Ann Arbor City Council Meeting (May 18, 2009): Ann Arbor’s city council approved the budget for fiscal year 2010 at its Monday meeting, spending little time discussing a separate resolution key to that budget, which approved an early-retirement inducement for police officers involving a one-time payment of around $6 million – depending on how many officers take advantage of the incentive.
The fact of the lengthy discussion over much smaller items was acknowledged around the council table, with councilmember Sandi Smith (Ward 1) making a note of it when she made an unsuccessful bid to eliminate or delay the introduction of parking meters into near-downtown residential neighborhoods. Smith was comparing the relatively short discussion of parking meters (involving potential additional revenues of $380,000) to the previous deliberations on Project Grow’s funding. And in the course of the more than 45-minute deliberations on Project Grow’s $7,000 grant, Sabra Briere (Ward 1) noted: “The least expensive ones are the ones we fight the hardest over.” Briere lost her fight for the community gardening nonprofit.
The approved budget did include amendments to allocate funds for the Leslie Science and Nature Center. Also related to the budget, the two resolutions to approve fee adjustments for the community services and public services areas were approved with no deliberations by council, leaving the issues raised at the previous night’s caucus by the chair of the market commission undiscussed publicly.
In other budget business, city council passed a resolution to create a taskforce to study options for the Ann Arbor Senior Center, which is slated for closure under the FY 2011 budget plan (i.e., not the budget approved by council at this meeting).
Council also approved an extension to the purchase-option agreement with Village Green for the First and Washington parcel, gave final approval to a completely new liquor ordinance, approved increased water/sewer rates, approved grant applications for multiple properties under the greenbelt program, and asked planning commission to review the C3 zoning regulations regarding the kind of temporary outdoor sales conducted in previous years at the Westgate farmers market.
The funding of the north-south connector study was again postponed, pending coordination with the Downtown Development Authority.
Police Early Retirement Inducement
Background: The police department reduction proposed in the FY 2010 budget would take away a total of 27 full-time employees, with 16 of those (6 command and 10 patrol) sworn officer positions.
As a strategy to avoid laying off personnel, on Monday night city council gave final approval to a revision to the city’s general retirement policy that provides an inducement for police department employees to retire early.
A summary of the general retirement policy, as contrasted with the revision made for police officers, is provided in the actuarial evaluation of the proposed change that was made by the city’s consultant, Gabriel, Roeder, Smith & Company:
PRESENT PROVISIONS: General members are eligible for regular retirement (unreduced pension) at age 50 with 25 years of service, or age 60 with 5 years of service. Police members are eligible for regular retirement (unreduced pension) at 25 years of service, or age 55 with 5 years of service. General and Police members are eligible for early retirement (reduced pension) at age 50 with 20 years of service.
PROPOSED PROVISIONS: … Members in COAM or AAPOA meeting the age requirement (if any) and within two years of meeting the service retirement conditions (unreduced or reduced) by June 30, 2009 are granted 2 additional years of benefit and eligibility service if they retire on or before June 30, 2009.
In addition to granting two years of service to members of the Command Officers Association of Michigan and the Ann Arbor Police Officers Association, the early-out program authorized by city council allows members of those unions to purchase up to one year of service. The GRS&C summary of the police department’s personnel, based on information provided by the city, is as follows:
Number of active members: 149 Total payroll: $11,448,056 Average age: 41.3 years Average service: 14.7 years Average annual pay: $76,833 Eligible active members: 32 (+2 covered by AAPOA outside police department) Payroll of eligibles: $2,689,706
The analysis of the maximum cost, if all eligible members were to take advantage of the offer, is as follows: $3.5 million (pension), $1.6 million (voluntary employment benefit association – VEBA), $1.6 million (leave payouts), for a total of $6.7 million. That amount would be taken from the city’s reserve fund, which is projected at $15.2 million at FY 2009 – or 18% of expenditures.
That amount excludes the settlement of the Pfizer tax appeal, which reflects a potential liability of $0.9 million, as well as the Act 312 additional arbitration costs of $0.6 million that council authorized at its May 4, 2009 meeting. If all that actual cost, plus all the potential costs, are calculated in, reserves could be reduced to $7.6 million (9% of expenditures).
Projected operating cost savings, based on planned reductions of 18 FTEs excluding vacancies: FY 2010, $1.6 million; FY 2011, $1.9 million; FY 2012, $1.9 million; FY 2013, $2.0 million.
Budget Questions Raised During Public Commentary: Two speakers during the public hearing on the revision to the city’s employees’ retirement system raised questions about the financial wisdom of the incentive program. Karen Sidney pointed out that for around $600,000 the civic band, Project Grow, the historic district consultant, plus gaps in human services funding could be covered, leaving around $6 million (from the maximum cost of the early-retirement program) that could be spent in part to pay police officers to do police work for two years, after which time they could retire at no extra cost to the city.
John Floyd echoed the same sentiment, saying that one option would be not to spend the cash from the city’s reserve upfront, and wait to see what ordinary attrition brought over the next two years – then use cash for an early retirement program if necessary. Floyd reasoned that if early retirement buyouts were necessary at that point, then it would be less costly in cash terms than now, because less incentive [in terms of years of service credit] would be required to induce officers to retire. Floyd concluded his brief remarks with a request: “I’d like to see the analysis.”
Deliberations: In terms of the analysis that Floyd requested, during deliberations Leigh Greden (Ward 3), who serves on council’s budget and labor committee [along with Margie Teall (Ward 4), Marcia Higgins (Ward 4), Stephen Rapundalo (Ward 2) and John Hieftje (mayor)], offered the observation that with an attrition-based approach, there was no guarantee that anyone would retire. Officers needed some incentive to retire, Greden said.
In his other remarks on the issue, Greden rejected the notion that money should be taken from cash reserves to pay for operating expenses [like Project Grow or the historic district consultant], saying that a government using such a strategy would wind up bankrupt. He also stressed the fact that the general retirement program in place for the city was sound – it saves the city around $10 million a year, he said. What made the enhancement being offered to police officers even better, Greden said, was the fact that it targeted middle management positions, while leaving patrol strength unchanged.
After Hieftje had brought police chief Barnett Jones to the podium to recount some of the history of crime rates and policing in Ann Arbor, Christopher Taylor (Ward 3) took the opportunity to clarify with Jones how the elimination of the downtown beat [which currently consists of six officers, who walk or bicycle the downtown area on a two-at-a-time basis] would affect the ability of Ann Arbor’s police force to address the “broken window theory” in downtown. Otherwise put: How would the elimination of foot and bicycle beat cops downtown affect the AAPD’s ability to keep downtown from getting out of hand?
Taylor’s clarification could be seen as an attempt to address the concerns of Newcombe Clark, president of the board of the Main Street Area Association and downtown resident, who had spoken during public comment on the issue. Clark reported that even with an assigned downtown police beat, when bars let out around 2:30 a.m., downtown Ann Arbor was something akin to Beyond Thunderdome.
In response to Taylor’s query on the matter, Jones explained that the total number of uniforms downtown would actually increase. Officers are required to spend one hour every day outside of their cars – partly to conserve fuel, Jones said. And during these out-of-car breaks, they’d be walking around downtown. Sandi Smith (Ward 1) clarified that by “break” Jones didn’t mean sitting in a cafe eating lunch. Jones also clarified for Smith that the new way of organizing the policing of downtown was not a break from the notion of “community policing.”
Although the subject didn’t receive much attention during the council meeting, at the previous week’s budget work session Jones had explained that part of the out-of-car time would be used to write parking tickets. That would compensate for the reduction in community standards officers, who are specfically dedicated to ticket writing.
On the subject of ticket writing, during public commentary general time, Jim Williams of the Local 369 AFSCME union objected to the possible transfer of job activity [here, ticket writing] from one bargaining unit to another.
After hearing Jones’ explanation of the reorganization of policing in downtown, Taylor offered Jones a cheerful: “Go get’em!”
The main event of the evening – deliberations on the city’s FY 2010 budget – left little unchanged from city administrator Roger Fraser’s proposed budget. What did change in the budget centered mostly around the Leslie Science and Nature Center. [electronic packet of amendments]
Leslie Science and Nature Center: Amendments #1 and #2 dealt with reallocating money to the nature center – which could have been expected, based on the budget work session.
At that session, Christopher Taylor (Ward 3) had queried Jayne Miller, director of community services, about the implications of eliminating the historic district consultant for the city one year earlier than originally planned. Taylor clarified, as he did at the budget work session, that the consultancy in question was not the city staff position currently held by planner Jill Thatcher, who has expertise in historic conservation.
Amendment #1, which was passed unanimously, reallocated the $24,000 alloted to the historic district consultant (whose job was described at the budget work session as largely completed) to fund the Leslie Science and Nature Center. That left the center short of the $28,350 council wanted to allocate to it based on the previous agreement that had been struck with the center in spinning it off from the city to become an independent entity.
Amendment #2, which was also passed unanimously, allocated the remaining $4,350 from the general fund reserves – something that violated a basic principle set forth by Leigh Greden (Ward 3). That principle was that any additional costs needed to be balanced by an alternate revenue source. In the case of Leslie, Greden introduced five points that convinced him the violation of the basic principle was worth it:
- It’s not a great deal of money.
- There’s an agreement with Leslie establishing an expectation.
- The $28,350 is a 10% reduction from 2009 levels.
- The agreement with Leslie is designed to transition the center to independence.
- The center needs the money.
LDFA: Amendments #4, #5, and #6 dealt with the Local Development Finance Authority. They were all sponsored by Marcia Higgins (Ward 4) and Stephen Rapundalo (Ward 2). It was left to Higgins to provide the explanations. Tony Derezinski (Ward 2) explained the absence of his Ward 2 cohort by reporting that Rapundalo was attending the Bio International Convention. In broad strokes, he’s there in his capacity as president of MichBio to represent Michigan as a fertile place for biotech companies to locate and grow. Otherwise put, he’s engaged in economic development activity outside the area that is meant to benefit from that activity.
It’s precisely this geographic distinction that’s addressed by Amendment #6. The basic idea is that it’s meant to enforce the idea of not spending money that benefits areas outside the geographic area of tax capture of the LDFA. The resolved clause reads:
Resolved, The SmartZone LDFA expenditure budget for Marketing be limited to funding [emphasis added] activities within the geographic boundaries of the Ann Arbor portion of the LDFA, specifically promoting the Business Accelerator.
The language of the amendment caught the attention of Christopher Taylor. He asked if a billboard outside the district promoting an activity inside the district would count. Based on Higgins’ responses, it seemed to Taylor that the intent was that such a billboard would be okay. That being the case, Taylor suggested the resolution in its current form didn’t reflect that intent – the substitution of the word “promoting” for “funding” would capture the intent, he said.
Though the discussion seemed at that point on the verge of resolution, it foundered on the question of whether the resolution was necessary at all, because it was already reflected in either the founding documents of LDFA or else the contract between the economic development agency Ann Arbor SPARK and the LDFA. Skip Simms of SPARK and Tom Crawford, the city’s CFO (who sits on the LDFA board in an ex officio capacity) offered explanations involving a desire to improve clarity, something that Hieftje suggested had not been achieved by the resolution – because council itself had not been able to understand what the resolution meant. Higgins withdrew the amendment, but will perhaps bring it back as a standalone resolution in the coming weeks.
The other LDFA-related amendments could also come before council in another few weeks, in order to restore the elements of the LDFA budget that they eliminated. Amendment #4 eliminated $25,000 worth of funding for the angel investment group. Higgins reported that assistant city attorney Mary Fales had verified the legality of such support, but Higgins wanted to remove it for now and bring it back in four weeks or so. That amendment passed.
Amendment #4 could also be back before council in a few weeks to have $50,000 worth of funding restored for an LDFA staff position – the amendment cut the proposed new position. Because the position listed in the budget did not yet have a job description, for now council agreed it should come out of the budget. The initial rationale offered was that there was “incomplete justification for the position.” Taylor initially said he was uncomfortable voting for it, saying that the description “‘incomplete justification’ is itself incomplete.” It was Hohnke who brought out the fact that there was as yet no job description. It was enough to bring Taylor on board.
The saved money, perhaps temporarily so, will go to the LDFA reserve fund, which is separate from the city’s budget.
Related to the LDFA budget amendments – via its contractor, SPARK – was Amendment #8, which allocated an additional $25,000 from the prior year’s economic development fund balance [created in order to pay for Google's parking spaces] to provide SPARK with discretionary funding to promote economic development in the Ann Arbor area. That passed unanimously.
Project Grow: The discussion was thorough on Amendment #7, to allocate $7,000 from the general fund park operations budget for contracted services to Project Grow instead. In the end it did not win approval. Its sponsor, Sabra Briere, fought hard for it, citing a citizen survey of her constituents that showed strong support for the program, even among respondents who did not garden with the nonprofit. Hohnke had a larger vision in mind that involved the city providing infrastructure elements, but not cash. Greden didn’t want to accept the “ruffles” around the edges of the parks that Sue McCormick, director of public services for the city, described as possible when the contracted services budget for light trimming was reduced.
After first indicating his opposition to funding Project Grow, Taylor voted for it. In opposition, he had cited his understanding that Project Grow had applied for and been rejected in the human services funding competition. Briere clarified that Project Grow had not applied as a part of that set of allocations. But Taylor’s vote was not enough.
Parking Meters: There was a late amendment brought forward by Sandi Smith (Ward 1), which required a brief recess in order to formulate, to forestall the implementation of the city’s plan to introduce parking meters into residential areas in the near downtown area. Confusion prevailed for much of the discussion. Smith herself apologized for what she described as the “circus-like” manner in which the resolution was introduced.
Part of the plan at one point seemed to be for the Downtown Development Authority to guarantee any lost revenues by a possible delay in deploying the city’s meters. Higgins expressed concern: While Smith does serve on the DDA board, she’s not in a position to speak for DDA funds, and the council should not commit to a proposal if the DDA has not voted on the issue. [Editorial Aside: That will strike members of the DDA board as ironic, given the assumption of an extra $2 million in the city's FY 2011 budget plan paid by the DDA – which the DDA has not voted on. And yes, on the council side, the quick reply will be that it's just the budget plan, that's why we just call it the budget plan, not the budget, and there's time to sort it all out before FY 2011 decision time.]
Mike Bergren, with field operations at the city, assured council that there would be kiosks (instead of meters) deployed as appopriate to the DDA’s rollout of their kiosks.
Project Already Paid For: The first amendment proposed was actually Amendment #3 in the packet, and it was, as its sponsor, Leigh Greden (Ward 3) put it, “an easy one.” It involved eliminating $85,000 from the general fund community services area administration budget for FY 2010, because the project for which the money had been allocated had already been paid for out of FY 2009′s budget – through a resolution that very same evening. That project was a capital and operating needs assessment for the housing commission.
Present: Sabra Briere, Sandi Smith, Tony Derezinski, Leigh Greden, Christopher Taylor, Margie Teall, Marcia Higgins, Carsten Hohnke, John Hieftje.
Absent: Stephen Rapundalo, Mike Anglin.
Next Council Meeting: Monday, June 1, 2009 at 7 p.m. in council chambers, 2nd floor of the Guy C. Larcom, Jr. Municipal Building, 100 N. Fifth Ave. [confirm date]