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.

MSP_Area_ElectricityProviders

Xcel Energy’s service footprint in light blue – basically the entire metro area.

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).

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6 Responses to More on the Infrastructure Cost Discussion

  1. Sam Rockwell
    Sam November 21, 2014 at 10:25 am #

    Nice post and good points about efficiencies and costs of non transportation systems.

    I would add a point to your roads-vs-transit section. Transit investments can reduce the need for road expansion. As photos like this (http://randomdude.com/images/car-bus-bike.jpg) show, moving travelers to transit reduces congestion because transit riders take up less road space than car drivers. Of course, this only happens if the transit line is useful and people actually ride it.

    • Walker Angell
      Walker Angell November 21, 2014 at 11:46 am #

      What that image doesn’t show is that transit seems to often need some level of dedicated space, ROW for a rail line, bus stops, etc. I wonder what the actual space per capita mile traveled works out to be.

      • Alex Cecchini
        Alex Cecchini November 21, 2014 at 2:32 pm #

        Think of a train/bus stop in terms of total ROW per person compared to, say, on-street parking though. We hear pretty often how businesses can’t do without on-street parking in urban areas, but rarely step back and challenge that if transit were to become X% more attractive because we gave space to it directly.

        I think we should strive to maintain on-street parking, but treat a bus bulb (for side-running buses) or train platforms (for center-running LRT like University) as the equivalent of a parking space (just more efficient).

  2. Walker Angell
    Walker Angell November 21, 2014 at 11:42 am #

    Great post Alex. And very timely. I’m working on an audit of some NE metro communities that this all fits well in.

    Do you know the actual costs of these various facilities/services? When a road is built how much does each component (storm, sanitary sewer, water, road surface lane, bicycle path, sidewalk) cost? How long does each last? It seems that water, storm, and sanitary sewer lines last a considerable time, like 80-100 years? What is the effective cost of a mile of roadway with 40 houses vs one with 60?

    Perhaps Chuck needs a StrongMetros to go with StrongTowns 🙂

    On the side, I wonder what the real costs are in Annecy. From what I’ve seen of public services in France, we’re massively more efficient in providing them.

    • Alex Cecchini
      Alex Cecchini November 21, 2014 at 2:39 pm #

      As you can probably guess, I’m trying to answer those very questions to really understand how much the public sector spends at given urban forms and densities. The Strong Towns work is great and really gets the conversation started, but loses clarity when talking about retrofitting and the complexities of the costs needed to serve different forms when you scale up a city past a small town (<40-50k) where facilities and simple mixed-traffic buses suffice to get people around.

      I'm not sure on Annecy's actual cost, but I always like to flip that argument back around. If we believe in American Exceptionalism (which seems to be a subconscious theme in those who support our way of doing things), wouldn't you think we could have their built form but do it better/cheaper? Part of me says yes, we're quite productive, etc. Part of me says no – many Europeans build transit for far less than we do here. I guess I'm just not qualified to answer that.

Trackbacks/Pingbacks

  1. Sunday Summary – November 23, 2014 | streets.mn - November 23, 2014

    […] More on the Infrastructure Cost Discussion and Re-Framing the Regional Transportation Debate continue discussion about regional transportation (and the costs of urban and suburban development patterns) which kicked off with a recent Chart of the Day. This should be read along with A Quick Fix for Minneapolis Transit for more discussion of costs and density.  MN GOP Beware: Biking and Pedestrian Improvements Have Broad Appeal is less about the GOP and more about showing interest in biking and walking is state-wide and not limited to the (presumably DFL) urban core; commenters question both the title and scare tactics as well as the numbers in the post. […]

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