In his introductory remarks, Bill Kinley joked that this was the first mayoral debate – and possibly the last ever – held at University Commons, a condominium community for people over 55 that was founded by University of Michigan faculty. They’d have to see how it turned out, he said.
Kinley, a University Commons resident and local developer, moderated Monday’s event, which drew about 50 people to listen as incumbent mayor John Hieftje and challenger Patricia Lesko answered questions for an hour on a range of topics, from Argo Dam and Fuller Road Station to the city budget and possible income tax.
It’s the latest in a series of exchanges between the two candidates, as the Democrats head into next week’s Aug. 3 primary election. [See Chronicle coverage: "Ann Arbor Forums: The More, The Mayor-ier" and "Ann Arbor Dems Primary: Mayoral Race."]
After introducing the candidates, Kinley cautioned that the residents there are “a group of wordy people.” They know that “platform” and “platitude” derive from the French word “plat,” he said, “so if you can keep platitudes to a minimum, you’ll find the reception here is much more responsive.”
Each candidate was given two minutes to answer the question. The first person who answered was also given the option of an additional one minute response. Questions had been developed by Kinley and the program committee for University Commons.
Question: Ann Arbor is known for its parks, but lacks adequate funds to maintain them. What is your position on selling the Huron Hills golf course or other designated parkland, in order to raise funds for park maintenance?
Lesko on Selling Parkland
The question contains a fallacious assumption, she said – that the city doesn’t have enough money to support its parks. Lesko said she used the word “support” deliberately, because that’s what the city should do. The current administration, however, is under the impression that some parks are “bloodsuckers,” she said, sucking the life blood out of the city’s $300 million budget. There’s a belief that the parks need to support themselves, that they’re “deadbeats.” That’s not the case.
There is a millage for parks and a greenbelt millage, she noted – a double commitment to supporting parks. If she were mayor, selling Huron Hills would not be an option. It’s being made unprofitable by an accounting sleight of hand, she said, and that’s not acceptable. It’s an historic golf course.
Lesko said that she doesn’t golf, but she swims, bikes, kayaks and does a variety of recreational activity. This community should have a wide variety of sporting and recreational facilities available, that are supported by taxpayers. The city shouldn’t have to raise revenues to do that – residents pay property taxes that are already relatively high, she said.
Hieftje on Selling Parkland
Hieftje said he would never advocate selling the golf course, and that the city is managing the parks pretty well. The mowing schedule has been changed from 14 days to 19 days, he noted, and unfortunately there’s been more rain so the grass has been growing faster and people can see the difference.
He pointed out that councilmember Stephen Rapundalo, who attended Monday’s forum, has been working with a golf task force to turn Huron Hills around, and it’s becoming more profitable. Hopefully, he said, it will get to the point where it’s standing alone, the way it’s supposed to be. Otherwise, he said, parks continue to do well. He noted that the city and the state are in the midst of the worst financial crisis since the Great Depression.
His advocacy for parks has been well recognized, Hieftje said, noting that he won the Local Elected Official of the Year award from the Michigan Parks & Recreation Association. The city’s park system and open space around the city has expanded more since he’s been mayor than perhaps it has under any previous mayor, he said. They’ve done a great deal to grow the park system and take care of it. Much of the parkland that’s been added has been natural areas, like Bluffs Nature Area – areas that need less maintenance, he said. Ann Arbor is a city that loves its parks, he concluded, and it will stay that way for a very long time.
Lesko Rebuttal on Selling Parkland
Right now, the city is entertaining a notion to issue a request for proposals (RFP) to privatize Huron Hills, Lesko said. Councilmember Rapundalo sits on that committee, she noted, adding that she attended one meeting at which the RFP was discussed. Lesko said she couldn’t support issuing an RPF to privatize Huron Hills or any golf course or other recreational facility. Again, in Ann Arbor, residents support the parks with their tax dollars, she said. The current rhetoric is that the parks are subsidized, she said. “Again, that’s fallacious.”
Question: Will the city be able to retain staff levels, including essential workers like police and firefighters, and stay within budget for the coming year? What is your solution for adequate staffing within the present budget constraints. [Kinley noted that the city is in active negotiations with police and firefighter unions, which are operating under a temporary reduction agreement.]
Hieftje on Staffing Levels
Hieftje said he doesn’t think there’s a city budget in Michigan that has as many police officers and firefighters as it used to. Cities across the state have needed to make changes. Ann Arbor has the correct number of police, he said, and the correct number of firefighters. Hieftje reported that Ann Arbor’s police chief [Barnett Jones] told him the force could remain a pro-active one, given the current staffing levels. No police officers were laid off, Hieftje said, though a few positions were cut.
Crime is down 15% since 2002-03, which is quite remarkable, Hieftje said, given that we’re in the middle of a very tough economy. The city has moved in a good direction, he said.
Regarding firefighters, the council asked the fire chief to address three criteria, Hieftje said: 1) keep all the fire stations open, 2) ensure that an adequate number of firefighters will be available to perform rescue, which is to get four firefighters on the scene without affecting the current response time, and 3) ensure that 18 firefighters can get to the scene quickly enough to maintain the city’s insurance rating. Hieftje also noted that they’ve been enhancing mutual aid agreements with other communities, like Ypsilanti and Ypslianti Township, that factor into these scenarios.
It’s important to realize that there are 70% fewer fires now than there were in 1970, he said, due to things like improved building codes and sprinkler systems. In fact, the city’s fire department hooks up to a fire hydrant on average only 10-12 times per year, he said. Large fires do occur, but they’re quite rare. The fire department is like an insurance policy, Hieftje said – you need to have it in case you need it. The city also has an excellent ambulance service, he said.
Lesko on Staffing Levels
Lesko said she did a shift at the fire station. What she learned is that the fire department can provide 18 men within 8 minutes to exactly 24% of the city. “That is a circle around the main fire station,” she said. “You are out of that circle,” she told the audience. She and her children also live out of that circle, she said, and it’s not acceptable.
Yes, it is insurance, Lesko said, and at the moment the city is carrying major medical, knowing that at any moment they could get a very serious disease. How does the city fund core services like police and fire? she asked. They need to realize that services are being cut to fund other kinds of projects, she said, such as the Fuller Road “parking garage.” She contended that $900,000 for that project is coming out of the general fund – that could pay for several firefighter positions.
Lesko also referenced Hieftje’s statement that crime is down 15%. What does that mean? she asked. There are various categories of crime, like arson and larceny. To say that crime is down 15% is like cotton candy and rainbows, she said – you have to look at the various kinds of crime to understand what it really means. The president of the police officers union told her that crime is down because there are fewer police officers to report crime to, she said.
Officials never compare Ann Arbor to other cities its own size, Lesko said. If they did, they’d find that crime in those cities is down more. She said she’s not sure if it’s because they have more police, but they need to have an honest discussion about it.
Hieftje Rebuttal on Staffing Levels
“I tend to listen to the police chief and the fire chief more than I do the union chief,” Hieftje said. That’s a better way to go, as the city forms its policies for the long term, he said, noting that in the fire department, the fire chief is the only member of the department who’s not in the union.
He said that they have compared Ann Arbor to other cities – Lansing, for example, is almost the same size, and Ann Arbor’s crime rate is considerably lower than Lansing, he said. Crime in Ann Arbor has been low for a long time, and it continues to go down, he said.
Hieftje noted that at one time, the city used to cover the University of Michigan campus. Now, UM has a police force of 50-55 officers. Hieftje said that when he became mayor, the city had the same number of officers as they did when they were responsible for UM. Changes have been made that bring the number of officers more in line with current responsibilities, he said.
Fuller Road Station
Question for Lesko: The city and UM are developing a transit station on Fuller Road on the site of a parking lot that the university leases from the city. The lot is on land that’s designated as parkland. The university will continue to pay the city for use of the parking structure on the site, and is sharing costs of construction. The structure is geared toward ultimately being the site of a train station. You’ve been critical of this project, based on the leasing of parkland. The Sierra Club, one of your supporters, has also been critical of that agreement. Please expound on what you find unappealing about that project.
Lesko on Fuller Road Station
Lesko began by noting that the city’s park advisory commission (PAC) has also been critical of the project – some PAC members have asked very pointed questions about it, she said. Lesko said she’s not critical of transportation. She lived in Rome for three years, and she often takes the bus and rides her bike – her family has just one car. She’s a proponent of non-motorized and alternative transportation.
Rather, she said she’s critical of putting a parking structure on parkland, because in 2008 Ann Arbor voters approved a charter amendment that gave voters control of the disposition of city parkland. The long-term lease of the Fuller Road site is a defacto sale, she said, and it’s been called that by members of PAC. It “circumnavigates our right to vote,” she said. The Sierra Club came out against it before she did, and she agrees with them and with PAC.
The university has space on its own property nearby, she said – on the helipad, for example. If the university needs more parking, they have 600 acres on north campus, she said. They built the Arthur Miller Theatre on what used to be a parking lot. Now, they want to build a parking deck next to the river, on parkland. If the citizens of Ann Arbor would vote in favor of that, she said, then it would be clear: “I’m always in favor of referenda.”
Hieftje on Fuller Road Station
Fuller Road presents the city with an amazing opportunity, Hieftje said. He noted that PAC members aren’t against the proposal, but they’d like to ensure that they see more revenue coming from the user fee that UM would pay. That hasn’t been decided and he said the city is willing to take up that discussion. [Selected Chronicle coverage: "Hieftje Urges Unity on Fuller Road Station," and "Park Commission Asks for Transparency."]
It’s perhaps the most unique location in the state for a transit center, he said. They’ve been working very hard with state and federal officials on bringing east/west rail to Ann Arbor. The federal government has already dedicated $40 million to a high-speed rail project to fix the tracks in the Chicago area. Rail is coming this way, he said – Ann Arbor has been working with SEMCOG and the Michigan Dept. of Transportation (MDOT) to bring commuter rail to the city. The Fuller Road site is near the UM medical complex, where 18,000 people go to work every day, plus another 6,000 visitors. It’s probably the most concentrated employment center in the state,he said, and no other site in Washtenaw County fits the bill for a rail and transit center.
The university does need parking, Hieftje acknowledged. They just added a new women’s and children’s hospital, and they plan to hire 500 new workers every year. It’s the city’s largest employment center, he noted, and the fastest growing. It will be essential for the future of the community to have rail. We’re facing a carbon-challenged future, he said, one in which gas prices will go up. The site has been a parking lot since 1993, Hieftje said, but it’s not being sold or leased. It’s going to be used by several other entities, he said. Amtrak hopes to be there, he said, Greyhound would like to be there, and the AATA is working as a partner with the city. It will put the city on the track to anywhere, Hieftje concluded, including the airport.
Lesko Rebuttal on Fuller Road Station
Lesko said the mayor must have missed the PAC meeting where Eli Cooper, the city’s transportation program manager, told commissioners that Greyhound has backed away from participation. There are no trains, she said. SEMCOG has said that the cost per rider and the projected number of riders doesn’t work out for Ann Arbor to be able to qualify for funding that it needs, she said.
The city is building a parking garage for the university, and some of the money for it has already been paid from the general fund, Lesko said. In the meantime, the city has lost firefighters and services have been reduced. If the university needs a parking garage – and she’s sure they do – as mayor, Lesko said she’d partner with UM and see if they can reduce the number of commuters to the university and Ann Arbor. That’s the crux of the problem, she said. It’s important to reduce the number of people commuting into the city, which has 1,700 empty houses.
Question for Hieftje: You’ve been very supportive of “densification,” after the successful adoption of the greenbelt millage. The idea was that the greenbelt would form a donut of preserved land around the city, while the city would have more development and go vertical. However, you and council have been less than supportive of some specific projects downtown, such as the hotel proposed at the corner of Washington and Division [Metro 202], and more recently, of The Moravian and Heritage Row projects, which have caused a great deal of turmoil. Explain your feeling about downtown density and how the city can move forward in reaching that goal.
Hieftje on Downtown Density (plus Fuller Road Station Detour)
Hieftje said he has been supportive of downtown density, noting that the city recently completed a complete rezoning of the city. For the first time, there’s a height limitation of 16 stories, he said. The whole process took about six years and had incredible public input, he said.
The Washington and Division project is going back a few years, he said. [“I have a long memory,” Kinley quipped.] Council approved it, he said, but he wasn’t in favor of it because it didn’t fit the site. The Moravian actually isn’t in the downtown, he said. It was a large, boxy apartment building in an area that will eventually be redeveloped. But if they’re going to accept a building in that area, it should be more attractive, he said.
Hieftje then circled back to the question about Fuller Road Station, saying that the federal government just awarded $30 million to Dearborn for a new train station, because they’re convinced that rail will be a reality in the future. Battle Creek received about $10 million for its station. Cars for the new commuter rail are being refurbished, he said. The exact same track improvements in the Detroit and Chicago areas will clear the way for commuter rail. That means the Ann Arbor area might be looking at a future similar to a European city, he said, where you have high-speed rail that takes you far distances, plus commuter rail. That’s what will open up possibilities for transit-oriented development, he said, especially for areas of town like Broadway Village.
Lesko on Downtown Density
Sometimes, Lesko said, there’s a myopic obsession with downtown. She asked how many in the audience go downtown regularly, then said that she bikes and takes the bus downtown regularly. However, she said she’s knocked on about 5,000 doors and she’s met thousands of people who don’t go downtown.
Lesko said says she lives near the blight on Broadway, and she’s been knocking on doors near the blight of Georgetown Mall, too. The south side of Ann Arbor is looking more and more like Flint, she said, while people obsess about downtown. We need to take care of downtown, but the city is more than that. The city does need economic development and investment in the downtown – that’s crucial to the growth and sustainability of the community, Lesko said. But in terms of allowing denser development in the buffer neighborhoods – where The Moravian would have been located – we must be careful to protect the downtown, the buffer areas and the city as a whole. She said her administration would focus on the big picture.
Hieftje Rebuttal on Downtown Density
There certainly is an effort to look at the whole city outside of the downtown, Hieftje said. He pointed to the Washtenaw corridor study as an example of that – the city is working with the county and other municipalities on that. There are other areas that he’d like to see redeveloped, and they’ll see that when the economy comes back.
Hieftje said it’s important to remember that the city is just coming out of the worst time financially in several years. Lenders are very reluctant to lend for new construction, although there might be a couple of projects coming along soon. Zaragon Place 2 is one development that’s already been approved by planning commission.
He again mentioned the city’s effort to put in place design guidelines. A task force is working on that, he said, aiming to set some parameters on design. There shouldn’t be any more ugly buildings in the city, he said, adding that he understands it’s sometimes in the eye of the beholder. Still, they were coming up with guidelines to make sure buildings are attractive and withstand the test of time. It should be coming to city council later this year or early next year, he said.
Question: Argo Pond is formed by a dam, and within the past few years, the state has said that parts of the dam should be repaired or that the dam should be removed. That’s caused a lot of controversy. Crew teams actively use it for practice, and others use it for recreation – these groups advocate repairing the dam. But the Huron River Watershed Council, one of the mayor’s supporters, has strongly recommended that the dam be removed. Now, the city has asked for an estimate for repairing the dam, and HRWC has asked that an estimate be made for removing the dam. What’s your position on the Argo Dam issue? [Background Chronicle coverage: "Two Dam Options for Argo."]
Hieftje on Argo Dam
For quite a while, the city’s position has been that there isn’t really anything wrong with the dam, Hieftje said. The state has been pursuing a different tact, he said, and had some problems with the raceway [headrace] and earthen embankment. From an environmental standpoint, there’s a limited amount to be gained by the removal of the dam, he said, adding that he’d be very happy to take a comprehensive look at all the dams on the river.
The dams at Gallup and Argo don’t produce electricity now. But the city’s energy commission, on which he also serves, has recommended keeping Argo Dam – they see a time when the way that we use energy and what we pay for it will change, he said. In the future, it might be profitable again to install turbines at Argo and generate electricity there.
But the rowing community and others who use the pond are also important constituencies, Hieftje said. If you look at high school sports, rowing is the most popular one, he said, and local teams have won regional and even national competitions. He said he’s in favor of keeping the dam, and of working up a comprehensive plan for the Huron River because it’s a great asset, it’s water is getting cleaner and it’s looking better all the time.
Lesko on Argo Dam
The question contains some fallacies and myths that have been circulated, Lesko said. One is that Argo Dam was ever in danger of failing. She said that Laura Rubin, the head of the Huron River Watershed Council, wrote an op/ed in the Ann Arbor News – the first sentence stated “Argo Dam is failing.” That wasn’t true, Lesko said. Then we were told the embankment was failing, she said, but that wasn’t true either.
Lesko said she was told by a park advisory commission (PAC) member that city staff pushed very hard to convince PAC that Argo Dam needed to be removed. “This is city government at its worst,” she said. We were told the pond wasn’t adequately oxygenated – that wasn’t true. There were members on PAC who became so frustrated with the faulty research being presented that they did their own research, Lesko said, and “decimated these notions.”
The state has been trying for years to get the city to do one thing, she said: maintain the toe drains. She likened it to the Larcom building [city hall] and its leaky roof that wasn’t fixed, or the Stadium bridges, which the city has known to be in dire straits for years, she said. The toe drains reflect a pattern of the city government not tending to its capital assets. Without the right people at the helm, she said, the city won’t take care of its assets.
Lesko said she kayaks almost every day between Bandemer and Argo. She said she’s not in favor of removing the dam, and part of the reason is that it would expose parkland [as the pond is reduced in width]. Based on the precedent of the Fuller Road parking garage, that newly-created parkland could be leased, she said. So she didn’t want to do that until the city closes the loophole on the charter amendment regarding the sale of parkland.
Hieftje Rebuttal on Argo Dam
Referring to Lesko’s responses, Hieftje said the question apparently has ranged far and wide, to include capital improvements, so he’d go that route too. A study recently came out that shows Ann Arbor has some of the lowest water and sewer rates in the state. At the same time, the city’s water wins awards almost every year as the best water in the state. The city is increasing its water rates about 3-4% per year, he said, while other cities are making often double-digit increases. At the same time, Ann Arbor has been saving money for a $140 million improvement on the sewage treatment plant, and some of the lines leading to it. This system was built in the 1930s with money from the Roosevelt administration during the Depression, Hieftje noted, when they were putting people to work on project, much like the federal government is doing today.
Water pipes were quite neglected in the 1980s and 1990s, Hieftje said, but the city has been replacing pipes at a pretty regular rate over the past few years – that’s another capital asset, he noted. They’ve also replaced two of the city’s aging maintenance facilities [on North Main and 415 W. Washington] with a brand new maintenance facility. “So there is a lot of work going on in taking care of the city’s infrastructure,” he said.
The county ended the city’s lease at the county courthouse, he added – because the county wanted to move their juvenile court into that location. So the city had to build a new police station and courthouse, he said, which should be finished on time by the end of the year.
Why Ann Arbor Is Lovable
Question: Recently, once again, the city has received a “best of” award. Ann Arbor has received many awards through the years. What makes this city so doggone lovable?
Lesko on Why Ann Arbor Is Lovable
Lesko described how she’s lived here for 26 years, first coming to attend UM as an undergrad. She lived in Rome, Italy but came home again. Her family has lived in Michigan about 170 years. The quality of life here is indescribable, she said. Her family lives near Bandemer Park – they can load up their kayaks and be in the water in five minutes. She said she rides her bike downtown, though the bike lanes are in a “sorry state.” She takes the bus, just like she did when she lived in a European capital and took the bus everywhere. Having a top-notch bus service is a great goal. She said she had a wonderful discussion with the CEO of the Ann Arbor Transportation Authority [Michael Ford] about her vision for Ann Arbor’s bus system.
But above all, she said, the quality of life is tied to where she lives. It’s a neighborhood they chose because it’s racially and socio-economically diverse, she said. Unfortunately, there aren’t many sections like that. The city needs to maintain its racially diverse and socio-economically diverse housing stock. As a native Michigander, she said she can’t think of living anyplace else. “The bumper sticker says it all: I’d rather be in Ann Arbor.”
[Editor's note: Hieftje was not asked to respond to this question.]
City Income Tax
Question: Like most cities in the state and nation, Ann Arbor is fiscally challenged. We have declining revenues and increasing expenses. One option for stabilizing the city’s long-term revenues is to change to a city income tax, balanced by a reduction in property taxes for residents. Is a city income tax the proper solution for helping to maintain the fiscal stability of the city?
Hieftje on a City Income Tax
Hieftje said he’s been thinking about this for a long time, and every once in a while a very robust conversation will pop up about this issue. The income tax would be different than the other cities in Michigan that have it, he said, in that it’s in Ann Arbor’s city charter that if a city income tax is passed, there would be a 6 mill decrease in property taxes.
Right now, 28% of a resident’s property taxes go to the city, he said. Property owners would get a break, and for many people, that might offset the income tax. But the income tax doesn’t have an even impact, he said. Renters, for example, likely wouldn’t see any benefit, because landlords wouldn’t necessarily pass on the property tax savings to them. It also shifts taxation from businesses to a greater burden on individuals – that’s something to consider.
He said he’s also worried about encountering a situation like one faced by Grand Rapids, which has had an income tax for many years. It’s a thriving city, he noted, often held up as the best on the west side of the state – it’s just about twice as big as Ann Arbor. Yet in January they cut 140 jobs, including some police and firefighters. They passed an increase in the income tax, to bring in another $8 million, yet they’re still struggling. The problem is that revenues from the income tax are falling at the same time as their property taxes are falling. When you implement an income tax, you introduce a new variable, he said.
Lesko on a City Income Tax
Pointing to a magazine she had in front of her, Lesko said that it reports the population of Grand Rapids is 778,000, which she noted was not slightly more than twice the size of Ann Arbor, as Hieftje had stated. [Based on the 2000 census, the city of Grand Rapids has a population of 197,800 – the Grand Rapids metropolitan area, to which Lesko was likely referring, has a population of 778,009.]
Lesko then read an excerpt from an article in the magazine, which described Grand Rapids as a thriving city. Ann Arbor should be thriving equal to Grand Rapids, she said, because we pay property taxes that are some of the highest in the state.
She said she agreed with many things that Hieftje cited as reasons why a city income tax isn’t a great idea, including the fact that it pushes the tax burden from businesses onto individuals. She said that as an individual, she would never vote for a city income tax. But as the city’s next mayor, she said, if there’s consensus on council to put it on the ballot, “I will bring it to you, and you will decide.”
Lesko noted that councilmember Stephen Rapundalo [who represents Ward 2 and who attended Monday's forum] has supported an income tax, and that there are reasons for it. But the question again contains some myths, she said. The city is not fiscally challenged. Pfizer left the city with 4.68% less revenue – that’s the glass half empty view, she said. The glass-half-full view is that they have 95% of their property tax revenue left. The city has increased fees for water and sewer – those increases are among the smallest because the city started with higher fees, she said. It’s important to tell the whole story, she said.
Hieftje Rebuttal on a City Income Tax
The water rates are still some of the lowest in the state, Hieftje countered. And regarding population size, there’s a difference between the metro area and the city itself.
Returning to the income tax question, it’s a discussion that comes up occasionally, and he’s concerned about the “double hit” of getting into a recession and seeing both falling income tax and property tax revenues. The other thing that’s happening is that the state revenue-sharing cuts have been deep, he said. The city is getting close to $4 million less than they used to in 2002. He said they were hopeful that state revenue-sharing would stay flat over the next two years, and not decrease.
If an income tax were to be accepted by the voters, there would need to be a considerable education program, he said, because most people don’t understand that they’d get a 6 mill property tax break. He said he’s certainly not recommending that the city needs more revenue at this time. The city has been doing an admirable job of keeping all the balls in the air while moving forward on a number of initiatives, he concluded.
City Income Tax (Redux)
[Later in the meeting, the candidates were asked a follow-up question by Don Kaul, a University Commons resident and columnist.] Question: In your responses to the city income tax question, neither of you mentioned the people who live outside the city but who earn their living here. Is it possible to single out those people for a tax?
Lesko on a City Income Tax (Redux)
In going door to door, Lesko said she ran into two professors who teach at Wayne State, and they made the same kind of argument. It’s a valid argument. As an individual, she said disagrees with that vehemently. The city has adequate revenue right now to fund superior services, excellent recreational facilities, and superior infrastructure, she said. At their last mayoral debate, state Rep. Alma Wheeler Smith talked about this, and Lesko said she agree with her – that’s how you build a city. Do we need another tax? As an individual, Lesko said she’d say no. But as an elected official, if there’s a will within the citizenry and council to examine it more closely, she would support that and bring it to the ballot for a vote. But from her perspective, the city doesn’t have a revenue problem, she said. The city has a spending problem.
Hieftje on a City Income Tax (Redux)
In Michigan, local governments can impose a property tax and an income tax, Hieftje said. The income tax would need to be 1% for residents and .5% for non-residents. “You don’t get to choose – it’s a package deal,” he said. What’s more, Ann Arbor is the only city that would require a 6-mill cut in property taxes, if an income tax is levied. Even without that, the city does well, Hieftje said. He noted that he wouldn’t trade places with any mayor – and that he makes that statement often. Ann Arbor’s services are better than most places in Michigan, he said, and Ann Arbor’s millage is slightly lower than it was in 2000. There was a failed millage in Troy recently, and now that city is eliminating a third of its workforce, he said. Royal Oak is struggling too. So far, throughout this long economic malaise, Ann Arbor continues to hold up well, he concluded, and they are not proposing a tax increase.
Lesko Rebuttal on a City Income Tax (Redux)
Lesko noted that this is something Hieftje says all the time – that Ann Arbor is doing better than Troy, Royal Oak and Grand Rapids. We should be, she said, because we pay more. They’re paying less and getting fewer services. We’re paying more, and getting fewer services, she said, and that’s a fundamental difference.
Payment In Lieu of Taxes (PILOT)
Question for Lesko: On your blog, you’ve suggested that the city use your ideas for increasing revenues and decreasing expenses. One of those suggestions is to ask the largest nonprofits to make voluntary payments in lieu of taxes – what’s known as a PILOT. Which nonprofits should be approached?
Lesko on PILOT
Boston and Providence, Rhode Island – cities which host multiple universities, she noted – have voluntary PILOT programs. Right now, UM pays the city about $8.8 million for water, sewer and other services, which works out to be about $2,200 per acre of land it owns, she said: “That’s a low charge for the university.”
Cities that go about implementing PILOT programs generally hire consultants who have done it elsewhere, Lesko said. She described the process like this: The mayor goes to the university and asks for a voluntary payment. When that overture is rejected, then the mayor goes to the state legislators and suggests putting a tax on tuition. Then, the consultant comes in and crafts a program. Lesko said that Providence gets “millions and millions and millions of dollars” in PILOT payments, as does Boston.
Lesko said that Hieftje often states that 40% of the city’s land is off the tax rolls – that’s a little misleading, she said. The figure includes parkland, which was never intended to be on the tax rolls. The city wouldn’t approach religious groups or small nonprofits for PILOT, she said, but could approach large nonprofits – a consultant would come in and design a program to identify those. But it won’t be done unless there’s the political will to do it, she added. “You can’t win the lottery without buying a ticket. We will have a PILOT program if there are people in place who support a PILOT program.” There hasn’t been a PILOT program because there aren’t people who are willing to go forward and design one, she said.
Hieftje on PILOT
“I have yet to hear of a city that has a state university that makes such a payment,” Hieftje said. Certainly, UM wouldn’t be happy about that. It’s a question that’s been studied by city attorneys probably for 130 years, he said, trying to figure out a way for the university to make a PILOT payment. City attorneys have said there’s no way to force the university to do that.
State legislators are also against it, he said. Hieftje asked the audience to picture themselves as a legislator from Traverse City. UM is, in reality, a university for the state of Michigan, and the state is giving hundreds of millions of dollars to UM. Under a PILOT program, UM would in turn give some of that money to Ann Arbor. If you’re from Traverse City, you might say, “If they’re going to give money to Ann Arbor, why not give it to Traverse City too?” Hieftje noted that there are state universities throughout Michigan, and this could set a precedent for giving money back to their local communities. It wouldn’t be long before the rest of the legislature asked “What’s going on here?”
Cities where universities are located have a certain benefit, he said, such as a stable employment base. Does the city want to pursue something that every legal authority he’s talked to, and every state legislator he’s talked to, continue to say isn’t going to happen? It makes for a really good talking point, he concluded, and there are private universities that are doing it – but not in Michigan.
Lesko Rebuttal on PILOT
Lesko pointed out that Hieftje was quoted in the newspaper saying he’s been trying to get a PILOT program going and trying to negotiate payments with the University of Michigan for a long time. “So which is it?” she asked. This isn’t supposed to be a “gotcha,” she said. It’s looking at what they’re planning to do at a particular time.
She described her plan as a can-do plan, with a can-do attitude. If the city attorney says they can’t do a PILOT program, do they stop there? “Is that what you do with your children? Is that what you taught them?” No, she said – you tell them not to give up. This is the lifeblood of the city, she said. Do you want a mayor who will stop the second somebody says you can’t do it? “I’m not that kind of manager in my own company, I’m not that kind of a CEO, I’m not that kind of a parent and I surely won’t be that kind of elected leader. A can-do attitude is what we need, and I have it.”
Question: Recently there have been projects that have been denied by city council after a process. A developer submits a plan to the city for review. The city planning staff reviews it and recommends it to the planning commission, which is appointed by council. It reviews the project and passes along a recommendation to city council. These are for real estate developments. In the city code, there is a requirement that if a certain percentage of residents within a certain radius of a project ask for it, they can demand that the project get approval by a super-majority of city council – or 8 out of 11 votes, instead of the standard 6-vote majority. This process happened recently on two projects [The Moravian and Heritage Row], which were both recommended by staff and planning commission, but which were rejected by council because they didn’t reach the 8-vote majority. Is this a fair process? If not, how would you modify the super-majority rule to be more representative of a fair process to encourage development and not discourage good development?
Hieftje on Downtown Development
Hieftje clarified that The Moravian failed on a 6-5 vote, and Heritage Row vote was 7-3, with one councilmember absent. [Heritage Row initially failed on a 7-4 vote at council's June 21, 2010 meeting. It was brought back for reconsideration at a subsequent council meeting, where it failed by a 7-3 vote, with Mike Anglin absent. The Moravian was voted on at council's April 5, 2010 meeting.]
It’s important to distinguish between “by-right” developments and “planned unit developments” (PUDs), Hieftje said. By-right means that the developer, as a matter of law, meets the zoning requirements and has the right to build. A recent example of that is Zaragon Place 2, a 14-story building proposed for the corner of William and Thompson. He said he expects city council will vote for it because as a by-right project, they really don’t have much choice. City council doesn’t have a legal way to say no to a building – that’s why they need design guidelines, he said.
In contrast, a PUD requires special zoning for the site. Developers should all understand that when they bring a PUD, there’s no guarantee that it will be approved, he said. It ultimately comes down to a subjective opinion, and everyone on council can form their own opinion about whether the project meets the criteria needed to pass as a PUD, he said: Does it meet environmental standards? Does it have affordable housing? Is it a good fit for the neighborhood?
Lesko on Downtown Development
Lesko pointed out that the question was very specific: Is requiring an 8-vote super-majority fair to the developer? In terms of the current rules, it is totally fair, she said. If you want to change the rules, then there needs to be a discussion on that.
The city does need development, Lesko said. There needs to be an open and honest discussion about projects that come to council. The Moravian is a classic example, she said, “of a French farce without the wigs.” Ninety people lined up to speak at the council meeting on the night of the vote, then several councilmembers read their prepared remarks, she said. “What does that tell you? That they’d decided how to vote before they came in the room, right?” It was unbelievable to see the enthusiasm of people during public commentary, she said, and to see their commitment to participate in city government.
Lesko said the crux of the question is: How do we make neighborhoods and the developers that have projects in those neighborhoods have less antagonistic relationships? Because ultimately, the city does want development, she said. But letting planned unit developments into neighborhoods is an economic subsidy, she argued, because buying land in a neighborhood is less expensive than it is downtown. Zaragon Place 2 is a great development for that area, and they paid a premium for the location. The Moravian acquired several smaller parcels, then asked for a favor from city council, she said. When you ask for a favor, she added, sometimes you’re told no – that’s the problem. There needs to be a more honest discussion at council between citizens and councilmembers, she said, or council needs to say to developers that the city won’t give them exceptions. But antagonism is bad, and it’s something that needs to change, she concluded.
Hieftje Rebuttal on Downtown Development
The 8-vote super-majority is a very strong tool the neighbors can use to protect themselves, he said. Everyone can imagine living in a neighborhood and then having a large project come along that they might not want or that’s completely out of character with the neighborhood. If enough property owners agree that they want to protest it, that triggers the 8-vote requirement, he said. That’s the way it’s been set up for a very long time, Hieftje added, and he thinks it’s served the city well overall. The developer who brings a PUD before council should understand that it needs to meet the standards that councilmembers will hold it to.
Funding for Ann Arbor SPARK
Question for Lesko: An alphabet soup – DDA, LDFA, TIF, MEDC, SPARK. You know the question.
Lesko on Funding for Ann Arbor SPARK
Lesko said that she understood the question. The DDA is the Downtown Development Authority, she said, which was established to fight off blight in the downtown area. Some folks have questioned whether it’s outlived its mission. One of those folks was the city administrator, she said, who she contended in April put forth the idea of dissolving the DDA and taking the revenue in house.
The LDFA is the financing authority that provides money from local school districts to SPARK, as a contractor. [Ann Arbor SPARK is a nonprofit economic development agency.] At their last debate, she said, Hieftje stated that the state reimburses schools for that money. Then people “higher up the food chain,” she said – Alma Wheeler Smith, Jeff Irwin and Rebekah Warren – stood up and said the state’s not reimbursing schools for the money that the LDFA takes.
Lesko said that the Detroit Free Press did an exposé recently and said that in exchange for about $127 million in tax money, SPARK had created a “whopping” 900 jobs since 2006. “That’s not good enough,” she said. Going door to door, Lesko said she met a man who had an idea for a start-up and that he’d talked about it with Hieftje, who had told him to go to SPARK. SPARK said they’d help him write a business plan for $2,000. That’s a bad deal, Lesko said.
The city needs to encourage existing businesses. These are the people who have jobs now, she said. Fifty percent of start-ups fail after five years. She asked the audience whether they would invest their money knowing that they had a 50% chance of losing it all – she said she wouldn’t. The city needs to make Ann Arbor a magnet for existing businesses.
Hieftje on Funding for Ann Arbor SPARK
Hieftje said he’s a big believer in organizations like SPARK. When he’s in Lansing, other mayors are constantly saying they wished they had an organization like SPARK, he said. It’s renowned across the state for bringing jobs to the community, and they have a strong record of success.
[For the last question, Kinley flipped a coin to see who would choose the order of answering. As sitting mayor, Hieftje was allowed to make the call. He won the toss, and chose to answer the question first.] Question: How would you suggest that the city and its council and citizenry move forward in the two years following the November election?
Hieftje on Looking Ahead
The city needs to continue to do what they’ve been doing – it’s worked very well, he said. The city has made some dramatic reductions in its workforce, but has also added a lot of technology to bring efficiencies. One example is water meter reading. In the past, someone physically went to each meter, Hieftje explained. Now, the meters send out signals that can be read via computer.
He noted that the city used to have 21 department heads, and now has just five “bubbleheads” – a term derived from the city’s organizational chart. There’s been a large middle-management reduction. Conservatively, the city is saving about $15 million annually from these changes, he said. They’ll have to continue to “sharpen our pencils,” he said – everyone is working harder and being more frugal. That’s why the millage is slightly lower than it was in 2000.
Taxes are certainly not low in Ann Arbor, Hieftje said, but the city has managed to get this far without a millage increase. Just 28% of local taxes go to the city, he said. They could make some considerable cuts in the city’s 28% and taxpayers still might not notice that they were paying that much less. The city will continue to enforce the efficiencies they’ve put in place, he said, and continue to make that better.
Lesko on Looking Ahead
It sounds great, Lesko said, but it’s not the whole story. She noted that Hieftje stated that the city saved $15 million. But there are 200 fewer employees, and the city is paying about the same for personnel. Where are the savings? she asked. Folks who retire go into the city’s retirement system – there’s a $190 million unfunded pension liability, she said: “That scares me.” Pension payments are not optional.
The city needs to go forward by realizing real economy, she said, by tackling real non-essential spending, and by realizing that over the last decade, they’ve had leadership that’s been concerned with re-election. Lesko said that she’d have to take a leave of absence from her job to be mayor. She noted that she has small children, but this is important to her. She was raised by someone who believed that democracy should be participatory. Citizens need elected officials who aren’t going to tell people what they want to hear. They need people in office who are willing to talk about the hard issues, she said, like the $190 million unfunded pension liability.
The city is hiring consultants and full-time temporary laborers, Lesko said, and paying them peanuts. Single moms are being hired as full-time temps time after time, and being denied membership in the union, and being paid peanuts. That’s how the city is realizing these economies, she said. She added that she is not willing to head a city that takes advantage of people, and creates and perpetuates poverty. They have to talk about the hard issues, she said, and they can do it, as long as they have open, honest and transparent discussion.
Hieftje Rebuttal on Looking Ahead
Hieftje said he doesn’t know any single moms who are being paid peanuts – he hasn’t heard about that. And the city has a plan to deal with the pension liability, he said. Fortunately, it’s not due next week, he noted – not for a long time. He likened it to having a mortgage, with time to pay it. The city has a plan that its CFO has confidence in, he said. He acknowledged that financial markets have been down, and that certainly affects pensions.
He thanked the audience and organizers of the forum, and noted that he didn’t answer the earlier question about why Ann Arbor is a great city. A lot of that has to do with the people who live here, he said, who are willing to give their time and talent to move things forward. Many people in the room have served in that capacity, he noted, and he appreciates that. He pointed out that Kinley had served on the city’s residential task force.
Ann Arbor is in a very good position, Hieftje said, as the economy improves and they move out of this recession. The city is ready to spring forward, perhaps more than any other in the state, he said. A program on PBS last year reported on some great things about Ann Arbor, Hieftje noted. He said the title of the program was “Ann Arbor: Michigan’s Life Preserver,” adding that the rest of the state looks at Ann Arbor to be that for the economy. He thanked everyone for their contributions to that as well.