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Common Currency: Value of downtown reconstruction project? Priceless

Alan Zemek

There is a concept in finance used to describe the phenomenon of the inevitable decline in productivity over time of any physical asset such that eventually its intrinsic value reaches a vanishing point: It still exists, but it isn't worth anything. It is called "economic life".

An asset that remains in use beyond the end of its "economic life" gets replaced in only one of two ways: Catastrophic failure or orderly replacement. One of these days I'll buy a replacement for my old beater pickup truck, or the engine will seize up someday and that will be the end of it.

I can either plan for it and do it at a time of my own choosing, or roll the dice and hope it doesn't leave me stranded somewhere out it in the toolies when it happens. Either way, I am living on borrowed time until I replace it. The economically perfect solution is to drive it just one more day, but before it completely conks out.

Later this month the city will be holding public hearings on the assessments to be levied on property owners now that three years of downtown reconstruction is winding down. I have seen several different formulas for allocating the cost, but however it comes out, it will be the bargain of the century. I mean that quite literally.

Make no mistake; this is not a convenient time to increase the tax burden on Main Avenue business owners still struggling to recover from the impact of recession, the collapse of the credit bubble, high gas prices and two summers of back-to-back disruption caused by the construction itself.

But the funny thing about catastrophic failure is no one remembers the one that didn't happen. (Sounds like a Zen Buddist Koan, doesn't it? - If something doesn't happen, how do you know?)

And now that the bills are coming due it would be too easy to forget the frequent sink holes, pipe leaks and sewer back ups that were occurring with regular frequency just a couple short years ago. It was getting dangerously close to catastrophic failure. The new system will easily pay for itself many times over for the next 80 years or so.

The "buzz" about Park Rapids alone should carry over at least a couple years or so, and should make us a top contender as the host city for the 2013 Governor's Fishing Opener, a classic Minnesota tourism and media event easily worth $300,000 or more of publicity for local businesses.

And the "buzz" from that event will carry over a couple more years after that. And then the armory project will get done, and the county-wide broadband project will get done, classes at M-State will take hold, and new residents, retirees, artists and young entrepreneurs will find Park Rapids a more and more attractive place to live, invest and do business.

The engineers and the green eyeshade accounting folks are tallying up the bills and estimating the "economic life" cost of our new sewer and water system on Main Avenue. There will be real dollars and cents to pay, but in the fullest meaning of the words "economic life," the value of the new system will be priceless.

Alan J. Zemek is a Park Rapids area developer and author of "Generation Busted: How America Went Broke in the Age of Prosperity." You can follow his blog, or comment on this article on his website, www.genera