Friday, March 10, 2006

Now THIS is Transportation Planning

House Republicans have picked out 22 transportation projects and are pledging that if their no-tax-increase approach prevails these projects will be done, says this morning's Washington Post.
'"By picking out individual projects, it takes some uncertainty out of what the path forward is," said Del. Joe T. May (R-Loudoun), one of the House members who came up with the list. May said the project designations came from lawmakers in consultation with local planners.'
The resident Wise Man of Virginia transportation planning says, bad idea:
'"Earmarking projects is an extremely poor idea, one of the worst ideas," said Philip A. Shucet, who resigned as commissioner of the Virginia Department of Transportation last summer to take a job as president of a development firm in Virginia Beach. "Once you begin doing it, it's difficult to stop, and it erodes a reasonable process."'


At 2:58 PM, Blogger Ray Hyde said...

What they have is some goals. They do not even have milestones, because there is no schedule as to when they will be complete. They are not prioritized as to order of completion or importance or cost effectiveness. And they do not have the budget or other resources. They don't have concensus, design or management structurem, not to mention life-cycle cost analysis or maintenance plans.

When they get that done, they will have a plan.

At 7:37 PM, Anonymous Anonymous said...

Why didn't you discuss the rest of the Post article? You know, the (only partial) list of earmarks that are demonstrated to be akin to the Alaskan "bridge to nowhere."

The Post lists projects in the House plan that are demonstrated to do nothing. Others that are already fully funded (so the "fiscal conservatives" are throwing money away). And yet others still that folks simply don't know what the hell the projects are. Heck, there's one project in Stafford where the House (the Speaker) has given money -- but, trouble is, there's no land to be had for it.

Yeah, that's right: good planning. Very good planning. Geez ...

At 5:28 AM, Blogger Larry Gross said...

"This" is nothing more than business as usual.

Politicians (vice transportation planners) have arbitrarily designated certain projects as their "favorites" then those same guys(gals) did what to get them built?

Well, they allocated token money for them.

Hmmm... let's flash back to what Shucet did what when he came to VDOT?

Well.. he flushed their list of "to be constructed" projects, most of which, had token money and absolutely no chance of being fully funded within a reasonable timeframe.

Blame the politicans?

Well.. what happens when your transportation agency has no process for prioritizing and ranking projects for cost effectiveness or uses performance criteria or measures of effectiveness?

Answer - you get a vaccum and invite those with political agenda's to decide priorities.

The TPB of MWCOG did an aerial photo study and "discovered" that identifying bottlenecks and doing site-specific upgrades had a significant good effect for a lot less money than mega projects that had decade-long milestones.

Wouldn't it be a real kick.. if they came back with say.. a bigger list of recommendations of how to improve the network in like manner with... a very judicious selection of bigger projects.. actually justified with.. now hold on to your hats - data and analysis that showed they had a high bang-for-the-buck potential?

The "road map" for this is not some pie in the sky rhetoric.

JLARC and the Virginia Auditor of Public Accounts - BOTH - put their those same ideas in the form of recommendations - which both VDOT and the GA continues to ignore.

I'm starting to think.. that most folks .. like to bitch about congestion the same way they like to complain about.. crummy weather.

They're really not serious about doing anything.. especially if it means more money out of their pockets.

At 5:58 AM, Blogger Larry Gross said...

Here's a little tidbit that might change folks minds about the future of Transportation Planning and the role of the gas tax in funding transportation projects.

From Toll Road News (url at end)

In the past few months there have been major developments in scaling up Lithium-ion rechargeable batteries - which used to be confined to cell phones and laptops.

One of the leaders, A123 Systems of Boston, run by MIT professor Yet Ming Chiang is committed to providing Li-ion batteries for hybrid electric/gasoline-diesel motor vehicles.

Plug-in hybrids

Depending on your electric rates, plug-in will provide power at the equivalent of 75c to $1/gallon gasoline/diesel (17c to

Half the cars in the US are driven only 40km (25mi) or less per day, so these could virtually run off the electric grid.

The big breakthrough for plug-ins will be when they are offered as a
factory-built option. That seems quite likely to happen within the next year. By some accounts Toyota will announce a plug-in this summer.

This has huge downside implications for "trust funds" based on petroleum fuel taxes.

Where's the equity in a road pricing system that derives its revenue from the people who drive the old cars - the gas guzzlers - allowing new car buyers running largely on electric power to contribute nothing.

The case for a toll - a per-mile road charge regardless of fuel -
becomes overwhelming.

At 8:45 AM, Blogger Toomanytaxes said...

Six of one, a half dozen of the other. Earmarks are not a good approach to solving real transportation problem, but neither is the current system where, according to the state auditor's report, the CTB makes transportation funding decisions based on politics as well.

Both Larry and Ray have made some good points about the flaws in the process. "If you keep on doing what you've been doing, you'll keep on getting what you've been getting."

Thanks goodness for Vince Callahan and others in the House who are resisting raising taxes to fund this dysfunctional system!

At 7:55 PM, Blogger Ray Hyde said...

Depending on where you live, electric rates may go up from 30 to 50% this year.

A plug in hybrid is an oxymoron, and the power density from batteries is stillnot there yet. Give it another twenty years. Hybrid technolgy has been available for over thirty years, but it is just now starting to come on stream.

But a per mile charge doesn't cut it. You really want to charge more where roads are congested and less where they are not. The idea is to get the best possible use and maximum economic benefit out of your road investment. There is a benefit provided by transportation, and most people apparently find that the best benefit comes from motor vehicles. Let's not propose a plan that throws the baby our with the bathwater. What we are looking for is the optimum net benefit, which is not necessarily the same as the minumum acceptable driving amount.

But if pollution from autos is drastically reduced, then a good portion of the argument against them goes out the tailpipe. There is still the land use thing, but what we are talking about here is better autos, not some mythical alternative option.

If half the autos are already driven 25 miles or less per day, what does that say about the likeliehood of reducing VMT by increasing density? But, as usual, Larry is on to something: 20% of traffic congestion is due to predictable daily commuter congestion, Everyone going the same place at the same time. Almost half is related to unplanned or temporary incidents: accidents or construction. If we really want to eliminate a lot of congestion, this is where the bang for the buck is. And, As Larry points out, almost a third is due to a handful of well recongnized major bottlenecks: these things even have names like "The Mixing Bowl" or "The Hillside Strangler" Some ar bigger than others, and some are just the result of land use stupidity, but they are fixable: this is an area where you actually can build your way out of congestion.

At 11:04 PM, Anonymous Anonymous said...

"Slowing development is the only way to maintain speedy development!

From Kaine's Address to the Joint Assembly.

"I am proposing initiatives that will better link land-use and transportation planning. We cannot allow uncoordinated development to overwhelm our roads and infrastructure. This important and necessary step is not anti-development, but it recognizes that new thinking about development is needed."

Let's see here. You have two sides to this coin. On the face side you've got Virginia's economic development, which has exploded in recent years and everyone's standard of living is skyrocketing at an unbelievable rate.

On the backside is the traffic problem that's built up as a result. Now, between the booming businesses and the insufficient roads, which one is the government responsible for?

The roads you say? Why, that's a strange coincidence--they're also the ones that can't seem to keep up. It's almost like the government is ineffective at doing anything efficiently.

So Tim Kaine has looked at the prosperity we have enjoyed in our more business-friendly environment than our neighbor to the north (Maryland, not Canada--though them too, I guess), then looked at the government's inability to build roads fast enough to keep up...

...and he's come to the conclusion that the answer is to get the government to "coordinate" economic growth, since we now can see that it was so very good at "coordinating" the maintenance and expansion of the roads?

We must give local governments the power to control their own destiny and balance the benefits of economic growth while protecting their quality of life.
Ok, deep breath here...

...With lower unemployment, an increasing standard of living, great programs that both help pay for higher education and encourage people to invest in Virginia schools...I have to wonder what "quality of life" Governor Kaine desires to protect, exactly. Because as I see it, trying to slow down economic growth so that we don't attract too many jobs before we have more roads is a threat to the continued improvement in our quality of life.

Something is lacking in your perspective, I think, when you see traffic as a decrease in "quality of life". But then, maybe Kaine put it exactly right--his slow-growth ideas area all about "protecting" our quality of life. The one that we've already got. We won't get anything better, particularly as we're slowing down and other states aren't, and so businesses that are told they have to wait for new roads before they can come to Virginia will undoubtedly be content to find space elsewhere. So, no new jobs. Probably won't lose the ones we already had, but you sections of VA that haven't experienced the best of the boom yet, well, sorry. You don't get to. That might give us more traffic. And think of how stressful that would be.

I really hope Kaine gets nothing on this one, not an inch.

posted by Adam Gurri at 9:50 AM

2 Comments:I agree.

Strangely enough, most communities (Fredericksburg for instance) are still members of regional cousels to promote the area and encourage businesses to move here.

We already don't have enough labor to support all those businesses in DC/alexandria. If successful, more people will flock to this area seeking those jobs. No place for them to live here, so they will live farther away and commute.

And there is no place for them to live here because building houses and apartments are "development" and we don't want any more of that.

And we don't want more/better roads because that will lead to "development"."

At 4:48 AM, Blogger Larry Gross said...

Here are three very relevant portions of the previous hybrid article:

1. - "Depending on your electric rates, plug-in will provide power at the equivalent of 75c to $1/gallon gasoline/diesel"

2. - "However plug-in would be valuable insurance against $3 or $4/gal fuel."

3. - "The big breakthrough for plug-ins will be when they are offered as a factory-built option. That seems quite likely to happen within the next year. By some accounts Toyota will announce a plug-in this summer."

I think plug-in hybrids are much closer than folks think. There are already after-market kits being sold.

If gasoline goes to $3 a gallon - and Toyota-made plug-ins come on the market.. I'd say watch out...

At 5:00 AM, Blogger Larry Gross said...

I'm perplexed about the mechanics of the land-use measures.

For instance, in Fredericksburg and environs - we generate a substantial number of I-95 northbound commuters.

I'd guess it's on the order of 30-40 thousand trips a day on I-95 which is on the order of about 25% of it's AADT - average daily traffic.

What kind of land-use "reform" would affect this?

Even if HB1610 had passed, I'm not sure what impact it would have because our area is adding several thousand new homes per year (70%+ are commuters to No Va) - and almost all of them are "by-right" which doesn't require rezoning approvals.

So even with HB1610 - there would have been no mechanism to blunt that growth.

So.. I'm trying to understand how the current flock of land-use legislation would do much to influence ... the numbers of commuters from our area to NoVa.

It is my believe that it is these outer-suburb commuters who are, in fact, the reason why the No Va road network is maxed.

Or to put it another way, if you subtracted all the outer-suburb commuters from the NoVa transportation network - what would happen?

So .. I'm not seeing how the land-use legislation would have much effect on the outer-suburb commuters.

At 8:49 AM, Blogger Ray Hyde said...

On my Prius the gas engine is about 70 HP and the electric motor/regenerator is about 50 HP. In order to have a useful plug in, you would have to reverse that, or you wouldn't have enough power. In the Prius, the electric motor is there primarily to give a boost during acceleration, and the rest of the time it is recharging the batteries.

But you can't have a useful long distance vehicle unless the gas engine has sufficient power to recharge when it is not being fullly used, which pretty much means the gas engine needs to be larger.

So to have a plug in, you would need at least a 70 HP electric, and probably a 90 HP gas/diesel. Now the electric has to pull more weight around and the energy draw is greater, batteries are heavier, etc. And the gas engine would be underutilized, but carried around for longer distance use.

For a shorter range, special purpose vehicle, that might not be true, but that would limit the market, it seems to me. Consider all those that drive an SUV because it meets their maximum need, even though it far exceed their average need.

I'm sure there is something I'm missing here, and the Toyota engineers and marketers have it figured out. It seems to me it is going to hard to improve on the Prius: even at $3/gallon, you can drive to Boston for $36; you can fill it up for $25.

I'm sure we will see plug-ins, and my wife might be a candidate, even out here: her driving is mostly strictly local. But I don't see a major impact on fuel use, driving habits, or road funding needs for quite some time. For the town house and condo crowd, plugging in might be a problem.

As for the land use reforms, let's call them what they are: land use restrictions. These are not going to solve the congestion problem, or the VMT problem: as Larry points out, half of vehicles already drive short distances. Our VMT problem is most likely an artifact of a booming economy, and when that goes away VMT will be the least of our problems. At that point, affordable housing will be more of an issue than ever, and we will finde that land use restrictions have decimated the 25% of the economy that is construction and increased home prices considerably.

That's great if you own a home already, not so great if you are still in high school right now.

At 11:44 AM, Blogger Larry Gross said...

I think the quest for "affordable housing" is driving (pardon the pun) congestion,VMT,infrastructure,land-use issues.

Right now, there essentially is a gigantic loop-hole in terms of generating enough revenue to pay for new infrastructure to cope with the congestion/maxed roads.

Once that loophole is "closed" via toll-roads and/or other market-based mechanisms... then there will be much less easier ways to obtain "affordable housing"..

If you live save on tolls but pay more for housing.

If you live far, you pay less for the house but more for tolls.

The Toll Roads will essentially "manage" congestion by varing the price of the tolls.

In doing so, the "toll effect" will be to charge ever increasing tolls as the outer suburbs continue to grow, add population, and in turn, more commuters.

So.. it you move to the outer suburbs for a cheaper house - you'll be seeing ever increasing tolls... as long as the growth rate continues unabated.... OR
they face the prospect of even worse congestion/delays in the non-toll lanes.

It'll take a decade or more for this to play out... but at some point... a "kind" of an equaliberirum might result.

I'm not saying anyone will be happy with it. It'll be a lot like purgatory.. :-)

At 12:00 PM, Blogger Larry Gross said...

re tolls:

The number I'm hearing in terms of cost from the Fredericksburg Area to No Va is on the order of $15 one way. I'm quite sure this is a WAG... :-)

But that's $600 a month - or about 8K a year NOT including the cost of gasoline.. or replacing your car every 3-4 years when it trips 100K+ on the odometer.

Add all of that to your mortgage costs and see what happens....

Does anyone think if THAT ends up being reality that folks will then check to see how much more house they could afford for $600 plus $ savings from the other commuting costs?

... or folks might look at jobs in the Outer Suburbs that are $8K
lower on annual salary?

... or employers in the NoVa area might boost salaries and/or pay toll costs... for their employees?

another datapoint:

"Fifty-six percent of the Northern Virginia residents surveyed favor HOT lanes. Just over one-third are opposed.

from a 2005 poll by the NoVa Transportation Alliance. page 5

At 9:51 PM, Blogger Ray Hyde said...

Larry, you and I are so much on the same page, pretty soon people will think we are one blogger with two pseudnyms. I think you have hit it on the head, again.

Probably, all of the above will occur in varying degrees. But $8k a year is a major tax: how many Fredericksurg commuters (and south) are there? That adds up to a lot of money. ($320 Million?, per year? Just for I95? Whew.) And won't some of those employers just move, rather than pick up the tab for tolls?

I wouldn't put toomuch stock in the polls, because they are a what if scenario. When people actually have to pay for what they get, they may feel differently. PEC says farms pay three dollars in tolls for every dollar they get in services, therfore, the argument goes, we need to save these farms because they keep our taxes low.

But if people should pay for what they get, then why are farms paying 300% of what they owe. If farm taxes were set equitably, then taxes for homes in Fauquier would go up by 20 to 30%. Right now, if you took a pool on whether we should save our prime farmland, Fauquier residents would say yes. But if they suddenly got slapped with a 20% tax increase to help ensur that happens, then they might feel differently.

But homes everywhere are undertaxed. Which is one major reason we are not generating enough revenue to pay for infrastructure, and also why jurisdictions (and present residents) are so opposed to new construction: they know it will add to the deficits and shortfalls.

But if the answer is for new residents to make up for all the shortfalls (current residents included), affordable housing goes out the window.

If a bunch of people decide they can afford to live $8k closer, then close in home prices will go up, and I will make a killing on my Alexandria home. But if the home prices go up enough, then gas and tolls start looking cheap.
The end result is the same as what we have now, but with a smaller radius, higher home prices, and higher commuting costs.

With more people in a smaller area, I submit it will mean more congestion, not less. It is not clear to me that anyone is necessarily better off.

My property on the farm will take a bath and we will "save" a lot of open space. But that space will be needed to provide the water and air and garbage disposal and recreation for the hordes of people closer in. They will demand better roads so they can flee the city on weekends, so we will wind up building the roads anyway.

That, of course, will affect land and home prices. And around we go again.

If I'm lucky, Fauquier County will let me do a bed and breakfast, but given the way they are treating wineries, I wouldn't count on it.

There is plenty of affordable housing in Detroit. The reason is that there are no jobs. I would suggest that we can get federal employees that are just as inept in Detroit, and for a lot less money, but that ideea is unpopular because it would kill home prices in F'burg.

Name your poison, there is plenty to go around.

At 5:10 AM, Blogger Larry Gross said...

At the root of the affordable housing issue is ... whether or not the availability of it is a market issue or whether it should be a government issue - and more specifically whether government policy should be to essentially transfer wealth.. to certain folks who want certains kinds of residential options.

I sometimes think the issue is portrayed as one where people cannot afford a place to live because of high housing prices.

This is not true.

What the complaint is that folks can't afford a 2000 square foot single family dwelling on 1/4 to 1/2 acre.

The market.. as one would expect - does provide a wide spectrum of housing options to fit most every budget unless one is on welfare.

I fail to see the justification for the government to have a responsibility to provide every worker or even workers who earn "average salaries" with a SFH on 1/4 acre.

You go to school. You get educated. You choose a career and you determine your financial fate in most respects with regard to advancement and salary. We all pay taxes to give every kid this opportunity.

And no company owes you a promotion nor a certain salary. You market yourself to maximize your salary.

What I'm hearing is that folks are "entitled" to that 2000 sq ft SFH on 1/4 acre - and if they have to drive 50 miles to obtain it, then that is their rightful choice
AND the government's responsibility to provide the infrastructure necessary for them to exercise that "option".

And I'm hearing that if there are infrastructure costs that are a consequence of that 50 mile commute that it's NOT the responsibility of the person who chose that commute and that it's socially and ethically unfair to assign those costs to them.

I'm not going to argue this from a point of view of "welfare for the middle class" (though this is what it really is) but instead on equity and fairness to OTHER landowners and workers.

Why should a teacher in Emporia pay higher taxes and fees on their auto and have those taxes diverted to pay for infrastructure in NoVa that's needed to provide congestion relief for someone who wants to commute 50 miles so they can afford a 2000 sq ft house on a quarter acre.....

..... when that teacher in Emporia probably lives in a house or an apartment that the NoVa commuter would think beneath them and their standing in life and would probably refuse to live in?

And to your issue of fairness and equity to landowners - why should your right to development your property be restricted, in essence, to prevent your property for being sold for a price keyed to its highest and appropriate use?

The answer is that is that localities will take the path of least resistance in dealing with infrastructure deficits.

The taking of your individual property rights is less a threat to them than the hundreds/thousands of "new" taxpayers who got a low-price house because they did not have to pay for infrastructure costs and now, as residents, will vote anyone out of office if they try to raise taxes to pay for the infrastructure deficit.

So.. Ray.. your adversary is not local officials ... it's the folks who will vote them out if they try to assign infrastructure costs to those that require the infrastructure.

It's easier and politically healthier for them to restrict your individual rights rather than deal with hundreds/thousands of angry taxpayers.

... and ......
The General Assembly folks that represent that teacher in Emporia... to a certain extent are conerned about the similar equities that you have as a landowner.

Essentially, our current policy of "assisting" folks to obtain "affordable housing" has equity impacts on many others.

At 11:09 AM, Blogger Ray Hyde said...

We agree completely that new construction will have infrastructure impacts. We agree that existing homeowners are acting in their own best interests in by demanding growth controls to limit new infrastructure costs and to inflate home prices. Apparently we agree that rural landowners are getting a screw job on the basis of numerical superiority of others. And I think we agree that people should pay for their own costs and benefits.

I'm not convinced that we have an accurate assessment of what those are. I'm not convinced that trading one pattern of development for another doesn't mean that we will change the pattern of infrastructure, but not the costs. Even if we had the data to properly evaluate costs and benefits, I suspect there would be endless arguments over the interpretation. In the meantime, we shouldn't be surprised if people act according to the rules, and benefits of those rules, as they now exist.

Following is a quote from a recent editorial in the Seattle Times"

"But it is at best foolhardy to think this voter initiative does not rise from broad disparities in the way urbanization has treated the land, and how a family can lose an inheritance with the stroke of a planner's pen.

A few weeks ago, I sat over lunch with five farmers — two, a father and son in farming — who are watching Pierce County turn from farm to suburb. Some families have been on the land for nearly 100 years. They say they can make a go of it raising lettuce and other row crops, especially selling to Fred Meyer, the retailer that buys mostly local produce. At the same time, their land is locked into rural use, denying them higher land values. In one case, a farm is 60 feet — a two-lane road away — from a housing development that went for multiple thousands of dollars an acre because of rezoning.

These eccentricities of the law are passed over as regrettable outcomes of proper land management by critics of the property-rights initiative. Yet, to hear a farmer talk, it would be nice if some of those eccentricities also fell on politicians, college professors and land-use planners.

That's why I think there has to be some common ground beyond the lettuce fields. Owners of a few acres of timber or row crops have to feel their land is not subject to whimsy in the form of someone else's land values. And the rest of us, we who grow rhodies instead of yields per acre, should understand it's not enough just to say we are going to defend the family farm and then treat the farmers as penal labor, prisoners of their land." ......

"Instead, the debate I'd like to see is how five farmers in Pierce County can be asked to take a bullet for the rest of us. If they are instructed by land-use regulations that their land is immune from the rising value for houses and roads, then how should they be compensated? The law doesn't set a market price for lettuce locally grown, or put a value on their time in the fields.

Saying we are going to save the family farm from development isn't enough. It doesn't walk the fields and ask the price of seed or prevent the strange inequities that emerge from pricey housing sitting across the road from artificially undervalued dirt."

Even environmentalists are now seeing the problems they have caused, as this quote from another editorial notes.

"The battle lines drawn in these legal wars left many people on the defensive, which is partly responsible for today's urban/rural cultural divide and a polarized political climate with little middle ground.

A major failing of environmental groups during this period was this battle-line approach to litigation, without an adequate understanding of, respect for or consideration of the values of "the other side." "

I don't think I ever said anyone was entitled to anything. I do believe that there could be a lot more housing, and ultimately more affordable housing, if the government would just get out of the way. Some estimates claim that as much as 30% of new home costs are the result of unneccesary government regulation.

My argument is that almost all residential housing is not paying its own way as it is, and that is part of our infrastructure problem. Whether that next new person lives 50 miles out or downtown there are going to be substantial costs involved, although the kinds of costs might shift away from roads a little bit. But our present transportation issues are not going away and are going to cost more money, regardless.

That person in Emporia is probably driving on uncrowded roads which were partly (50% ?) paid for in past years by NOVA. Now the bill is coming due, and people in Emporia object. I don't blame them. But if the rules change and each area is going to pay for their own roads, which area do you think will suffer more?

As for my ability to build or not, I really don't care one way or another, but if the county is going to put me in the business of providing scenery, then they need to figure out how to become a customer rather than an overseer. If the issue is one of creating a more economical core of infrastructure in the growth areas, then they are effectively renting my property (without rent payments) in order to hold it in abeyance. It is a matter of looking at ALL the costs and ALL the benefits, before we start sending someone a bill.

The county claims that my property provides valuable services and, unlike most homeowners, the county tells me that I'm paying them 300% of what I cost in services. If the day ever comes, when I am allowed to develop, and if I choose to do so, then they will be asking for another $30k in proffers and another $20 to 50k or in fees of various kinds. Not only will I not get credit for paying 300% of costs for past years, but they will want back taxes at the higher rate for five years in the past, on top of all the other costs. And they will want a permanent, irrevocable, conservation easement on 85% of my land.

That is a pretty heavy hit for building one house.

All that I might want to do is put up a modest home to rent to a local teacher or some such. That person won't be a long distance commuter, and I live in a place, like Burke mentions where transportation isn't a (local) problem. The real infrastructure problem is in the schools, same as in the city.

But the likliehood of the government allowing me to build is zero, and if allowed to build the cost is so high that I cannot build just one. So I submit that these government policies are effectively killing affordable housing, and making the farm and open space harder to keep as well. The end result is likely to be a developer, and a bunch of high end homes instead of one modest one.

Those people will likely be commuters.

I will readily agree that developers (and everybody else) should pay their own full costs. But I don't think anyone should be expected to pay 300% of costs and also be denied the opportunity to join the class of people that enjoy a 20% subsidy.

I don't think that subsidy should exist, either. But if I was only paying 100% of costs, and the other position was also paying 100% of costs, then the incentive to change from one to the other would be smaller.

And, by the way, if those other people were paying 100% insted of 80%, then our infrastructure would be fully funded, and we wouldn't be having this conversation. I don't expect anyone to elect officials who campaign on a 20% tax increase, so none of the above is going to happen, and we will be stuck, as you say, in Purgatory.

Everyone seems to think that their particular situation is unfair. Maybe that is just a marketing failure on the part of government: they haven't adequately explained their rationale.

It might be a good sign that everone is unhappy. In the regulatory industry, it often appears that regulations are set in such a way that the lawsuits from the pro side and the con side are equal in value. Right now, no one is even looking for the middle ground, they are too busy staking out their own.

At 5:21 AM, Blogger Larry Gross said...

good dialogue. I think the interesting thing for this and a lot of issues is how folks hold on to different parts of the elephant when describing it. :-)

re: allocating infrastruction costs. Yes.. we apparently built lots of infrastructure fairly cheap many years ago and now have exhausted that original capacity and must add new capacity and it's going to be very expensive.

Who is going to pay? What is a fair and equitable allocation?

re: 300% .... how much money did you actually pay? vs much money will be required to provide infrastructure?

I know around here that farmers pay vastly reduced taxes because they have their land in "land use" and that they pay less tax on a hundred acres than a homeowner pays on 5 acres - even though 4.5 acres of that tract do the same thing that farmers land does - not require services or infrastructure.

So your argument is a little like saying that for 30 years you paid $50 a month into Social Security but now you're entitlted to a $1500 a month pension ? :-)

That's the part that gets me about s lot of people in general.

"I pay taxes" so I'm entitled to whatever grand visions of infratructure and services my mind can conjure up"

This is sorta like have an single size admission cost for WalMart then you can haul out whatever you're willing to pile into how ever many carts you can push.

So.. no problem.. expand.. I-95 to 12 lanes and screw the HOV and HOT lane concepts because I ALREADY pay taxes and shouldn't have to pay more taxes or tolls... :-)

At 11:30 AM, Blogger Ray Hyde said...

I'm playing devil's advocate here, but the part of the elephant I'm pointing out is very real to me. I don't think very many people understand what it takes to run a farm, even a part time one like mine. I sure didn't before I got a few hundred thousand into it. Think about it: I drive the farm vehicles almost half as far as I drive the car every year.

The 300% figure is the county's number, not mine. They use it to make the argument that we have to save this prime farmland because it keeps our taxes low. To which my response is keeps whose taxes low? Not mine. If someone wants to make the pay for what you get argument, I'd be the first to sign up, if that is the basis.

The land use tax is based on what you could theoretically make from the land, and it is based on an analysis of soil type, etc. The process is handled by a committee somewhere and it is pretty arcane, but it works out that the land is valued at $400 per acre, for tax purposes, less in some places more in others. In effect, this converts property tax to an income tax, which I believe is inherently more fair. Unfortunately, I've never come close to making $400 an acre from the farm, $125 is more like it, and that is gross, not net. In any case the land use tax is quite low.

The county Ag agent has said a soybean farmer might make $75 an acre. There are about twenty farms that bring in substantial farm subsidies: one of them is over $80,000 per year. But even including these, every farm in the county is losing money to the tune of $2000 per year, on average. Because of the few profitable ones, the real losses are probably more like $5000 to $10,000 per year.

So farming is likely to lead to losses, but if you don't farm, you get taxed at the full rate, unless you put the land in permanent easement. Considering that every other activity is prohibited, that bit about holding farmers as serfs is not far off. What other business is prohibited from folding and selling off the assets? That's why I say that if they want me to be in the scenery business, they need to find a way to make it a business.

You would like the farm to make money, but from a practical aspect, you just want to make sure your losses don't exceed the amount of the tax deferral. that is one reason you see a lot of "minimum farming".

The county calls it a tax deferral, because the money is still owed. If you stop farming, whether or not you build, the county will come and collect rollback taxes for five years. It is in the supervisors agenda to change that to ten years. That should pretty much put the kaibosh on anybody with thoughts of going in to farming, as if land prices wouldn't do that anyway.

So why does anybody do it? It is patently nuts. Well, of course there are benefits. You can have goats and sheep or cattle or horses, and some people enjoy that. You live in an environment that few others get to enjoy. If you call working your tail off enjoyment. I have had neghbors who bought in, and later sold out. they lacked the skills, equipment, fortitude, and attitude that this takes.

Or maybe they were just smart.

The land use tax does not apply to the home and two acres, for which farmers pay the same as anybody else. It does not apply to barns and other infrastructure on the farm which get taxed at the regular rate. As a result of land use, everybody in the county, farmers included pay 28% more than they would without land use. For some working farms with valuable structures, that means their taxes are actually higher than they would be absent land use.

Now, part of the county's argument is that every time a home is built, it costs them $2100 per year. I think that number is bogus, but it is the county's number, not mine. It's an old number and it's probably more like $2600 now. Suppose I could build thirty five-acre lots. That means that every year I don't build them I'm saving the county $63,000.

This year, the value of the land doubled, which means that the difference between the full tax rate and the land use rate is around $10,000. This makes it a lot easier to make the justification to keep farming at a loss. But you still have to feel as if the intangibles are worth the cost.

In any case this means the county is taking a $10,000 loss in order to prevent taking a $63,000 loss, so their ROI is 158%. Not too shabby.

But what about me? I expect that with new assessments, taxes on the farm will be around $6000 this year (it would be $16,000 with out land use). For comparison, my taxes on my home in Alexandria are around $5000, and I actually get some services there. Then throw in my losses of $2500 to $5000, on top of that. Not to mention the value of my labor. I'm spending as much or more than the county is in order that they can save $63,000. If my ROI was half of what the county's is, I'd be happy. 7% of $63,000 would just about cover my losses.

But what if I built those thirty houses, at $500,000 each? Suppose I made 15% profit, that means that every year that goes by that I don't build one, I'm taking a pass (being required to take a pass) on $75,000. At 7% interest that's $5250 per house per year.

Bottom line is that the county is giving up $10,000 to save themselves $63,000. And I'm giving up $167,000 a year to save them $63,000. Now, all of a sudden, the benefits I get for living on the farm don't look so hot, and besides, I can buy a new and better farm someplace else.

And what about all those people who might have lived here? If assessments double again this plan is costing each of them $500,000. the county argues that any time a home is built that costs less than $700,000, they are losing money. but those homes, and all the 500 or so other homes the county has rejected in the last four years would now be worth that much, so their argument on this account is bogus. Using their own numbers, it doesn't make sense.

If assessments double again in four years, something is going to have to give. What are my options? I can sell the house in town, and give up forever the idea of moving close to work, if it becomes a necessity. I can use my by-right development possibilities and build six grandiose homes on the farm. I can sell to a developer, who is willing to take the risk of a rezoning application, but that won't happen: the best I can do is sell an option on the farm to be exercised if the rezoning is approved. I can sell it in one piece, as a farm, to someone who is truly wealthy and could care less about the losses. They will get it at an enormous discount to its real value, because of county regulations, and they can then slap an easement on it and get a huge break against their already discounted price. Or, I can pay the taxes, take the losses, and wait.

If I build my one lousy teachers home, with equestrian rights, then I make enough off of that to cover the farm losses, and I gain another farm customer. I see it as a win win, but the county sees it as a no no.

The current rules are stacked in favor of the wealthy, and that is what this county wants. I have been told as much by a county supervisor.

So what are the transportation implications? The state took 60 acres from the farm for road construction, for which they paid my father in law the princely sum of $200 per acre. If the county now comes to me and says the farm owes more money for infrastructure, I'm not too impressed: we've done our bit. If it stays a farm, then transportation stays as it is out here: underutilized. If it turns into 30 homes, they will be commuters, and cause more of a problem in Gainesville.

Your comments about open space are partly correct: five acres is five acres, in a lot of respects. Although the farm drops a lot of money on the local economy, I'm frankly shocked when I see the kind of money some people spend on their half acre. I'll willingly concede that some of the most heavily cultivated land anywhere is in suburbia. I think we could do better with clusters of housing, but that idea is very unpopular. I think we could do better if they were not so adamant that I use the land for farming. What's wrong with a truck wash? Artificially refrigerated cross country skiing? Anything?

Right answer? I don't have a clue.

I'm pretty sure that screaming at farmers who sell out as speculators is missing the point. As I see it their problem is a result of not having sold out soon enough: they are now being punished for having saved the land the longest. I'm also not convinced that the costs of infrastructure caused by development aren't outweighed by the costs associated with preventing development.

At 10:01 AM, Blogger Ray Hyde said...

Sorry 158% should have been 15.8%.

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