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Owen Bailey
Town Project Manager
Asked a question 11 months ago

The town of Sudlersville (population 500) on the Eastern Shore of Maryland, bought a new waste water treatment plant in 2006 in anticipation of a 650 home development. When the recession hit, the developer backed out and the town has been left with the bill for a waste water treatment plant they cannot ever hope to afford. The town is desperate and trying to find a solution to their debt. They are discussing on whether to build an ICE detention center that would house 600 immigrant, or build a Motor Sports Arena. My concern is both would create more problems then they would solve as both would add a huge burden to this small town's infrastructure, and would drastically change the character of this farming community. Does anyone know of any ideas that have been proposed and put into affect in other towns with similar issues? I ask this understanding that towns are complex ecosystems and all are different. What worked in one town may not work in another. Thank you.

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Owen,

I spend most of my time working to engineer projects for wastewater treatment plants (WWTP).  I can think of a couple solutions that may help pay the bill that is due for the plant.  

1. A trend for wwtp with extra capacity (which sounds like this community) is to receive septage that is many times pumped from septic tanks in the surrounding area. A fee is then charged to add a revenue stream for the community. 

2. One food processor or brewery could easily need the same capacity as the development and fit better with the Farming Culture. Many times such an industry would have to pay for an expansion of a wwtp, this could be the leverage to bring one into this community. 

Hope this helps. 

Adam

Hey Owen, great to hear from you. In a perfect world—where the developer actually builds all the homes they promised, plus all of the necessary infrastructure—these large, built-to-a-finished-state developments rarely (if ever) generate enough tax revenue to cover their long-term maintenance obligations. You can learn more here: https://www.strongtowns.org/journal/2017/1/9/the-real-reason-your-city-has-no-money39

Throw in a waste water treatment plant on the balance sheet and I'd imagine that, since the developer bailed, it's nowhere close to servicing enough taxable developments to recoup its cost or cover its long-term maintenance obligations. 

As you and your colleagues discuss how to cover the debt from the plant, keep in mind that new projects will have their own long-term maintenance obligations. Sure, they'll generate immediate tax revenue, which you can use to pay off some debt from the plant, but flash-forward a few decades and consider what revenue the town will use to maintain those developments.

At Strong Towns, we call this the growth ponzi scheme: exchanging immediate cash flow for long-term maintenance obligations of new infrastructure. You can learn more about the growth ponzi scheme here: https://www.strongtowns.org/journal/2011/6/15/the-growth-ponzi-scheme-part-3.html34

As you have time, I recommend you check out this video that explains how Fate, Texas, does the math on proposed developments to see if they'll generate enough tax revenue to cover their long-term maintenance obligations: https://community.strongtowns.org/post/5d45cb36e8d4676044b77bb837. Since you're stuck with the plant, it's essential that all new developments—now more than ever—cover their own infrastructure and maintenance costs.