Typically capital projects involve investment in infrastructure or purchases of major equipment. Regardless capital projects typically have a time span of 10 years, maybe 5 years. It’s a bit curious to see demolition fall under the “Capital Project and Equipment Five Year Plan” cited here.
In my view, demolition should not be bonded nor should it be considered a capital project. Demolition should be an operating expense incurred the year of demolition and budgeted as such. Here’s why it matters.
First, demolition imposes hard costs on tax payers regardless of how much shared services rhetoric you wrap around the topic. If the story above makes one thing perfectly clear, it is that demolition requires hard dollars; it’s not a free ride. Or put another way: each and every property demolished raises taxes. Or yet another way: if you champion demolition, you are championing higher taxes.
Second, by bonding the demolition expense, the cost gets sprinkled over many years and hence the true cost appears much smaller as a result. This creates incentives to increase demolition as the bonding of the cost makes the impact more palatable on a year-by-year basis. As a rough cut, spending $100K in demolition per year over 5 years is much more palatable than $500K in one year. Hence the incentive to understate the true cost and as a result, pursue more demolition — a disastrous incentive.
Third, the time line of demolition is way out of sync with the bond issue which is not desirable. I may bond the demolition of the house over 10 years even if I demolish the house today but I still end up paying for that over the next 10 years.
Fourth, we should learn our lesson on demolition from past experience when demolition was ‘free’ via urban renewal grants and monies. I think demolition is anything but free and keeping it as an expense would harshly remind us of that fact each and every time. In turn, this would enable alternate ideas and approaches to demolition with financial incentives that would yield better returns to tax payers if we could minimize or eliminate demolition.
Now that would be a capital idea.