Beneath Undergrounding: The Social Compact and Financing Equity

Worker looks at underground electrical wires (Adobe)

Deliberations about burying utility lines as a preferred alternative to Florida Power and Light’s above-ground “hardening” project have centered more on how to pay for it than whether to do it.  The payment question has exposed a community-degrading “east side vs. west side” fissure, despite Village Council (past and present) affirmations that the significant project cost should be apportioned among payers in some equitable manner.  The binary choice — tax or assessment — overlooks the possible solution broached by the last Council, that the “grid” might be paid by tax revenues with individual property connections being paid by the owner as a service fee, thus recognizing relative benefits while avoiding east side/west side overgeneralizations.

Tax proponents speak about “one community,” invoking a social compact implying common concern and responsibility for the common good. Also implicit in this is the notion that for assessment proponents the common good is subordinated to self-interest. This isn’t new.  During the Charter-writing exercise after the incorporation vote, some suggested that condominiums should have their own electoral district. That was so contrary to our Village identity as to correctly draw a tsunami of repudiation.

Now, the assessment rationale introduces a similar “we/they” divide. To some, assessment seems a selfish strategy to kill the project by requiring property owner (not resident) approval that might not happen.  Whether or not such sinister machinations lurk, the assessment talking points do insinuate that our “one community” ethic is qualified by the self-interest of a discrete constituency.

We should change the conversation.

One way might be to demonstrate that the assessment vs. cost differences are neither as great nor as uniformly spread among condominiums as assessment proponents contend.  Another would be to recognize that “we’re different” rationalizations are fundamentally flawed. That’s how I see it, so that’s my task here.

Two rationalizations are offered for a special assessment. First, undergrounding benefits are not uniform throughout the Village because much of the east side is already undergrounded. Since project benefits are not uniformly realized throughout the community, it follows that the cost should be apportioned commensurate with the benefit. Second, property taxes are said to be inherently unfair, because tax burdens fall more heavily on newcomers than old-timers.  It’s true that some already have what others want or need, and it’s true that tax burdens fall unevenly.

So what?

The Village’s consultant, Raftelis, produced a methodology that would apportion project costs property-by-property, commensurate with relative benefit measured in terms of aesthetics, reliability and safety, by attributing to individual properties something he calls Economic Benefit Units, or EBUs.  Some credit this as empirical, equitable and proven. Others try politely to refrain from descriptions such as nonsense. This writer is in the latter camp.

Public improvements are not insular and specific to particular properties as distinct from the community generally. The EBU breakdown presupposes that benefits are measurable meaningfully at one property line differently than down the street, across the block or across Crandon Boulevard. That’s a fallacy. It is plausible-sounding but unsound.

FPL concrete pylons here and there would degrade community aesthetics, for example, not footprint by footprint, but generally.  To validate the Raftelis supposition, we have to conclude that a quantum of benefit diminishes measurably for properties more and more distant from the precise location of a public improvement. To test the premise, the property adjacent to a speed bump would pay more because cars would be slower at the speed bump than 20 feet past, or 40 feet past, and so on. Or a street tree planted by a particular house would cost that adjacent resident more than his neighbor who’d be farther from the beauty and the shade. But are we overlooking the greater burden on the adjacent owner who suffers root intrusion differently?  So it goes, in circles.

We make choices about where and how to live. Condo dwellers pay assessments for common area maintenance.  Single family dwellers maintain their own properties. Condos submit to internal regulations and governance; a necessary device for sharing common areas. Zoning governs the single-family district in its own way. Does this mean that “one community” is a fiction?  Not at all. The assessment proponents say unabashedly that it’s not about “one community,” it’s about money. Well, if the social compact stands only when incremental dollars are not at issue, there goes the social compact. Public investment is for the community notwithstanding that the magnitude of immediate impact may differ here and there.

The beach is a public asset, but if your balcony overlooks it are you not benefited more directly than a distant inland property owner? Should beachside owners pay more for beach renourishment since they’re more directly at risk of subsidence and flooding from beach erosion?  Should property owners farther from the Village Green have paid a lesser share for its purchase and improvement? Should taxpayers without kids not pay school taxes? Should the young and healthy pay less because they’re less likely to need fire-rescue help for a stroke or heart attack?  Why don’t some condo owners pay more for fire-rescue, since high-rise logistics are more complicated than those that apply in a one-story house? Should bike owners pay more for police since bike thefts are common?

Undergrounded condos benefit from system-wide undergrounding just as the island overall benefits from dry streets everywhere. The Raftelis plan propounds invalid assumptions from which flawed conclusions flow. We should thank them and move on.

This brings us to the eureka insight that tax financing is inequitable because it is value-based and values vary, and because taxpayers are advantaged the longer they’ve lived here. That’s a remarkable contention considering property taxes pay for almost everything in Florida and that tax policy garners little attention apart from millage debates.  Where do we go with this? Is it inequitable that some are wealthier than others, or that dividend moguls pay lower tax rates than the working poor? That’s not to dismiss worthy and necessary economic justice debates, but as things stand, governments levy taxes on properties to pay for services and improvements.

Financing equity tolerates and even requires some flexible approximation in public finance decisions. That’s part of the social compact.