Yes, the fund is already established and hosted by AAACF. Here’s the relevant graf from the intro:

Several steps have already been taken to achieve these goals. An endowment was established in 2011, with $2.1 million in commitments so far. That amount includes a $1 million gift from the St. Joseph Mercy Health System to create the endowment, which is called the Sister Yvonne Gellise Fund for Supportive Services for Housing. Gellise is the former CEO of St. Joe’s. She’s on the task force and is a founding board member of the Washtenaw Housing Alliance. Another $1 million commitment comes from the Ann Arbor Area Community Foundation (AAACF), where the endowment is housed. AAACF Cheryl Elliott is another task force member. In addition, an anonymous donor has contributed $100,000.

If you follow the link to the Gellise Fund on the AAACF website, there’s a bit more background.

Is the intention that AAACF would also host the endowment fund?

I thought that John Floyd got right to the point – if we perceive housing and homelessness to be a public service, we should not be bonding for it, but pay for it via a current revenue, whether a millage or a general fund allocation. That is true for all public services.

Conan Smith has previously expressed willingness to make major decisions on redirection of public monies without a vote of the public. (The road tax idea.) This is another example. A millage vote would be reasonable, but a pre-emptive bond sale would not.

Great comment!

The issue is bonding. The purpose of bonding is to spread the cost of long-lived physical assets over the life of the asset, so that people living here today do not pay the full cost of building, say, a bridge that will be used by people living here 20 years from now. It’s one thing to say that a bridge will be used for 30 years, so we should spread its cost over 30 years. It’s another thing to say that we should pay today, for rent and social services to be delivered 20 years from now, with no benefit to anyone in the meantime. It’s not obvious that this is the purpose of public taxation.

Funds raised by selling bonds are a VERY different thing from an endowment. An endowment’s purpose is to permanently support some annual OPERATION. A bond exists to spread the cost of a capital asset to users per the life of the asset.

A further issue is the inflexible nature of a restricted endowment. Should priorities change in the future – better medications for various mental illnesses developed in the future, for example – a fund dedicated only to 500 units of supportive housing would not be available for other such uses. For private money, this is fine. For tax dollars, this is not. A millage to fund social work and rent can be repealed or altered as conditions change. A millage raised to fund a particular bond issue may not be so flexible, and in any case the county is obliged to pay for bonds it sells regardless of any particular millage.

I applaud Mr. Smith’s eagerness to find ways to use the county’s AAA bond rating for the benefit of county residents as well as his desire to end homelessness, but if selling bonds to fund current services is not a good idea (and it isn’t), then selling bonds to fund services to be delivered a generation from now is a more not-good idea.

This money can be raised privately, and I will contribute.

John Floyd
Republican Candiate for County Commission
District 9

I read this after mulling about the problems the endowment fund might have with managing its investments. The whole concept of an endowment as I understand it is that one amasses a certain amount of capital and then spends the income from the capital on the desired activity. But there are expenses (the financial managers of such funds are usually paid fairly well) and the investment picture for fixed-income returns is rather limited right now. With interest rates so low, how would the fund be able to assure enough income to achieve its goals?

Conan Smith’s suggestion that magic money would appear from the bonds (a very optimistic rate of return) is stunning. He would encumber the county with bonds essentially on a gamble that the most optimistic scenario would result.