Ann Arbor City Council Elections: Ward 5

In Ann Arbor city council races for the general election, Ward 2 and Ward 5 are the only two wards where more than one candidate is on offer to voters on Nov. 2. On the last Monday in September, the League of Women Voters hosted a combined forum for all candidates for Ann Arbor city council. The Ward 2 and Ward 5 forum took place at Community Television Network studios and was recorded – it is available online through CTN’s video-on-demand service.

The respective incumbents in Wards 1, 3 and 4 – Sandi Smith, Christopher Taylor, Margie Teall, who are all Democrats – are unopposed.

This report includes just the Ward 5 candidate responses – independent Newcombe Clark, Republican John Floyd and Democratic incumbent Carsten Hohnke. Ward 2 candidate remarks are reported in a separate acccount.

As stipulated in the city charter, Ann Arbor wards divide the city into roughly pie-shaped wedges. Ward 5 is a wedge generally covering the area between the 8 o’clock and 10 o’clock positions on the “city pie.” Each ward is represented on the city council with two council seats, one of which is up for election each year for a two-year term. Mike Anglin serves in the Ward 5 seat that’s not up for election this year.

The four questions posed by the League were confined essentially to two topics: the budget and parks. Candidates uniformly identified the most important challenge facing the city as the budget, and that fit thematically with a specific question about the budget. The remaining two questions focused on specific parks: Huron Hills golf course, which is currently the subject of a request for proposals for private management; and Fuller Park, part of which is a proposed location for a new parking deck to be built primarily for the University of Michigan, and which has a possible future as a train station.

The report is organized chronologically by candidate response. After the candidate responses, we offer some background on a few of the candidates’ remarks, including: the closure of one of the city’s fire stations, a tax “loop hole” identified by Newcombe Clark [about which he has issued a written clarificational statement], short- versus long-term public service, and participation in candidate forums.

Opening Statement

Each candidate began with a 1-minute opening statement.

Clark’s Opening

Newcombe Clark offered thanks all around: to the League of Women Voters for hosting, to CTN for use of the studio, and to the audience. He began the substance of his remarks by saying that he was humbled to be there to “interview for the job” of Ward 5 representative. He expressed his hope that over the next hour, the audience would learn a little bit more about him and some of his ideas that could “make this great town a little bit better.”

Some of his ideas, Clark said, were new and creative, while others would just seem like a common sense approach to tackling current challenges. He stated that there are two kinds of politicians: those who want to be something and those who want to do something. Clark promised that he’d work hard to do something. He said he was committed to running for only one two-year term, and said that he intended to donate his council salary [around $16,000 annually] to charity. He said he would add a new skill set to the leadership that already did a great job of serving the city.

Floyd’s Opening

John Floyd began with a series of questions: Have you ever wondered who will pay to park at the very bottom of the new Library Lot parking garage? Have you ever wondered who will pay for the bonds used to build the garage, if enough people won’t pay to park that far underground? Have you ever wondered why – when Ann Arbor has a bit more than half the number of police officers it had 10-15 years ago, and it’s short of cash – that this is the time that the city council chose to build a new police station? Have you ever wondered why the new station needs a $1 million fountain?

The questions, he said, may have reasonable answers. But over the last two years, he said, he had not heard the council ask probing questions about big-money issues. He concluded that he wanted to represent Ward 5 because he wanted to make sure that probing questions get asked routinely.

Hohnke’s Opening

Carsten Hohnke thanked the League of Women voters for organizing the forum. He noted that he was the nominee of the Democratic Party and had served Ward 5 over the last two years. He described himself as “gratified” by what they’d been about to accomplish together. He’d focused on working with the community to find solutions that impact people’s everyday lives, he said – keeping Mack Pool or the Westside Farmers Market open, improving pedestrian and cycling infrastructure, expanding the recycling system. These are things that make Ann Arbor “a better place for everybody,” he said.

Hohnke observed that cities across the state are facing historic budget challenges. He described himself as a businessman, a scientist and an economic development professional who understands that investments in public infrastructure are critical. He said that he looked forward to continuing to work to represent citizens and that he’d be honored to have their support.

Challenges

Question: What are the primary challenges facing the city council in the next two years and what strengths would you bring to that role?

Clark on Challenges: Property tax revenue – real estate experience

Newcombe Clark said that in the short term it would be difficult – as it has been for the past year and the past decade. What he could contribute in the short term, he said, is an understanding of the city’s main source of revenue, which is property tax revenue. Based on what he’s seen working in the real estate industry for the last 10 years is a city that has spent money, as the bubble has grown.

Now, the city has to figure out how to get that back in line, either by creatively finding new revenues – closing loopholes in the tax laws that we already have – or by finding a way to be more austere. In the next two years, we’ll see more painful decisions, he cautioned, but he promised to be honest about those decisions, both in terms of the condition of our infrastructure and the projections – both the “rosy and the scary.” He said that his financial experience in real estate and as a business owner would help.

Floyd on Challenges: Debt and its impact on services – accounting experience

John Floyd said that he agreed in part with Derezinski and Salvette – Ward 2 candidates at the event – who talked about providing services in the current economic climate as being an important priority and a big challenge the city faces. The level of debt the city has taken on, he cautioned, impedes the city’s ability to provide services.

What he could bring to the table to help solve the problem comes from his experience as an economist, and accountant and a public policy analyst, as well as his work in government, the private sector and the not-for-profit world. He suggested that the city needs to look at the acquisition of land by the University of Michigan inside the city – every time they buy a piece of land, the city’s tax base goes down, without a corresponding decrease in expenses.

Hohnke on Challenges: Budget – scientist, businessman, economic development professional

Carsten Hohnke said he thought there is no question that the continued pressure on the city’s budget would be the primary challenge in the future. Employee benefit costs are a problem faced by all cities across the country, he said. Finding ways to collaborate with regional partners, to leverage technology, and to make sure that the work force is flexible and coordinated will all be important.

In Ward 5 in particular, Hohnke said, we need to keep an eye on the advancement of the dioxane plume – he spends time with Gelman and the city staff to review that quarterly. He then repeated his description of himself from his opening statement as a scientist, a businessman and an economic development professional, as evidence of a background that would help with all the challenges the city faces.

Parks: Golf

Are Ann Arbor’s city parks under threat? For example, what should be the future use of the Huron Hills golf course?

Floyd on Golf: Citizen vote on Huron Hills

John Floyd stated that the future use of Huron Hills should be put to a vote of the citizens. The city has a plan now, he said, to lease the riverside portion of the park to private developers to raise money. Given the times we’re in, he allowed, “that’s not crazy.” But he said he feels it deserves a vote of citizens – that’s how it should be resolved.

Hohnke on Golf: Examine ideas for privatizing

Carsten Hohnke said he did not feel the parks are under threat in the way that Floyd did. Parks, like all areas of the city, are under budgetary pressure, he said. Mowing in parks is not as frequent, he said, but an effort was made to ensure that parks are maintained in a way that’s enjoyable for everybody. He described the city’s park system as “world class” and said that there’s a strong consensus across the community that we want to continue to invest in it.

With respect to Huron Hills golf course, Hohnke insisted there is no plan to lease land or to develop anything. There has, however, been some discussion by the city staff, he said – who understand the operations of golf at Huron Hills – to convert the front nine at Huron Hills to a driving range. That’s being examined, he said, by asking people for good ideas about keeping the parks funding at a level that’s appropriate.

Clark on Golf: Parks as capital assets

Newcombe Clark described the parks as a “unique form of capital assets” that the citizens own. As such, he said, we have a responsibility to be prudent with that asset. When a resident thinks about their lawn, they think about its size, how often they want to garden in it or mow it, and then plan accordingly.

The problem he sometimes sees, he said, is that there’s a zero-sum game when it comes to parks, where some people think the parks in their part of the city are more important than the parks in other areas. They then lobby hard to protect their parks in tough budget times. He said he believes in advocacy and in listening to people, but he also believes in inquiry. He hopes that all of the city’s capital assets are viewed as such. And as a capital asset, Huron Hills falls into that category. It’s common sense, he said, that if you have a park, you hope you can pay for it.

Parks: Fuller Road Station

Question: Is a transit station and parking structure an appropriate use of Fuller Park?

Hohnke on FRS: Fully supportive

Carsten Hohnke said that a multi-modal transit station as a replacement for a large cracked-asphalt parking lot that’s been there for 20 years would be a significant improvement. He described it as exciting and appropriate and a good investment in the future: the university will fund 75-80% of the construction; funds leveraged through the federal government will pay for the remaining cost; it provides Ann Arbor with an asset; it adds bus bays and pedestrian improvements; it provides a potential connection to the federal high-speed rail investments.

Clark on FRS: Who will handle this asset?

Newcombe Clark said that as a Downtown Development Authority board member, he has a “love-hate, enabling co-dependent relationship” with the city’s parking decks. He said he obsesses about them, and has a lot of questions about the proposed Fuller Road deck. He noted that the city does not have the best track record in running parking decks.

Until there’s a clear understanding of who will be handling the asset, he said, including reserving adequate reserve funds, concerns will exist. He said he also had concerns about the location. He allowed that something better is needed, but it’s not entirely clear how to connect the deck to the downtown, thus making it an asset for more than just the university. Basically, he said, “I want to know more.”

Floyd on FRS: Deserves citizen vote

John Floyd began by cheerily announcing that “I think that someday we may have rockets flying to other planets from that center, so I think we should call it an ‘interplanetary transit center.’” That’s about how likely he feels it is that we’ll see rail travel from that center. He said that one could make the case that Fuller Road Station is the greatest civic improvement since Rome built the Colosseum, but he still thinks that citizens deserve a vote on the use of their park land as the city charter calls for. Calling it a “lease” or a “joint use agreement” is not playing straight with the citizens of Ann Arbor and is “not Ann Arbor at its best.”

Budget

Question: Balancing the budget is a continuing challenge. Do more cuts need to be made – if so, what? Are there additional sources of revenue, if so what?

Clark on Budget: Short-term revenue by eliminating fraud

Newcombe Clark began by saying, “This is where I’m not going to make any friends in my profession.” He reported that few weeks ago at a bar, he and a colleague had put together a list of about $4.5 million in fraud. These are not people who are behind on their taxes, he said, but who have exploited some loopholes in the tax system that still exist for moving properties around without paying the taxes that are due. He suggested that if he and a colleague could identify $4.5 million “on the back of a napkin,” who knows how much else there could be. He called for a full audit of commercial properties, suggesting that they could find a lot of money that could help us through the short term. [Clark, on Friday, Oct. 1 issued a written clarificational statement.]

Floyd on Budget: TIF and UM purchases need a look

John Floyd said we needed to wait to see what revenue projections are before we can know what specifically to do about the budget. He noted the city has already closed one fire station and sent about half of the police force home – he didn’t think that’s the place to look for additional spending cuts. He said he hated to say it, but that we just might need to let the grass grow in the parks a little longer before it’s cut, rather than make further cuts to public safety.

Floyd also said the level of debt that’s issued needs to be curtailed – it’s a constraint on the city’s ability to provide services. He also said we need to look at the city’s use of tax-increment financing (TIF) as a way of taking money from the general fund and putting it into projects that aren’t required to go through the same budget process that other money is put through. Lastly, he said we need the university to consider the effect of buying city land on the city tax base and the effect of that on the quality of Ann Arbor as a place where their faculty live.

Hohnke on Budget: Pension, health benefits need focus

Carsten Hohnke allowed that the budget is a challenge and there’s a lot of pressure on it. Responding to Floyd’s remarks, he noted that in the last two years, the city has not laid off any police officers or closed any fire stations. Hohnke contended that he’d led an effort to protect police and fire services.

The big challenges in the future, Hohnke said, would be in how the city handled pension and health benefits for employees. The costs to the pension system due to the downturn in the market in late 2008 would require “serious ground” be made up as those costs get amortized over the next five years. As of the end of fiscal year 2010, he said, the pension fund was 94% fully funded, but that would go down over the next five to ten years to perhaps 2/3, all other things being equal. How that’s managed will be important, he said.

Closing Statements

Each candidate made a 2-minute closing statement.

Clark’s Closing

Newcombe Clark summed up with thanks. What’s going on, he said, is that we’re at the down cycle of 30 years of unprecedented growth. He pointed out that he would turn 30 in a few weeks. He said in the 30 years he’s lived in Ann Arbor, he’s seen an incredible expansion. He grew up on welfare close to downtown and watched his mom’s home equity grow to a point where she could afford to give him a middle class lifestyle. The school system gave him the opportunity to attend UM as a undergraduate on an academic scholarship.

Looking at the demographics of the town in the year he was born, 1980, 50% of the population was age 20-35, while now that number is about 6% – he wonders what the next 30 years will look like. If the decisions we’ve made over the last 30 years have been to plan for 8% economic growth, what do we do if we have 2% or -2%, as we’ve seen in the last couple of years?

Over the last 10 years, Clark said, he’s served on a variety of boards in the city: Ann Arbor Downtown Development Authority, Ann Arbor Area Chamber of Commerce, the Michigan Theater, University Museum of Art, Peter Sparling’s Dance Gallery Foundation, and the Main Street Area Association. That service, he said, gave him a good idea of what’s going on in the city. He described himself as “worried, but I’m also optimistic.”

Clark said he’d be graduating from the UM Ross School of Business in the next couple of years, and that he’s looking forward to the next 30 years that he has to live in Ann Arbor. He said he hopes there are opportunities for him and people like him to find value and raise their own families here.

Floyd’s Closing

John Floyd began his closing statement by saying that three years ago, partly out of concern over the possible sale of Huron Hills golf course, Ann Arbor citizens passed a charter amendment requiring that park land sales have to be approved by citizen referendum.

He then posed a series of questions, as he had in his opening statement. Have you ever wondered why the city council is choosing a lease as its transaction form when it’s proposing to give developers access to Huron Hills? Have you ever wondered why now, when the city wants to transfer land inside Fuller Park to the university for a 1,000-car parking garage, it’s calling this a shared use agreement instead of a sale? Have you ever wondered why the council calls it an “intermodal transit center” instead of a “university parking garage with bike racks and a bus stop”?

Ann Arbor’s issues are not necessarily partisan, he said, but years of one-party government have not helped public discussions or encouraged accountability. Given the city-manager form of government, asking probing questions with good will is our part-time council’s job, he said. The current council’s job seems to discourage probing questions, he said, and it is time for different voices to be heard.

He described Carsten Hohnke as likable and well-educated and said that he’d done some great “ombudsman work” on issues like Westside Farmers Market, Mack Pool, and the skatepark. However, Floyd suggested that Ward 5 residents could use a different skill set in their city hall representative: asking questions outside of the city council’s current mindset. He thanked the League of Women Voters for sponsoring the debate and to his opponents, “for showing up.”

Hohnke’s Closing

Carsten Hohnke said that being on the council involved big ideas and he enjoyed “engaging on those.” He characterized the vast majority of the work as helping the people of the community with everyday problems. He said it’d been his honor to serve Ward 5 constituents for the last two years and he is proud of what they’d accomplished together. He said he’d provided effective leadership to protect police and fire services, expand the recycling program, and implement the first ever management plan for the Huron River.

Hohnke said he was also proud of making the city’s streets safer and more enjoyable for bicyclists and pedestrians and making it easier for local merchants to do business downtown. There is a lot left to do, he cautioned. The country is struggling through the most difficult environment it’s seen in many years, he said. That has a real impact on our ability to make investments. The hard, serious work that needs to be done will require effective leadership, he said, getting things done day-to-day.

Hohnke said his record demonstrated he could do that. We need to look to the future and make long-term commitments that will allow us to make investments in the community that reflect the values we all share. We need a dynamic economy that provides opportunity for everyone, and a more sustainable multi-modal transportation mix, he said, along with environment that is healthy and diverse. He then ticked through a number of endorsements he’s received. If he’s elected, he said he’d work tirelessly on behalf of the residents of Ward 5, he said.

Backgrounder

We offer background on some of the candidate’s remarks.

Background: Closure of Fire Stations

Floyd was correct in stating that the city has closed a fire station, and Hohnke was correct in saying that it had not happened in the last two years. From reporting by Amalie Nash for The Ann Arbor News on June 13, 2004:

The announcement never officially came, but Ann Arbor’s Fire Station No. 2 has been closed.

It started with a staffing model to reduce overtime costs, and the station at Packard Street and Stadium Boulevard was closed on days when minimum staffing levels couldn’t be met without using overtime. That proved to be nearly every day.

By November, it wasn’t staffed at all. The trucks were moved to other stations , and when firefighters were asked to bid on station assignments, that location wasn’t an option.

Firefighters were notified this month that a contractor for the city’s automatic meter reading capital project soon will be moving into the first floor of the station . The contractor, which was promised city space as part of its agreement, is expected to be there more than a year, Fire Chief Joseph Gorman said.

“Station 2 was closed a long time ago, but I can’t say exactly when,” Gorman said. “There aren’t any plans to reopen it in the future at this point, because we don’t have the funds to staff it.”

The city has five remaining fire stations:

Background: Tax collection

The “tax loophole” to which Newcombe Clark alluded is based on Clark’s experience in the real estate field, which includes past employment with Oxford Company, Bluestone Realty Advisors, and currently Jones Lang LaSalle. In his written statement issued a few days after the League of Women Voters forum, Clark attempts to put distance between his remarks made at the event and any allegation of specific fraud, and calls on city officials with the authority to pursue the issue to do so:

While I am aware that taxes may not currently be properly assessed in certain instances, I am NOT accusing any individual or organization of fraud. I am not a tax assessor or hold any authority to investigate tax abuses. Any possible case of misrepresentation or impropriety should be fairly investigated by a city commission set up for the purpose. …

I, my associates, and my clients are not to my knowledge currently party to, or have ever been party to, any instances of tax fraud or evasion in regards to any real estate transaction.

The kind of “tax loophole” in question relates to real estate transactions involving companies that own companies, which in turn own real property – where the transaction itself is not directly about the real property, but which have the end effect of transferring the ownership of that property.

In a court case from 2006, Signature Villas v. City of Ann Arbor, the Michigan Court of Appeals ruled that in a transaction involving ownership of a company that, in turn, owns real property, the transaction meets the state statutes definition of a “transfer of ownership.”

From the court’s opinion [emphasis original]:

Petitioner asserts that § 27a(6)(h) only applies to the conveyance of ownership interests in legal entities that own property, and does not apply to the conveyance of the ownership of a company that owns a company that owns property. We disagree.

Whether a transfer of ownership has taken place is important, because when a transfer takes place, the effect of Proposal A [passed in 1994] – which limits the rate at which taxes on a property can increase – is undone. From previous Chronicle coverage on tax issues:

When a property is purchased, the taxable value is reset to be equal to assessed value. And the assessed value is an amount set at roughly 50% of market value. But in years subsequent to that purchase, the assessed value of the property will increase or decrease, depending on overall market conditions.

If the market goes up after the purchase, then the assessed value goes up, and intuitively, taxes paid on the property (that is, the taxable value) should increase, and they do. But Proposal A puts a cap on how fast the taxable value can increase. That cap is 5% or the rate of inflation, whichever is lower.

Suppose you buy a home for $200,000. If you’re paying the “right” price, based on the assessor’s assumptions, then the assessed value and the taxable value would be $100,000. Further, suppose that the following year, the properties in your neighborhood appreciate by 10%, putting the assessed value at $110,000. And suppose that inflation for that period is right at 5%. The difference between the 10% appreciation and the 5% overall inflation means that for that year the taxable value can’t increase to match the assessed value . Due to Proposal A, the maximum taxable value for the property would be $105,000. On that scenario, the property would have an assessed value of $110,000 and a taxable value of only $105,000.

If a property’s assessed value is currently greater than its taxable value, then a transaction involving that property will reset the taxable value at an amount greater than its current taxable value – so there’s an advantage to the purchaser if that transaction could be analyzed as not an actual transfer of ownership. That’s the kind of analysis the Court of Appeals ruled against in 2006.

For the city of Ann Arbor, then, the question is: How realistic is this idea that there could be $4.5 million in additional property taxes that are currently not being paid, because there were transactions since 2006 that were not property analyzed and reported as transfers of ownership?

Background: Doing, Being

Newcombe Clark’s pointed contrast during the event focused on “doing” something as opposed to “being” something, as well as his assurance that he would only serve a single two-year term, is a possible allusion to a belief among many in the community that Hohnke’s political aspirations extend beyond service on the city council. When asked by an audience member at a Democratic primary event in July, held at the home of Tamara Real, if he considered himself to be a career politician, and how long he wanted to serve on the city council, Hohnke appeared to try to distance himself from that idea. From The Chronicle’s report of that forum:

Question: Would you describe yourself as a career politician – why or why not? How long are you looking to serve on the city council?

[Though candidates were allotted five minutes for their closing remarks, Hohnke tried to wrap up his comments quickly to allow time for additional questions. The question about being a career politician thus came directly from an audience member and was asked only of Hohnke. Possible background to the question is some speculation that Hohnke might be interested in eventually running for mayor.]

Hohnke said it never occurred to him to think of himself as a career politician. He said he’d become involved in his community at a young age, growing up in Ann Arbor. He gotten involved in PIRGIM and then went off to graduate school working on affordable housing solutions. He said said he’d always thought of himself as “one to be engaged in my community.” A couple of years ago, he decided that the way he thought he could do that best and the “way the stars aligned,” he said, took him to the city council.

He said that he was really excited at the actual change he’d been a part of, citing the pedestrian island at 7th and Washington, and getting halfway to adding a skatepark to the city’s recreational facilities. He said he’d be happy if the residents of Ward 5 would continue to support him on the city council. He concluded by saying he didn’t think of himself as a career politician.

Background: Showing Up

John Floyd’s thanks to his opponents for “showing up” is a possible allusion to the fact that Carsten Hohnke has indicated that he will not participate in an Ann Arbor Chronicle-hosted event for Ward 5 candidates, in the third week of October. He’s also shown a reluctance to participate in a forum hosted by AnnArbor.com. After a few weeks of emails among the three candidates and The Chronicle, Hohnke confirmed in a face-to-face conversation with The Chronicle on Monday, Sept. 27, 2010 that he would not be participating in The Chronicle’s candidate event, not due to scheduling issues, but because he didn’t feel he needed to participate in any more events than are already on his calendar.

Details of that event will be forthcoming, with one highlight being that it will be “task-oriented,” with candidates challenged to complete a series of specific tasks in cooperation with each other.