Roger Marolt: Roger This
October 27, 2011
You all know what “Moneyball” is, right? It’s the title of a book and movie about how Billy Beane, the general manager of the Oakland A’s, turned the professional baseball world on its head by using new metrics to measure players’ performance relative to what they cost the team in salary. For a few years before the large-market teams in New York, Boston and Philadelphia caught on to his calculations, he made the A’s into an annual threat to win it all on a fraction of what the big teams were spending.
Anyway, Beane’s approach to baseball got me to thinking about the Droste trail. Yeah, I know it sounds like a stretch, but let me explain: The traditional, if not the only, metric anybody has ever used around here to get taxpayers to spend money is how much the initiative will cost per $100,000 of their real property’s value. You know the drill: The new $100 million this, that or the other expansion, construction or acquisition is going to cost only a measly $18.51 per year per $100,000 of your home’s assessed value. It’s financial magic – turning big numbers into nothing.
But a story in the papers the other day about the throng of people who used the Droste trail this summer lit the incandescent low-wattage, but highly efficient, bulb above my head. Is the gold standard of cost-per-$100,000-of-assessed-property-value the proper metric to use for taxpayer purchases? I don’t think so. I mean, what relationship does the value of your house have to the financial merits of acquiring the Droste property? None!
Instead, why don’t we calculate the cost of the proposed initiative based on how we will use it? Unfortunately, the answer is simple: because it oftentimes highlights astounding absurdity.
Take for example the Droste purchase. The property, which includes the ridge, which is where the trail is, which is the only part of the property we can use, cost $17 million, or about five or six bucks a year per $100,000 of your house’s assessed value. That’s peanuts, right?
Hold on: The number of human trips up and down the Droste trail this year, its inaugural year full of hype and fanfare, was about 6,500. Wow, that’s a ton of users! But, I think it is safe to assume that this number will drop as the newness wears off. For discussion’s, sake I’ll generously guess that maybe 4,500 trips will be made along the trail each year from now on as things settle down.
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OK: So the property cost $17 million. Let’s assume it is financed over 30 years at 4.5 percent interest. I’ll spare you the details of the amortization schedules, but if we divide the annuitized cost of the property by the number of trips over the Droste Trail, it works out to about …
Hold on again: Let’s do it this way by a show of hands. Who thinks skiing is expensive? OK, lots of you. Yeah, at around $100 a day it’s pretty pricey. All right, how about golf? Yeah, that too. At $125 and up per round I’d agree that greens fees could eat into your recreational budget pretty quickly. How about a health club membership? Sure, depending on where you work out that’s several C-notes per month. That’s not cheap.
Thank goodness there’s hiking or biking on the Droste trail, right? Well, are you ready for this? I doubt it, but here goes: Over the next 30 years, based on the conservative assumptions above, each and every crossing of that trail is going to cost $230!
But the skeptics will argue that the purchase will benefit folks a lot longer than a measly 30 years. All right, I’ll buy that. Let’s extend the assumed benefit period a little. Does a million years satisfy everyone? Great! If the cost of that property is amortized over the next million years, the cost drops significantly – all the way down to $170 per ride or hike. Seriously!
But, the skeptics stammer further, “This purchase benefits more than hikers and riders. Lots of people just appreciate looking at that unobstructed ridge.” Wonderful. Let’s again generously assume that a hundred thousand looks are cast upon that ridge each year with anything other than complete indifference as to whether there are half a dozen houses on it. Fair enough? Well, you better sit down: The cost for each and every caring glance from cars speeding down Brush Creek or Owl Creek roads for the next million years works out to about $7.75 each. Ouch! That’s a lot of lunch money!
Oh yeah, but I forgot about the elk. Well, you can forget about them, too. It doesn’t make any difference to them either way.
Spread out over all the taxpayers in Pitkin County, Droste sounds cheap. Allocated only to the people who will use it, it is ridiculously expensive. I don’t believe that even the New York Yankees can afford to spend money like this!