After more than three and a half hours of deliberation ending after midnight at its March 5, 2012 meeting, the Ann Arbor city council gave approval to a four-party transit agreement – with the city of Ypsilanti, Washtenaw County and the Ann Arbor Transportation Authority. The agreement would provide a framework and chronological sequence for the transition of the AATA to a new governance and funding structure. The Ann Arbor approval leaves several steps that would still need to be completed, before such a transition would be possible.
The goal of the transition is to provide expanded service in Washtenaw County – both within the city of Ann Arbor, and outside the AATA’s current service area. [.pdf of four-party as initially considered on March 5]
The council considered several amendments to the four-party accord on Monday night, but did not approve all of them. Four of the amendments, all of which failed, were proposed by Jane Lumm (Ward 2) or Stephen Kunselman (Ward 3). Their amendments would have: (1) added a seat for city of Ann Arbor on the board of the new transit authority (giving the city 8 out of 16 seats); (2) added a requirement that the minimum transportation services to the city of Ann Arbor be commensurate with the Ann Arbor millage; (3) required that the parties agree to reconsider the four-party agreement if pending state legislation were to be passed, which would establish a regional transit authority (RTA) for the counties of Washtenaw, Wayne, Macomb and Oakland; and (4) required at least 50% of the jurisdictions in Washtenaw County to participate in the new transit authority as an additional contingency to closing the deal.
None of those four amendments got more than five votes from the 11-member body. [.pdf of document showing all proposed amendments]
The council also considered an amendment put forward by Sabra Briere (Ward 1) stipulating that by signing the agreement the city council was not thereby automatically pledging its full faith and credit to any project undertaken by the new transit authority. That amendment received unanimous support.
Another amendment proposed by Briere was also approved – on a 9-2 vote – which gives the city of Ann Arbor the right to withdraw from the agreement if a funding source is not approved by a majority of Ann Arbor voters. But the amendment does not require the withdrawal unless Ann Arbor voters have not approved a funding source by Dec. 31, 2014.
The vote on the four-party agreement as a whole was 7-4, with dissent from Stephen Kunselman (Ward 3), Jane Lumm (Ward 2), Marcia Higgins (Ward 4), and Mike Anglin (Ward 5).
The new transit governance structure would be provided under Act 196 of 1986 instead of the state statute under which the AATA is currently incorporated – Act 55 of 1963. Called for in the four-party agreement is a 15-member board, to which Ann Arbor would appoint seven members. The AATA currently has a seven-member board.
The other eight slots on the board would be filled as follows: city of Ypsilanti (1); Pittsfield Township (1); an east district that includes Ypsilanti Township (2); a middle south district (1); a middle north district (1); a north east district (1); and a west district (1). [.jpg of map showing districts]
Act 55 was originally conceived to provide public transportation for cities, whereas the subsequent Act 196 was enacted to allow a broader range of political subdivisions to create public transportation systems, including counties. [See "Act 55 versus Act 1986" for more detail.]
Several steps remain before the AATA’s operations could transition to a new governance structure, including: (1) the approval of the four-party agreement by the city council of Ypsilanti and the Washtenaw County board of commissioners; (2) the ratification of articles of incorporation by the city councils of Ann Arbor and Ypsilanti; and (3) voter approval of a funding mechanism for the new transit authority.
Funding: Additional Transit Millage?
Of the steps that remain before the AATA could be transformed into a new transit authority, the most significant one, which is a contingency spelled out in the four-party agreement, would be voter approval of a funding source adequate to pay for the planned expanded service.
The most likely scenario at this point would be an additional transit tax for property owners countywide – or whatever geographic area remains after any political subdivisions choose to opt out of inclusion. Five townships out of 20 in the county have already indicated a preference not to participate. The other townships and the cities of Ann Arbor, Ypsilanti, Chelsea and Saline are participating so far with the unincorporated Act 196 board, which has been meeting since the fall of 2011.
A financial advisory group, which has been providing input to the AATA on the fiduciary aspects of the plan, declined at its Feb. 29, 2012 meeting to recommend that the funding source be a transit millage. But if the funding source were to be an authority-wide transit tax, that group has calculated the required amount to be 0.5 mill. [A mill is $1 for every $1,000 of taxable value on a property. For a house worth $200,000, with a state-equalized value of $100,000, 0.5 mill is $50 per year.] The 0.5 mill tax is estimated to generate around $32 million over five years.
At the advisory group’s Feb. 29 meeting, Dennis Schornack, a special advisor to Michigan Gov. Rick Snyder on transportation issues, characterized the pending legislation recently introduced in the state legislature as likely requiring two to three years to see any practical implementation, even if the bills were enacted swiftly. [See Chronicle coverage: "Michigan Regional Transit Bills Unveiled"]
The calculation that a 0.5 mill tax on property owners authority-wide would be sufficient to fund expanded service is based on a requirement in the four-party agreement – that the current millages levied by the cities of Ann Arbor (a bit over 2 mills) and Ypsilanti (a bit under 1 mill) would remain in place and be passed through to the new Act 196 transit authority.
The entity to place a ballot question before voters would be the new, incorporated Act 196 transit authority. In order for a question to be placed on the ballot for the Nov. 6, 2012 election, it would need to be certified to the county clerk no later than Aug. 28. Calculating backward from that date would need to accommodate the 30-day initial window that local government units in the county have after the articles of incorporation are filed, if they wish to opt out of the new Act 196 authority. And a millage campaign to encourage voters to support the additional tax would likely need a few months of lead time to get organized.
Given Ann Arbor’s approval of the four-party agreement, it could be considered by the Ypsilanti city council as early as March 20 and by the Washtenaw County board of commissioners at their March 21 meeting.
Financial Advisory Group Work
AATA’s financial advisory group is a collection of more than 20 representatives of the public and private sectors, led by McKinley Inc. CEO Albert Berriz and retired Washtenaw County administrator Bob Guenzel. They have met since the fall of 2011.
At the group’s Feb. 29 meeting, the categories of service recommended for inclusion in the first five years of the program include ongoing bus replacements, urban bus network enhancements (including enhancements to the WAVE, a western Washtenaw express), countywide door-to-door and flex services, express bus services, local community circulators, park-and-ride lots, vanpool services, and “superstops” in the Washtenaw Avenue corridor.
A subcommittee that did much of the detail work for the larger group is recommending an average increase for fixed-route fares of $0.50, with the possibility of fare increases for paratransit services as well. [The current basic fare for fixed-route service is $1.50.] Higher fares should be charged for express bus services, with the possibility of distance-based zone fares, according to the subcommittee.
Also, projects like the north-south high-capacity connector, the Washtenaw Avenue high-capacity service, as well as the east-west and north-south commuter rail service are recommended by the financial group to be considered separately. Those projects are not recommended for inclusion for local expenditures in the first five years. It’s also recommended that the Ann Arbor downtown circulator service (previously called The LINK) should be discretionary and should rely on private investment.
Compared to existing levels of funding and the amount of funding needed to support the AATA’s planned expansion of service, the financial advisory group identified a roughly $20 million gap on the operating side and a $12 million gap on the capital side – for the first five years of the plan. So over the first five years of the plan, the group identified a total $32 million funding gap, an average of roughly $6 million per year. The group calculated that this gap could be covered through a 0.5 mill property tax. Within the city of Ann Arbor, 0.5 mill of property tax translates roughly to $2.25 million a year.
[.pdf of budget summary][.pdf of capital budget] [.pdf of operating budget] [.pdf of financial performance data] [.pdf of financial group's final report] [.pdf of financial group's subcommittee report]
Other Steps Before Any Ballot Proposal
Before the Act 196 authority could be incorporated, several other steps would still need to be completed. The four-party agreement would still need to be ratified by the Ypsilanti city council and the Washtenaw County board of commissioners.
According to the four-party agreement, the AATA would also need to publish the details of the funding and expanded service plan in a newspaper of general circulation. And the city councils of Ann Arbor and Ypsilanti would need to approve the articles of incorporation for the new Act 196 authority. Before the AATA would be able to request that Washtenaw County file the articles of incorporation with the state of Michigan, the funding and service plan would need to be published, and the two city councils would need to ratify articles of incorporation. [.pdf of draft articles of incorporation]
The Route to Approval
The four-party agreement nearly failed to appear on the March 5 agenda at all.
The council agreed at its Feb. 6 meeting to postpone the vote until March 5 – but with the proviso that postponement to that date certain would be “contingent upon materials being submitted to City Council by Feb. 29, 2012.” During the deliberations on postponement, councilmembers were content to give the mayor and city administrator the discretion to hold the item off the agenda, if the desired information was not submitted to the council by Feb. 29.
In an email sent to councilmembers on Feb. 24, city administrator Steve Powers wrote: “I do not believe the intent of Council’s motion is met by AATA providing material late on the 29th and prior to the public information session on the 2nd.”
In his email, Powers’ allusion to March 2 was a drop-in session hosted by the AATA in the city council chambers from 4-7 p.m. About half a dozen residents attended who were not affiliated with the AATA. Several AATA staff, members of the AATA board, and members of the financial advisory group were also on hand.
The Feb. 29 reference in Powers’ email was to the meeting of the financial advisory group, co-chaired by McKinley Inc. CEO Albert Berriz and retired Washtenaw County administrator Bob Guenzel.
Powers’ email was countered in a message sent by AATA CEO Michael Ford to Powers and all city councilmembers on Feb. 27: “… we will be sending Councilmembers the Financial Task Force recommendations on Feb. 29 as promised. I believe this will fulfill the intent of Council’s motion. My staff and I continue to plan coming to council on the 5th as previously discussed.”
By the time the financial advisory group had concluded its meeting on the morning of Feb. 29, the council’s agenda had been published online, but did not yet include the four-party agreement agenda item. After the advisory group’s meeting, which was held at the offices of the Ann Arbor Downtown Development Authority on South Fifth Avenue, Ford walked the block to city hall, located at Fifth and Huron.
Later that afternoon, the four-party agreement appeared on the council’s agenda.
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