Friday, June 8, 2012

Unsustainable CAOs (and SMP)

At the Council meeting this past week, it was noted that the redesign of Odlin Park on Lopez will cost more than anticipated. The cost estimate has soared from an initial estimate of $445,000 to $797,500 and the Council approved an additional request for $194,850. The total now stands at $992,350 which, if I am not mistaken, is 223% of the original estimate. While there are the usual issues associated with the County's seeming inability to run any project on budget, reportedly much of the reason for the higher costs is the greater permitting effort needed to comply with a multitude of regulations. Of course, this is occurring even before the full effect of the CAOs and SMP comes into force.  It's also before much of the actual work has begun at Odlin, especially the construction of the new road at the park, which will affect an alleged wetland and require mitigation. My bet is that costs go even higher once dirt starts to fly.

Odlin Park illustrates several things. For instance, it is one more example of how the County, once it has made up its mind, will not reverse course no matter what the revised price tag or data say. Think solid waste. The same appears to be happening on the CAO/SMP. Every local project here seems to be a reprise of WPPSS in microcosm. Reminiscent of a Custer decision in Little Big Man, projects aren't re-thought even when projections don't pan out, even if disaster is at hand. The County seems to have a collective ego about its own decisions that prevents it from ever re-evaluating or reversing decisions, much less learn from past mistakes.

But the main point I want to emphasize is that the Odlin Park fiasco illustrates that the County may not be immune to the costs of its own stricter regulations. After the contemplated CAO/SMP revisions go into effect, everything the County does, or will do, will probably cost more. Even in the unlikely event that the oft-talked-about phantom "millions in lost grants and loans" materialize, it may be eaten up by correspondingly higher costs for mitigation and for enforcement. And the stricter regulations are likely to erode the tax base, so the "millions in grants and loans" will likely have to make up for increased costs as well as decreased revenue from other sources, such as taxes.

Odlin is just one example foreshadowing our CAO's Wile E. Coyote relationship with money. We are told we cannot take into account the cost impact of the CAOs on property owners. Yet, the same people who make that declaration chase State money purportedly linked to the CAOs. We can't consider economics, but we have to ram these requirements through because of economics. That only makes sense if, paraphrasing the old Mad Magazine Lone Ranger joke, it depends what you mean by "we" kemosabe. We (property owners) will bear the cost of the CAOs so "we" (the County government) can get millions in grants and loans. Sweet, if you're the government ... or is it?

On average, the governments of rural communities already rely more heavily on State funding than urban communities. Whereas State funding in King County may make up less than 10% of the County budget, in rural communities like San Juan County, State funding can comprise 20% or more (sometimes much more) of the County budget. One way to interpret such data is to say that the size of government in rural communities is much more out of whack with the tax base than in urban communities. There is a bigger tax-base funding gap to close. An overly restrictive CAO/SMP won't improve the situation. By shrinking the tax base while adding costs, it increases the tax-base gap and our relative dependence on State funding. This creates a feedback loop which just makes us even more fiscally susceptible to State policy pressure about the CAO/SMP (or other matters).  I have a suspicion that buffer widths vary across communities according to the State's ability to apply fiscal pressure rather than environmental risk. A community's adopted buffers probably have more to do with fiscal leverage than functions and values.

In the end, rural overreaction on the CAOs and SMP leaves us economically vulnerable and is likely to cause implementation of those ordinances to be economically unsustainable. In high school economics we should have learned that the classic factors of production are land, labor, and capital. The CAO/SMP undercuts those factors of production, especially the use of rural land. With further restrictions, we will accelerate our current trend of an increasingly less diverse economy and a government that must either shrink accordingly or be further subsidized from outside. And, no, tourism (not even eco-tourism) will be enough to pull us out of our decline.

The situation at Odlin Park is a harbinger of hard times to come, unless you think we can get grants to cover every cost overrun. Like the planners at WPPSS who projected electricity demand to double every 10 years, we're contemplating outlandishly expensive measures designed for projections that are likely never to occur, except in the minds of our community Custers. The real community massacre won't run its course until after adoption of the revised CAO/SMP, when eventually there won't be nothing left of our community but a greasy spot.


  1. Come on guys. I am very supportive of THB positions, but you are taking an assumption and running with it.

    What increased regulations led to doubling the budget??
    If you had said "reckless spending", "poor financinal management", "generally incompentent project management" those would be legit.

    Please identify what new regs caused this? I honestly think you are trying to make a correlation when none exists.

    We have plenty of ammo for the fight against the CAO and SMP, but this seems a bit flawed.

  2. I think you need to familiarize yourself with the discussion that took place at Council that day. These are the words of the Council and Dona Wuthnow, the project manager for the Odlin Park project. Follow the link to the video and see for yourself. Councilman Stephens even specifically draws a comparison to the CAOs. The Council itself made this comparison. Also, I believe the video shows how difficult it is to follow the particulars of this project, so the specific linkages between costs and cost drivers are not easy to follow. If you have information that can augment or clarify, please do, but I believe the point of this post survives. Many believe it will undoubtedly be more expensive to operate after the CAOs/SMP pass, but no economic impact analysis has been done. TH wishes there would be an economic analysis, especially because so many are pushing for passage based on presumed grant and loan eligibility down the line.

  3. Part of the problem here is that quite frankly we just do not know the economic impacts of these regulations because the County policy has been very clear, they do not want to go there. The original CAO review committee was directed not to consider economic impacts. The CDPP consistently holds the position that they do not need to consider the economic impacts. And so, we have no data on the economic impacts. Not surprisingly more folks are raising that question, because it matters.

  4. What I've wondered for many years is why we have so many County employees doing so much stuff that is generally contracted out with fixed budgets. Why the big engineering staff (if they can't observe that Mt Baker road is smack all over wetlands)? Why all those construction rigs? Has anyone done a cost-benefit analysis? At least if it's bid out, the contractor is on the hook for overruns.