Lowell’s – CivilMechanics

The True Cost of South Limestone

September 22, 2009March 3, 2016 Rob Morris 7 Comments Local Better Lexington, Business, Community, Economic Development, Jobs, Lowell's, Streetscapes

The South Limestone streetscape project began with the closure of South Lime two months ago today, and the project is slated to continue for another 10 months. Meant to better connect downtown with the University of Kentucky campus, the project includes the widening of sidewalks, the installation of bike lanes, and the underground placement of utilities.

When the project started, we wrote about the chaotic process of closing the street and about the need for practical planning and design on South Lime and other urban development projects. How has the project evolved since then?

Not well.

Severed Artery
The closure dramatically impacted traffic patterns between downtown Lexington and the south side of our city, resulting in gnarled traffic on a number of alternative routes to downtown. At various points in the project, intersections with cross-streets (High, Maxwell, and Euclid) have also closed with little notice, adding to confusion and gridlock for downtown commuters and shoppers. In effect, the closure of South Limestone has walled off downtown from Lexington’s south side.

Several businesses along South Lime have struggled to cope with the substantial loss of customers and the physical disruption of their businesses. Last week, Joe Graviss, the owner of the McDonald’s on South Lime, pleaded with Lexington’s Mayor and Urban County Council to add extra shifts or more workers to speed the project.

City officials responded that extra shifts will not accelerate the project. The project’s manager noted that the city’s concrete supplier closed in the evenings and that local utilities were already providing personnel to assist with the location and relocation of utility lines. At one point, he admitted that he had no ideas for speeding the South Lime project along.

Vice Mayor Jim Gray – the CEO of Gray Construction and the only councilmember to oppose the project – countered the project manager’s claims. “It would be wise of us not to be extravagant in describing the difficulties of this project… With 2000 projects under my belt, I’ve never seen a project that couldn’t be improved or accelerated.”

At this point, most elected leaders and city bureaucrats seem unprepared to take significant action to accelerate the South Limestone streetscape project.

That’s because they have been thinking about the impacts of South Lime on the wrong scale.

Estimates on the price of the South Lime project vary, but the early $5.2 million estimate has ballooned to somewhere between $13.1 and $17 million. The newer, higher price was partly meant to help expedite the project.

But, as we’ll see in a moment, that price far underestimates the true cost of the project to our city, our economy, and to our future.

South Limestone’s closure is not a mere inconvenience – it is a severed artery that is bleeding the life from downtown. It demands an urgent response from our leaders. The cost to the city is too
dear to delay action, especially in this difficult economy.

Disruption: Anecdotes and Hard Data
A number of weeks ago, on the first day that the High Street intersection with South Lime was closed, I worked in my office and overheard two different customers from the south side of Lexington talk about the enormous problem of getting to our downtown shop – the confusion from suddenly closing the High Street intersection had made traffic especially difficult to decipher.

Then, we had an elderly customer from Nicholasville make an appointment for the next day, asking for directions on how to get to the shop with all of the construction. Concerned about getting lost, she decided to do a dry run the day before. After experiencing the jams, diversions, and delays, she called back and canceled her appointment.

Last month, I talked with another downtown business who is in our same industry. They were scratching their heads about why their August business “fell off a cliff”. I talked with them again last week, and their business was still much slower than usual.

Yesterday, a regular customer who owns a shop in Festival Market came into Lowell’s and opened the discussion with a flat “Business sucks”.

When I started hearing these anecdotes, I began to think that the impacts of the South Limestone closure extended far beyond South Lime. I wondered about the effects of South Lime as a customer deterrent for our business:

How many of our customers come from the south side of Lexington?
How many of those south-siders might have chosen to stay away from “the mess” downtown?
What could that data tell us about the impacts to all of downtown Lexington?

And what I saw in the data was astounding and troubling:

About 30% of our customers come from ZIP codes which would use Nicholasville Road (which turns into South Limestone) as the primary corridor to downtown
Since July 22nd – the date of the closure – we have lost one third of the business we’d normally expect from those ZIP codes. By comparison, the rest of Lexington is relatively flat or growing.
The net of this was a loss of 10% of our sales (and a much bigger hit to our profitability) directly attributable to the South Lime closure.

I disclose these facts not as a woe-are-we pity party, but as a fact-based assessment of how “the mess downtown” affects one downtown business. Our business is a relatively healthy, well-respected business with incredibly loyal customers (Last week, we won “Best Honest Mechanic” from Ace Weekly readers). And, still, the closure of South Limestone accounted for a loss of a full third of south-side customers.

Ripple Effects
Can we extrapolate from just one business to the whole of downtown? Not with any degree of certainty. But my conversations with other business owners make me believe that my business’ experience with the South Lime closure is not exceptional. Admittedly, not every downtown business is as impacted by traffic disruptions, but most are impacted in some fashion: lost customers, lost productivity, supply chain delays, etc.

Hard data for downtown Lexington is difficult to come by.

Just how much of Lexington’s $11 billion economy takes place downtown?
Which businesses depend upon the smooth flow of traffic? To what degree?
How many of their customers / employees / suppliers come from the south side?

Depending on the assumptions used, the estimate of impacts to downtown can vary wildly. Our best “conservative” estimate? Downtown Lexington loses about $360,000 each business day that South Limestone is closed. (Depending on our assumptions, the estimates ranged between $275,000 and $600,000 each day.)

That translates to between $7.0 to $7.7 million in lost business every month, or between $84 and $92 million for the year-long duration of the South Limestone project. That’s around 700 to 1000 jobs which could evaporate from downtown Lexington, especially as the closure drags on.

Are these numbers absolute? Not by any means. But they do provide a ballpark idea of the true cost of the South Limestone project.

Much of the focus on the costs of South Lime have focused on either a) the direct taxpayer costs ($17 million) or b) the costs to businesses on South Lime. And while those South Limestone businesses deserve special attention for the degree this project impacts them, our estimates suggest that our leaders and our community have been thinking about ‘cost’ on the wrong scale. There is a much bigger, much more urgent cost which must be addressed.

The irony of South Limestone – as the cycle of lost customers, declining businesses, lower employment, and more lost customers continues – is that the project may well end up strangling the very downtown that the streetscape is meant to connect with.

Our leaders frequently assert the necessity of a vibrant, livable downtown. It is time for them to live up to their words.

With the South Limestone closure, they must now choose: Will they continue to choke off downtown from a significant portion of the city, or will they act with urgency and extraordinary effort to accelerate and improve the project?

Their actions now will determine whether the prediction from our Chaos post will come true:

“And the results of the chaos are easy to predict. Confused commuters and shoppers stay away from ‘the mess’ downtown. Downtown businesses die. And, after fits and starts, Lexington ends up with a beautiful street. To nowhere.”

Time to choose.

The Treeds Experiment

September 4, 2009March 3, 2016 Rob Morris 6 Comments Local Better Lexington, Community, Lowell's

Back in May, I blogged about the abandoned properties next to our shop, and about what to do about blight in our city.

In this week’s Urban County Council meetings, residents of several neighborhoods surrounding the University of Kentucky campus registered their concerns about the changes taking place in their communities.

The biggest concerns surrounded how some property owners were effectively converting single-family homes into makeshift dormitories / frat houses / flop houses to take advantage of the burgeoning student population at UK. The complaints centered not only on the creation of multi-unit apartments and the paving of lawns for parking, but also on the often-destructive behavior of the residents who move in.

Some on the council wished to impose a moratorium on these kinds of conversions while the city figures out how to accommodate growth at UK.

Last night, the council rejected the proposed moratorium, to the disappointment of many of the residents. At one point, Councilmember Lane suggested that neighbors should simply “file a complaint on property owners you feel are in violation of zoning ordinance, see if our government can apply the laws we have on the books,” to which citizen Janet Cowan responded “I know all of the numbers, Mr. Lane. I have them on speed dial.”

So, how well can the government apply the laws we have on the books? It is time to see.

The Treeds Experiment
What happened after openly blogging about the properties surrounding Lowell’s back in May?

Nothing.

Well, not nothing, exactly.. The 8-foot tall tree-weeds (“treeds”) I talked about then have now grown to some 16- to 18-feet tall, dwarfing the hedges that they have grown through.

The treeds now spill out over the sidewalks, making them impossible to navigate without a machete. Some pedestrians step into the street rather than navigate the mess on the sidewalks.

The grass growing next to our building has now grown to 7 1/2 feet tall (That’s me back there earlier this afternoon, risking chiggers and other man-eating varmints. I’m 6 1/2 feet tall…).

And, finally, the only drain on the lot is completely crusted over. So, during heavy rains, the lot drains straight into Mechanic Street, contributing to an occasional “Lake Mechanic”.

All of which sets the stage for what I’m calling “The Treeds Experiment”. The Treeds Experiment is a test — wherein I plan to take up Councilmember Lane’s suggestion — and learn just how long and how well our government takes to apply the laws that we already have on the books.

Simultaneous with this blog post on the afternoon before a holiday weekend, I am sending an email to code_enforcement@lfucg.com requesting that they take remedial action upon this lot and its owners.

I will chronicle the communication (and, I anticipate, the non-communication) I get from the Code Enforcement folks and other city officials in updates to this post and on Twitter. I will not tell them that I am doing so (so that they will not artificially accelerate their actions).

But I am telling you.

Should be interesting. Look for updates here as the weeks and months progress.

Note: Many thanks to AceWeekly for chronicling the LFUCG meetings and civic discussions. Ace captured the quotes I used above.

Pat Gerhard at Third Street Stuff has recently contacted the Downtown Development Authority about the lot. We agreed a month or so ago that I would contact Code Enforcement. (Sorry for the delay, Pat.)

9/4/2009, 3:46 PM: Sent initial email to LFUCG Code Enforcement, while publishing this post.

To whom it may concern:

I am the owner of Lowell’s, an auto
repair shop at 111 Mechanic Street. There is a lot at the North corner
of North Limestone and Mechanic which appears to be abandoned, as no
maintenance has been done by the owners for over 2 years.

There are now large tree-weeds growing through the hedges
surrounding the lot, making progress on sidewalks very difficult. The
only drain on the lot is clogged, and the lot drains into Mechanic
Street, contributing to flooding during heavy rains. There is a large
clump of grass which is now approaching 8 feet in height which is
growing next to our main building. Many customers assume that the lot
is ours (since it borders our building), and a few have asked us to
clean it up.

Can you take remedial action on this property and update me on your progress in addressing these issues?

Thank you,
Rob Morris

9/4/2009, 6:18 PM: Blog comment from the Lexington Streetweeper (written by an LFUCG employee) on how the Treeds Experiment is “destined to fail”.

9/4/2009, 9:28 PM: I reply that failure really isn’t possible.

9/7/2009, 10:50 AM: During torrential downpours, Lake Mechanic forms again as Mechanic Street is completely flooded, due in part to runoff from the Treeds lot with a clogged drain.

9/8/2009, 10:45 AM: I receive an email from David Jarvis, Director of Code Enforcement:

I will have Calvin Powell assign an Inspector. Thank You.

9/8/2009, 1:25 PM: I respond:

Thank you. I look forward to your updates.

Rob

9/8/2009, 2:19 PM: David Jarvis sends me another email:

Property will be cited (14 day time limit) and the limbs will be cleared back off the sidewalk as soon as we can get our contractor there.

As I read that email (and post this update) the contractors arrive with weed-eaters and loppers in hand:

Buh-bye treeds! But where will the varmints live now?

9/8/2009, 2:45 PM: Taylor Shelton and 10th District Councilmember Doug Martin post responses on the blog. Councilmember Martin mentions that Code Enforcement is particularly short-handed and suggests that citizens use LexCall 311 with details of their similar complaints.

9/8/2009, 6:31 PM: I came back to Lowell’s after being out since about 3:30 PM, and most of the debris was removed. Still a couple of piles which couldn’t fit into the contractor’s truck.

9/9/2009, 9:15 AM: Contractors cleaning up remaining debris from lot next to Lowell’s main building.

9/9/2009, 10:14 AM: The lot’s only drain is still clogged. Not sure whether that is a Code Enforcement issue or not. Sent a response to David Jarvis and Calvin Powell:

Thank you for your quick actions in getting this lot cleared.

Is the clogged drain in the lot something under the purview of Code
Enforcement, or would there be another department which handles that
drainage issue?

Thanks,
Rob

Health care reform: A small business perspective

August 28, 2009October 10, 2015 Rob Morris 4 Comments Ideas Business, Community, Healthcare, Lowell's

This week, we’re finalizing our shop’s health insurance requirements for the next year. Our policy will be 25% more this year for the same coverage. Last year, it grew by 16%. Compounded, that’s 45% in two short years. No other cost increases on that scale for us.

As a small business, the spiraling costs of health care hit us particularly hard each year. And the need for a new approach to health care is particularly acute, for us and for our employees.

I’ve been puzzling over health care for a long while – and I won’t claim to have the answers here. But I thought it could be helpful to step away from the town hall and cable channel histrionics and fear-mongering to share some observations on health care from a small business perspective.

Insurance companies are like casinos: The house always wins.
Insurance companies have received a lot of criticism during the
health care reform debate. But they are doing precisely what they are
designed to do. They make money for investors by taking bets on the
health requirements of their customers.

Insurance companies operate like casinos or racetracks: the table is
always tilted in favor of the house. They may lose big on a single
‘jackpot’, but across the full array of customers they nearly always win. And when they don’t win ‘enough’, they’ll raise the cost of making bets with them.

When we enter into agreements with insurance companies, we’re always taking a sucker’s bet that we’re very likely to lose. The only reason an insurance company takes our money is because they ‘bet’ that we won’t need that amount of medical care.

Ultimately, as with the casino, the house wins.

The oddity of employer-provided health insurance.
We don’t really question it much today, but it is just plain strange that something as personal and as private as health care is mediated by employers at all. We don’t usually involve our employers in house payments or banking or appliance purchases or car insurance. But, somehow, we’ve come to expect them to provide health care insurance.

Employer-provided insurance is an historical artifact from negotiations between General Motors and labor unions in the late 1940’s and early 1950’s. Charles Wilson, GM’s CEO, saw it as a last-ditch concession to help prevent the ‘nationalized healthcare’ system that Harry Truman was championing – which Wilson saw as a threat to the integrity of the free enterprise system. (Funny how many things just don’t change.) Soon, other employers adopted health care coverage as a standard part of their benefits packages, and employer-provided insurance became the norm.

But, really, why are we employers involved at all?

Leverage
One reason that employers remain involved is that they often have more buying power than individuals. Over the past 60 years, we’ve been able to provide leverage which lets us negotiate somewhat better plans with insurers and medical providers.

But small businesses have scant more negotiating leverage than an individual. Often, our employees choose to get independent coverage rather than participate in our group plan.

When Lowell’s bid out to three other health insurance companies, the results were disheartening. The other three companies offered rates that were 200% to 300% higher than our current rates with Anthem. So we’re ‘trapped’ with Anthem.

Expanding waistlines, increasing costs.
As a nation, we’re getting a lot unhealthier. We eat more. We exercise less. We sleep less. We’re in worse health. We’re living longer. And we need more care.

We don’t spend much time, effort, or money on the preventative health care and self-care which would help eliminate the much more expensive catastrophic care. We’re too busy to exercise. We don’t want to pay for the mammogram. We don’t like waiting in the doctor’s office.

And we require more medical care as a result. Often, we get that
care after a catastrophe built upon years of self-abuse: We have a heart
attack. Our knees fail. The cancer spreads. (We see the same phenomenon with routine maintenance in the car business – put it off, put it off, put it off, then replace an engine.)

Health care is getting more expensive, in part, because we are getting unhealthier.

Rising expectations, increasing costs.
We’ve
come to expect more from our medical system. We expect our doctors,
staff, drugs, equipment, and facilities all to improve. And we should expect improvement as medical science advances.

But
those advances are costly. The astronomical research and development
costs for the medical ‘miracles’ of MRIs and cholesterol-fighting drugs
and ‘little blue pills’ have to be paid for in some fashion.

And doctors, hospitals, and insurance companies won’t simply absorb those costs. They will pass them on to patients.

Health care is getting more expensive, in part, because health care is getting better.

There are no painless solutions.
We’ve seen politicians, lobbyists, pundits, and fellow citizens all offer various versions of ‘painless’ solutions to the healthcare problem.

They promise that government should bear more of the burden. Or that government shouldn’t bear any of the burden. Or that we just need full, universal insurance. Or that insurance companies should pay. Or drug companies. Or hospitals. Or doctors. Or that we shouldn’t have to pay for the chronically uninsured. Or that we should just collar all the lawyers and their malpractice suits. Or we should just have more competition.

Nobody says that we must bear the responsibility. But we must.

If we refuse to provide insurance or government coverage for the roughly 45 million uninsured Americans, what happens to those who can’t pay? Hospitals and emergency rooms will still provide care. Their costs will go up. And they will pass those costs to other patients in the form of, say, an $8 dose of ibuprofen. We pay.

If we provide government-paid health care to them (or to ourselves), what happens? Our national deficit will rise. This week’s projection of a $9 trillion deficit over 10 years amounts to about $30,000 per man, woman, and child. Which will have to be funded through taxes. We pay.

If we have full universal coverage in a government program, what happens? Because they don’t bear the initial brunt of the costs, patients get more health care than they really need. And doctors and medical institutions will happily provide (or suggest) that profitable care. More deficit. More taxes. We pay.

If we squeeze insurance company profit (or put greater requirements on them), what happens? They will likely refuse coverage for the riskiest, least profitable customers. Unable to find private coverage, those customers will opt to go without coverage or to go with a public plan. More $8 (or, now, $10) ibuprofen. More taxes. We pay.

If we squeeze drug or equipment company profits, what happens? They have less to invest in research and development. They take fewer risks, and release fewer blockbuster drugs or fewer equipment breakthroughs. Improvements in our medical care falter. We pay.

If we collar lawyers and malpractice suits, what happens? Doctors’ malpractice insurance costs will likely go down. But a few careless doctors who commit malpractice may inflict injury or death without significant penalty. And who ultimately bears the cost of that irresponsibility and that injury or death? We do. We pay.

If we allow more competition between insurance companies, what happens? The insurance companies look at the same basic actuarial tables. They evaluate risks in the same way. They put a price on the ‘bets’ they are willing to take in the same way. And their prices remain about the same as without as much competition. We pay.

We want ever-better medical care. We are getting unhealthier. We want someone else to pay for it. But they won’t. We must bear the responsibility. We must pay.

Can government, insurance companies, hospitals, and doctors get more efficient? Sure. Are there opportunities to eliminate waste? You bet. Can we patients get healthier and do more preventative care? Absolutely. But it will cost us in some way.

There are no painless solutions. In the end, we all pay.

The moral obligation
“Is health care a right or a privilege?”

It is a question that we don’t talk about enough, and which underlies much of the national divide about health care today. Is health care a right to which all people are entitled? Or, is it a privilege bestowed only upon those who have earned it?

It is an interesting question, and the health care debate has hinged upon how people answer it.

Except that I think that it is the wrong question.

The “right or privilege” question presupposes that rights and privileges are somehow separable. I don’t think that they are.

I think of health care in many of the same ways as I think of citizenship or, even, to being a human being. As citizens and as humans, we have certain ‘inalienable’ rights. Heck, our country was built upon them – “Life, liberty, and the pursuit of happiness”.

But those citizen’s (and human) rights come with deep responsibilities. We must participate. We must act in certain ways. We must work together to improve our nation and our well-being. We can’t abuse the fundamental rights we have been given.

For me, health care comes down to a moral issue. I can’t tolerate 45 million fellow citizens living without a safety net. I can’t tolerate wasteful spending on needless tests and procedures on the public dime. I can’t tolerate 45% increases in insurance costs over 2 years. I can’t tolerate ‘competition’ which triples my existing rates. I can’t tolerate people (including me, unfortunately) who don’t take good enough care of themselves.

I can’t tolerate the status quo. Can you?

For me, health care is a citizen’s right. And an earned privilege. We must strive to provide health care for fundamental human needs whenever possible, while simultaneously striving to ensure we grapple with the responsibilities that come along with that privilege.

So to the politicians, lobbyists, pundits, and citizens engaged in the public debate, I say: Grow up. Step up to the plate. Quit attacking. Get realistic. Have adult discussions. Lose the scare tactics. Work together. Compromise. Take responsibility. Live up to your moral obligations.

Then, maybe, just maybe, we can build a better health care system. For our nation. And for one another.

A modest proposal to end blight

May 27, 2009March 3, 2016 Rob Morris 2 Comments Local Better Lexington, Business, Community, Ideas, Lowell's

Comprehensive Care Parking Lot

Every morning when I walk into work at Lowell’s, I see 8-foot-tall tree-weeds growing through unkempt hedges and spilling over into the public sidewalk. I see a planter adjoining our building, burgeoning with weeds and grass and the massive stump of a long-dead tree. I see a pitted, crumbling parking lot with clogged drainage.

Many customers assume it is our lot. It does adjoin our building. And they can’t see the sign declaring “Comprehensive Care Center Parking Only”.

116 Mechanic Street

Across the street I see a tiny old shotgun house with a gigantic half-rotted tree looming ominously over both the house and the main Lowell’s parking lot. After the ice storm and other storms this spring, downed branches lay in the asphalt front yard of the house. For over two months.

Absentee owners neglect both properties. Neighboring businesses have conducted the most of the maintenance on the properties over the past couple of years. In effect, they are abandoned.

As a business owner, I worry about the effect it has on Lowell’s famously loyal customers. Even if they cherish us and the service we provide, I’m genuinely concerned about the ability of such eyesores to repel visitors to the shop.

I often talk with nearby business owners, who share my concern for the negative effects of these properties on our neighborhood.

* * *

Many folks have wondered why I have been so vocal on the CentrePointe mess. There are many reasons, but one of the biggest is that the abandoned properties surrounding Lowell’s have given me firsthand experience the negative effects of blight like the CentrePointe scar.

There are many such highly-visible, blighted, non-productive and apparently abandoned properties in Lexington: CentrePointe in Downtown, Lexington Mall on Richmond Road, and Continental Inn on New Circle at Winchester are some of the most apparent. But there are numerous smaller examples littering our city.

Just like the properties surrounding our shop, the absentee owners seek to avoid any and all expenses. They avoid capital gains taxes by refusing to sell their properties. They avoid maintenance expenses by refusing to invest to make their properties economic contributors to the community. They avoid property taxes by refusing to improve their decrepit real estate.

Such abandoned properties generate near-zero direct contributions to the economy. Moreover, they generate negative economic effects for surrounding properties and businesses: They drive away business and drive down property values.

* * *

It is time for such neglect to end. It is time to make sure that lazy landowners are motivated 1) to improve their holdings and 2) to transform their properties into contributors to our community’s economic engine.

My modest proposal: Implement a ‘blight tax’. Lexington landownders whose property qualifies as ‘blighted’ would have to pay a moderately severe annual blight tax.

The definition of ‘blighted’ would need to be worked out, but should include an assessment of the property condition, as well as proof of substantial progress on needed improvements. We could start with Division of Code Enforcement standards.

To overcome their avoidance of maintenance expenses, property taxes, and/or capital gains taxes, I’d propose that the blight tax have some teeth: Say, 35% to 50% of assessed property value per year.

In the CentrePointe case, the blight tax would generate $8 to $12 million per year of revenue to the city until the developers improve their land. When historical buildings were demolished to make way for CentrePointe, many rationalized that the old buildings were greater eyesores than the pit which remains today. I disagree. But a blight tax may also have helped prevent the demolition-by-neglect which occurred on that block over the years.

I would imagine the former Lexington Mall and Continental Inn properties would generate amounts similar to CentrePointe, given their sizes and their locations on busy thoroughfares.

Such tax revenue could be specifically allocated to offsetting the effects of blight: community improvements to sidewalks, bike paths, streetscapes, parks, community centers, business incubators, community ventures, and the like. If property owners avoid the blight tax by making their properties more valuable (i.e., by improving them), then all the better.

To create a vibrant city, we need to ensure that Lexington doesn’t have the economic scars that blight leaves behind: dead spots which contribute little (or which actually destroy) monetary value in our community.

My proposal is the blight tax. What’s yours?