Editor’s note: The Ann Arbor city council has held two retreats to discuss the city’s FY 2012 budget – one in early December 2010 and another in early January 2011. A summary of the material covered in those retreats is provided in previous Chronicle coverage: “Ann Arbor: Engaging the FY 2012 Budget.”
Leading up to the city administrator delivering a proposed budget in April – for FY 2012, beginning July 1, 2011 – the city council is also holding a series of work sessions on the budget. Their typical scheduling pattern is for the weeks between council meetings. Previous work sessions have taken place on community services, as well as the 15th District Court and police and fire services. On Feb. 28, the council held its final budget work session of the season – on public services and the city attorney’s office. [.pdf of combined public services budget impact sheets provided on the city of Ann Arbor's budget impact web page.]
Streets, sidewalks, trash collection, trees in the right-of-way, water and sewers are all included under the general label of “public services” in the city. At Monday’s budget work session on those kinds of activities, public services area administrator Sue McCormick did not present the council with any news more dramatic than Roger Fraser did when he announced at the conclusion of the session that he’d be leaving his job by the end of April.
But McCormick did present the council with options for meeting reduction targets that would, if enacted, have a significant impact on the range of services offered by the city. In at least one case, the range of service would expand – the city (instead of adjoining property owners) could assume responsibility for sidewalk repair and replacement.
In another case – which McCormick stressed was not a recommendation, but rather just an informational ballpark amount for potential annual savings to the city ($2.1 million) – the city would get out of the business of trash collection. In another month, the city expects to give the council a report that provides more detail on possible alternatives to having city workers perform that task, including some kind of franchised trash collection operation.
Many of the specific reduction target tactics presented on Monday evening involved assigning costs to a unit outside the general fund. While the city’s total budget includes around $340 million in expenses, the annual discussion typically spotlights the general fund, which gets revenue from the general operations millage [listed on tax bills as CITY OPER] – and is currently levied at a rate of roughly 6 mills. The widely reported projected deficit of $2.4 million for the city’s budget is for the general fund.
During the work session, the assignment of costs to other funds caused Sandi Smith (Ward 1) to wonder if it was just a matter of “shuffling” money from one bucket to another. The answer she heard was: No – it’s a matter of assigning costs appropriately to whatever fund should properly bear the cost of a particular activity.
One of the largest instances of such a cost reassignment would use the stormwater utility fund, instead of the general fund, to pay for forestry operations for trees in the right-of-way. That move would save the city’s general fund around $660,000 a year.
Another example of that kind of “shuffling,” albeit with a smaller dollar figure ($35,000), was a proposal from the city attorney’s office to charge capital projects part of the cost of a paralegal specializing in easements, instead of burdening the city attorney’s budget with that expense. The city attorney’s reduction strategy, which had originally been scheduled for a prior work session, was also part of Monday evening’s presentation.
As budget planning began in December 2010 with the first of two off-site budget retreats, the city’s chief financial officer, Tom Crawford, had projected a $2.4 million deficit for the general fund. That amount assumed that: (1) the city would continue to receive roughly $2 million in “rent” from the Ann Arbor Downtown Development Authority for use of city facilities to operate the city’s public parking system; (2) that state shared revenues would remain relatively constant; and (3) that union contracts would settle with no wage increases and with greater employee contributions to the benefits plan.
However, based on the state budget recently proposed by Gov. Rick Snyder, city administrator Roger Fraser has estimated the additional negative impact to the city’s budget – including statutory and constitutional state shared revenue and fire protection grants – as ranging from $0.5-1.7 million.
But for the part of the public services budget that is supported from the general fund, public services area administrator Sue McCormick offered some brighter news – she’d identified more reductions than her target for both years of the budget planning exercise: nearly $600,000 in FY 2012 and $500,000 in FY 2013. If those savings can be realized, it could offset a significant part of the reductions proposed by the state.
Current reduction targets for different departments vary from 2.5% to 4.0%, depending on the number of employees who are not on the city’s new benefits plan – departments with higher reductions are those with a greater number of workers whose benefits packages are more expensive to the city. It’s part of the city’s attempt to align its budget strategy with its labor strategy.
Forestry: From Field Ops into Stormwater
McCormick told the council that across the country, more and more governments have recognized the importance of forestry in helping to manage stormwater. This year, she continued, when the city applied for and received a $0.5 million grant from the state’s revolving loan fund for sanitary and stormwater utilities, it was for planting trees. So the state of Michigan is aware that – based on the state of the art in stormwater management – the benefit of an urban forestry program is predominantly for stormwater management, she concluded.
What she’s proposing is to move forestry operations out of the general fund and into the stormwater utility fund for a savings of $659,798 to the general fund. Some forestry expenses would remain in the general fund – expenses associated with past retirees, for example. Moving forestry to the stormwater utility would include the elimination of two vacant full-time positions, and a strategy of contracting out services like tree trimming, planting, and stump removal. Tree planting levels would be maintained, McCormick assured the council. [Previously. the city has paid for some stump grinding activity out of the stormwater fund.]
During council discussion of forestry and stormwater, Mike Anglin (Ward 5) expressed concern about the trees, saying they were the most important thing in Ann Arbor. McCormick told Anglin: “I don’t disagree.” She said that moving the payment from the general fund to an enterprise fund like the stormwater utility would bring with it “an ethic of asset maintenance.” You recognize that you have an asset, she said – it’s a mental shift that would be of value to the city. The city had recently done an asset inventory of all the trees in the city, she pointed out. That includes the age, condition and maintenance activity on the tree. [Chronicle coverage of the inventory as it was underway: "Where Are Ann Arbor's Trees?" The result of the geomapped inventory is available as a .kml file on the city's Data Catalog]
McCormick noted that the city does not trim trees just for aesthetics, but to protect the health of an asset.
Anglin was also concerned about the use of contracted services instead of filling vacant staff positions. By way of reply, McCormick noted that the question is how to do the work most cost effectively. The work load isn’t constant, McCormick replied, saying that contracted services gives the city flexibility to achieve the scale it needs to deal with backlogs – like stump grinding, for example, and planting.
When McCormick discussed the stormwater fund, she noted that the reason the stormwater utility could afford to absorb the cost of forestry operations this year is that a certain amount of loans the city had received through the county had been forgiven through federal stimulus funding. The planned rate increase would be 3.25% in FY 2012 instead of 2.25%, and 3.50% in FY 2013 instead of 2.30%, she said. That extra revenue would have otherwise gone into debt service, instead of supporting forestry operations.
Each 1% increase in the stormwater rate across the whole system is about $60,000, McCormick said. The roughly $2.7 million fund is comparatively small, she said. So if the city were trying to move the forestry operations into the fund at any other time than when it had this extra capacity, it would be difficult.
Streetlighting: LEDs Plus More Conversation – Golf?
McCormick pointed out to the council that an upcoming meeting agenda included an item authorizing an expenditure to buy LED fixtures for those city-owned streetlights that have not already been converted to lower energy fixtures. [The March 7, 2011 agenda item shows 500 LED cobra head fixtures at a cost of $315,968.] Anticipated energy and maintenance savings from installation is expected to be $32,000 in FY 2012 and $47,000 in FY 2013.
The budget impact sheet that McCormick presented for FY 2013 showed a $120,000 savings, which she characterized as a “placeholder” – it’s the same target they’d had when they implemented a program to deactivate lights in some areas of the city last year, as part of the FY 2011 budget. The city council eventually voted to restore the lights in October 2010. [Chronicle coverage: "Streetlights Back On"] McCormick stressed that it was not a proposal to reimplement the de-lighting program, but rather to engage the community in a conversation about how to fund streetlighting. [Options discussed last year during the council's budget work session included streetlighting special assessment districts: "Budget Round 4: Lights, Streets, Grass"]
Also in field operations, McCormick pointed to $158,248 in savings that is expected from using temporary labor in park operations to accomplish work done by workers in now-vacant full-time positions. McCormick reported that the city had discussed with its AFSCME union the idea of keeping positions open in order to provide soft landings in case there are operations in the city that it chose not to keep in the future. So if the city eliminates a position in one area, it could transfer that worker to another job that’s been kept vacant elsewhere.
[One of the potential legacy costs to converting Huron Hills to a non-golf use would be two union workers – one AFSCME and one Teamster – for whom other city positions would need to be found, if golf operations were ended at Huron Hills. At the community services budget working session, the city council had expressed a consensus that for the next two years, which corresponds to the duration of the five-year plan put in place for improving financial performance at the city's two golf courses, Huron Hills would remain a golf facility.]
Sidewalks, METRO, Street Repair Millage
A total of roughly $200,000 in field operations savings is forecast for FY 2012 as a result of reallocating costs from certain field operations – snow removal, graffiti removal, and some mowing operations – to the METRO expansion fund. To do that, future METRO money needs to be freed up. So what does METRO money pay for currently?
[The METRO fund gets its revenue from payments made by the state, based on telecommunications companies that pay to use the city's right-of-way under Act 48 of 2002, which established the Metropolitan Extension Telecommunication Rights-of-Way Oversight (METRO) Authority. Expenses/revenues for the city's METRO fund in the council's authorized FY 2011 budget were $635,000. However, budget impact sheets from the working session showed $340,000 for FY 2011 as well as for FY 2012-13.]
Over the last few years, the city has chosen to spend most of its METRO funds on maintenance in the right-of-way – McCormick explained that a restriction on the use of the METRO funds is that they must be used in the right-of-way. The city has chosen to pay for general fund obligations out of the METRO fund, so that it effectively supplements the general fund, McCormick said. [The METRO money is not a part of the general fund.] For example, the city has used METRO funds for streetlight pole replacements. Early in the program, the city used METRO funds for tree planting.
METRO funds also pay for administrative expenses associated with the city’s sidewalk replacement program – the marking of slabs, notification of property owners and the like, McCormick said. That’s key to understanding a significant impact on the way that the city might fund sidewalk maintenance and replacement in the future.
By way of background, the city’s sidewalk replacement program is a systematic way of ensuring compliance with the city code on sidewalk maintenance and replacement, which places responsibility on adjoining property owners to maintain and replace sidewalks. From Chapter 49 of the city code on sidewalks:
All sidewalks within the City shall be kept and maintained in good repair by the owner of the land, adjacent to and abutting upon the same; and if any owner shall neglect to keep and maintain the sidewalk or any walks and ramps leading to a crosswalk along the front, rear, side of the land, owned by her or him, in good repair and safe for the use of the public, the said owner shall be liable to the City for any damages recovered against the City sustained by any person by reason of said sidewalk being unsafe and out of repair.
The city’s experience with the sidewalk replacement program was uneven, with many property owners complaining about a failure by the city to communicate adequately. From a September 2008 Chronicle report of a city council caucus:
Residents along Second Street reported a variety of problems with adequate notification – including invoices sent from the city after work had been completed, work begun by the city without adequate notification, and lack of adequate marking. Under the rules of the program, property owners are supposed to make arrangements with private contractors to complete the work, with the city only undertaking the work when a property owner does not comply. During a period of low activity for the sidewalk program, council suspended it temporarily between November 2007 and March 2008 so that an ad hoc council committee could implement a clearer set of communication guidelines. Problems along Second Street this year could be remnants of ineffective communication beginning last year.
At the budget working session, Mike Anglin characterized the sidewalk replacement program as “an opportunity to get to know your neighbors under duress.”
In the upcoming months, McCormick told councilmembers, they would be asked to appropriate some additional fund balance from the METRO fund to make sure that the first cycle – the current one – of the city’s sidewalk replacement program is closed out. The closing out of the first cycle of the program would take place over the course of the summer, McCormick said. And that will, for the future, take the METRO fund out of the sidewalk replacement funding picture. What will take the METRO fund’s place in sidewalk replacement?
What the city is now contemplating, as McCormick laid it out, is for the city to start paying for the sidewalk maintenance and replacement – using the street reconstruction millage. Anglin wanted to know: What about property owners who already paid to replace sidewalk slabs under the old program?
McCormick explained that the idea of using METRO funds to close out the first cycle of the program is that all property owners, in the interest of equity, should have experienced one complete iteration of the program. This would entail, in part, performance of work by the city that property owners should have done. Property owners would be billed for the work, but the city would have upfront costs.
Making the city responsible for sidewalk replacement would require changing the city code on sidewalks as well as revising the street reconstruction millage language the next time it’s put on the ballot – on Nov. 8, 2011. Voters last approved the street repair millage in 2006 for a period of five years and a rate of 2 mills. The street reconstruction millage is listed as CITY STREETS on tax bills.
The point that some alternative revenue would be required – like redefining the street reconstruction millage – emerged during councilmember discussion by Marcia Higgins (Ward 4) and Christopher Taylor (Ward 3), who agreed that “it’s not magic.”
McCormick said there’d of course need to be a conversation about whether to roll the sidewalk replacement program into the street reconstruction millage. She said she’d heard some interest in making it a five-year millage, as well as some interest in seeing it be a 10-year millage.
On an ongoing basis, then, METRO funds in the future would not be used for administration of the sidewalk program, McCormick explained. That would free up METRO money to pay for other activities in the right-of-way. Among those activities proposed to be paid for out of METRO funds would be snow removal on sidewalks fronting publicly owned property, graffiti removal, and traffic island mowing and brush clearance. Paying for those activities out of METRO funds would relieve the general fund of around $200,000.
Customer Service – Return to Larcom
McCormick said she felt that a reduction on the $265,206 projected expenses for FY 2012 in customer service would be difficult to achieve in the first year, but doable in the second year. The return to the Larcom building – also known as city hall, which is currently being renovated – would provide some efficiencies due to co-location of some service desks.
Due to some changes in job classifications, she said, the city would have some ability to adjust staffing levels so that by FY 2013, half of one staff position could be eliminated. That move would actually result in exceeding the combined reduction target for both years.
Larcom Building: Five-Day Janitors
The facilities unit – with $1,406,393 in projected expenses in FY 2012 – was actually proposing several increases, reported McCormick. However, it is implementing decreases where it can. Those reductions include small adjustments in the IT fund, the elimination of a managed clothing program and the elimination of half of a facilities maintenance tech position.
The increases include restoration of janitorial services from three days per week to a five-day service. That move from five-day service down to three-day service, McCormick said, proved to be the “worst thing we could have done.” Exacerbating the issue is the age of the building, and there’s ongoing construction adjacent to the building, plus the fact that more people will be returning to work there. So next year’s budget proposes five-day service – an additional expense of $33,500 per year. In the new municipal center, McCormick said, a three-day-a-week janitor service would be a “recipe for decline” in the new building.
By way of brief background, the new municipal center has been constructed directly adjacent to the existing Larcom building (city hall) and is physically connected to it.
Several renovations to the Larcom building amount to roughly $350,000 in additional costs over FY 2012-13. The renovations reflect the reality of the decision to keep city offices in the Larcom building for the foreseeable future, said McCormick. She spoke of holding the building together with “baling wire.” In taking the ceilings apart to do some of the renovations, they’d found “systems” of keeping water off the ceiling tiles. She said that everyone had experienced some of the issues with bathroom drains backing up.
Asbestos mitigation is underway in the east end of the building now, because the plumbing in the bathrooms is failing. Fixtures need replacement – the bathrooms are deplorable, McCormick said. In the course of the next two years, the city wants to put a fresh bathroom on each floor next to the east elevator tower. In the second year, the city wants to do a complete renovation of bathrooms on the west side of the building.
Sabra Briere (Ward 1) wanted to know if the improvements to the Larcom building were in the capital improvement plan (CIP). She also asked for confirmation that the renovations were not expenses that were anticipated when construction started: “It’s add-on, yes?”
McCormick said the answer was actually: yes and no. The city had originally intended the renovations of the Larcom building to focus only on areas intended for repurposing. For example, the planning department formerly on the sixth floor is being moved to the renovated first floor. The reason these activities don’t show up in the CIP, McCormick said, is that generally you don’t put capital improvements from the general fund into the CIP – they’re typically funded from operations.
McCormick clarified further that the Larcom building is a general fund facility. It shows up in the general fund, but to some extent those costs can be allocated – using the municipal service charge – to the departments that actually occupy the space, if they’re not general fund departments.
The environmental/energy fund, which is part of the systems planning unit, had projected expenses of $113,478 for FY 2012. A savings of $8,800 was proposed to be achieved by reallocating the expense of participation in the getDowntown go!pass program. The go!pass program allows employers like the city to purchase unlimited bus passes for its workers at a cost of $5 apiece for the year. The passes are subsidized by a grant from the Ann Arbor Downtown Development Authority.
McCormick’s proposal was to move the payment for the go!passes to the alternative transportation fund, which is not part of the general fund. Later in the discussion, Stephen Kunselman (Ward 3) got clarification that the alternative transportation fund gets its money from Act 51, which is the state statute under which state gas tax money is allocated.
In the utilities budget, McCormick said, the city had historically supported maintenance and operation of dams from the drinking water utility. She noted that the staff has had significant discussion with the council about how dams are funded. [At its Nov. 10, 2010 meeting, the council approved a resolution that directed the city administrator to end the payment for repairs, maintenance and insurance of Argo and Geddes dams from the city’s drinking water fund. The shift in dam activity funding is supposed to be effective with the start of FY 2012, which is July 1, 2011].
McCormick said that funding for the city’s four dams – Barton, Argo, Geddes, and Superior – would be shifted around, in order to accommodate the council’s direction.
Barton dam, she said, has a hydroelectric function, but is also source water for drinking water. So the city staff believe it is appropriate to allocate some of the Barton dam administration and maintenance activities to the drinking water fund. Responding to a question from Sandi Smith (Ward 1), McCormick explained that the amount of water drawn from Barton Pond, compared to the city’s well field, depends on the time of year – in the winter, more is drawn from the well field to moderate the water temperature.
In the snapshot presented by McCormick, Geddes and Argo were grouped together as recreational dams, with Barton and Superior grouped as hydroelectric dams. In FY 2011, $88,938 for Geddes and Argo was spent from the drinking water utility, but nothing was spent from the parks millage. In FY 2012, roughly $90,000 is proposed to come from the parks millage for those two dams, but nothing would be spent from the drinking water fund.
In contrast, Barton and Superior were not funded with any drinking water money in FY 2011, but in FY 2012, $19,661 is proposed to be spent on Barton – because of its role in the drinking water supply.
Maintenance, operation and insurance on all four dams will have expenses of around $330,000 per year over the next two years.
Sabra Briere (Ward 1) wanted to know if the picture could change depending on what the VA Hospital wound up proposing – the VA has expressed interest in a collaboration on retrofitting Argo and Geddes with hydropower. McCormick said there would be an impact and that would need to be part of any conversation with the VA.
McCormick walked the council through the projected rate increases for drinking water. In the last three years, the rate of increase has been somewhat higher than what’s been projected through FY 2017. Starting in FY 2009, the city has had annual increases of 4.62%, 3.61%, and 3.88%. Starting in FY 2012, the chart provided by McCormick to the council indicates increases of 3.36%, 3.25%, 3.50%, 3.38%, 3.38%, and 3.68%.
Mayor John Hieftje mentioned a study showing that Ann Arbor had some of the lowest rates in the state. McCormick said she predicted that Ann Arbor would maintain that distinction.
For the sanitary sewage system, the rate increases were higher, compared to drinking water. For the last three years, starting in FY 2009, the sanitary sewage rates have increased by 3.20%, 3.10%, and 3.00%. Starting in FY 2012, rates are projected to increase by 4.00%, 4.25%, 4.50%, 5.00%, 6.00% and 6.00%. McCormick said she felt that these increases were not outrageous.
Hieftje asked McCormick to give an update on the solids handling project at the waste water treatment plant. The city is just now wrapping up that project and bringing it online, testing the functionality. That was about a $22 million project, she said. The next step is replacing half of the liquids handling part of the plant – design is complete and it’s going out to bid in the next six months, McCormick reported. Much of it had been built in the 1930s, she said.
When the city builds infrastructure but depreciation isn’t built into the system to accumulate funds for its replacement, it’s financially difficult to undertake capital improvements. So the city has adopted a strategy of a “levelized rate increase” – where rates increase incrementally every year, in order to save up money to make a down payment on capital improvements, McCormick said. She later clarified for Hieftje that around $40 million has been accumulated through that strategy. To undertake the $110-120 million investment in that facility, in less than 6-7 years with only moderate rate increases, she characterized as “really quite an accomplishment.”
The city is still looking at applying for the state’s revolving loan fund for the project, which would be a nice benefit, McCormick said. But there would be some administrative burden, she allowed. The real problem is that the state does not typically fund projects that large. So the city may look at ways of staging the project. There’s a balance between bidding out a project in pieces in order to qualify for a state revolving loan, and taking advantage of a contractor’s market, which McCormick characterized as “hungry.”
The budget impact sheet for solid waste includes a revenue drop of $226,077 from the solid waste millage. [The 2.5 mill levy shows up as CITY REFUSE on tax bills.] Contract increases for operators of the city’s recycling curbside pickup, its materials recovery facility and the commercial franchise recycling are expected to total $320,000.
On the savings side, McCormick showed the council a budget impact sheet that included nearly $600,000 in savings due to efficiency gains at the materials recovery facility, which are due to single-stream processing. Additional savings of $80,000 come from eliminating a full-time supervisor position at the compost facility – the city council authorized the outsourcing of its compost operations last year. Improvement in the market for recycled material is expected to add $250,000 in revenue.
A reduction in one full-time position for trash collection will be made possible through eliminating one trash collection route. In addition to savings on the labor side, McCormick pointed to savings of $84,500 in FY 2013 that the city would gain by not having to replace one of its garbage trucks. McCormick said the single-stream recycling effort – which added automated cart pickup for recyclables – had also allowed Recycle Ann Arbor to reduce a route as well.
In a followup phone interview with The Chronicle, solid waste manager Tom McMurtrie explained that having fewer routes (six instead of seven) would, for the vast majority of residents, not change the day of the week on which their trash and recyclables are picked up from the curb. For some areas, that would change, however – probably sometime this spring. Both trash and recycling carts, he said, would continue to be emptied on the same day of the week. Yard waste collection routes are somewhat variable, he said, and there’s no expected change in those.
“For illustrative purposes only,” at the work session, McCormick gave the council a sheet that included a savings of $2,132,000 if the council and the community decided the city should get out of the business of trash collection. She noted that some households need more trash collection service than others. Some households are now approaching zero waste, with the availability of the larger single-stream recycling carts, she said. Some households might be able to share service, she said.
It’s something that the city would likely want to regulate through some kind of franchising agreement to ensure quality of service – one vendor providing service throughout the city instead of multiple vendors running trucks through the city. That would be one possible model, she said. In about a month, the council would be given a report on various approaches to trash collection, but McCormick stressed that it’s not part of the city’s budget plan.
Hieftje was eager to make clear that before making a decision to move away from city-provided solid waste collection, there would need to be “a ton” of community input and there would need to be a lot of discussion. Stephen Kunselman (Ward 3) expressed his lack of enthusiasm for the idea by venturing that he was not sure he even wanted to have that discussion.
In fleet services, McCormick said the city would be taking advantage of eliminating a vacancy due to a retirement, for a savings of $113,000. Another position would also be eliminated, for a savings of $84,309, based on reduced workload as a result of better preventive maintenance. Repair response times, however, could increase. A $45,000 savings was expected from a reduction in on-hand inventory for repair parts. The city will, said McCormick, attempt to reduce the amount of spare part inventory – they will monitor to see if that works.
Fleet rates charged to other departments are expected to be decreased for FY 2012 by 0.53% but increased by 8.26% in FY 2013.
Sabra Briere (Ward 1) wanted some information about why the number of large pieces of snowplow equipment had been reduced from 15 to 14 snowplows on the road, but only 12 of them had been available for service during the most recent storm. [Snow removal was discussed by the council at its last council meeting.]
Craig Hupy, head of systems planning for the city, clarified that the extra piece of equipment that the city previously owned was a front-end loader – not effective for plowing streets, but somewhat useful for clearing cul-de-sacs. As the city had moved to a containerized collection system for leaves, and discontinued the loose leaf program, retaining and replacing a front-end loader was not a priority, Hupy explained.
Hupy said he was not sure of the details about why the two plows were down at the start of the storm. Briere asked if there was adequate staff for all the equipment – Hupy assured her that staffing was not a problem. In the most recent storm, they had staff for all the equipment that was available. He called that group of employees dedicated – “they answer the call,” he said.
Stephen Kunselman (Ward 3) wanted to understand whether the city’s Wheeler Service Center was being used to its fullest capability. That came in the context of mechanics positions that appeared to be slated for elimination. He wanted to know what percent of the maintenance center’s capability was being utilized. McCormick said she would have to defer to Matt Kulhanek, who’s head of fleet services, on that question. He was not at the meeting, but McCormick said she’d pass along the question to him. She allowed that it’s not the case that the city operates the center with three shifts, with all bays full. The city runs two shifts – the second one is smaller.
But the maintenance center was not, she explained, originally programmed for that kind of use – the center is relatively new, dating from 2007. She clarified for Kunselman that although there had been discussion with Washtenaw County about possibly collaborating on the use of the facility, the county had elected not to collaborate. There have been discussions, she said, about collaborating with the University of Michigan and the Ann Arbor Transportation Authority on the use of the facility. The Wheeler Center has bays that are nose-to-nose, which can accommodate longer buses – that’s why those two organizations are interested in the facility, McCormick explained.
McCormick gave the council some numbers just as an informational sheet to keep in front of them: costs incurred but not directly reimbursed by the University of Michigan in connection with UM home football games. The costs in question are those associated with signs and signal reconfiguration to manage traffic on football game days. Each home football game costs the city $20,000, according to the information McCormick provided the council.
If additional homeland security measures are implemented for home football game days – by closing Main Street – it’s estimated to cost the city an additional $8,900 per game. McCormick said that in conversations with the university about that proposal, the city has made clear that in order to implement the street closure, the city is interested in getting reimbursed for the expense.
The money to pay for this work comes, for the most part, out of the street maintenance fund, said McCormick, so it affects things like pothole repair, snow plowing, crack sealing.
In response to a question about the December 2010 Big Chill hockey game at Michigan Stadium, Craig Hupy, head of systems planning, said an invoice had been sent to the university for the signs and signals work – he had no information about whether it had been paid.
Responding to councilmember questions, McCormick said the city did not send the university invoices for the regular home football games, because the university has made it clear that it will not pay. McCormick said when she’d notified UM of the city’s intention of invoicing for the Big Chill, the response she gotten was, “We really don’t know how we’ll fund that.” There was little recourse for the city to take, she said, and in the end the city would have to write it off.
Stephen Rapundalo (Ward 2) expressed what seemed to be a council consensus that the university be invoiced as a matter of principle, so that it’s on the record. There should be a constant reminder, he said, especially when the university comes and asks for street closures and other things. Sabra Briere (Ward 1) allowed that the university’s rationale for not paying – that the home football games bring commerce into the city – was correct, inasmuch as they did bring commerce into the city. However, Briere pointed out that the additional commerce does not put money back into the street maintenance fund.
Christopher Taylor (Ward 3) expressed some caution about the possible accounting implications – what might the city’s financial auditors have to say about these amounts that get written off? McCormick said that it does create some complications, but it’s doable. Taylor agreed with the principle of billing the university for the costs, but wanted some additional assurance that it would not cause more administrative hassle than it would be worth.
City Attorney’s Office
The 2.5% target reduction on the city attorney’s $1,912,106 budget amounts to roughly $47,000 in reductions.
City attorney Stephen Postema began his work session presentation by asking the council to consider the reductions he was proposing in the context of three retirements last year, which had resulted in the merging of three positions into just two: an office manager position and two paralegal positions had become just an office manager and one paralegal. The reduction in one staff member, he contended, had a large impact on his small office. [In FY 2011, the current budget year, the city attorney's office was budgeted for 13 full-time positions, including eight attorneys.]
The required reduction this year, Postema said, is being achieved partly through a reduction in “materials and supplies” of roughly $12,000. Materials and supplies, he said, includes the library, much of which is available online through sources like Westlaw.
Postema said that in conversation with Homayoon Pirooz, who is head of project management in the public services area, they had concluded that work done by paralegals on easements in most other cities was done in a department different from the legal department. Postema said the reason easement work is done in Ann Arbor through his department is through happenstance. When Marylou Zimmerman – the paralegal who had previously handled easement work – was originally hired, Postema said, her salary was funded by another department. Now, the legal department pays for it.
Although it hasn’t been done as carefully as it should have been, it’s important now, Postema said, to charge out as much time as possible, through whatever grants are supporting various capital projects – like the Stadium bridges project. So the other reduction is actually a revenue source, he said, to charge out half of the easement paralegal’s time to various projects. That $35,000 in additional revenue, combined with the $12,000 in savings, would meet the $47,000 target for FY 2012.
For FY 2013, Postema said, the savings might have to be realized by reducing the easement paralegal to a half-time position, and he remarked that it would be painful, if the department had to do that.
Sandi Smith (Ward 1) wondered: If a project is not grant-based, and the easement paralegal’s time is charged to the project, doesn’t that amount to shuffling it from one bucket to the next? Postema replied by saying that what’s at issue is the amount of time that is properly and legitimately allocated to capital improvement projects.
City administrator Roger Fraser, also responding to Smith, put the easement paralegal work in the context of an ongoing analysis for all of the city’s operations, regarding what the appropriate sources are for funding different activities. It’s easiest and most convenient, he said, to bill something to the general fund, but the city has not been as diligent as it should have been in making sure that the activity is supported by the appropriate departments.
Postema returned to his earlier point that most city attorney offices do not have a position for an easement paralegal – that position is in the engineering department, he said.
Stephen Kunselman asked if annexations of land to the city from the townships were in the same basic category as easements. There’s paperwork that needs to be done for that, Kunselman said. Postema replied that annexations had not been contemplated as part of the additional revenue projection, but if additional revenue could be realized, then that’s all the better. There have been a lot of annexations in the last two or three years, Postema said, but he was not sure if the volume will continue.
Sue McCormick began her part of the evening’s presentation, which immediately followed the 10-minute discussion of the city attorney’s budget, by providing some additional comment on the question of charging easement paralegal costs to capital projects.
She invited councilmembers to think about how the general fund works. Many of the general fund departments – such as finance– provide support to non-general fund departments. Those services are eventually allocated to the non-general fund departments as part of their operating expense budget. That allocation is achieved with the mechanism of the municipal service charge (MSC). But capital expenses, she said, should be capitalized as part of the project.