Once upon a time, a condominium was built.
The first residents to purchase units eagerly elected a board. It was the board’s responsibility to plan for longterm capital and infrastructure expenses. They calculated when the roof would need to be replaced and when the parking lot would need likely need to be repaved. They estimated the cost of landscaping, elevator repairs, and planned for some additional security system enhancements. Then, fiscal plan in place, they set the condo fee at a specified level for the first year.
How long before the condo fees would need to increased? Likely the rates will be increased in the second fiscal year. Why? Simply, nothing about the condominium becomes cheaper to maintain in the second year. Parking lots do not become a bargain to repair the longer they are exposed to the elements. Elevators do not cost less to fix as they get older. Utility lines and built infrastructure are not self-repairing. The cheapest year to live in the condominium is the year it was built. Condo fees must inflate with the inflated cost of the building itself: the capital fund to replace the roof in twenty years must raise more money than it costs to replace the roof today.
The condominium board must anticipate this year-by-year increase in operating expenses. By planning for small, longterm, incremental increases of a few percentage points each year, they gradually increase the annual fees to pace with inflation.
Now imagine that the residents elect a condominium board on the promise that they are going to stop raising the condo fees each year. If condo fees are frozen, they argue, more people will want to move in. And if more people move in, their condo fees will cover the shortfall from not raising current fees. More residents, richer residents, everyone wins!
Except that nobody wanted to move into a crumbling, shoddy condominium. And by adding more residents, the wear and tear on the infrastructure only increased instead of magically paying for itself. When new washing machines and dryers had to be installed to handle the greater demand, they were no less susceptible to inflationary maintenance costs than the old ones.
The entropy of bricks and mortar has no respect for one fiscal policy over another.
A city is like a big condominium.