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Monthly Archives: April 2015

Ability to pay?

April 28, 2015
finance, Leadership, management, Revenues, Water Funding, water sewer management
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So what does ability to pay really mean?  We hear this discussed by political pundits and local officials but few really understand what this means.  Likewise the “I’m on a fixed” budget argument pops up a lot, and it is hard to understand what this really means.

The ability to pay concept was developed many years ago by political scientists and economists looking at the allocation of costs to consumers for government services.  Property taxes are a logical place to start – higher value homes have more potential for loss, so their taxes were more (the percent was the same but because of their value the amount was higher).  For income taxes, those with higher incomes we deemed to have more disposable income and again more to lose, so the rates increased as income rose (we forget that until 1963 the highest income tax rate was 90%, and the economy was growing quickly!).  People with lower incomes had little disposable income because all their money went to food and housing.  Today the issue of affordability arises with water, sewer, taxes and storm water fees, as well as federal and state taxes.  The SRF and bonding agencies often look at 3.5% or 4.5% and the maximum water or water/wastewater cost as a percent of income, but few  utilities charge this much.  Few water and sewer utilities (combined) approach the cost for power per household, let along the cost of cable or cell phone use for all but the cheapest carriers.  Certainly water, sewer and storm water are essential service, but not so much cable, although there are those who will argue the point.  So somehow the ability to pay issue does not apply to private sector services, but does to essential services, especially when we all know we do not collect enough money to cover significant infrastructure needs on those public works systems?  That just does not make logical sense except in the political world.

Likewise the “fixed income” argument is often applied in tandem.  Fixed income is generally applied to retirees, but let’s not forget that 10% of those in poverty are retirees, but 18% of millionaires are over 65.  But don’t most people have a fixed income – their income is fixed by their employer.  They can change jobs but the argument that younger folks should change jobs if they want to earn more is like telling retirees to go back to work.  There is only so much we can do and only so much income to be earned because few control their income.

So on both counts, the ability to pay argument seems like an argument created to keep public service costs down and prevent the full cost application to many.  The squeaky wheel gets coddled, at the expense of society.  Somehow that is not fairness, and subjects us all to unnecessary risks.  The question is who is going to be the person/group to stand up and say enough?

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Climate and Health

April 24, 2015
Climate, health risks, Risk, social vunerability, stormwater, water sewer management, water supplies
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A project I am currently involved with looks at the impacts of climate change on public health in southeast Florida.  The initial grant focused on looking at socially vulnerable populations and the impact on chronic diseases these groups from climate change.  The question was whether climate change, which in southeast Florida is basically sea level rise, would have an impact on health issues.  On the face of it, the correlation between chronic health conditions and climate seems tenuous although the statistics support the link between chronic health impacts and socially vulnerable populations.  But what is interesting is that in general, the climate vulnerable topography and the socially vulnerable people do not correlate.  This may be a southeast Florida issue, but it is the less socially vulnerable who live in the climate vulnerable topography.

Those familiar with the history of southeast Florida know that makes sense because of the beaches.  The beaches are topographically vulnerable but eh wealthy want to live there anyway. But the problem is more pervasive.  The data actually can be mined further to reveal that the older homes (1940s-1960s), generally smaller and of lower value, were traditionally built on the high ground.  Turns out our ancestors were a little smarter than we thought – they actually thought this out.  Aside from Henry Flagler building the railroad on the high ground, most of the cities were located similarly – on the coastal ridge.  Drainage of the Everglades permitted the western migration of residences – newer and larger, but at lower elevation and mostly reliant on drainage across the ridge to the ocean via canals.  But as sea level rises, the water moves more slowly.

The question that must be asked then is what happens as this housing stock ages?  We already see some newer communities, primarily built for retirees, moving to relieve themselves of the 55+ designations to allow the housing stock to be sold – the children of the retirees don’t want the property and desire to sell it – often quickly.  To increase speed of sales (and ultimately retaining some value), eliminating the 55+ opens younger families to move in.  However the lower value of the properties makes them conducive to migration of people who are social vulnerability, so migration may be toward social vulnerable people moving to topographically challenged property.  That portends poorly for the link between climate and health in the future.

Two issues arise from the research.  First future health vulnerability from climate may be more related to vectors and waterborne disease than chronic health effects.  That expands the health vulnerability to all populations.  The second issue is that storm water, sewer roadway and water infrastructure may relieve some pressure on these topographically vulnerable properties, but the people who are moving to then will have significantly less ability to pay for those improvements, creating a political conundrum that will that a significant amount  of leadership to overcome.  That means that resiliency must be built into infrastructure and redevelopment projects now, to address future conditions.  Building in resiliency is not currently being considered by local planners and engineers because the situation is not well understood and a 50 year planning horizon is not the norm.  Also, it would likely create a firestorm of fuss from developers who would pay the costs, which discourages good planning.

Finally, if things accelerate, wealthier parties may begin to see a retreat from vulnerable eastern beaches to higher ground as being a reasonable concept.  However the high ground is currently occupied by socially vulnerable people, creating a potential area of conflict over the fate of displaced residents who’s social status may force them toward the vacant, topographically vulnerable properties.  This is a future problem for planners, developers and officials approving new development with an eye to displacement a concept not in the current thought process.  Thinking about vulnerability means a lot of infrastructure must not only be constructed, but maintained meaning local public works and utility budgets will need to increase in kind.  That means higher rates and charges to populations that may have limits to their ability to pay   Stay tuned…..

Water Use – does drought really tell us anything – or do we miss just the message?

April 21, 2015
Climate, decision-making, Development loans, Drought, groundwater, Leadership, water sewer management, water supplies
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Spring is in the air, at least in some places, so it gives us a chance to take stock of where we are after the winter.  Boston actually is seeing the ground after record snow.  The west is seeing lots of ground, even though some areas should not be seeing ground at this point.  I recall the Colorado Rockies having snow at 8000 ft a couple years ago, but not this year.  Some ski resorts in western Colorado never opened.  Not a good sign.  Snow was 10% of normal in parts of California which means the drought will continue.  12% in Oregon and Washington is some part – not good for places that rely on snow for water supplies.  So the question is whether the current drought is the start of a longer climate driven issues and/or the result of where demands have permanently exceeded supplies?  And if the latter is true, conservation is one option, but has obvious financial and supply limitations since urban use is less than 12% of water total use (agriculture is 40% and power plant cooling water is 39%).

Better management is part of a toolbox, but when the supply is finite, the economics says that costs will increase, shutting out certain sectors of the economy.  This is where the “market system” theory of economics fails large sectors of the population – at some point finite supplies become available only to those who can afford to pay, but water is not one of those commodities that is a luxury – we need it to survive.  Certainly the argument can be made that water is underpriced, but like energy, low water prices have helped fuel economic development while improving public health.  It is a chicken/egg conundrum where the argument that conservation will solve all problems is not realistic, nor is using the market or curtailing economic activity.  This is where the market fails and therefore governments have a role in insuring that all sectors are treated fairly and the commodity can be provided to all those in need of it – serving the public good.  The public good or public welfare argument is often lost in the political dogma of today, but our forefathers had this figured out and designed regulations to insure distribution after seeing the problems that arose in the late 19th and early 20th centuries.  We have forgotten many of those lessons.

The public good or welfare does not mean unlimited distribution to areas that would otherwise be bereft of the commodity.  The early engineers in Los Angeles realized that development could only continue if water was brought in.  So massive water movement projects were developed.  The economic benefit was the only consideration – the impacts of these changes were not considered.  Likewise the Corps of Engineers was directed to drain the Everglades, but no one asked if this was a good idea or would have negative impacts.  Loss of the Everglades permitted economic development that is southeast Florida – 40% of the economy of the state, but it impacted water supply and places millions are risk for future sea level rise impacts.  Worse, agriculture was fostered in the upper Everglades as the federal government sold off the acreage to private interests cheaply to encourage sugar cane and winter vegetables.  That agriculture is now planning to develop the Everglades if the property is not purchased by the state.  But purchasing the property rights a prior error in consequences – it is likely in the public interest as an effort to restore water supplies in the Biscayne acquire that feed southeast Florida, and to increase water flows to retard saltwater migration in the southern Everglades.  These are both ”sins” of the past, made with good intentions but with very little thought of consequences beyond the economic benefits.  Both have resulted in water shortages in the areas they were meant to serve as climate patterns have changed.

The question is whether we continue to make these mistakes.  Development in desert areas, areas known to be water poor, and deepening wells to get groundwater supplies who’s levels continue to decline are all poor long-term decision, despite the short-term potential gains.  California farmers continue to deepening wells but those aquifers have a limit in depth.  Deepening wells means those wells do not recharge (otherwise the aquifer levels would not continually decline).  What happens when the wells run dry permanently? Clearly the sustainability criteria is not met.

Meanwhile lower aquifer can divert surface waters into the ground – not enough for full recharge, but perhaps enough to impact surface water flows to other farmers, potable water users, and ecosystems.  Droughts are climate driven- and we have persevered droughts before, and will again.  However in light of the California drought, perhaps we should all assess more closely the long-term trends – lowering groundwater, increasing demands, lessening availability and make better decisions on water use – not only in California but in many parts of the US and the world.  Changing water use patterns is great, but it is just part of a larger issue — do we need to change our current behaviors – in this case water use – in certain areas?  Are there just places we should not develop?  Is there a limit to water withdrawals?  And how do we deal with the economic losses that will come?  All great question – but do we have the leadership in place to make the hard decisions?

A Question of Ethics

April 17, 2015
engineering, ethics, Leadership
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I could not find any actual laws or rules issues here, but does it bother anyone else that it is increasingly common for big engineering contracts to have lawyers, lobbyists, etc. get involved in what is intended to be a qualifications based selection process?  I find little that specifically addresses the issue beyond some inference in older ASCE canons.  In Florida, the intent of the statutory selection process might be is that governmental agencies “shall negotiate a contract with the most qualified firm for professional services at compensation which the agency determines is fair, competitive, and reasonable.” But wouldn’t employing lobbyists and lawyers frustrate this process ?.  And it is not like Florida hasn’t had several elected official go to jail and/or be indicted over such issues.  So as the public becomes more aware of these activities, does it create a more negative perception of engineers?  And is this good for either the engineering profession or the local governments (and their utilities) involved in the selection process?  The comment that “that’s how business get done” is not an acceptable argument when the priority purpose of engineers, and utility operators is the protection of the HEALTH, SAFETY AND WELFARE OF THE PUBLIC.  The concept of qualifications-based selection processes enacted for public agencies is that getting the professional who has the best set of qualifications usually means fewer issues arise since they have designed similar projects before and know the pitfalls.  Someone who has not, likely will not, which can add unexpected costs to a job.  Just a thought, but maybe it is time to think about this seriously.

Traveling Vietnam Wall

April 13, 2015
Leadership, respect
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I had the opportunity this weekend to visit one of the traveling Vietnam Memorial Walls.  I have been to the real wall in Washington, but this was a 3/5 scale model in steel that gives a lot of people who cannot get to Washington a chance to check it out.  There were ancillary exhibits that went with it, but it was generally a fairly quiet event.  Too quiet in fact.  Over 58,000 people lost their lives in Vietnam and 150,000 were wounded.  Some 25,000 of them were 21 and under.  They were kids.  And there were maybe 20 people there.  The vendors had very few visitors.  Most of the merchants in Jupiter near the exhibit were closed (it was Sunday, but still). Even the band had only one person sitting and listening to the 60s tunes they were playing.  Students from adjacent FAU were conspicuously absent.  There were a number of Vietnam vets there eager to share memories and stories, many of which were great.  But I really felt that this was a missed opportunity for a lot of people.  WWII vets get attention, as they should, but sadly they are leaving us.  Likewise Korean War veterans are passing on as well.  Our next set of fighting vets are those in Vietnam, who were never greeted with the same fervor as WWII.  Vietnam was the longest war we fought until that point and these guys just did the job they were drafted to do.  It was a game-changing event in America. Go see the wall if you can and pay your respects.  These guys will appreciate it after all these years.

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