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Grading the Cities introduction THE GOVERNMENT PERFORMANCE PROJECT
Introduction: 35-City Average Grade: B
Cities are doing reasonably careful capital planning. They are paying much closer attention than they once did to the impact that capital investments have on future operating budgets. The majority have finally come to the realization that if they build a new jail, they’re going to have to hire guards for it — forever. And capital plans seem less vulnerable to political tinkering than they used to be (although not invulnerable). Many cities have developed creative ways of involving the public in the decision-making process, thus reducing reliance on special interests and political favors.
The building process is more efficient, too. Of course, there’s not much that can be done about a construction boom that creates a shortage of bidding firms, an escalation of costs, and delays due to over-booked contractors. But technology has given many cities the tools necessary to track capital projects as they proceed, and step in quickly when they appear to be going off schedule.
That leaves maintenance. It’s the weak spot in capital management. Too many city leaders seem deluded by the idea that they can ignore the condition of their infrastructure indefinitely without paying a price.
Even cities with relatively strong capital management systems frequently suffer from faulty systems to take care of the city’s maintenance needs. Whether or not a city has the resources to fully fund all the preventive and ongoing repairs to its infrastructure, the first step is to know where the usually limited dollars could be most effectively spent.
Minneapolis, for instance, has an excellent long-term analysis of future needs. But maintenance has suffered under a feudal environment in which each department takes care of its own assets. Funding allocations for maintenance are hopelessly inconsistent from one department to the next. The city is now in the process of purchasing a combined capital maintenance and monitoring computer system that should help.
There are exceptions to the bad news in this area. New York City has a charter-mandated condition survey program for assets with more than $10 million replacement value and a life of more than 10 years. It also maintains an Asset Information Management System, which reports the state of repair for some 2,500 city-owned assets, including 200 million square feet of buildings, 2 million square feet of bridge decks, 350,000 linear feet of piers and bulkheads and 6,200 miles of streets and highways.
Of course, the very notion that New York City excels at maintenance is going to sound patently absurd to anyone who has bounced around on its streets lately. That’s because the presence of good information doesn’t necessarily lead to sufficient funding. Over the years, New York’s leaders have made some conscious decisions to throw in the trowel on pothole repairs, secure in the knowledge that it will never catch up that way. The problem of deteriorating streets is handled by resurfacing. For better or worse, New York determined that this was the most financially sensible use of limited resources.
The truth is, only a handful of cities have enough money to maintain their infrastructure. Maintenance needs outstrip funding in the vast majority, with Baltimore, Denver, Detroit and Dallas being prime examples.
Los Angeles may deserve a dubious-achievement award in this category. Encouraged by good times, the city is adding new capital projects. But maintenance funding has been inadequate for years. With a street inventory of about 6,500 miles, the city repaves about 200 miles a year. L.A. officials estimate that 80 percent of needed maintenance on facilities is currently being deferred; 66 percent for streets.
The problem, of course, is that it’s easy to put off maintenance for a long time before roofs start to leak or roads begin to crumble. Austin, Texas, is now trying catch up with a backlog of needed repairs on its infrastructure. But the problem stretches back to the economic downturn of the 1980s, when maintenance was sacrificed to keep the budget in balance. “You didn’t see the problem at the time you were causing it,” says the city’s budget director, Charles Curry. “Now you have streets in poor and very poor condition, and they’re going to have to be rebuilt.” The city’s research shows that it costs 15 times as much to rebuild a street as to maintain it properly in the first place.
Of course, it’s much easier to fund street maintenance if you plan for it. A fair number of cities have caught onto this simple idea and already have long-term pavement management systems or are in the process of installing them. Says Cecile Pettle, budget and research director of Phoenix: “It’s easy to provide funding if it’s on the basis of a rational multi-year plan — even if it’s for mundane maintenance issues.”
The same kind of planning is helpful in maintenance of buildings. Cities are gradually learning the wisdom of considering long-term maintenance needs before they approve a new public project in the first place. Seattle, for example, established one of the nation’s most complete fiscal note processes for capital projects. Approval of any project costing more than $500,000 must be accompanied by an estimate of the facility’s life span, ongoing operating and maintenance costs, expected revenue, increased or decreased private investment and the financial cost of non-implementation. A less formal fiscal-note process is used for capital projects between $100,000 and $500,000.
This is having a strong impact on the way the city looks at all future capital projects. Seattle has started a major-maintenance reserve for several of its new facilities: a concert hall, an arena and an aquarium.
That’s a good thing. If an aquarium starts to leak into an arena and a concert hall, you wind up with a lot of dead fish and wet violas. And nobody likes that.
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It may be a little simplistic, but capital management in the nation’s big cities can pretty much be divided into three significant areas: building things, such as streets, sewers and schools; maintaining them once they’re built; and planning for the future. In two out of the three areas, the overall news is pretty good.