Column: DDA Pay Increases, Open Meetings

Earlier this month, Ann Arbor Downtown Development Authority executive director Susan Pollay received a 5% raise from the DDA board. That brought her annual compensation to $114,570.

The free response portion of a performance evaluation for Ann Arbor Downtown Development Authority executive director Susan Pollay. The DDA board appears to have decided her salary increases in FY 2013 and FY 2014 in a way that did not conform with the Open Meetings Act.

The procedure used this year by the board to award Pollay a salary increase appears to have conformed completely with the requirements of Michigan’s Open Meetings Act (OMA).

However, that procedure was different from the one used to award raises to Pollay in each of the two previous years.

Those raises worked out to 8% and 6.7%, respectively. In each of the two previous years, the decision to award Pollay those raises appears to have been made in a way that is contrary to the most basic requirement of Michigan’s OMA: “All decisions of a public body shall be made at a meeting open to the public.”

That conclusion is based on records produced by the DDA to The Chronicle in response to requests made under Michigan’s Freedom of Information Act (FOIA), as well as records the DDA was not able to produce.

The analysis below begins with an overview.

Overview

Responding to a request made by The Chronicle under Michigan’s FOIA, the only documentation the DDA produced for board authorization of the two previous years’ raises was two letters. The letters were sent by former board chair Leah Gunn to the city of Ann Arbor’s human resources staff – dated Oct. 9, 2012 and June 27, 2013.

Those letters don’t appear to describe the salary decisions by the board in ways that meet basic OMA requirements. Specifically, OMA requirements do not appear to have been satisfied for either the board as a whole, or for a subquorum committee of the board – which DDA board members may have assumed was acting lawfully on behalf of the entire board.

By way of contrast, this year the board voted on the question of a salary increase for Pollay at its regular meeting of July 2, 2014. That vote, in open session on a written resolution, came after a roughly 15-minute closed session held by the board on Pollay’s performance review. A personnel matter like a performance review – if the employee requests it – is one of the limited number of reasons under Michigan’s OMA that a public body can bar the public from a meeting. That procedure, including the vote in open session by the board, is familiar from The Chronicle’s coverage of other public bodies. It’s a procedure that conforms with the OMA.

However, for neither of the two previous years did the DDA board discuss at any of its meetings the question of salary increases for its executive director. Nor did the board hold a closed session on a personnel matter during that period. Nor did the board vote on those salary increases at any of its meetings.

Some DDA board members might have assumed the board’s executive committee had authority to act on the board’s behalf in deciding executive director salary questions. But in response to a request made under Michigan’s FOIA, the DDA was not able to produce any records with documentation that the performance review of its executive director and recommendations on salary increases have been specified by the board as duties of the executive committee.

And even if the executive committee had been tasked by the board with those duties, the DDA was unable to produce any records of minutes for its executive committee meetings during the relevant time period. Further, it’s not clear that the executive committee posted adequate public notices of its meetings during this period, or that the typical location of executive committee meetings – the executive director’s personal office – can be considered accessible to the public under the definition of the OMA.

Concerns raised by the material that was provided to The Chronicle under Michigan’s FOIA are not limited to questions about the openness of decision-making procedures – as measured against the requirements of the OMA. The written performance reviews of Pollay are heavily weighted towards general expressions of support and commentary on Pollay’s personality, instead of providing important critical feedback on performance.

Laid out in detail below are the arguments that the decisions to award Pollay a raise in two previous years – for FY 2013 and FY 2014 – were made in a way that violated the OMA. The analysis concludes with a note on the oversight role of the city council with respect to the DDA.

Salary Decisions Made: FY 2013, FY 2014, FY 2015

At its July 2, 2014 meeting, the DDA board voted to award its executive director, Susan Pollay, a 5% pay raise for fiscal year 2015, which started July 1. That brought her annual compensation to $114,570. During board deliberations on the resolution, long-time DDA board member Roger Hewitt mentioned that Pollay had received good raises the two previous years.

Those raises were reflected in the salary history that deputy DDA director Joe Morehouse forwarded to current board chair Sandi Smith in late June of this year. That salary history is as follows:

Fiscal YR       Salary   % Increase
FY 2014    $109,114.40   6.70%
FY 2013    $102,263.20   8.00%
FY 2012     $94,689.40   0.00%
FY 2011     $94,689.40   0.00%
FY 2010     $94,689.40   0.00%
FY 2009     $94,689.40   0.00%
FY 2008     $94,689.40   0.00%
FY 2007     $94,689.40   0.00%
FY 2006     $94,689.40   0.00%

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The July 2, 2014 DDA board deliberations framed that salary history as the equivalent of only a 1.9% annual raise since 2006. Board members indicated an interest in raising Pollay’s salary in future years, to bring it into alignment with the mid-point of the salary range for her city of Ann Arbor “Level 2″ position. That midpoint is $126,000 – in a range from $95,340 to $157,312.

City administrator Steve Powers cast the sole vote of dissent on the board’s July 2 action to increase Pollay’s salary by another 5% in FY 2015. He felt that 3% was more appropriate. He also expressed a desire to see a more robust evaluation process in the future.

Expressed as a percentage, the total amount of Pollay’s pay increases over the last three years comes to nearly 21%. How does that compare to other employees at the city? Powers responded to an emailed query from The Chronicle with the following data:

FY 2015   3%
FY 2014   3%
FY 2013   one-time $1,000
FY 2012   0%
FY 2011   0%

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Previous Board Action

When Hewitt mentioned at the July 2 DDA board meeting that Pollay had received raises for FY 2013 and FY 2014, that was likely a revelation to anyone outside the DDA board.

The Chronicle’s coverage of the DDA since 2008 – which includes reporting on all DDA resolutions approved by the board – does not reflect any board discussion or votes on pay raises for Pollay during that period. A machine search of the DDA’s board meeting minutes available on the DDA’s website produces a single search result for the phrase “performance evaluation” – from 1997, which is a year after Pollay was hired as DDA executive director.

On July 2, 2014 The Chronicle made a records request under Michigan’s FOIA that included “all records or documentation showing authorization – by the DDA board, a DDA committee, or any member of the DDA board – for adjustments to the Ann Arbor DDA executive director’s salary over the past two years, adjustments referenced by Roger Hewitt at the board’s July 2, 2014 meeting.”

Based on the DDA’s July 10 response to that request, only two records are in the possession of the DDA that document any authorization for Pollay’s salary increases in FY 2013 and FY 2014. The two records are letters sent by the board chair at the time, Leah Gunn, to city of Ann Arbor human resources staff – dated Oct. 9, 2012 and June 27, 2013.

What the DDA did not produce in response to the request made under Michigan’s FOIA were any board resolutions or minutes from board meetings reflecting a decision by the board to increase Pollay’s salary in FY 2013 or FY 2014. The DDA also did not produce any resolutions by a committee with the authority to act on the board’s behalf, or any minutes from such a committee that reflect a committee decision to increase Pollay’s salary in FY 2013 or FY 2014. [.pdf of records from July 2, 2014 FOIA request]

What about Gunn’s letters? They do not indicate in an explicit way when the board as a whole might have made its salary decisions in FY 2013 and FY 2014.

Based on the records that the DDA did not produce, as well as the records that the DDA did produce (Gunn’s two letters), it’s fair to conclude that if the board as a whole did decide to increase Pollay’s salary in the two previous years, then the board made those decisions in a way that did not conform with the most central requirement of Michigan’s Open Meetings Act: “All decisions of a public body shall be made at a meeting open to the public.”

However, the first of Gunn’s letters, written three months after she was elected DDA board chair, refers in a general way to the executive committee of the DDA board, and its role in Pollay’s performance evaluation and salary adjustment. It’s important to consider, for the sake of argument, the possibility that the board’s executive committee might have acted lawfully on behalf of the board, and that the executive committee acted in a manner that was consistent with the OMA.

Previous Executive Committee Action

Some background on the executive committee is presented first, before evaluating possible decisions by the committee – with respect to the OMA and the DDA’s bylaws.

Previous Executive Committee Action: Background

The executive committee of the DDA board is a subquorum subset of its members – the chair of the board, the vice chair, secretary and treasurer. Ex officio non-voting members of the executive committee are the executive director and the immediately preceding board chair.

So during the most recent year in which Leah Gunn chaired the board – from July 2012 through June 2013 – the executive committee consisted of Gunn, Sandi Smith (vice chair), Keith Orr (secretary) and Roger Hewitt (treasurer). The two non-voting members of the executive committee were Pollay and Bob Guenzel.

When a subquorum committee of a public body effectively makes decisions on behalf of the body, then according to a Michigan attorney general opinion from 1998, that committee is itself considered as a public body under Michigan’s Open Meetings Act. [.pdf of AG Opinion #7000]

So to the extent that the executive committee might have made the decisions on salary increases for Pollay in FY 2013 and FY 2014, those decisions were required to have been made in accordance with OMA requirements – including those on noticing meetings to the public and on maintaining minutes for its meetings.

Previous Executive Committee Action: OMA Noticing Requirements

The letter from Gunn about the FY 2014 salary increase does not mention the executive committee, but rather only the board. However, Gunn’s letter about the FY 2013 salary increase for Pollay describes a meeting of the executive committee in a way that at least hypothetically could have been held in conformance with the OMA – a meeting at which the committee might have made a decision to authorize a pay increase for Pollay for FY 2013.

From Gunn’s Oct. 9, 2012 letter:

During the course of this work, I spoke with every member of the board and I brought their feedback to the October meeting of our DDA executive committee where we met with Susan to discuss their comments (which by the way were unanimously excellent). We are in complete agreement about adjusting the salary of our executive director to $102,264 from her current salary.

Although Gunn does not give the exact date of the October executive committee meeting, it is possible to infer that it took place on the same date as the DDA board meeting that month, which fell on Oct. 3, 2012.

That inference is based on the kind of posting that the DDA has used this year for its annual meeting calendar of the full board. In that posting about the full board meeting schedule, the executive committee is mentioned. It’s worth noting that in contrast, other DDA board committees have their own separate postings of meeting schedules, with the name of the committee prominently stated in the headline/title of the page. The DDA’s position is that this type of posting of the executive committee meetings complies with the OMA posting requirements. [.pdf of DDA Feb. 25, 2014 response letter from DDA]

The first occasion on which The Chronicle attended a scheduled meeting of the executive committee was March 5, 2014. The meeting was held in Pollay’s office. There is no signage at the DDA offices that would alert someone to the fact that the executive committee meets there, as opposed to the board’s meeting room. The board’s meeting room is immediately apparent on exit from the elevator that opens onto the third floor of 150 S. Fifth, where the DDA rents office space. The DDA’s management assistant, Jada Hohlbrook – who staffs a reception desk – directed The Chronicle to the specific location of the executive committee meeting, which requires a couple of turns to arrive at Pollay’s office at the back of the DDA suite.

The March 5 meeting was attended by only one voting member of the committee – Keith Orr. The following month, on April 2, 2014, attendance was perfect. A member of the public, Changming Fan, attended the April 2 meeting. When he arrived at the doorway to Pollay’s office, executive committee member Roger Hewitt advised him that he could not stay, as it was a meeting only for the executive committee of the board. If Hewitt thought the public could be excluded from the meeting, it’s not clear why he did not attempt to exclude The Chronicle – already sitting in plain view. In any event, Pollay told Hewitt that executive committee meetings were open to the public. Changming Fan and The Chronicle remained through the end of the meeting.

It’s fair to conclude that the conditions under which the executive committee meets are at least somewhat dubious with respect to satisfaction of OMA requirements.

The next part of this analysis focuses on issues that are clearer cut.

Executive Committee Action: OMA Requirements on Minutes

Not in doubt is the fact that no DDA executive committee minutes were kept for the period from February 2010 through February 2014 – the period during which the executive committee might have made decisions on increasing the executive director’s salary. That conclusion is based on the DDA’s response to a FOIA request made by The Chronicle on March 5, 2014. That request asked the DDA to produce, among other items, the executive committee meeting minutes for January 2008 through March 2014. In its March 11 cover letter responding to the March 5 request, the DDA indicated that only the minutes for “2008 to 2010″ were included. The most recent minutes provided were those from January 2010. [.pdf of DDA response to March 5, 2014 FOIA request]

Starting with the April 2, 2014 board meeting, after a gap of more than four years, the DDA began producing executive committee minutes for approval. That’s an implicit recognition, possibly on prompting from The Chronicle, that the executive committee is actually required under the OMA to keep minutes – if it is acting on behalf of the board as a whole. That requirement applies, even though the executive committee is a subquorum set of board members. [.pdf of AG Opinion #7000].

Let’s assume for the sake of argument that the DDA’s position is that the executive committee acted twice on behalf of the full board to increase the executive director’s salary during the period of July 2012 through June 2013. On that assumption, the fact that no minutes have been produced for the meetings during which those decisions were made is an ongoing violation of the OMA. And action could be taken in Washtenaw County’s 22nd circuit court to ask that court to enjoin the DDA against this ongoing OMA violation by ordering the DDA to produce minutes for those meetings.

Possibly a more significant question, however, is whether the executive committee of the DDA board is even empowered to act on behalf of the DDA board with respect to executive director salary issues.

Executive Committee Action: Power to Act?

According to the DDA bylaws, the executive committee could be empowered to make decisions on behalf of the board about the executive director’s salary adjustments – if it were a duty specified by the board. From the bylaws:

The executive committee shall fix the hours and place of meetings, make recommendations to the board, and shall perform such other duties as specified in these by-laws or as may be specified by the board.

The bylaws themselves don’t assign the duty of deciding the executive director’s salary to the executive committee. And in a July 18, 2014 response to a July 13, 2014 request from The Chronicle under Michigan’s FOIA, the DDA indicated that it had no records that documented the board’s specification of executive director performance review or salary recommendation as duties of the executive committee. [.pdf of July 18, 2014 DDA response to FOIA request]

So even if the executive committee made two decisions on the executive director’s salary sometime between July 2012 and June 2013 – undocumented by any meeting minutes – it’s not clear that the committee was even empowered under the DDA’s bylaws to make those decisions.

Executive Director Performance Evaluations

Written performance evaluations of Susan Pollay by board members from 2006 to the present were included in the response to The Chronicle’s July 2, 2014 request under Michigan’s FOIA. [.pdf of records from July 2, 2014 FOIA request]

General highlights include the fact that the evaluation form provides suggestions for phrases to be used in open-ended description – all positive:

(sample ideas you can use in your comments:)
• is accountable
• is able to motivate/lead her staff
• is willing to try new ideas, methods
• is an important resource to downtown stakeholders
• is knowledgeable in his/her field
• makes decisions on her own
• completes assignments on time or earlier
• responds accurately/quickly to information requests
• remains cool despite challenges
• maintains appropriate sense of humor
• gives credit to others when deserved
• puts in the extra hours and effort to get the job done
• speaks/communicates well flexibly adapts to changing priorities
• demonstrates dedication to the DDA mission
• effectively uses resources/consultants

For the free-response portion of the evaluations, board members in many instances appear to have copy-pasted from that set of suggestions – either wholesale or in part.

With respect to the objective scoring portion of the form, board members have in many cases simply filled in the objective scoring portion of the form with the maximum score for the first few items (15). They have then “auto-filled” the rest of the items – apparently not noticing that the maximum score for items at the end of the list is a different number (10).

It’s also striking that some board members seem to have filled out the forms in an informal manner. One respondent offered “Mary Poppins” as the entire text of the written review; another simply stated “The goddess always does a great job.”

The set of one-page evaluations provided to The Chronicle also includes some that are apparent duplicates with respect to content – even though the sheets of paper that were scanned for The Chronicle are different. An example of that is the “goddess” evaluation. That evaluation appears twice in the set – but only one of the two scanned pages includes the handwritten year “2011″ at the top of the page.

In this context it’s worth noting that city administrator Steve Powers’ July 2, 2014 vote of dissent on Pollay’s salary increase included by way of commentary a hope that in the future the evaluation process could be more robust.

City Council Oversight

Ultimately it is the Ann Arbor city council – as the governing body of the municipality where the DDA is established – that has responsibility for oversight of the Ann Arbor DDA board. It is the city council that confirms the appointment of DDA board members. And it is the city council that can potentially remove members from the board for cause.

How well has the Ann Arbor city council exercised its oversight role over the years? On Aug. 26, 2013 a joint meeting of city council and DDA board members was held. At that meeting, Sally Petersen – a first-term Ward 2 city councilmember, now a mayoral candidate – characterized her understanding of the city council’s historical performance in its oversight role. In the following quote, she was commenting on the city council’s oversight of one specific aspect of the DDA’s function – tax increment finance capture [emphasis added]:

And if we talk about goals, my goal – and I think it’s incumbent upon the city council, I don’t think that the DDA has done anything wrong per se, it’s just that the city council historically has not held the DDA accountable in terms of understanding what that is.

Does the Ann Arbor city council have an oversight role in approving the compensation of a downtown development authority executive director? That role appears to be clearly and specifically stated in the state statute enabling the establishment of the DDA [emphasis added]: “The board may employ and fix the compensation of a director, subject to the approval of the governing body of the municipality.”

However, based on the city of Ann Arbor’s response to a request made under Michigan’s FOIA, Ann Arbor’s city council did not explicitly approve Pollay’s initial hire or her compensation level in 1996. Nor has the council approved the new compensation levels in the last two years.

In more detail, on Oct. 18, 2013, The Chronicle made a request to the city of Ann Arbor under Michigan’s Freedom of Information Act for all records documenting Ann Arbor city council approval of the employment of Susan Pollay as director of the Ann Arbor Downtown Development Authority. On Nov. 7, 2013 the city of Ann Arbor responded with copies of all of the Ann Arbor city council’s annual budget resolutions dating from 1997 to the present, which include the DDA budget (as a component unit of the city), but not in line-item detail.

But no record of a council resolution specifically and explicitly approving Pollay’s hire or compensation was produced by the city of Ann Arbor in response to that request.

By way of contrast, when the Grand Rapids DDA hired a DDA executive director recently, the Grand Rapids city commission (analog to Ann Arbor’s city council) passed the following resolution on June 19, 2012:

*81555 Com. Gutowski, supported by Com. Bliss, moved adoption of the following resolution under the Consent Agenda:
RESOLVED:
1. As required by the Downtown Development Authority Act, Act 197 of the Public Acts of Michigan of 1975, MCL 125.1561, et seq., and the Rules of Procedure of the City of Grand Rapids Downtown Development Authority (the “DDA”), the selection of Kristopher M. Larson as Executive Director of the DDA is hereby approved.

The Ann Arbor city council might be able to render somewhat moot the OMA questions raised in the analysis above, by taking an affirmative action. That action would be to consider and pass a resolution that approves the pay increases given to Pollay in the last two years, as well as this year. An additional action available to the council would be to pass a resolution requesting that the DDA board produce minutes for the meetings during which executive director salary adjustments were made for FY 2013 and FY 2014.

But given the backdrop of a Democratic primary race for mayor that includes four councilmembers, the politics of those actions could be delicate. In addition to Petersen, Sabra Briere (Ward 1), Christopher Taylor (Ward 3) and Stephen Kunselman (Ward 3) are also running.

Kunselman has made efforts over the last few years to lead the council to exercise more oversight of the DDA. But those efforts have been fraught with the perception that they are purely political in nature – even when the issues Kunselman has identified have merit independent of their political dimension. DDA board members have on occasion openly criticized Kunselman for his actions, or resorted to anonymous Internet commenting in defense of the DDA’s position.

Sandi Smith, for example, has admitted to The Chronicle that in response to a published Chronicle opinion piece, she left a comment on that op-ed under the screen name “Eco Bruce.” The comment in part attempted to dismiss criticism about the DDA’s apparent failure to adhere to the city’s ordinance on TIF capture – by implicating that this criticism is rooted in “Director K’s [Kunselman's]” desire to be CEO [mayor]. Smith was DDA board vice chair at the time.

With respect to the situation about Pollay’s salary, the politics are especially a challenge – because it would mean approving a nearly 21% increase for Pollay, when computed over the last three years. That’s a period during which other city non-union employees received slightly more than a 6% increase – a $1,000 lump sum in FY 2013, 3% in FY 2014, and 3% for the current fiscal year.

Adding to the political challenge is the fact that it’s Leah Gunn who appears to have led the DDA board effort to increase Pollay’s salary in the two previous years – in a way that escaped public attention. Gunn, a former elected official and long-time Democratic activist, is treasurer for Christopher Taylor’s mayoral campaign.

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