Cohousing-L Mailing List: Strong Towns Again -- A financial Report Decoder

[Sharon Villines (sharon]

Another example of Stong Towns particularly helpful approach to understanding 
what a strong town is is their development of a tool to analyze the annual 
financial reports. It’s free and requires some knowledge to understand but the 
vocabulary but it is also applicable to developing and managing cohousing 
communities — particularly larger communities. Strong Towns has a series of 
articles explaining why many cities receiving awards for their health are 
actually fragile and heading toward bankruptcy. Annual reports often hide the 
reality while they receive much praise.

If you understand city planning you can skip to the end to download the Decoder.

(Quotes are edited for length)

Introducing the Strong Towns Finance Decoder
> Explains why the decoder is necessary and how it reveals the true financial 
> state of the community. Strong Towns advocates for financial resilience — 
> cities that can maintain essential services, adapt to economic shifts, and 
> avoid long-term financial crises. This requires looking beyond annual budgets 
> to understand the structural forces shaping the financial future.
https://www.strongtowns.org/journal/2025/3/24/introducing-the-strong-towns-finance-decoder

Cities are already defaulting on their debts
> If you normally spend $5 million a year maintaining roads, and now you borrow 
> $5 million to do the same work while freeing up that $5 million to spend 
> elsewhere—you’re using debt to balance your budget. You’re just calling it 
> capital spending instead of operations. Cities appear to balance their 
> budgets without cuts or new revenue, but they do it by quietly accumulating 
> obligations. Each sleight of hand—whether it’s borrowing, deferring 
> maintenance, or shifting funds—adds another layer of future cost. And because 
> these obligations aren’t obvious or immediate, they pile up unnoticed. This 
> is how cities slide into insolvency: not with a dramatic collapse, but with a 
> slow, steady drift into financial fragility.
https://www.strongtowns.org/journal/2025/4/14/cities-are-already-defaulting-on-their-debts

Two views of one budget, Why Houston’s financial story isn’t as simple as it 
looks
> The Popular Annual Financial Report (PAFR) frames Houston’s 2024 financial 
> outlook in glowing terms. It highlights a $1.3 billion increase in the city’s 
> net position, improved bond ratings, strong revenue growth, and renewed 
> investments in infrastructure and services. The city also emphasizes the many 
> awards it has received for financial management. These accolades commend 
> Houston for its transparency, completeness, and polished 
> presentation—indicators of strong communication, not necessarily financial 
> strength. The report presents accurate year-over-year improvements. But these 
> numbers reflect a single year in a much larger trend. The report is a 
> snapshot—a carefully composed image that may not capture the full reality of 
> Houston’s long-term trajectory. Houston’s financial health remains deeply 
> concerning.
https://www.strongtowns.org/journal/2025/4/3/two-views-one-budget-why-houstons-financial-story-isnt-as-simple-as-it-looks

GET THE DECODER

The decoder is available at the link below on Google Sheets along with 
instructions. You can make a copy for your own Google Drive or download a 
version for several software programs including Excel. You just have to sign up 
for Strong Towns email — I’ve never had my email address shared by them or been 
swamped with spam.

https://www.strongtowns.org/decoder-resources

The blizzard of unfamiliar terms in the DECODER is not fatal. They just take 
getting used to. The detailed instructions link below explains how to interpret 
your city’s financial reports.

Instructions:
https://docs.google.com/document/d/1le-0tyAcNVKXSHSEzDHlCNsBtrqOY8x6Vj4i85-jGkg/edit?tab=t.0