Archive for May, 2013

At a May 2 working session lasting more than 3.5 hours, Washtenaw County commissioners were briefed on a bond proposal to fund the county’s pension and retiree healthcare plans, and debated the merits and risks of issuing up to $345 million in bonds – by far the largest issue in the county’s history.

The bonding is made possible by Michigan’s Public Act 329 of 2012, which the state legislature passed in October of 2012. [.pdf of Public Act 329] The law enables municipalities to issue bonds to cover unfunded accrued pension and retiree healthcare liabilities, but has a sunset of Dec. 31, 2014. The county faces a $30 million contribution toward these obligations in 2014, and is looking for ways to manage that obligation.

The most recent estimates put the county’s maximum retirement obligations at $340.8 million. New actuarial reports are due in June, however, and estimates could change. The board was presented with calculations for borrowing $344 million at an assumed average interest rate of 4%. The county would pay $239 million in interest over the life of the 25-year bond, for a total of $583 million in combined interest and principal.

John Axe of Axe & Ecklund, a Grosse Pointe Farms attorney who has served as the county’s bond counsel for decades, helped craft the state legislation that permits this type of bonding. He was on hand at the working session to describe the proposal and answer questions. “If you don’t issue the bonds,” Axe said, “you’re going to have horrible budget problems.”

County administrator Verna McDaniel has advocated for this move, in part to make long-term budgeting easier by having predictable bond payments. She raised the proposal publicly for the first time at the board’s April 17, 2013 meeting. However, Axe told commissioners that he’d been asked by the county administration to start looking into this possibility in November of 2012. He also met earlier this year with the board in closed session, when labor negotiations were discussed.

During the May 2 working session, several commissioners referred to the fact that the new 10-year labor deals approved earlier this year had been key to moving forward with this bond proposal. Allusions to that connection have been made at previous board meetings, but not directly stated. The crucial point was closing the defined benefit plan to employees hired after Jan. 1, 2014. Unless the defined benefit plans were closed, the county would not have been allowed by law to proceed with this type of bonding.

Also a factor are the new accounting standards of GASB 68, which require that unfunded liabilities be included in an organization’s financial statements for fiscal years beginning after June 15, 2014.

Some commissioners expressed concern that the bonding process, now that it’s public, is being rushed. “If I’m borrowing $350 million, I think we should take our time to ask appropriate questions,” said commissioner Ronnie Peterson. “That’s a lot of money.” He felt it was important to see updated actuarial estimates, but noted that based on the board’s discussion, “it’s like we’ve already made up our minds.”

Dan Smith lobbied to explore more options, rather than just one proposal, and raised the possibility of putting this issue before voters. “What we’re really trying to do is to manage our cash flow,” he noted. Smith also expressed skepticism about projections that the bond proposal would result in more than $100 million in savings for the county over 25 years, compared to the amount that the county would pay for its retiree obligations without bonding.

But Conan Smith argued that the board “set the course” when it approved those labor contracts and voted to close the defined benefit plans earlier this year. He acknowledged concerns about the timing, “but in part it has to move so fast because this board closed the plan, and we’re looking at a $30 million payment in 2014 if we don’t do something. So it was a choice we made willfully and with full knowledge and now we’re designing a fiscal strategy to minimize the severity of the impact on our budget.”

That specific budget impact was not discussed publicly when the board voted on the new labor contracts.

Axe also urged the board to act quickly, saying that the proposal is interest-rate sensitive. The proposal assumes that the county would borrow at an average annual interest rate of 4%, then invest the bond proceeds to earn an average rate of return of 6.5% over the 25-year period.

The proposal calls for the board to take an initial vote at its next meeting, on May 15, followed by final approval to issue a “notice of intent” on June 5. The board would also need to approve a state-mandated comprehensive financial plan in July, setting the amount of the bond issue. The county would then submit an application to the state Dept. of Treasury, which must approve the bond issue.

Some commissioners hope to get more input from experts – faculty at the University of Michigan business school, for example, or the county treasurer – who don’t stand to benefit from this bond issue. Because of these concerns, the county is expected to hire a third-party consultant, Public Financial Management Inc., to review the proposal.

In response to a question from Dan Smith, Axe told the board his firm would earn $485,000 in fees from this bond issue, at his standard rate. The county is also using Municipal Financial Consultants Inc. (MFCI) as the financial consultant on this proposal. Axe & Ecklund provides a 15% discount on its fees if the county hires MFCI as the financial consultant. MFCI president Meredith Shanle attended the May 2 working session. Though it was not mentioned at the meeting, Shanle is Axe’s daughter.

Board chair Yousef Rabhi stressed the importance of community engagement, and outlined plans for getting input – including a public presentation and possibly extra meetings. “Regardless of the decision that we make,” he said, “it’s important that the community is involved in that process.” [Full Story]

The first item on the Ann Arbor city council’s agenda, when it resumes its May 6, 2013 meeting next week on May 13, will be consideration of the site plan for the 413 E. Huron project. The project is a roughly 500-bedroom apartment building proposed for the northeast corner of Division and Huron streets.

The council suspended its May 6 meeting at around 11:30 p.m. after completing eight public hearings – including one on 413 E. Huron – and voting on a number of other business items. The same meeting will resume at 7 p.m. on May 13.

This brief was filed shortly after the May 6 meeting concluded. A more complete report of the meeting will follow: [link]

The necessary approvals for the Summit Townhomes project – zoning and site plan – have now been given final approval by the Ann Arbor city council. The approval of the site plan came at the council’s May 6, 2013 meeting. Approval of the new R3 (townhouse) zoning had come at the council’s April 15, 2013 meeting.

Both the site plan and the new zoning for the parcel, located at 2081 E. Ellsworth Road, had appeared on the council’s April 15 meeting agenda. The council approved the R3 zoning at that meeting. But as the hour grew late, at around 3 a.m. the council postponed all remaining items, including the Summit Townhomes site plan, until May 6.

Both the site plan and zoning request had … [Full Story]

The Ann Arbor city council has withdrawn its formal objection to the renewal of a liquor license for The Arena – a bar located on the northeast corner of Washington and Fourth in downtown Ann Arbor. The action to withdraw the city’s objection came at the council’s May 6, 2013 meeting.

The council withdrew objection when The Arena paid all outstanding obligations to the city on April 30, 2013.

The basis of the council’s objection to the renewal, which was made at its March 18, 2013 meeting, had been The Arena’s failure to pay a combined $8,755 of 2011 taxes and an additional default judgment. The default judgment was made in the 15th District Court by then-judge Julie Creal in favor … [Full Story]

Initial consideration of a new ordinance regulating the use of public surveillance cameras has been postponed by the Ann Arbor city council until May 20. The council’s action came at its May 6, 2013 meeting. The council had previously postponed the item at its April 15 meeting – due to the length of that meeting. [.pdf of ordinance as presented to the council on April 15, 2013]

… [Full Story]

On a unanimous vote, the Ann Arbor city council has again delayed final enactment to changes in the city’s ordinance governing the Ann Arbor Downtown Development Authority. The postponement is until the council’s second first meeting in September – on Sept. 3, 2013.

Ann Arbor DDA TIF revenue projections. The vertical line indicates the year when the clarified calculations would be implemented. The red line is the amount of TIF revenue assumed by the DDA in its FY 2014 and FY 2015 budgets, and in its 10-year planning document. The blue line is the estimated TIF … [Full Story]

Final approval to changes in the city’s sign ordinance – to allow for only a limited type of digital signs – has again been delayed by the Ann Arbor city council. The council had given initial approval of the changes at its March 18, 2013. But at the council’s April 1, 2013 meeting, the council delayed action until May 6.

And on May 6, the council again decided to postpone final action – this time until June 17.

… [Full Story]

The Ann Arbor District Library board has authorized its fiscal 2013-14 budget with a millage rate of 1.55 mills – unchanged from the current rate. The action took place at the board’s May 6, 2013 meeting. [.pdf of budget summary from AADL board meeting packet]

The $12.328 million budget assumes a 2.1% increase in tax revenues, based on an increase in property values. The approved budget and millage rate are slightly lower than the draft proposal presented at the AADL board’s April 15, 2013 meeting. At that time, trustee Ed Surovell argued strongly against even the slightest increase in the millage rate, which had been proposed at 1.575 mills. The library is authorized to levy up to 1.92 mills, but … [Full Story]

A resolution to extend the Ann Arbor District Library’s space-use agreement with the nonprofit Friends of the Ann Arbor District Library for one year was unanimously approved at the AADL board’s May 6, 2013 meeting.

Friends of AADL operates a used bookstore in the lower level of AADL’s downtown branch at 343 S. Fifth Ave. Proceeds of the store – about $90,000 annually – are given to the library. [.pdf of current FAADL space-use agreement]

This brief was filed from the fourth-floor conference room of the downtown library at 343 S. Fifth. A more detailed report will follow: [link]

The Ann Arbor city council’s May 6, 2013 meeting agenda includes significant unfinished business – postponed from its meeting on April 15. Live updates on action taken at the May 6 meeting will be included in this article “below the fold.”

The April 15 meeting had lasted until 3 a.m. before the council decided to postpone all remaining items on its agenda until May 6. Two controversial issues left unfinished from April 15 – 413 E. Huron’s site plan and the Ann Arbor Downtown Development Authority ordinance – could themselves potentially take up enough time to extend the May 6 meeting into the early morning hours.

In addition to a significant amount of new business on the council’s agenda, the May 6 docket includes a total of eight public hearings, including one on the fiscal year 2014 budget. The council will need to make any amendments to the city administrator’s proposed budget by the end of its May 20 meeting.

Based on discussion by councilmembers after their special workshop held on April 29, and subsequent follow-up by The Chronicle, the council has a contingency plan for the May 6 meeting. If it lasts too long, councilmembers may decide at a certain point to recess the meeting until May 13. That is, on May 13, the May 6 meeting would continue. That’s a different strategy from the one used on April 15, when the council chose to end that meeting, but postponed all remaining items until May 6.

Recessing a meeting, to be resumed at a later time, is a strategy the council last used two years ago. The council began a meeting on May 16, 2011 – when it was supposed to adopt the FY 2012 budget – but recessed the meeting until May 23, 2011. Then on May 23 councilmembers immediately recessed the meeting again, and finally ended the meeting on May 31, 2011.

Readers can follow the live meeting proceedings on Channel 16, streamed online by Community Television Network. But even for interested residents, the proceedings might be difficult to follow – due to their sheer length.

So in this report, we’ll be filing live time-stamped updates from the meeting. At the end of the May 6 session, these updates will provide a record of what items received council action and which (if any) were left until later. [Full Story]

Writing on Ann Arbor Schools Musings, Ruth Kraut takes an in-depth look at the Broad Foundation and its influence on school systems nationwide, including in Ann Arbor. The current Ann Arbor Public Schools superintendent, Patricia Green, attended a training center funded by the foundation, and the search firm that’s helping to find Green’s replacement has ties to the center. Kraut writes: “It’s not just that I don’t agree with the Broad Center’s agenda; it’s that I don’t think that most Ann Arborites do either. Further, and even worse, I don’t think that the Broad Foundation is honest about their agenda. I believe that their agenda is to privatize, and profit-ize, public schools.” [Source]

Ann Arbor greenbelt advisory commission meeting (May 2, 2013): This month’s GAC meeting was highlighted by remarks from a likely new member – Stephanie Buttrey, an engineer and retired Chrysler executive. She’s being nominated to serve out the remainder of Liz Rother’s term through June 30, 2014, and is expected to be confirmed by the city council on May 6.

Buttrey told commissioners that she’s a 50-year Ann Arbor resident and University of Michigan graduate who’s interested in land preservation. Dan Ezekiel – GAC’s chair – said she’ll bring common sense, business acumen and knowledge to the commission.

Ezekiel also noted that there are other vacancies that need to be filled. GAC’s June 6 meeting will be the last one for him and two other term-limited commissioners – Tom Bloomer and Laura Rubin. “So all of you people watching us breathlessly on TV, please send in your applications,” he said. [.pdf of application form for city boards and commissions]

GAC’s May 2 meeting was also attended by Barry Lonik, a land conservation consultant who is representing Ann Arbor Township in a possible greenbelt deal. He was invited into the commission’s closed session to share communications about the property.

When commissioners emerged from the closed session, they unanimously voted to recommend that the city council pursue the purchase of development rights for two properties, including one in Ann Arbor Township. Before appearing on the city council’s agenda, details of proposed greenbelt acquisitions are not made public. Parcels are identified only by their application number.

At the end of the meeting, Ezekiel marked the recent death of Charles Braun, describing him as a very influential leader in the local farm community. Braun’s property – a 286-acre farm in Ann Arbor Township – has been preserved as part of the Ann Arbor greenbelt program. [Full Story]

Forbes and Mashable are among the many media sites that have posted a video of Twitter CEO Dick Costolo’s speech at the May 4 University of Michigan commencement. Mashable notes: “Costolo, a graduate of UM who pursued comedy after earning his bachelor’s degree for computer science in 1985, started his speech by tweeting a photo of the crowd and ended it saying, ‘hashtag go blue!’” [Source] [Source]

[Full Story]

Ann Arbor Downtown Development Authority board meeting (May 1, 2013): The DDA board’s meeting, which lasted under a half hour, included only public commentary and some updates from the board’s committees. No voting items were on the agenda.

The meeting did not feature one of its typical highlights – discussion of the monthly parking report. However, the data was released to the public at the meeting, and it was mentioned that the data was now available to the public in draft form.

So this meeting report adds that provisional parking data to the data set that The Chronicle maintains – to chart the activity in Ann Arbor’s public parking system as the DDA measures it.

Highlights from public commentary included appreciation from representatives of the Neutral Zone for grants the organization has received from the DDA. The board also heard an update – during public commentary and in its committee reports – on a proposal to install an artificial ice rink on top of the new Library Lane underground parking garage.

Committee reports included updates on a possible economic development task force initiated by Ward 2 city councilmember Sally Petersen. Other updates included getDowntown’s commuter challenge, which takes place during the month of May, and the opening of the “Bike House” bicycle parking facility inside the Maynard parking structure.
[Full Story]

Ann Arbor Public Schools board of education study session and regular meeting (April 24, 2013): As the main event of the meeting, AAPS administration unveiled its proposed budget to the board. Director of finance Nancy Hoover gave a presentation on district expenditures, then walked the board through proposed cuts of $8,689,293.

Four community dialogue meetings the board held regarding the budget were summarized by board president Deb Mexicotte and treasurer Glenn Nelson. The trustees will be working to divide some of the suggestions they heard from the public into short-, mid-, and long-term action items.

The board also met during a study session before the regular meeting to address some of the most pressing needs of the superintendent search: identifying a salary, determining a superintendent profile, confirming the superintendent search timeline, and approving an advertising schedule.

The trustees hope to have a candidate in place by the end of July. They decided on a salary range of $180,000 to $220,000, commensurate with experience.

Also at the meeting, Mexicotte made standing committee appointments. The trustees recently moved away from a committee-of-the-whole structure to planning, performance, governance, and executive committees.

Additionally, the board heard first briefings on paving contracts, tech bond purchases, and the Freeman School lease renewal. Trustees voted to approve the 2013 spring grant awards. [Full Story]