Three County Departments to Merge

Board briefed on new community & economic development office

Washtenaw County board of commissioners working session (May 5, 2011): A consolidation is underway for three county departments that share similar missions and programs: providing services to low-income residents; support for low-income housing; help for job seekers; and projects designed to spur economic development.

Conan Smith, Barbara Bergman, Mary Jo Callan

From left: Washtenaw County commissioners Conan Smith and Barbara Bergman, and Mary Jo Callan, director of the county/city of Ann Arbor office of community development, at the May 5, 2011 working session of the county board of commissioners. (Photos by the writer.)

County commissioners were given an update on these plans at their most recent working session. They’ll be asked to give initial approval to the consolidation at their June 1 meeting, with final approval on July 6.

Mary Jo Callan, who is expected to lead the new office of community & economic development, made the presentation and fielded most of the questions from commissioners. She is currently director of the office of community development, a joint department of the county and city of Ann Arbor, and one of the three departments slated to merge. The goal, Callan said, is to provide a more coherent approach to the broad spectrum of community development, from providing for basic needs to helping people get jobs. And in a climate of reduced resources, they’ll be eliminating duplication and cutting costs, she said, while making it easier for residents to get the services they need.

The three departments – the office of community development (OCD), ETCS (the employment training and community services department) and the economic development & energy department – employ nearly 60 people with a combined budget of about $16 million. Staff cuts will likely result from the changes – those and other details are still being worked out.

Most commissioners expressed support for this effort, though some wanted more information – including a business plan for the new department – before their June 1 vote.

The working session also included a presentation and discussion on the Packard Square brownfield redevelopment, an issue that was initially debated at the board’s May 4 meeting. A Chronicle report on that part of the working session will be published separately.

Consolidation of Departments

For about a year, county administration and staff have been looking at the possible merger of the office of community development (OCD), ETCS (the employment training and community services department) and the economic development & energy department. Planning for the change is near completion.

County administrator Verna McDaniel set the stage for commissioners, telling them that this was part of a broader effort to look for ways to create efficiencies in the county organization. The county needs to address the reality of decreased state and federal funding, to focus on the programs and services that the county does best, to leverage partnerships with other organizations, to find structural savings, and to mitigate duplication of work, she said.

McDaniel said she’d instructed the department managers to check their egos at the door and figure out what’s best for their customers – the residents of Washtenaw County. This was the context for challenging these three departments to come together, she said.

Mary Jo Callan, OCD director, gave an overview of the proposed changes – it’s anticipated that she will lead the new department. She said that she and the other department directors – Patricia Denig of ETCS and Tony VanDerworp of economic development & energy – have been meeting for about a year. They’ve taken McDaniel’s charge seriously, Callan said, and have worked in honesty “and sometimes in pain, frankly.” In all their conversations, she said, a focus on providing services to residents has come first.

All the departments face challenges. They’ve recently learned that the departments in total are on the verge of losing another $1 million in federal funding, Callan said. Not long ago, the three groups had revenues totaling about $29 million – now, it’s closer to $16 million. [All three departments receive significant funding from state and federal grants that they administer.] Declining revenues have forced them to look at structural issues, including staffing and external costs. The solution they’re proposing, Callan said, aims to reduce duplication and improve services.

Callan then gave an overview of each current department:

  • Economic development & energy: Four employees, led by Tony VanDerworp. Programs focus on energy efficiency and renewable energy investments, historic preservation, brownfield redevelopment, community engagement and planning, and economic development – including support for the Eastern Leaders Group, the Detroit Region Aerotropolis, and other efforts aimed at job growth.
  • Office of community development: Twelve employees, led by Mary Jo Callan. OCD, which is funded by both the county and city of Ann Arbor, handles a range of programs, including energy efficiency improvements for residential housing, affordable housing development and rehab, improvements to public facilities and infrastructure, neighborhood revitalization, and community engagement and planning – particularly focused on human services. OCD is managing the coordinated funding of local human services nonprofits by the county, the city of Ann Arbor, the Urban County, Washtenaw United Way and the Ann Arbor Area Community Foundation – a process that was discussed at length at the board’s May 4 meeting. The Barrier Busters program is also managed by OCD.
  • Employment training & community services (ETCS): Forty employees, led by Patricia Denig. [Long-time ETCS director Trenda Rusher retired at the end of 2009.] ETCS also offers residential energy efficiency programs, including help with weatherization, and contracts with other agencies to provide human services support, primarily related to food and nutrition. They’re involved in crisis intervention services, like Barrier Busters, and provide services to job seekers and employers.

Callan said there are several areas of overlap, and that the departments have reached out and worked together in the past. But the reality is that they operate in silos, she said. By coming together into one operation, they’re acknowledging that quality of life isn’t just about jobs, or neighborhoods, or housing – it’s about all of those things, and more. She noted that health rankings were recently released, and many of the health outcomes relate directly to social and economic conditions. A unified organization could take a more coherent, broad-based approach to developing community, she said.

Consolidation of Departments: What’s the Plan?

The proposal is to create a new office of community & economic development, Callan told commissioners. It would have four units: (1) housing & community infrastructure, with a budget of $4.3 million; (2) economic & workforce development, with a $6.6 million budget; (3) human services, with a $5.2 million budget; and (4) finance and operational support.

Structure for proposed office of community & economic development

Structure of the proposed county office of community & economic development.

Although they’ll organize around teams in these four areas, Callan said there will be lots of “cross-fertilization” as well, with people working across units. Callan described the primary responsibilities of each unit:

  • Housing & community infrastructure:  This unit will bring together the weatherization and energy efficiency programs from all three departments, as well as all efforts to provide decent, affordable housing to local residents. This group would also work to support public infrastructure projects aimed at low-income residents.
  • Economic & workforce development: The work of this unit will focus on developing a pipeline of workers for jobs in fast-growing sectors of the economy, Callan said – they’ll tie their workforce development to business needs, so that people will get trained for jobs that actually exist. This group would continue with other economic development work already being done by the county, including heritage tourism, brownfield redevelopment, and support for projects like the aerotropolis and development near Willow Run Airport.
  • Human services: This unit will combine the community services parts of ETCS and the office of community development. They’ll focus on partnering with local nonprofits to provide safety net services to residents. The unit will also coordinate emergency financial assistance and services for seniors.
  • Finance and operational support: Now, each department handles finance and operations in different ways, Callan said. OCD does theirs all in-house, for example, while ETCS uses an external contractor for most of those services. Callan said that keeping finance and operational support within the department creates greater accountability, ensuring that their investments are being managed properly. Among the three departments there are 37 funding streams, she noted. They need to braid those sources so that residents don’t have to navigate the bureaucracy, and so that the funding can be coordinated for maximum benefit. It’s even more vital to do this at a time when resources are scarce, she said.

This approach provides specific ways to enhance services, Callan said. They’ll be streamlining services to the county’s most vulnerable residents – things like eviction prevention, housing improvements and help for the unemployed. When residents are in crisis, they’re on a sinking lifeboat, she said – they shouldn’t have to reach for more than one ladder to help them out. Instead of calling two departments, residents will be able to make one phone call and get twice as much help in a timely way, she said.

Taking a pipeline approach to workforce development will be a huge benefit, Callan said. ETCS has done a great job of focusing on the worker side, but that needs to mesh better with business demands. It’s fine to help someone get certified as a heating and cooling technician, but if there are no jobs in that sector, they’re not achieving their goal. Coordinating worker training with potential employers will help both ends of the pipeline. “It’s pretty simple,” she said.

Finally, combining the different weatherization programs with housing rehab support will help improve access and service to low-income residents who are most in need, Callan said. She related the story of an elderly man on a fixed income, who was cited by a building inspector because his porch was falling down. He had to deal with paperwork for both ETCS and OCD to get assistance. “This is an area where we have to come together and do this in a more coordinated and coherent way,” she said.

The departments hope to begin the first phase of this consolidation in July 2011, after receiving final board approval. This phase would include creating a single housing improvement program, and begin transitioning the financial and operational support activities to an internal unit. In the fourth quarter of 2011, they’d begin bringing the human services team together.

The last phase of consolidation would happen in the first quarter of 2012, to merge the workforce and economic development programs.

This transition entails a lot of change, “and that’s not an easy thing,” Callan said. Barriers include changing the traditional ways that departments have operated, and functioning in a context of constantly shifting circumstances – she pointed to the recent $1 million in funding reductions as an example. Another challenge is to ensure that as they restructure, they’re still complying with state and federal funding requirements, which are often complex.

It’s one thing to create a concept and vision for this change, “but implementation is really harder,” Callan said. It’s understood that staff, advisory groups and key stakeholders like Ann Arbor SPARK need to be fully engaged in the process, she said. It also needs to be determined whether the county is the right entity to offer the services it currently provides. If it’s not, Callan said, then the county needs to ensure that handing off those services to another group doesn’t diminish what residents receive.

Kelly Belknap, the county’s interim deputy administrator, made some concluding comments in the presentation. She noted that McDaniel had challenged the three departments to cut $500,000 from their combined general fund budget in 2012 and 2013. “They are on track to meet this,” she said.

Next steps include meeting with labor leadership that represent employees in these departments – that’s happening this week (the week of May 9). General staff meetings for the departments will take place from May 25-31 to discuss these changes.

The board will be asked to give initial approval to the plan at its June 1 meeting, with a final vote to approve the consolidation on July 6.

Consolidation of Departments: Commissioner Comments, Questions

Commissioners raised a variety of questions over more than an hour of discussion. Conan Smith began by noting that the $500,000 in budget cuts was nice, but it’s more important that they’re taking a strategic, intellectual approach to attacking root causes of problems in the community. He asked Callan to comment on how these changes will improve the quality of life for residents at the neighborhood level.

Community is first and foremost about family, neighborhoods and schools, Callan said. And every community needs the same ingredients to be successful: safety, jobs and a good education. The needs of a community might differ, but the ingredients are the same. By bringing together these three departments, she said, they’re poised to look at community issues in ways that weren’t previously possible. Each department has handled different pieces in the past, but never took a systemic approach.

McDaniel gave the example of Parkview Apartments, a troubled 144-unit complex in Ypsilanti that was foreclosed on by the U.S. Dept. of Housing & Urban Development (HUD) and acquired by the Ypsilanti Housing Commission. All three county departments were involved in making that a viable community, she said – when resources are coordinated, you can do a lot more.

Smith asked how the process for making grants to local nonprofits would be handled. Currently, that’s done through both OCD and ETCS. Callan said that both departments fund many of the same nonprofits. By consolidating, they’ll be on the same page in terms of expectations, outcomes and accountability. A nonprofit won’t have to deal with two application and monitoring processes, she said. At a minimum, it will amplify the county’s investments. More importantly, she added, they’ll be taking a more coherent approach to making those investments, and tapping the combined experience and expertise of all their staff.

Smith said he’s excited about integrating community development and economic development. They’ll be attacking poverty from two angles: through jobs that put wages into a household, and by reducing the cost of living – with weatherization and other housing services – without reducing the quality of life. How housing and jobs are linked becomes really important in terms of building a sustainable community, he said – and transit plays a role in that as well. Government is the only place where that kind of broad-based thinking occurs, Smith said – only governments take responsibility for community design.

In that regard, one of the challenges is that the county doesn’t do land use planning or zoning, Smith added. The county needs to partner aggressively with local units of government that do that work, he said. Along those same lines, Smith wondered how this new department envisions partnering with other internal units – bike paths in the community, for example, are being built by county parks & recreation.

VanDerworp replied that mobility is an important aspect of community health – and transit is on a checklist for developing healthy neighborhoods. Under this new organization, they’ll be thinking in broader ways, he said, and building that perspective into their assessment of needs and delivery of services.

Smith then pointed to the opportunities created by consolidating renewable energy and energy efficiency services, which have been handled in different ways by all three departments. Washtenaw County can be the center for a new driver of the economy, he said – they have the academic expertise at the University of Michigan, the will of the people to make investments, and the capacity in terms of the workforce and manufacturing facilities. It’s a huge opportunity, he said.

Barbara Bergman expressed some frustration at the level of collaboration among community partners, in areas ranging from food delivery to mental health services. This community talks a lot about collaborating, she said, but doesn’t always pull it off. The fact that the three departments are consolidating is nothing short of a miracle, Bergman said – to expand that effort into the community will be about as easy as shoveling fog. She asked whether substance abuse services are currently coordinated with workforce development services.

Patricia Denig

Patricia Denig, interim director of the county's employment training & community services (ETCS) department.

Denig said they do reach out to each other, but not in a coordinated, holistic way. She agreed that collaboration is difficult. Bergman urged staff to create some kind of way to coordinate substance abuse services with workforce development.

Wes Prater described the consolidation as impressive, and asked if they’ve developed a business plan for the new unit. McDaniel said that all departments will have a business plan – they’re developing a new budget structure, and departmental business plans are part of that.

Prater clarified that the $500,000 in budget reductions for the consolidated department will occur in 2012. That’s a long way off, he noted. Personnel costs are a big part of the budget, he said – what’s the consolidation’s impact on those costs?

McDaniel said they’re still working on that, and will be bringing that information to the board in June.

Prater expressed interest in seeing the department’s business plan before they vote – the board needs to be comfortable with it, he said. The new department will be handling a substantial budget, he added, and it will need some scrutiny to ensure it’s achieving the projected outcomes. “You’ve done a good job, but I think we’ve got a long ways to go,” he said.

Kristin Judge called the consolidation a phenomenal idea. By the June meeting, she hoped the department heads could provide information about how current operations will fit into the new structure – including the two advisory boards that work with ETCS: the community action board (CAB), and the workforce development board (WDB). [A few members of these boards attended the working session, including Myles Romero, Howard Edelson, and Mary Kerr, president of the Ann Arbor Convention & Visitors Bureau. Judge also serves on the CAB.] Those boards will remain in place, Denig said. Their existence is required in order for the county to receive certain federal funding.

Judge asked how many people would work in the finance and operations unit. Callan said that’s still being figuring that out. Judge also asked whether the department’s eviction services are coordinated with the work of the county treasurer’s office. Callan replied that her department focuses more on rental evictions, while the treasurer’s programs relate to foreclosure prevention.

Judge wondered if the staff had ever considered having just one intake process for all county services. It’s not just weatherization or housing rehab that could benefit from that consolidation, she said – the same pool of residents typically tap a much wider range of services from the county.

McDaniel said the concept has come to fruition for the county health department, and they can certainly study it for other areas. She said she wanted to get the consolidation of these three departments on solid ground, but it’s just the beginning of what they can do throughout the organization. Judge encouraged the administration and staff to think on an even bigger scale.

Ronnie Peterson gave extensive comments, stressing the importance of human services and economic development – those services are joined at the hips, he said. You can’t end homelessness or poverty until you address employment.

Peterson touched on the history of these three departments. Some of them had drifted away from what they were originally created to do, he said. They were birthed for a reason, and he wanted to make sure they kept true to that after the consolidation. And if any of the programs have lived out their existence, the board needs to talk about that, he said.

Peterson noted that the reason that Barrier Busters exists is because the system isn’t working. Over the years they’ve spent millions of dollars trying to fix the system, he said – this is the third or fourth reorganization of county departments he’s seen since he’s been on the board.

He noted that the need for services is rising. Many people who recently held decent jobs are now out of work and for the first time are relying on the government for support. Peterson said he’s never seen a situation like this on such a long-term basis.

Peterson agreed with Prater that the board should see a business plan before they approve the consolidation. He noted that the role of citizen advisory groups is important. He also wanted to see an organizational chart showing staff assignments, and details about where funding cuts will be made. He asked for more details about how these changes will enrich services to residents. He argued that collaboration among departments should be a mandate for the entire county operation.

Peterson concluded by saying he had two more pages of questions and comments, because these three departments provided front-line services to his district and he wanted to be clear about how those services would be affected. But Judge had asked him to “go light,” he said, so he was cutting his questions short.

Rob Turner said that before he was elected, he didn’t know much about county government. He said he now understands the importance of services provided by the county, especially those provided by these three departments. Although District 1, which he represents, is often considered affluent, Turner said he’s sent several residents to get assistance from these departments. [District 1 covers the northwest portion of the county, including Dexter and Chelsea.] These are people who have been self-reliant, but who lost their jobs and are in terrible need. Those residents sometimes hit dead ends when they tried to get help from the county, he said, so he’s glad there will be a more coordinated approach in place soon.

Turner said economic development is important, and local employers are a pivotal part of that. He appreciated that this new department would look at the whole spectrum, from providing help for basic needs to getting residents back in the workforce and becoming self-reliant again. Turner also advocated for a common database for different county services – otherwise, people seeking services can fall through the cracks.

Conan Smith weighed in again, saying he wanted to give some pushback on a couple of points. He agreed with other commissioners who said that economic development is important, but he noted that the board hasn’t funded that work. They’ve changed the name and mission of that department several times, he said, and have fragmented the staff. They can either give economic development a home in this new department, Smith said, or make a commitment to funding economic development as its own, stable department.

Secondly, Smith said, he wasn’t sure a business plan could be completed by the time the board takes its initial vote on consolidation in June. Right now, they’re looking at structural changes, not programmatic ones. He cautioned against asking staff to develop a detailed business plan before the board agrees to approve the restructuring, saying it could be a potential waste of time. He didn’t think they should get into the weeds of how a new department will function until they’ve actually agreed to form the department.

Peterson responded by saying the board can take as much time as it needs to do its work. He observed that $16 million isn’t chump change, and wondered what bank would make that kind of loan without seeing a business plan. The services provided by these three departments affect certain districts more than others, he said – Districts 6, 5 and 2 are most affected. [Those districts, represented by Peterson, Rolland Sizemore Jr. and Dan Smith, respectively, are on the east side of the county, including Ypsilanti and Ypsilanti Township.]

Ann Arbor hasn’t felt the brunt of the economic downturn, Peterson said – the city is coming back strong. That’s good, because it will benefit the rest of the county. But other parts aren’t faring as well, he noted. It’s important that the county’s economic development role isn’t buried, Peterson added. He said he’s not arguing for a huge staff, but they need to be able to talk the language of the business community. He asked that a working session be scheduled for this issue.

Prater reiterated that a business plan is critical. It needed to include performance measures, but it didn’t have to be complicated. McDaniel said the staff could put one together.

Conan Smith said he didn’t disagree about the importance of economic development. But he wants to see the board’s commitment to that, not a haphazard approach. He agreed that Ann Arbor has been fortunate to not suffer as badly from the economic decline. [Smith, who represents District 10, is one of four Ann Arbor commissioners.] He credited the University of Michigan as an anchor, and the leadership of civic officials. It was also good that many people making decisions in Lansing have their roots in Ann Arbor. [Gov. Rick Snyder lives in the Ann Arbor area, as does Mike Finney, head of the Michigan Economic Development Corp. and former CEO of Ann Arbor SPARK.]

One of the things that makes this county strong is that people care about others, he said, no matter where they live. As an example, he cited the investment that the Ann Arbor Downtown Development Authority is making in public transit service to Ypsilanti. Smith noted that the organization he leads – the Michigan Suburbs Alliance, based in Ferndale – opened an office in downtown Ypsilanti. His sister also lives in the city – he’s seen the foreclosed homes on her street.

If the county board has the will to invest in substantial economic development over the long term, Smith said, they can do a lot of good. They can do an equal amount of harm by investing haphazardly.

Bergman agreed that economic development is important, but said she doesn’t think it’s being subsumed in this new department. She also noted that while Ann Arbor is a terrific place to live, there are certainly residents who need the county’s assistance. There are widows, for example, who live in large houses they can’t sell and who have to choose between buying food or medication. “Ann Arbor is not just a mansion city,” she said.

Yousef Rabhi concluded this part of the session by saying he was impressed with the consolidation plan. Like the IT collaboration that the board approved at its May 4 meeting, this is another step, he said.

Brownfields and Packard Square

The May 5 working session also included a discussion of the Packard Square project in Ann Arbor. At its meeting the previous night, the board was asked to give initial approval of a $1 million grant application and $1 million loan from the Michigan Dept. of Natural Resources and Environment, for brownfield cleanup at the site. Commissioners were also asked to authorize designation of the county’s full faith and credit as a guarantee to any loan that might be awarded, up to $1 million.

Some commissioners raised concerns at their May 4 meeting about the brownfield proposal and requested that the agenda item first be addressed at a working session. It was added to the May 5 agenda – that item will be reported in a separate Chronicle article.

Present: Barbara Levin Bergman, Kristin Judge, Ronnie Peterson, Alicia Ping, Wes Prater, Yousef Rabhi, Conan Smith, Dan Smith, Rob Turner.

Absent: Leah Gunn, Rolland Sizemore Jr.