Potholes Hurt Business, But San Francisco Votes to Fight Back

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The voters of San Francisco understand a basic fact about potholes. By a two-to-one margin in a November 2011 referendum, they approved a $250 million bond measure to fix their streets.

It was a bold move in recessionary times, and the vote might provide a case study from which the rest of the country might learn. Throughout the country, from the expressways of California to the bridges of New Jersey – with thousands of other spans in between, including 3,538 bridges closed for safety deficiencies in 2010 alone – crumbling infrastructure is plaguing business. Efforts to restore streets and bridges to safe, smooth passageways can have a beneficial impact on commerce; as of now, the opposite is happening.

The San Francisco vote was on the Road Repaving and Street Repair bond proposition, Measure B, on the November 8, 2011 ballot. Sixty-eight percent of voters (129,175 ballots) favored it, while 32 percent opposed (60,741 voters) – achieving the necessary two-thirds approval to pass the funding referenda.

The economics of the Bay Area are not terribly different from the rest of the country, with a 9.1 percent unemployment rate at the end of 2011. And about 31 percent of workers in San Francisco commute via public transportation, one of the highest percentages in the U.S. (New Yorkers are highest at 55 percent, followed by Washington, D.C. at 37 percent, Boston at 31 percent and 27 percent each in Chicago and Philadelphia).

Still, civic leaders argued that the quality and safety of their infrastructure was important to business. Why is that not so clear in other places, where surface transportation is used by a larger percentage of people?

Crumbling bridges and how it affects business

When the Indiana Governor Mitch Daniels determined in September 2011 to close the Sherman Minton Bridge – a double-deck through-arch span which links Louisville, Kentucky with New Albany, Indiana via I-64 and US-150 over the Ohio River – it was more than an inconvenience to 80,000 motorists who crossed it every day. It had a significant economic impact on businesses and consumers.

For example, Bloomberg News reported that a jewelry store in nearby Jeffersonville, Indiana saw a 40 percent drop in business within two weeks.

The news service also quotes a New York-based attorney who specializes in construction law. “Bridge failures throw a monkey wrench into the economic life of communities,” said the lawyer. “Things aren’t going to get better, things are going to get much worse.”

The attorney was referencing bridge failures of the past and, likely, the future. The most immediate example is the August 2007catastrophic collapse of the I-35W bridge in Minneapolis-St. Paul. As a result, the regional economy lost $73 million – in addition to 13 deaths and 145 injuries.

The cost of fixing the Sherman Minton Bridge in Louisville will be approximately $20 million. Other known factors relative to infrastructure deterioration in the U.S. are:

  • Overall, the American Society of Civil Engineers (ASCE) says that combined business and household losses in the U.S. due to surface transportation disrepair – potholed roads and unsafe bridges – total about $130 billion.
  • The average useful life of bridges is about 50 years, and the average age of all U.S. bridges is currently 43 years.
  • The total cost of repairing the known 3,538 deficient bridges would be $140 billion. This amount is three times the amount of money generated annually by the Highway Trust Fund (the federal taxes on fuel and tires), which is primarily designed to fund road construction and mass transit.
  • The economic impact of a bridge closing is a function of three factors: traffic load (vehicles-per-day), the commuter-commercial traffic mix and proximity to other bridges.
  • The ASCE assessed the condition of all U.S. bridges and roads on an A-F grading system in 2009, handing down a C grade to all bridges and D for overall U.S. infrastructure.

The widespread incidence of bridges and highways going temporarily or permanently out of service is now factored into how larger companies conduct their business. Delivery firms that include UPS and FedEx have developed software and information systems that help drivers take cost-effective detours when necessary. The business of rerouting gets a little more complicated for large-load haulers who must plan for bridge clearances and load capacities.

It’s not just the vehicles carrying large, heavy cargo on interstates – consider what happens in rural farmland. A Randolph, Nebraska farmer had been using a township-maintained bridge for more than 30 years when it collapsed under the weight of his $350,000 combine. Because the farm implement was 11 tons heavier than the load limit, he was charged a $28,000 fine by the town to rebuild the bridge. The Illinois Corn Marketing Board says that when bridges are closed to farmers and consequently force them to take long detours, the cost to produce corn increases measurably.

Proposition B raises $65 million per year to fix San Francisco infrastructure

Arguments for the San Francisco bill focused on residential and smaller areas, where access could serve the day-to-day needs of voters. The ballot referendum language said it would “fix potholes and repave deteriorating streets in neighborhoods throughout San Francisco, repair and strengthen deteriorating stairways, bridges and overpasses, improve safety for pedestrians and bicyclists, improve disabled access to sidewalks, and construct and renovate traffic infrastructure to improve …transit reliability and traffic flow on local streets.”

Where it comes to transportation, what’s good for the person is good for the economy. The less time people spend getting to work, the more time they have available to actually do things. Taking that a step further, the prevailing just-in-time commercial environment depends on the speedy arrival of materials and equipment to maintain productivity.

In the lead up to the vote, politicians and pundits voiced their ideas, facts and opinions on the measure:

  • San Francisco Examiner: “If Prop. B passes, which will require a two-thirds vote, spending on streets would increase to $65 million in the current fiscal year.” The previous year it was just $23.8 million, although it was $50.6 million in the year prior.
  • Supervisor Sean Elsbernd (to the Examiner): Arguing to repair the streets from general revenues, not a bond measure: “I fully recognize our streets need dollars, I get it. They desperately do. I just don’t think this is the way to fund that work.”
  • Supervisor Scott Weiner (to CBS/KCBS News): Parsing the difference between potholes and wholesale rebuilding of the streets: “Of course it would be inappropriate to use bonds to pay for filling potholes. But when we are talking about reconstructing our roads – that does have a long lifespan.”

What was clear in the media coverage of this vote, before and after, is that no one argues against the need to fix the streets, bridges and other facets of infrastructure. This is something people experience on a daily basis, as it happens in almost every municipality around the country. No one likes potholes.

The question centers on how to go about eliminating those potholes, reconstructing streets and shoring up aging bridges – fund it now, or pay (more) later. Certainly, no one wants to do have this discussion in the aftermath of a serious accident.