News from Patrick Flynn

Clark Yerrington, a Mountain View resident and activist with a blog of his own, sent me a thoughtful list of questions to answer for posting on his site.  You’re welcome to review them there or here:

Clark: You have displayed a flair for explaining complex matters of municipal finance and funding to constituents and others.  What do you think are the top two or three issues in regards to taxes, budgeting, indebtedness and revenue that you would like people to understand better than most of us do?

Patrick: First off, I’m gratified to hear that my attempts to explain some of the more arcane aspects of municipal activities have proven mildly helpful, so thank you for that.  As to some things that are important for folks to understand as we move forward, here are a few:

• While size matters, the structure of MOA’s budget has the potential to more greatly impact our community.  Case in point, Mayor Sullivan’s 2010 budget uses state dollars for services, thereby reducing 2010 property tax assessments.  This is a change from recent years where taxes were assessed on the entire cost of providing municipal services and state dollars, when available, were used to provide tax relief.  The net effect – total tax dollars collected – is the same but by applying state dollars prior to setting mill levies means future tax capacity is lower than the tax cap otherwise requires.  So when you hear that rising labor costs require reductions in services that’s only part of the story – reduced tax capacity is also a major factor.  In the interest of full disclosure, I helped craft and voted for the final budget despite my discomfort with its use of state dollars.  Frankly, I didn’t feel the Assembly had enough votes to override the mayor’s line-item veto authority and the administration refused to negotiate on that point.
• The 2010 ballot will see very few bonds, likely nothing from the School District and only a road & drainage bond for the municipality.  Given the general mood among taxpayers this is probably a smart move politically but risky financially for two reasons.  First, the current state-reimbursement program for school district bonds (which varies from 60 – 70%) expires on November 30, 2010.  If the legislature doesn’t vote to extend the program we’ve lost a terrific opportunity to reduce school bond costs (that said, I expect the legislature to extend the program). Second, the macroeconomic expectation is that interest rates will rise in the not-too-distant future.  If that comes to pass future bonds will be more expensive and we’ll likely kick ourselves for not issuing debt in the current low-interest rate environment.
• Concerns about the level of property taxes have merit.  While Anchorage’s total taxation level is amongst the lowest in the nation, our reliance on property taxes is higher than most.  Those who have owned their property the longest, meaning their loans are paid off or nearly so, feel this the most as their property tax payments dwarf other monthly costs.  Unless and until we diversify our tax base discontent about property taxes will disproportionately affect our plans for the future.   While I’m no fan of sales taxes, that’s the most likely alternative.

Clark: Mayor Begich was very enamored of public-private partnerships.  The Glenn Square Mall; negotiations with Wal-Mart over particulars of their Muldoon store proposal; redevelopment of the dead Safeway mall in Eagle River as a government service center; a proposed lease deal of part of Russian Jack Springs Park to First Tee; and the creation of the Anchorage Parks Foundation — as examples.  The public is sometimes suspicious of this kind of involvement by City Hall, and it can feel like the process engenders a lack of transparency and accountability, and other possible lapses that may be inappropriate for administering public funds.  What happens when public interest opposes business interest?  Are we losing a check and balance, when a newly-minted Municipal agency like the Development Authority is running a project with a private developer?  Are there certain types of projects that are only feasible or exponentially more effective if undertaken as a public-private partnership?

Patrick:  From my perspective the underlying question you’ve asked is, “When the city seeks out resources from beyond its revenue capacity, is the reduced taxpayer contribution worth the loss of control.”  As with many things the answer is not a simple yes or no.  Take the Glenn Square Mall – the developer has worked with the community but, despite what I feel were the best of intentions, has been unable to deliver in some areas (e.g. the lack of “magnet” businesses like a movie theater or a popular restaurant).  On the other hand Cook Inlet Housing Authority, which has worked very closely with the Mountain View community, has done a terrific job producing high-quality, lower-cost housing coupled with training for new homeowners and tenants.  The neighborhood effect has been quite positive and I love the looks of pride I see on owners’ faces, which manifests itself in a stronger neighborhood.

The short answer to your query is that there’s nothing inherently good or bad about public-private partnerships, but they do require a heightened degree of public vigilance.  And we should always ask why a private developer can’t or won’t advance a project without public involvement.  The answer(s) help inform whether the investment is a wise one.

Clark: How much importance do you place on Land Use Planning, generally?  I’m concerned that we are getting a little carried away with road projects and other infrastructure that is starting to degrade our quality of life.  I appreciate the work that Anchorage Citizens Coalition is doing to increase awareness of processes and options we should consider, instead of continuing existing decision-making process and protocol.  There are legitimate concerns that both the Knik Arm Crossing and Highway to Highway projects are in conflict with the goals and aspirations of Anchorage 2020, our city’s master plan and template for growth.  What are some strategies we can use to protect and enhance existing assets?

Patrick:  While it may not be popular to say so, land use issues generally come down to basic economics – how do we achieve the maximum benefit for a scarce resource, Anchorage’s land base?  The good news is that economic arguments can drive the kind changes necessary to achieve Anchorage 2020’s goals.  More attractive land use, often achievable at relatively low cost, boosts land values and increases the desire for people and businesses to invest in our community.  The aforementioned CIHA projects are an excellent example.  So when faced with a project or proposal that one deems unpalatable I suggest looking at its costs and benefits, and then figuring out what alternatives can achieve greater benefits at less cost.

Clark: What’s being done to plan sensibly for Anchorage’s utilities, in a future where we’re anticipating growth and shortages?  I’ve heard of a proposal for wind turbines on Fire Island.  How might the proposed merger of several regional electrical utilities help or hurt Anchorage’s interests?  A lot of us would like to see more emphasis on alternative energy.  Why are we not allowing and encouraging solar panel installations on homes and businesses, set up to feed the excess electricity back into the grid?  I think a lot of people were disappointed at the appearance of the huge electrical wiring towers on East Northern Lights Blvd.  Is there a way to better anticipate and accommodate the inevitable capacity increases without so much compromise to the aesthetic experience of Anchorage?  A lot of people are surprised to find out the extent of well and septic, versus piped water and sewer in Anchorage.  What work is underway, such as consideration of mandatory maintenance requirements, or increasing environmental controls to ensure the future viability of these systems?  Likewise for upgrading [AWWU’s wastewater] treatment at Point Woronzof.

Patrick:  A lot of planning is occurring, but progress is tough to discern.  As you know, talks about merging railbelt electrical utilities were recently revived and, given the population served, it’s a reasonable idea.  My understanding is that Chugach (CEA) and Matanuska Electric (MEA) both face significant challenges in financing necessary replacement of existing generation facilities.  Municipal Light & Power (ML&P) is in better shape, and it’s reasonable for ML&P customers to question whether a merger that might prove more beneficial to CEA & MEA customers is fair, but it’s unreasonable to abandon CEA & MEA customers if some sort of reorganization could achieve economies of scale that would benefit everybody.  Given that you’d think all the railbelt utilities would be pushing for change but they’ve been fighting amongst each other for 30+ years and I haven’t seen significant evidence of change.  Their need for capital may provide the opportunity since the State of Alaska is the only likely source, and can enforce consolidation as a condition of financing.

On the renewable front there’s plenty of wind, solar and hydro potential but I think their development likely requires us to contemplate three facts some may find uncomfortable:

1. In order to encourage micro developments (e.g. solar panels on roofs) we need “net metering” regulations that allow utilities to purchase excess power production.  While that sounds simple, the Regulatory Commission of Alaska is taking it’s time developing those regulations to ensure they benefit independent producers without harming other utility customers.
2. Because of the hugely cyclical nature of energy consumption in Alaska we’ll need to maintain significant hydrocarbon redundancy.  The most likely candidate is natural gas, though the Interior may find it advantageous to stick with their current fuel supply, coal.
3. Maintaining natural gas demand sufficient to encourage necessary exploration and development of that resource requires significant and regular use, meaning industrial users.  Currently we have a Liquid Natural Gas export facility in lower Cook Inlet and the shuttered Agrium plant in Nikiski.  Those who understand the economics better than I inform me that we’ll not only need Agrium to resume operations but also at least one more petrochemical facility in Cook Inlet.  While that new facility is unlikely to be in Anchorage (we don’t have enough land) it wouldn’t surprise me to see it at Point MacKenzie, near Nikiski or near Tyonek.  In other words, we’ll need further development not for development’s sake, but for conservation’s sake.

The good news about all this is that we have relatively high levels of awareness about all these concepts.  The bad news is that there’s no clear route forward, nor consensus about the direction of that route.

Clark: Is Anchorage ready for another quake like the one in ’64?  There were, I believe less than 50,000 people here then; and 275,000 now.  Would there be a level of death and destruction that’d be overwhelming?

Patrick:  Once again, this isn’t a yes/no question.  A lot depends on factors well outside of our control.  Does the quake strike during a relatively mild season or in the depths of winter?  Are natural gas, water and electrical distribution networks severely compromised or are residents on their own for days or weeks before service is restored?  Does the Port of Anchorage, through which more than 80% of our goods flow, remain serviceable (as it did in 1964) or is it devastated (as Seward was)?  What is the condition of other transportation networks like roads, rail and airports?

The common denominator for these questions is resources – which ones are available and how do we allocate them?  The good news is that Anchorage’s Office of Emergency Management is well-versed in the Incident Command System (something I’ve worked with for many years) and, I think, would make good decisions in helping react to any natural disaster.

Clark: Much has been written about the condition of our municipal bus service, People Mover.  I think bicycling is the best way to get around Anchorage.  I would much rather be most of the way someplace, regardless of temperature and conditions, than standing at a transit stop for more than an hour, then boarding a bus for a slow crawl to someplace other than my final destination.  Low ridership is a symptom of inadequate service, but also used as a justification for not making improvements that cost money.  Can’t we do a little better?  I am hoping the business community will realize that having viable mass transit benefits them, and they will begin to demand it.

Patrick:  As one of the point people in recent budget negotiations, one of the most encouraging aspects of that conversation was the near-universal support for public transit.  Can we do better? Absolutely.  Will we see dramatic growth in the near future?  Because of economic concerns I doubt it, but Anchorage’s business community recognizes the importance of this service and I foresee an improving future.

Clark: I was pretty disappointed at the reaction by local business to proposed traffic lane and pedestrian amenities at both Fireweed Lane and Spenard Road.  Especially given the existing conditions are unsafe and unsuitable.  Maybe the proposed redesigns could be improved, but leaving everything as is would be unfortunate.  I find it notable that Anchorage lacks neighborhood commercial centers — where on-site parking is not mandated, and on-street parking is provided and there are substantial landscape and other infrastructure/amenities.  We have nothing like this, outside of downtown.  I began to try to sketch some possibilities of how Mountain View Drive could be reworked in this way, and a little about the pros and cons of the concept.  Will advocates for smart growth ever win hearts and minds in Anchorage?

Patrick:  Once again, this discussion reverts to economics.  In digging into the Spenard Road issue one of the concerns I heard from the business community was a concern less about the finished product than surviving the reduced patronage during construction.  One potential solution, beyond better communications between stakeholders, is to address this project a few blocks at a time.  That could achieve two results: opportunities to review project details for efficacy and reduced total neighborhood impact.  A potential detriment is the loss of economies of scale, but if the reconstruction of “Romig Hill,” the portion of Spenard linking Hillcrest Drive and 19^th Avenue, increases pedestrian traffic it may help drive other segments of the project forward and provide a road map for future endeavors.

Clark: Homelessness seems like Anchorage’s big issue at present.  A string of deaths at homeless camps; more visibility of homeless persons than ever; and a varying amount/availability of social support systems have contributed to a volatility and sort of deeply-rooted cynicism about how to approach and treat the various issues.  Nontraditional/novel programs like Homeward Bound seem to have the greatest success in breaking people out of a cycle of street living and drug/alcohol dependencies.  The public is weary of what looks like endless studies conducted, and ready for more action — but not necessarily the sort of action that is often proposed, i.e. pack them all up and ship them to Santa Monica [or some such].  Any insights…?

Patrick:  By the time I finish responding to these questions I expect you will have already read an article in the ADN discussing a proposed “Housing First” initiative.  The idea, pioneered in Seattle, is to get chronic public inebriates who disrupt neighborhoods and inflict high community costs via their use of local services into housing.  Unlike many other models, these individuals would not be required to quit drinking but results elsewhere indicate their consumption drops, community costs fall and they become more receptive to treatment options.  Some of my colleagues who initially opposed the concept have warmed to the idea and, since most of the other ideas we’ve tried haven’t solved the various issues, I’m hopeful we’ll give it a try.

Clark: What are two or three areas where Anchorage will be the most challenged in the next 20 years or so, and what could we be doing now to ease the transition and deal with uncertainties and our expectations?

Patrick:  Just one thing, though it’s multi-faceted and again returns to the importance of economics.  As a recent ADN editorial discussed, Alaska’s economy is heavily reliant on oil.  To one degree or another that will change and how we manage that change will have huge impacts on all of us.  Effectively leveraging our natural attributes such as an outstanding environment, global logistical position and abundant resources is important.  Creating a vibrant community with attractive land use, vibrant cultural opportunities, a strong education system and, yes, reasonable taxes, helps attract and retain the people we need to continue our community’s maturation.  We know our challenges – that’s the easy part – but we don’t agree on what we want to be, and that’s the hard part.