A Conversation with Charles Marohn

Chuck Marohn, the President and Founder of Strong Towns, joins me to talk about his newest book, “Escaping The Housing Trap: The Strong Towns Response to the Housing Crisis.” Along the way, we also discuss the upcoming Strong Towns National Gathering in Cincinnati, a different way cities can think about building and financing new sports facilities, and our different takes on the place-making of Disney World.

If you have an interest in attending the National Gathering in May, I highly recommend it. Register at this link, and use this code for Discounts: KEVINK2024

For some background on Walt Disney’s history in Kansas City, check out Thank You Walt Disney.

Find more content on The Messy City on Kevin’s Substack page.

Music notes: all songs by low standards, ca. 2010. Videos here. If you’d like a CD for low standards, message me and you can have one for only $5.

Intro: “Why Be Friends”

Outro: “Fairweather Friend”

Episode Transcript:

Kevin K (00:00.964)

Welcome back to the Messy City podcast. This is Kevin Klinkenberg. I'm delighted today to have my friend Chuck Morrone on the show. Mr. Strong Towns, Chuck, it is so good to see you and I'm really excited to talk with you today.

Charles Marohn (00:16.848)

Hey, I'm really happy to be here. And here's the amazing thing. I listen to your podcast. You have a great voice for this. I mean, I have this horrible voice that people have grown used to. But when you turn on, you're like, hey, this is the messy city podcast. I'm like, yeah, man, you should be doing way more of this.

Kevin K (00:37.38)

Well, at least you didn't say that I have a great face for radio. So.

Charles Marohn (00:40.72)

Well, you and I both.

Kevin K (00:44.484)

Oh man, well, it's fun. You know, I'm still very much an amateur at the podcasting gig. And it's been fun to learn and experiment with it. You've been doing it for quite a while. And so I really appreciate the opportunity to talk with you on this show. And we've got a couple of, a couple of fun topics, but in a couple of things that I think will get more serious and interesting as we go. And we'll just get through whatever we can get through. But.

Charles Marohn (01:11.568)

That sounds great. Well, you've been having all my friends on, you know, so like, yeah, here's Howard. I'm like, wait a sec. That was a blast. And then you had, you had Seth Zeran on recently. I'm like, that's really cool. So yeah, it's been fun. You know, I, I know you and I know, uh, you know, some, some of the ways that you think about things. And I really am. I love chatting with you, um, hearing you have these.

Kevin K (01:15.172)

I try to do that.

Kevin K (01:19.076)

Yeah.

Yeah.

Charles Marohn (01:38.704)

fun conversations that we sometimes get to have in person. Hearing you have them with other people is just, it's a delight for me. So yeah.

Kevin K (01:46.02)

Well, that's very great, very flattering to hear. You know, it's one of the fun things you've probably experienced this too. One of the fun things about having a podcast is you get to choose who you want to talk to. And there's a lot of people that we know and we've all known for a long time that I get to learn so much more about. And for me, that's been one of the most enjoyable aspects of this is just getting to really know people's backstories a lot more. And so that's been a great pleasure.

Charles Marohn (02:04.496)

Sure.

Kevin K (02:16.036)

So.

Charles Marohn (02:16.4)

Yeah, yeah. Well, you you know everything about me, so we don't need to talk about.

Kevin K (02:20.1)

We know a lot about we know a lot about Chuck. Chuck, fortunately, shares his backstory a lot, although I'm sure there's tons we could get into. I'd rather save the time for some other topics, but you. You do have an awful lot going on right now in this moment, and I want to talk about a couple of those things. One is you have a book, a new book, the strong escaping the housing trap, the strong towns response. This is your.

Charles Marohn (02:32.24)

Yeah, it's the least interesting part.

Kevin K (02:49.636)

third book, right? Yeah, okay. Tell me a little bit about why an engineer wanted to write a book about housing.

Charles Marohn (02:51.12)

Yeah, yeah. Number three. Yep.

Charles Marohn (03:01.52)

Well, the reality of the story is that I, in the early days of writing the Strong Town's blog, was thinking about a book the entire time. I mean, I started writing this three days a week blog back in 2008, and to me, it was building up to a book. I had a couple publishing companies and agents contact me.

And when I gave them my book proposal, it was just blah, blah, blah. It was, it was like 2000 word book. Like it didn't make sense. It was only when I got hooked up with Wiley publishing where we stepped back and we said, okay, this is actually multiple books, put this together in like the compilation of what you think it should be. And I said, well, I, I think I should write the book on finance first. I think I should write the book on transportation. Second, third would be housing. And then there's a couple others that are coming.

And so we kind of agreed to a five book series that would kind of encapsulate the strong towns conversation. Housing happened to be the third. And the crazy thing about it is I didn't plan to release it in the middle of a housing crisis where everybody's talking about housing and housing's like on the lips of, you know, every political debate and every public policy conversation. It just so fortuitously happened that we're dropping our ideas in the middle of this kind of housing.

you know, policy feeding frenzy right now. But.

Kevin K (04:27.556)

Yeah, I mean, that's an interesting aspect of that. I know obviously there's a long timeline to write a book anyway, to write it, get it published, edited, and all that sort of stuff. So I'm curious, like, what has changed in your mind from the point when you first started thinking about writing this book to actually getting it out today?

Charles Marohn (04:48.624)

It's, so Daniel Hergis and I co -wrote this, and I know you had him on a couple weeks ago. It was a really good conversation. The two of us, I think, encapsulate in our thinking the trap that we were trying to illuminate. Because I, we both went through the same graduate school program, and we both maybe took different things away from it. He was really focused on housing and kind of the,

the mechanics of zoning and how the government has intervened in the housing market and all the kind of things that I would just put under an urbanist label. And for me, I was really fascinated with the financial side of the whole thing. That was the thing to me that when I was in grad school, I didn't think the housing people made any sense, quite frankly. You have to take some of that. And I was like, this is really dumb. I don't get it. And

I think I didn't get it because as an engineer, I was more plugged into the finance side. I spent a number of years just reading every book on finance that I could. I actually watched for like two years straight, I had CNBC on in my office. Not because I think CNBC is like a good channel or like has revealing things, but because the lingo that they use, the finance lingo that they use, I didn't understand.

So when they said like MBS, like what is an MBS? It's a mortgage backed security. When they were talking about interest rate spreads and swaps, like I'm like, what the heck is that? Once I learned that language, to me the fascinating thing about housing was how it really is at its core downstream of the financial conversation that's going on in this country. So Daniel and I really tried to merge those two together, first in a set of insights that the two of us could agree on.

and then in a narrative of the book that we could publish and share with the world.

Kevin K (06:45.348)

So, without giving away too much of the book, obviously we want people to go buy the book. And I think you can pre -order it right now, is that right?

Charles Marohn (06:48.656)

Yeah, yeah.

Charles Marohn (06:55.248)

Well, it's not like it's a murder mystery, you know, like I'll tell people the core insights, but you know, there's a lot of depth there beyond that. So.

Kevin K (06:57.892)

Yeah, yeah, yeah. Right. But maybe how about just tease out a couple of the key insights that you think are critical to share related to what the housing trap actually is.

Charles Marohn (07:12.912)

Well, the housing trap is the situation we've gotten ourselves in where housing as a financial product needs to go up in value. So the price of your house needs to go up for the economy to churn. But housing as shelter, when the price goes up, everything falls apart. Lots of people can't get into a house. If they get into a house, they're very financially strained. Once they're in a house, it's tough to move, take another job.

So these two things compete against each other and they're both necessities. I mean, shelter is in Maslow's hierarchy of needs and we've literally structured our entire economy to where mortgage -backed securities, your house bundled with a bunch of other houses, sit as the bank reserves for every bank in the country. Housing prices can't go down. They have to go up financially. Housing prices can't go up. They must actually come down.

for us to be able to function as a society. And that is the trap because both of those things are true at the same time.

Kevin K (08:17.412)

Yeah, yeah, yeah. I think probably the word of the decade has been financialized. And it seems like we've used that to discuss a lot of the foundation of the economic system we have today. And it certainly affects housing in all forms of real estate.

Charles Marohn (08:23.76)

Mm -hmm.

Charles Marohn (08:35.184)

Well, Daniel and I reached this understanding quite a while ago, I mean, way before we started working on the book, that if you if you look at the market for housing today, it represents the market of financial products. So when you see developers out building single family homes on the edge of Kansas City, what you're seeing is the manifestation of a financial instrument. The mortgage bundled with other mortgages.

securitized, sold off as a mortgage -backed security. There's a lot of liquidity. There's a lot of money and capital put into that product because it's a really good financial product. When you see the five over ones being built, the one story of concrete with five stories of wood construction, whether it is an apartment building or a condo, whether it's a high -end condo or a mid -level condo, whatever it is, those also are financial products.

Those are really easy to bundle with other similar structures from all over the country. Again, securitized, sold off, bought up by pension funds, put on the books of banks, all this stuff. What you don't see is you don't see the single family home converted to duplex. You don't see the single family home where we take the fourth bedroom that nobody's using and put it, make it an accessory apartment. You don't see the backyard cottage. You don't see the small 400, 600 square foot starter home.

because there's no financial product for those things. But those are the products that if they were available in the local market would actually anchor the market at a lower price point and keep the rest of it from going crazy. And so the conclusion that we've come to is that we just need a policy to build not more single family homes and not more five over ones and more apartment buildings. We really need policies to build lots of this starter stuff.

And the cool thing about it is that cities can do that on their own. They don't need federal grants and approvals. They don't need state support and funding. They actually have the capacity to really shift their local housing market, make it more locally responsive, and they can do it all on their own. They just have to do it with intention.

Kevin K (10:50.436)

Yeah, I think one of the things that you've talked about and written a lot about too is the notion of how after the financial crisis, 2008, 2010 or so, that the housing recovery in many ways has been kind of re -inflating a bubble. And I'm fascinated by this because obviously I'm not an economist, although I play one on TV. And it certainly seems like...

Charles Marohn (11:07.248)

Hahaha.

Kevin K (11:17.604)

the signs of stress that we've seen in the banking system even the last, let's say, year, year and a half, is putting a ton of pressure on the local community banks and continuing to centralize the banking system into larger and larger banks, including the four banks that are essentially protected by the federal government. So in essence, it kind of seems like we haven't really...

At a federal level, we're almost doubling down on this approach that has given us these large products that we don't really like.

Charles Marohn (11:53.84)

There's no doubt that our strategy when housing starts to level off or go down, as in like 2007, 2008, when housing went down in price, our strategy is to pump more money into the top of the financial funnel in order to keep housing going in the other direction, in order to keep housing from falling. And so, yeah, you have this weird thing where every economist looks back at 2001 to 2008,

And when you say housing, what they'll fill in the blank with bubble. They'll say, yes, it was a housing bubble. And you say, OK, well, in 2008, it started to go down a little bit. And then 2010, it hits bottom and it starts to go back up. And it's way, way higher than it is today than it was in 2008. That was a bubble. What is this? And they say, well, that's a housing recovery. Right. Like we recovered to a bubble and then beyond. This is.

You know, I think we don't know all of the things that we will know after the next reset. Warren Buffett has the same. You don't know who's swimming naked till the tide goes out and the financial tide has not gone out yet. So we really don't know where the bodies are buried. But if you listen to financial news, you'll hear a lot of fretting over regional banks, commercial real estate.

A lot of people when they hear commercial real estate think Walmart or strip mall or franchise restaurant or what have you. Those are certainly part of commercial real estate, but also part of commercial real estate is apartment buildings. You know, multifamily, multifamily buildings is a big part of commercial real estate. And those are financed with at least partially with short term financial products at local banks that have to be rolled over. And there is a huge incentive to extend and pretend.

to pretend that they'll someday be rented out at high margins, at high prices. And that works when interest rates are low or very stable. But when interest rates rise, those financial products actually decrease in value, those bonds do. And so banks are less willing to, or less able to really pretend that...

Charles Marohn (14:10.544)

You know, the in the hundred unit apartment, the 50 units or 40 units that aren't rented will someday be rented at this really high rate. The bank can only pretend so much until, you know, the grim reaper of finance comes for them. And it kind of feels like for regional commercial banks, like that's going to be the shakeout that will make a lot of cascading things in the apartment market. Be very, very different six months, 12 months from now.

Kevin K (14:39.684)

Yeah, if I were to maybe tie together a couple of different things, one, you had a recent, one of your recent podcasts where you talked about, uh, this is an election year and you kind of went through, uh, this, which was great. I really enjoyed it. Uh, and, uh, I have long enjoyed the way that you have talk about politics and the sort of reframing of the top down versus bottom up, you know, instead of like left, right all the time. I think that's incredibly helpful to think about.

Charles Marohn (14:49.808)

Haha.

Kevin K (15:09.764)

But you mentioned, you kind of talked a little bit about the old Tip O 'Neill phrase and the all politics is local, you know, and how that shifted to all politics is national today. And I can't help but think about that in relation to like this real estate discussion and financing where real estate used to be hyper local and it feels more and more like all real estate is national in that respect in terms of how we plan, design and finance whatever is being built.

Charles Marohn (15:40.4)

I think that's a brilliant insight. To me, the question is, what is the price of the house sensitive to? And a lot of us think that it should be sensitive to the buyer's ability to pay, right? You have a product in the marketplace, there's someone coming to buy it. If that person can't afford it, the market will have to adjust and figure out, is it smaller units, is it smaller rooms, is it less appointment? What is it that will make that

unit affordable to the person buying it. But our market is completely insensitive to the ability of people to pay. What it is more sensitive to is the macroeconomic funding stream. If we can lower interest rates, if we can print money at the Fed and buy mortgage -backed securities, if we can create massive amounts of liquidity, if we can funnel this liquidity to hedge funds and others that will invest in single -family homes as rental products or in a commercial -backed

real estate, what we can do is we can really drive up the price. And so I think from a consumer standpoint, you have to ask, like, what is the product here? We think that the product is us buying a house where the consumer, the house is the product. But the reality is, is that that transaction is incidental to creating what the real product is, which is a mortgage or a commercial real estate certificate, something that can be bundled, can be securitized and sold off.

That is what the market is sensitive to, not to your inability to pay. We are, in all sense, not the consumer, we are the product.

Kevin K (17:18.436)

Yeah, yeah, yeah, I think that's right. And well, I suppose this topic, since the book is fresh or will be freshly out, will be a big center of discussion at the Strong Town's national gathering coming up in a couple of weeks.

Charles Marohn (17:34.736)

Yeah, no doubt. I mean, I know that I'm scheduled to do a little bit of housing discussion there. You know, the National Gathering is really we don't call it a conference. We don't call it we call it a gathering because it really is Strongtown's advocates from all over. I would say all over the country, but it's all over North America. And we've got people coming from around the world for this thing. It really is a chance for people to see and learn.

what other people are doing bottom up to build strong towns. And housing is certainly part of that and will be part of the discussion. But a big, big emphasis of the gathering is just to, there's a phrase that I used last year that I'll probably talk about this year again, is just like, you're not alone. Being an advocate in a city can feel, you can feel very alone. Like you're the man or the woman against the machine. And the reality is, is that when people join together in a neighborhood,

when they start to gather more people together with them, there's so much that can be done from the bottom up. It's really empowering to get these local heroes in a room, let them see each other, let them talk to each other, let them hear each other's stories. I feel like that's the most powerful part of the gathering, really.

Kevin K (18:50.371)

Yeah, yeah. Well, I certainly enjoyed it last year and then the first one you had a few years ago in Tulsa. And this one's coming up in Cincinnati, May 14th and 15th. It precedes the Congress for the New Urbanism and both are well, well worth attending. So I hope folks who are listening can get out. And if you get a chance to attend, that's great. If you can't look at it for next year, it's really a cool way to meet.

Charles Marohn (19:03.055)

Yep.

Kevin K (19:19.556)

people who are interested in the same things. I was really fascinated, Chuck, last year in Charlotte at the, I talked about this with a number of our CNU friends, the difference in the dynamic between the Strong Towns crowd and the CNU crowd. Seeing that like back to back was really fascinating. And it's completely and utterly anecdotal and just judging by what I saw. But I felt like there was a lot.

Charles Marohn (19:30.64)

Yeah.

Kevin K (19:47.268)

of energy in the Strong Towns room and Strong Town side of things. And generally speaking, a younger crowd and less, you know, like the senior crowd long has been focused on the design and building professions, architecture, engineering, planning, and the Strong Town, which is great. You know, it's fine. We need, we have to do that, but the Strong Towns crowd was really different. It was much more diverse in terms of the backgrounds of the people that were there.

Charles Marohn (20:16.24)

So you and I are, I'm gonna say I'm a little older than you, right? I'm 50 this year.

Kevin K (20:20.836)

No, I'm 54, my friend.

Charles Marohn (20:24.112)

Okay, okay, well, all right. I assumed I was a little older than you. You just look younger, that's what it is. You and I have been hanging out together at the CNU for many years. And I remember when I first started going, this was the place of super high energy, right? Like I would go, I would meet all these thinkers and all these people doing stuff. And we would like,

Kevin K (20:30.436)

It's just, I just kept my hair color longer, that's all.

Charles Marohn (20:50.48)

debate things in the hallway. And there was all these like side things going on. Remember in Salt Lake City, when we did the first debates, it was just this like crazy wild party of, and I say party, I don't drink. There was no like, this was a party of like intellect. Like it was just like electric in the air. I have, I have, I have been searching for that the last few years. I've been like, where's that? Like I want, I want to be in the room with that energy. And I showed up at,

are gathering last year with high expectations, but really, you know, knowing, having been on the road and met with people, knowing that our movement had a lot of this bottom up energy, a lot of, you know, just very different people from people who are doing retail and like, I sell flowers and I, you know, have a bakery to people who are, I'm out building homes, I'm doing this stuff, I'm on a planning commission, I'm a mayor of a city.

There really is a, when you say diverse, it's a crazy group of bottom up people all who self identify as like, I love my place. I want it to be better. I walked into that room at the opening last year and I'm like, this energy is out of this world. It's amazing. I'll give you a little like under the hood. I'm

I wanted last year, like, let's get some music. There should be a party. Like we're having a party here. Like everyone's coming together. Let's get some music. And when I got there and like I had a thing where my daughter was graduating, like that was the week of her graduation from high school. And I could, I flew in at the last minute and I had to fly out right away. So it was just like the timing didn't work well for me, but I got there and like, we didn't have the music because like logistically it wasn't going to work and the sound system wasn't going to work and all that.

And I kind of was like a little disappointed. I'm like, Oh, I don't, I don't, I kind of want the vibe to be up here. I walked in the room and the vibe was up here. And I'm like, if we would add music, like they would have blown the roof off this place. It would have been a little too crazy because people were amped. They were excited. Um, I have been re I've been assured that this year there will be music. So we'll see what, we'll see what happens in Cincinnati. If we can, uh, yeah, get, uh, get things even more, uh, more excitement, let's say.

Kevin K (22:53.284)

Yeah.

Kevin K (23:02.564)

Oh good.

Kevin K (23:11.364)

Yeah, well, I look forward to that. I mean, I think like you, I have, you know, it used to be like the CNU, we would come back from a CNU and the adrenaline rush was so crazy that for like a month afterwards, all you could do was think about the stuff that you heard and talked about and you're like, we've got to do X, Y, and Z now. And, you know, I honestly haven't felt that rush in quite a while with CNU. Part of that might just be that I'm getting older and...

It's harder for me to feel that and things change. But there's definitely, I love the excitement of the debate and the discussions and seeing a lot of younger people there I think is really cool. So kudos to you guys and hope it continues.

Charles Marohn (23:57.488)

Thank you. Thank you. It definitely will. We're committed to it. And, you know, I mean, this thing is going off here in a couple of weeks and we're almost full. So, I mean, we've sold hundreds of tickets, people flying in from all over. It will be, it will be, it will be really cool.

Kevin K (24:08.164)

Yeah, good.

Kevin K (24:17.092)

All right, well, let's shift and talk about something a little more lighthearted, perhaps. But I want to talk, first, let's talk about baseball, something that both of us share an interest in, both American League Central Division fans of different teams. And obviously, there's a rivalry. But honestly, there isn't really much of a rivalry because both teams are never good at the same time.

Charles Marohn (24:24.464)

All right.

Charles Marohn (24:43.152)

Who do you like legitimately consider your top rival?

Kevin K (24:47.076)

Well, I think for years, the weird thing is it was like the Cardinals, right? But they're not even, but they're National League. Right, so when interleague play started, I think that became a really, really big deal and those games were enormous in both cities. It's tapered off a lot and it's probably, you know, the Cardinals have been such a great organization for so long, they probably kind of laugh about it amongst themselves.

Charles Marohn (24:51.312)

Okay, right, they're not even in your division, right?

Charles Marohn (25:03.248)

Yeah, yeah.

Charles Marohn (25:12.976)

Sure.

Kevin K (25:14.468)

Uh, so, uh, any more, I don't know, you know, when I was growing up, um, it was the Yankees, it was the Royals and the Yankees. Um, because in the seventies, the Royals had those great teams that won the division every year, 76, 77, 78, and then went to the playoffs and just like lost to the Yankees every year. And, uh, finally turned around in 1980 and won it and world went to the world series. But.

Charles Marohn (25:21.104)

Okay. Yep.

Kevin K (25:41.732)

So for years there actually was a pretty fierce rivalry between the Royals and the Yankees, but that was again not in the same division. So it was a little odd.

Charles Marohn (25:50.8)

We share this in common because the twins, I think we, I mean, we did have the record of all sports for most consecutive playoff losses. And losing consecutively in baseball games is hard to do because you, even, you know, even coming in with mismatched teams, you've got a like 40 % chance of winning statistically any game. So the idea, I think we lost 17 or 18 in a row post -season and almost all of those were to the Yankees. And so we had a deep,

Kevin K (26:04.228)

Yeah.

Charles Marohn (26:20.912)

I mean, I told my daughter growing up, you know, she's two years old. And I said, in this family, we don't hate anybody, but we do hate the Yankees. So that's, that's an acceptable, but for me in the division, it's the white Sox. Like I, I'm not a fan of Cleveland. I, I don't really care about Detroit all that much. I gotta say Kansas city does not, like I don't get, you know, foaming at the mouth when we're playing Kansas city, but.

Kevin K (26:29.38)

Ah yes.

Charles Marohn (26:49.712)

When we play Chicago, the White Sox, I like go ahead and hit every ever the batter like I don't care. Like I'm I don't like those guys.

Kevin K (26:56.868)

Yeah. Yeah. And the White Sox, they just have every misfortune. I mean, come on. I think ever since they tore down Old Kamisky, it's been like a curse on that team. So speaking of, go ahead.

Charles Marohn (27:06.192)

Yeah. Yeah. Well, I took, let me, let me tell this story real quick. Cause this will solidify Chicago for me. I took Chloe, my oldest, she came, I was speaking in Chicago once and she, she's probably like five or six young kid. We rode the train, the Amtrak to Chicago and we were just there for a couple of days. I spoke at this conference. The White Sox were playing a game.

And so we went to the game because she likes baseball, you know, dad and daughter go in the game. We showed up. She wanted to wear her twins jersey because, you know, the twins weren't playing. It was the White Sox versus some other team. I don't even remember. We walked in to sit down. Little girl with a cute little pink twins jersey on. People started booing her and yelling at her like literally like she started crying. She felt bad. I'm like, these people don't deserve this kid. This is the White Sox. I hate you guys.

Kevin K (27:52.164)

Oh my god.

Charles Marohn (28:01.296)

I'm sorry I came to your dumb stadium with my beautiful daughter. Get lost. So.

Kevin K (28:06.02)

Well, it is their punishment for tearing down a nice stadium, building a horrific one, having a lousy owner. Yeah. Yeah. I mean, it was probably the worst new baseball stadium built in that entire era. So speaking of new stadiums, one of the things I just want to chat with you about and get your perspective on is we are having a big debate here locally regarding baseball stadiums because the Royals ownership.

Charles Marohn (28:11.984)

Yeah, it was a bad stadium. Yeah. Yeah.

Kevin K (28:34.884)

which is a new ownership group. They bought the team, I guess, three years ago, local people led by John Sherman. They want to build a new park. They want to leave Kauffman Stadium and build a new park in the downtown area. And which in theory, you know, I'm, I and many other people are like, great, let's do it. Sounds awesome. But, you know, obviously we're having this kind of age old debate about,

how to finance and build a stadium. And in a smaller market like Kansas City, that comes with fairly large public subsidy one way or another. And the projects themselves just balloon in size incredibly. So we're talking instead of a baseball stadium that might be, I don't know, let's say $600 million, now it's a stadium in a district that's two billion.

And the public is expected to underwrite a significant share of that. So there's, you know, we have this, we, there's been this knowledge within our world for years that a lot of us, the economics of this are just kind of silly, but how the, how the hell do cities escape this discussion and this trap? Because I'm completely mystified as how we ever get out of the situation where we are subsidizing major league franchises.

Charles Marohn (30:04.784)

I have some weird thoughts on this. And yeah, I don't think that, I think that people who are gonna hear this and I'm probably just gonna make like everybody angry. Because I do have like very strange thoughts on this. So let's go out to the edge of Kansas City where the DOT and the city are actively building interchanges because they wanna get more development.

Kevin K (30:06.692)

please share.

Charles Marohn (30:32.816)

What I find frustrating about that, when you go build an interchange and you've got on ramps and off ramps on the highway, you're in a sense robbing the highway capacity, right? Because an interchange creates friction and slows down traffic and all that. In order to get the development on the side of the highway, the frontage roads, the interchange, all the big box stores and all the stuff that will go there, and then the housing subdivision that will go adjacent to that.

The act of building that interchange makes multimillionaires out of a bunch of randos out in the middle of nowhere. It might be the guy who like inherited it from someone who inherited it or someone from inherited it like. And that's probably the most palatable. What generally happens is someone by bought it from him a decade ago and like a land speculator just sat on it and then worked with the D .O .T. to get it developed. But either way, it's a massive cash transfer from the public.

to private property owners. And I have always said, if we're gonna do that, we should do one of two things as a public. We should go out and buy up all that land around where the interchange is gonna be. I'm thinking like a mile in each direction. You know, we should buy that ahead of time at pre -interchange rates. We should build the interchange and then the interchange makes the land more valuable.

We should then sell the land back to the market at that higher rate and use that amount to pay for the interchange. That or a more conventional way to do it would be to do a special assessment, which cities do all the time when they're out building sewer and water, they special assess the whole thing.

I'm cognizant of the fact that like the Colosseum in ancient Rome was not built in order to get ancient Rome. Like ancient Rome was what it was. And then wealthy patrons came in and said, I want everybody to think I'm awesome. So I'm going to build this Colosseum and, you know, deck it all out and do all that. I feel like our stadiums are, in a sense, the same thing. And if I were a city.

Charles Marohn (32:41.36)

working with some very rich people to try to build what is in a sense a monument to them and their play thing, this major league baseball team. I would want to use the tools of either imminent domain and development, or I would want to use the tools of special assessment to recoup my part of the investment. Because if I'm gonna build a baseball stadium,

I want it to be Wrigley field in terms of the intensity of the development around it and what that actually means to the land values in its vicinity. If I'm going to build, I can't remember what the Atlanta one is called. I hate that state, the new Cobb field or something like that. It's a junk park. Like it might be a nice place, but I like, don't like anything about its development. Even, um, you know,

Kevin K (33:21.028)

the new one.

It's truest. Is it truest park? Yeah.

Charles Marohn (33:36.112)

Target Field, which is like one of my, I think Target Field is my favorite park and I'm biased obviously, Minnesota Target Field. But I think it's a great park. I think the way they financed it is really backward. And the development around it has trailed the park by 10 to 15 years because we didn't have the right kind of financial.

I'm going to use the word incentives, but I don't mean giveaways. I mean, incentives by like now you've got a $10 million special assessment in this land. You better build something that's a hundred million dollars on it or, you know, you're going to pay a high tax rate year after year after year. You got to make use of this property. We didn't have everybody's incentives aligned when we made the big public investment. And so we didn't get the private investment out of it that we should have got. That's.

I could buy into stadiums if we actually had that mindset because then the public is not only going to recoup their investment ultimately, but you're going to get a really nice product at the end.

Kevin K (34:44.804)

Yeah, I think that's a really interesting way to think about it. And unfortunately, I don't think we don't really have public officials who think about it that way. Yeah. Well, yeah, we don't have the stomach for it. And it's a good point.

Charles Marohn (34:53.36)

the stomach for it? I mean, Chuck says, imminent domain, everything within a mile. I mean, that's crazy. But if you were responsible with your finances, you would do a special assessment.

Kevin K (35:08.932)

Yeah, yeah, yeah. I mean, I think there's a lot of logic to that. And maybe you don't even recover all of the public investment, but you could recover a substantial portion of it. Who knows?

Charles Marohn (35:20.72)

What I think you can, I think you recover some of it upfront, right? Like you can, you can have your upfront and then you'll have the after effect of basically having the incentives aligned where people will then develop and then you will collect the rest of it in terms of long -term taxes. I mean, I, I've watched Kansas city Joe, our friend, Joe Mancosi did some, some analysis of tax increment financing deals that Kansas city's done that would make your stomach churn. I mean, just giving away.

tens of millions of dollars to the most ludicrous kind of things that will never cashflow. I've watched Kansas City build monstrosity things out on the edge of town and call it growth and call it public investment when the city's guaranteed to lose money on every single one of these things. You don't even need more than a napkin analysis to figure that out. It makes me sad. I would, if, if Kansas City were to become more sophisticated about the public purse, I think they could build a stadium.

responsibly, but they can't do it without, you know, in a sense, demanding that everyone who's going to get rich on it contributes proportionately to what is being built.

Kevin K (36:28.74)

Yeah, yeah, I like that. I mean, it seems to me almost like it's sort of a third way thought, you know, thought pattern about it because as I tried to talk to people locally about it here, unfortunately with the reality of sports and sports economics today, like a city the size of Kansas City, you're just not going to build a new facility without public investment in it. It's just not going to happen or you're going to lose the teams. And that sucks, but that's where we are.

Charles Marohn (36:55.408)

Did New York, didn't New York have public subsidy on their ZO2? I mean, I'm.

Kevin K (37:00.612)

I think they might have. I know in San Francisco when the Giants built their new stadium, they built it all themselves. And I can't remember some of the new football stadiums they have. Yeah. Yeah.

Charles Marohn (37:10.704)

I know the 49ers, the 49ers got a huge subsidy on theirs. So, I mean, you're like, I'm with you because you and I are both told that we're mid -market teams, you know, and you've suffered the trauma. No, I was going to say you've suffered the trauma of having a football team lead, but that was St. Louis that had the football team lead. That wasn't Kansas City. You guys have the glorious football team.

Kevin K (37:30.308)

That was St. Louis, yeah. Uh -huh. Nope.

We do. We had a baseball team leave, but that was before I was born. So the Kansas City A's. Yeah. Yeah. Well, we lost an NBA team and an NHL team in my life.

Charles Marohn (37:40.048)

Okay, so that that trauma is is gone.

Charles Marohn (37:47.984)

Really? What was your NBA team? I don't remember that.

Kevin K (37:50.276)

It was the Kansas City Kings. They went to Sacramento. Yeah, in the 80s. Yeah, yeah, yeah. Yeah, at one point we were the smallest city in the country that had all four major sports leagues.

Charles Marohn (37:53.104)

Sacramento, no kidding. I did not know that. Huh. Huh. Um.

Charles Marohn (38:05.52)

We've been told that that Minnesota can't support four because we're too small for that. And there's always the, you know, I feel like it's one of those things where each team can kind of threaten to leave because they're the we're the fourth one that can't be supported without a public stadium. Yeah, it here's here's so you have a you have a background in architecture. Here's what I struggle with with stadiums. I feel like.

And I'll say this even about my beloved target field. We don't build stadiums that will be around to be excavated in the future. Like the Roman Coliseum, we can look at and we can see this grandeur and like it's been there thousands of years. We don't build anything that isn't in a sense, it might have a nice fancy facade and it might be nice. And we've used some decorative brick to make it look good.

But the reality is, is like, like we just built a plastic band box with some good veneer on it that looks cool. And I like the dimensions, but these aren't like massive public investments meant to endure beyond really a generation. Right? I mean, am I, am I misunderstanding something about how we build these things?

Kevin K (39:25.38)

Well, I think there was an era where they were built differently. I think that's probably more commonly the case now. I mean, even Kauffman Stadium is a pretty incredible structure in and of itself. There were a lot of impressive structures, though, built in that era in the 60s now that basically are all gone. They're all torn down and replaced. It seems more like they're thought of more like a consumer product.

Charles Marohn (39:48.4)

Yeah. Yeah.

Kevin K (39:55.076)

now that is like you build these stadiums and they're wildly expensive and they're huge, but essentially they're built to last maybe two generations. And then we're looking to either completely overhaul it or replace them.

Charles Marohn (39:55.888)

Yeah!

Charles Marohn (40:11.952)

Well, I realized that the Metro Dome, which the Metro Dome was a special case product where we built the dumbest stadium at the end of the dumb stadium era. And like, I think the year after we built the Metro Dome or two years later, Camden Yards was built and everyone had buyer's remorse right away. But, you know, you're talking about a stadium that at the 18 year mark.

They said needs to come down and we're going to contract this team and actually have fewer baseball teams because of this bad stadium. We got target field in 08 or 09 somewhere in there. I think somewhere in that range. So, you know, the the the Metrodome era lasted 24, 25 years. And I remember that like the roof caved in on it and like you blew it like no one was sad really to see it go because it was really like a plastic box.

It seemed to me like it's a consumer good, like it's just designed. And I wonder if, because Wrigley Field, you know, say you could tear that down and rebuild it in place, right? I don't know what it would take to do that. I mean, people would flip out if you did that. They're going to maintain it till it can't be maintained anymore. But.

there's really no question of where the Chicago Cubs will play. And I don't think that's because it's iconic as much as it is embedded in this ecosystem around it. You know, so to I'm sorry, Kevin, to me, the key to having a good public stadium investment would be that you have to actually grow the ecosystem around it. So there's some codependency. So that thing actually like could never leave again.

Kevin K (41:45.7)

Yeah, yeah.

Kevin K (42:03.428)

Yeah, as our as our friend, Philip Bess would say, he wrote a great, great little book called City Baseball Magic, which actually was a study of what the White Sox should have done when they replaced Comiskey Park. But he talked about it's just the best ballparks are neighborhood ballparks. It would then emphasis on the neighborhood park. So check out one fun little bit of baseball park trivia for you.

Charles Marohn (42:24.784)

Yeah.

Kevin K (42:30.436)

One of the very first projects I worked on as a young architect right out of college was at the Metrodome. You remember at one point they put in these big vertical screens to block off parts of the seats. Yeah, to block off part of the seats to make it look more full for different events. I did that. It was a ridiculous project.

Charles Marohn (42:30.8)

Uh oh.

Charles Marohn (42:44.336)

The baggy? Yeah, the baggy.

Uh huh. Uh huh.

man, I hated you then. Because it was so weird because what it was, the Metrodome was built like a football stadium and then they overlaid this baseball stadium within it. And I had season tickets for a while. My brother and I, when I was in grad school, I got them. We went up, the twins had been historically bad for many years and they were selling season tickets at an event. And my brother and I said, well, let's...

Let's go look at them. If we can get front row seats, we'll do it. Well, we got front row seats down by the tunnel where they come out for the football game. So it was like by the bullpen. It wasn't it wasn't by the dugout or anything. It was like maybe like what would be in the corner today. But front row is front row. I mean, they were really cool. Like we were right there. You could yell at the right fielder and talk to the guys in the bullpen. It was it was awesome. The problem was you were facing the 50 yard line.

which was like center field. So if you wanted to watch the game, you had to like crane your head over the left to actually see the game going on. Those when those banners went up, I think the what you tell me, I feel like the thing was to try to make it feel less empty because you took out like 20 ,000 seats by by putting up this big curtain to say, hey, it's not as empty and it's a little more intimate. Yeah, it didn't work.

Kevin K (44:12.164)

Yep. Mm -hmm.

Kevin K (44:22.148)

It was a funny deal. Just the sort of project you give a young architect to work on.

Charles Marohn (44:22.288)

Hahaha!

Charles Marohn (44:28.88)

So did you, you came up to the metronome and like, you know, what was your level of involvement with?

Kevin K (44:33.988)

The funny thing on that, I was just the kid in the office doing the drawing work, so I didn't actually go get to do a site visit for any part of it. But when I was a little kid growing up in Albert Lee, I mean, we went to the Metrodome a lot. I have a lot of great memories of going to games at the Metrodome.

Charles Marohn (44:38.352)

Sure, sure.

Charles Marohn (44:49.648)

Now hang on a sec, you're not Minnesotan, are you?

Kevin K (44:52.836)

No, not really. We lived in Albert Lee.

Charles Marohn (44:55.536)

Okay.

I mean, I like you, I like you, and you have some positive characteristics about you. I didn't want to automatically attribute them to being Minnesotan, but now things are falling into place.

Kevin K (45:05.54)

No, we lived in Albert Lee for eight years. And yeah, yeah, totally. Yeah. And it was when I was a, you know, elementary school kid and junior high. So, you know, those are great years and great, great memories. My parents, I think my parents really were happy to get out. They thought it was way too cold and, you know, they weren't, they weren't too fond of that. But well, I was a kid. I was a kid. I didn't, you know,

Charles Marohn (45:09.68)

OK, OK, so you got a little of the vibe.

Charles Marohn (45:21.456)

Yeah, yeah.

Charles Marohn (45:31.376)

You didn't think it was too cold though, did you? Cause you're, yeah, bring it on.

Kevin K (45:36.548)

So, last thing I just wanna kind of touch on a little bit, cause it's a fun topic is you've been, you've shared a lot in many podcasts about your love for Disney World and your enjoyment of Disney World. And I just wanna touch on this a little bit. And I've probably like, you know, thinking way too deeply about all this stuff, but we took our kids there, I guess it was about a year and a half ago. I have actually no experience with Disneyland in California, just Disney World in Florida.

Charles Marohn (45:47.824)

Yeah.

Charles Marohn (46:04.752)

Mmm.

Kevin K (46:05.7)

And of course we had a fantastic time. It was absolutely magical for the kids for the age they were. And everything about it was really, really nice. And I just want to talk a little bit about it because it's fascinating to think about because if you could think about like the un -strong towns, it would be like Walt Disney World. It's...

you know, if you think about the most incredible, or at least this was the thought I had at the time. If you thought about something that was like the most top -down, large enterprise you could conceive of, it's Disney World. And yet we both really, really enjoy it and find a lot to admire. And I wonder if you could maybe expand on that a little bit or talk about it.

Charles Marohn (46:40.912)

Absolutely.

Charles Marohn (46:51.984)

Well, let's start with this. I think the thing that I have always loved from the time that I was, I think 13 was the first time that my family went up until today, is that it is some of the best designed urban spaces in America. If you want to experience, you know, you and I hang out with a crowd.

where there's actually a debate over, do you like your urbanism gritty or do you like it fake? And there's a whole strain of people who like, if I can't smell urine in the street, it's not a real city. And I'm from a small town. I actually like things nice. So the idea of going to Disney World and riding transit and having it be beautiful and comfortable and fun, the idea of not having a car and going to places and walking around and...

Yeah, there's a lot of other people there, but it's so well designed and proportioned. And the hyper attention on the human experience, not just standing, how you stand in line and wait, but how you actually get the transition from one place to another, to another. You know, like the sight lines that you have and the smells, like all of this, the music, as someone who is an auditory person,

The idea that you would walk between different places and the music would not clash with each other as you would go from one place to another, but actually blend. I try to explain this to my wife decades ago and I didn't do a very good job. I said, it's comforting to me because it's so well designed. I used to take my, when I ran my own planning and engineering firm, I used to take my team down to just show them.

Here's what good urban design looks like. And like, let me look at the way these buildings are proportioned and laid out. Look at where they've done with the lighting. Look at this. It wasn't like we were going to come back to Brainerd, Minnesota and build Disney World. But my gosh, you look at the lights we put in the park, they're just like ugly street lights because, oh, we need light here. The attention to detail is so deep and thorough. And the stories are just legend of like, you know.

Charles Marohn (49:10.416)

They would they would put a tree in a spot and what would come and he'd look at him and be like, oh, geez, I should be three feet over this way. And be like, why should it be three feet? Well, look at like here's where it blocks this view and that like this and that. And then he'd walk away and they go, we had to move the tree three feet because now I'll never be able to walk by this and see it that way again. Our cities. Could spend way less money and be vastly more beautiful if we had just.

a tiny bit of the understanding of urban design that like the base Imagineer has. And I think that is the thing that, you know, it is Disney World is not meant to endure. It is. I mean, they call it a stage. You're on stage when you're there at the park. It is, you know, like a stage in a theatrical production. It's false fronts. It's like not.

Not like super high quality construction. It's meant to be ripped down and rebuilt after a certain amount of time. But your city is made to endure. I mean, you want your city to be around 100 years from now, 200 years from now. None of us build thinking that, well, this neighborhood is going to be disposable. If if we grasped 10 percent of what the Disney Corporation grasp about building great places, it would be a revolution in this country of.

of urban design.

Kevin K (50:38.66)

Yeah, I think one of the things that struck me or maybe it just occurred to me differently this time as well is since I'm in professionally now, I'm running this place management organization here in Kansas City. And so I have gotten a whole lot more exposure in day -to -day work with just management of public space and how difficult that is and just the challenges.

Charles Marohn (50:51.888)

Yeah.

Kevin K (51:07.652)

I started to look at it a little bit through that lens. And I think when I started to do that, I'm just completely and utterly impressed with the management of everything that Disney does from beginning to end, from the entire experience, from when you arrive through the process of going through security. Oh my God. The thousands and thousands of people that go through security per hour. And it's just this utterly seamless experience that you're just like, why can't the airport be like this? You know?

Charles Marohn (51:37.072)

Yeah. Yeah.

Kevin K (51:37.092)

And, you know, all the aspects of it really makes you say, this is what I think a lot of us are really hoping. This is how we wish our places were managed on a daily basis, including the cleanliness of it. And I know it's a fake world. It's a theme park. But I think that's part of it seems to me like that's part of the attraction.

Charles Marohn (52:00.464)

Yeah, and I actually think we can discount it and say it's a fake world, like I totally get it. But I also feel like what they've recognized that we all could easily recognize is that a huge part of creating value is the experience. We were having a chat here internally today about an article that one of our writers is working on about transit.

and just how a lot of the wayfaring is being taken out in New York and in other places because it was old and it just didn't get replaced. And you can go to a place like Vancouver where they've got new parts of the system and those parts have great wayfaring and great signage. The reason is because the way we finance transit focuses on massive one -time investments.

but it doesn't really look at long term the user experience and how do we improve that? How do we put money towards that? And how do we make that fun? We would rather have double the size of the transit system and have it be really crappy for everybody than to have half the transit system and have it be marvelous for everyone who uses it. And that is really a byproduct of like our macro economy, right? Grow, grow, grow, build, build, build more, more, more. Disney builds a lot, but

They never build anything without having a strategy for how it will be exquisitely maintained, for how it will really be conformed and contorted to match the experience. They're always willing to check their assumptions, check their understandings based on how people use stuff. And I think that we could learn a lot from that.

The four step process that we use at Strong Towns, the idea that you humbly observe where people struggle and you ask yourself what's the next smallest investment and then you do that and you repeat the process. Part of that comes from really Walt Disney himself. This may be a apocryphal insight, but there's a story about Walt that feels like it's genuine.

Charles Marohn (54:21.232)

He had an apartment at Disneyland and he would go down in the morning and walk around in his bathrobe watching people get the park ready. And one day he's out walking around and they're putting up a fence. And he's like, why are you why are you putting up a fence there? And he's well, people keep cutting across the grass. We want them to stay on the sidewalk. And his answer was, well, you've got it wrong. Rip out the sidewalk and put it here where people are walking. They're showing you where to go.

anyone who's been at one big box store and trying to drive to the next big box store and recognizes that they have to drive half a mile up the highway and then do a weird U -turn and come back and use a right in right out and do all this. Anybody who's tried to cross a street and recognize that they have to walk half a mile to a street light to cross and then come back appreciates the idea that Walt has, which is observe where people are struggling, observe where this is hard and just make it easier for them.

To me, this is a genius insight, but it shouldn't be a hard one for us to do.

Kevin K (55:27.46)

Yeah. Yeah. And I think the other thing is the other observation that I think ties into all that is what you see with Disney World, or at least what I saw with it, is we're in this weird time and place in our culture where there's just not a lot of feeling that we're doing a lot of things really well. And even at the big corporate level,

very large corporations, it seems like there's more bad news than good when it comes to all that. And here you have this massive corporation. The Disney Corporation is absolutely massive and owns so many things. And they own this enormous complex of Walt Disney World. And I think when you go there, it's like it kind of, I can understand how my parents would have thought about that era, that America.

does big things really well because Disney World epitomizes somebody, an organization doing big things really, really well down to the smallest detail like you describe.

Charles Marohn (56:38.096)

Well, Walt Disney embodies, for better and for worse, I mean, I think there's obviously two sides to this, the immediate post -war mentality. I mean, Disneyland itself is a hubristic undertaking to transform an orange grove out in the middle of nowhere into this dreamland where you can take your kids, you can take your grandparents, everybody can go and have this wonderful time.

His vision came about because he was sitting at like an old carnival, watching his kids go on rides that were dirty and not well taken care of and grounds that weren't very fun. And he's like, as an adult, you're kind of ostracized from participating. Let's build this dream world. I think it is in many ways the best of that era because he did have a

a dream and a vision that was very, I'm not gonna use, I want to use the word inclusive, but I think that is probably wrong in our current context. But he would have said, a place for everybody to come. He was also criticized for it being too expensive like it is today. So there's limits to what is very expensive. But I think it's also the worst.

Kevin K (57:55.3)

It is expensive. Yeah.

Charles Marohn (58:00.912)

of what we did, because it is this idea that you can create perfection. All like it is possible to build to a finished state and have it be done right. And when it comes to magical make believe places, I think that that's probably right, because they don't have a mindset that it will always be there. They are always redoing and refixing things and all that. But we when we take that mentality and we bring it into our neighborhoods and our cities and we're like, well, we can build this.

with a Disney mentality where we go out and build it perfect the first time and then walk away. Sure, we'll get 20 years where it's the nice neighborhood and the good place, and then it will become a downward spiral like every place else. And I do think we have not, it's almost become a place that allows us to believe in the wrong things. Like we, to me, I feel like if my mayor went to Disney World, he would come back,

not with the mentality of we need obsessive maintenance and to humbly observe where people are struggling and to respond to the human condition and have great urban design. He would come back and say, wow, we can build big stuff really quickly and have it be awesome. And I'm like, that's the wrong takeaway, buddy.

Kevin K (59:16.196)

Yeah, yeah, it's interesting. I mean, I think it does espouse a lot of those contradictions. So that feels like probably a good place to leave it. I should also mention in case you didn't know that Walt Disney is from small town Missouri. And Marceline. Yeah. Yeah. Yeah. Well, everything in Missouri is pronounced strange. That's just the way it is. It's also Missouri. So I should say that. You know.

Charles Marohn (59:22.032)

Yeah, yeah, yeah.

Hey, thanks, man.

Charles Marohn (59:31.696)

He is, no, I definitely knew that. I've been wanting, it's Marceline, is that the name of the place? Marceline, okay, I'm saying it like I'm Minnesotan.

Hahaha

Do people actually say that? Missouri?

Kevin K (59:47.619)

If you're if you are not in Kansas City or St. Louis, it's pronounced Missouri. Oh, yeah.

Charles Marohn (59:52.336)

Seriously, I did not know that. You know, I spent a summer at Fort Leonard Wood, which was one of the most miserable summers of my life. So I had clay, you know, Minnesota, we have this beautiful glacial outwash. Doesn't mean like the engineering geek, but we have this nice glacial outwash. So when it rains, the water drains into the ground and I'm in Kansas City or I'm sorry, I'm in Fort Leonard Wood in Missouri and I have a tent that I'm sleeping in because I'm a soldier.

Kevin K (59:57.316)

Oh, that's right. Yeah. Yeah, that's it.

Charles Marohn (01:00:21.392)

And it rains and guess what happens to the water in Missouri? It just runs into the lowest area and floods it, which happened to be my tent. Oh my gosh, it's horrible. Just wretched.

Kevin K (01:00:24.548)

Yeah.

Kevin K (01:00:29.124)

Yeah, yeah, and you just get mud everywhere. It's wonderful. Yeah, but yeah, but yet continuing the story just briefly, Walt Disney then as a young man went to Kansas City and got his start in journalism and his professional career in Kansas City. And he worked at a place called the Laffagram Studios, which a friend of mine here, a developer is trying to restore and they're trying to make it into an attraction. But yeah, it should be a cool thing when it gets done. So.

Charles Marohn (01:00:41.328)

Yeah.

Charles Marohn (01:00:54.128)

Oh nice.

Is that where he did the first, because there was a first iteration before Mickey Mouse. Mickey Mouse was the second prototype after he had a falling out with his business partner. Yeah.

Kevin K (01:01:01.348)

Yes.

Kevin K (01:01:06.628)

Yes. Yeah. There, there is some, you know, urban legend that the first one was here at the Laffagram studios. But I think, I think that's, uh, I mean