SCOTTSDALE INDEPENDENT David Smith Apr 14th, 2015
Next Tuesday, April 21, your city council will again take up the questions of if and when to put before voters a bond issue for capital improvements in our city.
I will be answering, “yes” and “soon” for reasons I want to share.
Those of us who own property in Scottsdale paid a premium over what the same property would have cost in a neighboring community. That’s just as true for a $100,000 home as it is for a home costing a million or more.
Even renters commonly pay a premium over rent of a similar apartment elsewhere in the Valley.
This premium is the “value-add” to real estate associated with the name Scottsdale. It reflects the aggregate of all those assets and services that make ours one of the nation’s most livable communities.
City services are a discussion for another day, but consider the public assets that collectively comprise our home’s “front yard.”
City assets include the McDowell Sonoran Preserve, of course, but they also include all the libraries, parks, museums and entertainment venues; they include all the streets, transportation modes, flood protection structures; they include all the city offices, senior centers, parking garages, police and fire stations.
Unfortunately, all these assets (except the preserve) are depreciable … they wear out over time and periodically require major renovations or replacement.
The depreciable assets of Scottsdale’s city government amount to $3 billion (which, by the way, is original cost — the cost today would be even higher!) These depreciable assets have an average useful life of 30 years, meaning they will wear out at the rate of $100 million every year.
If we reinvest $100 million or more every year, we can maintain and even grow the stock of assets that create our city’s special cachet; anything less, and our stock of assets will look a little less fresh, a little more tired, a little more — depreciated every year.
And that’s what has happened. Because city revenues fell in 2008 and took so long to recover, we stopped investing at the rate needed to maintain the value of our city stock of assets.
Streets that were rated 85 (on a scale of 1 to 100) were allowed to degrade to 75; indeed, some sections of Scottsdale Road now score only 19! Cracks and potholes that would have been unthinkable just a few years ago are now commonplace.
As traffic increased, parking became more of a problem. Flood control projects have been delayed and delayed again. Firemen are housed in temporary trailers. Parks have been left half-finished. The list goes on.
The solution is simple; the proud citizens of one of America’s most livable cities must agree to make the investments required to restore our own “front yard.”
While no one else will make this investment for us, we will get a lot of help! For every dollar of new capital investment supported by a secondary property tax, Scottsdale citizens will pay less than half.
- The business community normally contributes a third or more. That’s because, collectively, commercial and industrial assets account for a third of Scottsdale’s total assessed valuation
- Snowbirds and out-of-state residential property owners can contribute as much as another 10 percent. Not only do we have a significant number of snowbird properties in our second-home community, but their individual value is commonly greater than the city-wide average.
- Various governmental agencies including highway funds, flood control districts might contribute an average of 10 percent. For some projects, their share will be as much as half.
- And, finally, citizens won’t be burdened in the future by the inefficiencies of high maintenance on assets kept in service beyond their useful life. That frees up money in the General Fund for new/improved city services.
A citizens bond taskforce identified a list of priority projects and city staff has suggested others. As we debate the list, there will a temptation to pick and choose; as tempting as that exercise might be, I urge every citizen to evaluate the projects against the single litmus test of “What projects are going to enhance the cachet of Scottsdale’s livability?”
More selfishly, we might ask ourselves, “What projects are going to increase the value of our homes and give us the quickest return on this property tax assessment?”
Each of us have chosen to live in Scottsdale because we place high value on the amenities that make this a most livable city. Considering the negligence of capital investment for so many years and the extraordinary return I believe citizens will earn on their investment, I will be supporting the bond projects.
Anything less is unsustainable.