Aerial view showing location of Kerrytown Place development, located between North Main and North Fourth Avenue.

Commissioners recommended approval of several items for the Kerrytown Place project: (1) rezoning the sites at 414 N. Main and 401 N. Fourth Ave. to D2 (downtown interface), with a “secondary street” building frontage designation; (2) modifying the city’s landscape ordinance to allow interior landscape islands outside of the perimeter of the “vehicular use” area; and (3) approving site plans and development agreements for both sites. Staff had recommended approval for all items.

The parcels are located at 402, 408 and 414 N. Main and 401 N. Fourth. All parcels are currently zoned for The Gallery planned unit development (PUD), a type of customized zoning for a residential project that was never built.

For the North Main section, developer Tom Fitzsimmons plans to build a 16-unit townhouse building with an underground parking garage, 12 carport parking spaces and 24 surface parking spaces. The townhouse building is designed with two short towers on a base of underground garages. A 3-story tower on the west side, fronting Main Street, will have 8 dwelling units. A 4-story tower on the east side will have 8 additional dwelling units, which will  face a central courtyard located between the two towers. A pedestrian walkway will run between North Main and North Fourth, on the north side of a surface parking lot, which will be located on the south side of the development.

On the North Fourth site – now a surface parking lot – the plan calls for constructing a duplex with a 2-car garage for each unit and a 21-space parking lot. Each unit of the duplex would face North Fourth.

One major wrinkle of this project is that McKinley Inc. – which owns the property adjacent to 414 N. Main – holds an easement for 57 parking spaces on the Kerrytown Place site. Those spaces will be provided on the development’s surface parking lots. Fitzsimmons told commissioners that finding a way to accommodate the easement requirements into the design had been “challenging.”

The total project is estimated to cost about $11.8 million. According to a planning staff memo, the site layout and architectural design were influenced by the Johnson Street Townhomes in Portland, Oregon and the Wickliffe Place condo development in Ann Arbor’s Kerrytown neighborhood.

The project will be forwarded to the city council for consideration.

This brief was filed from the second-floor council chambers at city hall, 301 N. Main. A more detailed report will follow.

The project had previously been on the commission’s Dec. 18, 2012 agenda, when action was postponed.

The 2.24-acre site is located on the east side of South State, across the street from a University of Michigan tennis facility. Most recently, Pilar’s Tamales restaurant was located there, though that building is now vacant. The owner, Capital Investment Co., requested rezoning from M1 (limited industrial) to M1A (limited light industrial) so that an auto dealership could be located there. The plan calls for renovating an existing 1,868-square-foot building that fronts South State, to use as a sales office, while using the rear warehouse as an auto repair shop. Repaired cars would be stored and sold in the front parking lot.

The city’s master plan discourages commercial uses along South State, except for the sites adjacent to the Stimson and South Industrial commercial area. And a new corridor plan for South State recommends a mix of office and residential uses for that area. Earlier in the May 21, 2013 meeting, commissioners had voted to recommend adding the South State Street Corridor plan to the city’s master plan, as an amendment to the plan’s land use element.

The only speaker during a public hearing was local attorney Scott Munzel, representing the owner. Among other things, he noted that the intent is for a small, non-conventional auto dealership. The site isn’t conducive to a traditional dealership – it’s long and narrow, and difficult to develop, especially in the current market. He indicated that it would likely be a short-term use until the site is developed for a different purpose.

Some commissioners leaned toward approval, saying it would be good to have some kind of use on the long-vacant site. But others expressed concern that it didn’t fit with the goals of the corridor, and that it could set a precedent for other rezoning requests.

According to a staff memo, regardless of the outcome of the rezoning request, the owner still needs to resolve several compliance issues related to the existing site plan, including lack of required landscaping, an unfinished building foundation, deteriorated driveways, and stormwater drainage problems. Owners also need to submit a re-occupancy permit that would require approval by the city’s building department, and the site would need to be brought into compliance before a new business could open there. The property is located in Ward 4.

It would be possible for the owner to bring the rezoning request to city council, even though it received a recommendation of denial by the planning commission.

This brief was filed from the second-floor council chambers at city hall, 301 N. Main. A more detailed report will follow.

A public hearing was held during the meeting to get input on any changes that residents might want to see in the city’s master plan. Such a review is required by the planning commission’s bylaws to be done each May. The hearing drew six speakers on a range of topics, including development in Lowertown, a park in downtown Ann Arbor, and adequate sidewalks cleared of vegetation so that kids can walk to school safely.

By way of background, there are seven documents that constitute the city’s master plan: (1) sustainability framework – adopted in 2013; (2) parks and recreation open space (PROS) plan – adopted in 2011; (3) land use element – adopted in 2009; (4) downtown plan – adopted in 2009; (5) transportation plan update – adopted in 2009; (6) non-motorized transportation plan – adopted in 2007; and (7) natural features master plan – adopted in 2004.

There is also a list of resource documents that are used to support the master plan. [.pdf of resource document list] The most recent addition to this list was made by the planning commission at its March 5, 2013 meeting, when commissioners added the Connecting William Street report, which had been developed by the Ann Arbor Downtown Development Authority. Commissioners spent a fair amount of time discussing why the Calthorpe report isn’t included on the list. That was a question raised during the public hearing by former planning commissioner Ethel “Eppie” Potts. The commission appeared to reach consensus that it would be worth reviewing the entire list of resource documents.

Planning staff recommended postponing action on the master plan review, pending discussion of work plan priorities for staff and the commission, as well as to give the commission additional time to consider comments heard during the public hearing. Commissioners voted to postpone action until their June 18 meeting.

Also on May 21, the commission held a public hearing to get input on the South State Street Corridor plan, as a possible addition to the city’s master plan. Commissioners and staff have been working on this project for more than two years. No one spoke during the hearing.

After some discussion, planning commissioners voted to add the South State Street Corridor plan to the city’s master plan, as an amendment to the plan’s land use element. In a separate vote, they recommended that city council also adopt the plan into the master plan’s land use element.

This brief was filed from the second-floor council chambers at city hall, 301 N. Main. A more detailed report will follow.

This aerial view shows Ann Arbor farmers market in Kerrytown. The surface parking lot is indicated in red.

The Ann Arbor public market advisory commission had recommended the work and appropriation at its April 18, 2013 meeting. According to a staff memo, the work would include “saw cutting and stripping the asphalt, grading the existing aggregate, and adding 3 inches of asphalt mix.” It’s a short-term approach intended to tide over the lot until longer-term improvements at the market are determined.

The lot is known informally as the “sand lot,” but parks & recreation manager Colin Smith noted that it’s actually built from a variety of materials, including asphalt. “It’s not some place where you’d be playing volleyball, let’s put it that way,” Smith said.

The project is already underway and initially will be paid for out of proceeds from the parks maintenance and capital improvement millage, to be reimbursed from the market fund balance. The total market fund balance as of Feb. 28, 2013 was $684,145.

The public market – located in Kerrytown, north of Catherine between Fourth and Fifth avenues – is part of the city’s parks & recreation unit, but operates as an enterprise fund. That means the intent is for the operation to be self-sufficient, without support from the city’s general fund. The market manager is Sarah DeWitt.

This brief was filed from the second-floor council chambers at city hall, 301 E. Huron. A more detailed report will follow.

Galardi’s term as committee chair will run until PAC’s September meeting, when the commission elects all officers.

Jennifer Geer – Doyle’s replacement on PAC – was confirmed by the city council the previous evening but did not attend PAC’s May 21 PAC meeting.

This brief was filed from the second-floor council chambers at city hall, 301 E. Huron. A more detailed report will follow.

Pranam provided the lowest of two bids. The other bidder was Wm. Molnar Roofing Co. Inc., which bid $271,319 for the work. Pranam was previously selected to replace the roof at Veterans Memorial Park Ice Arena. The contract for that project was approved by the city council at its May 20, 2013 meeting.

According to parks staff, the existing roof from the early 1990s was expected to last just 15 years. There are leaks and rusted steel lintels and joists, which need to be replaced. The project also includes removing rust and painting the pool ceiling and joists.

Funding for the project is available from two sources: (1) $186,088 from the fund balance of the parks maintenance and capital improvements millage; and (2) $26,212 from the Ann Arbor Public Schools, which pays annually into a capital facilities escrow account earmarked for Mack Pool.

The work will be done in June and July, while school is out of session. The pool is not open during the summer months.

This brief was filed from the second-floor council chambers at city hall, 301 E. Huron. A more detailed report will follow.

From left: Princess Logan and Monique Franklin, students at Ypsilanti High School, are part of the Young Women Making Washtenaw Better program. Seated behind them is Natalia Harris,
community outreach coordinator for the Washtenaw County sheriff’s office, which sponsors YWMWB. (Photos by the writer.)

In her state-of-the-county address, county administrator Verna McDaniel set a goal of identifying $6.99 million in structural reductions for the 2014 budget. The approach to addressing this $6.99 million target depends on whether the county moves ahead with a major bond proposal, which would cover the county’s pension and retiree healthcare obligations. [See Chronicle coverage: "County Board Debates $345M Bond Proposal."]

If the board decides not to bond for those obligations, McDaniel said that most of the $6.99 million would need to come from a reduction in operating costs, as well as $100,000 in cuts to outside agency funding. Finding the $6.99 million in cuts would be very challenging, she added, given the amount of reductions that have already occurred in the past few years. Serviceability levels and major programs would be affected.

Action related to the bonding proposal – for up to $345 million, the largest ever issued by the county – was originally on the May 15 agenda. But early in the meeting, board chair Yousef Rabhi announced a decision to push back the process until the board’s July 10 meeting. He cited the need for more time for public input and additional information – including updated actuarial reports that are due in late June. Public hearings on the proposal are set for June 5 and July 10, with a board working session on the issue scheduled for June 6.

The board also voted to hold a special meeting on July 24, to allow for additional bond-related votes and public commentary, if needed. Rabhi also announced a series of informal meetings at coffee shops in Ann Arbor to discuss the bond proposal with residents. The first “Bonding Over Coffee” will be held on Tuesday, May 28 from 4-6 p.m. in the basement of Elixir Vitae (formerly Café Ambrosia) at 326 Maynard St. in Ann Arbor.

Among the several items that the board is expected to vote on at its July 10 meeting is a “notice of intent” to issue the bonds. This is a standard initial step in the bonding process, letting residents know that they have 45 days during which they can circulate petitions to require a vote of the people before any bonds are issued. Ronnie Peterson reminded commissioners that just a few years ago, a citizens group had gathered enough signatures to force another bond proposal – for expansion of the county jail – onto the ballot, where it was defeated by voters. For the current bond proposal, about 15,000 signatures would be required to force a voter referendum.

In another budget-related item on the May 15 agenda, the board received a first-quarter 2013 briefing. The county’s financial staff is now projecting a $818,999 shortfall for the year – the difference between $102,364,815 in projected general fund revenues and $103,183,814 in projected expenditures. That shortfall is lower than the $3.03 million shortfall that was originally projected for 2013.

The board continued its budget discussion at a retreat on May 16, where they worked to hone priorities for the next four years. This Chronicle report includes a summary of that two-hour session.

In other May 15 action, the board gave initial approval to set the 2013 county general operating millage rate at 4.5493 mills – unchanged from the current rate. Several other county millages are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (0.2353 mills and 0.2367 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate to 5.6768 mills, a rate that’s also unchanged from 2012. A final vote and public hearing is expected on June 5.

The board also passed a resolution expressing support for the state of Michigan to expand the federal Medicaid program, as part of the Affordable Care Act – a measure currently being debated in the state legislature. During deliberations, Dan Smith (R-District 2) voiced his objection to the county weighing in on state issues, but he left the room prior to the vote.

A range of other issues were raised as items of communication by commissioners or during public commentary. Topics included: (1) a corridor improvement authority planned by Pittsfield Township for a section of State Street; and (2) the possibility of renewing the county’s membership in the Michigan Association of Counties.

Bonding Proposal

A resolution authorizing the publication of a “notice of intent” for a major bond issue was originally on the May 15 agenda of the board’s ways & means committee for initial approval. [.pdf of bond resolution on May 15 agenda] The proposed bond issue of up to $345 million, the largest in the county’s history, is intended to cover unfunded pension and retiree healthcare obligations from the Washtenaw County Employees’ Retirement System (WCERS) and Voluntary Employees Beneficiary Association (VEBA) – the defined benefit pension and retiree healthcare plans.

The proposal had first been mentioned publicly in mid-April, though the administration has been working on it since November of 2012, and commissioners had discussed it in closed session earlier this year as part of the county’s negotiations for new labor contracts.

In addition to the notice of intent to issue the bonds, the resolution on the May 15 agenda also would have officially retained Axe & Ecklund as bond counsel for this issue, and Municipal Financial Consultants Inc. (MFCI) as the financial consultant. Axe & Ecklund provides a 15% discount on its fees if the county hires MFCI as the financial consultant. MFCI president Meredith Shanle is Axe’s daughter.

Washtenaw County commissioner Yousef Rabhi (D-District 8) serves as board chair.

The notice of intent is a standard initial step in the bonding process. It must be published in a “newspaper of general circulation within the county,” letting residents know that they have 45 days during which they can circulate petitions to require a vote of the people before any bonds are issued. The notice must include a maximum amount of the bond issue, a maximum interest rate, and a maximum term for the bonds. Although the proposal previously presented to the board had indicated a 25-year bond term, the resolution regarding a notice of intent specified a maximum term of 30 years.

The amount of the bond issue is an estimate at this point and will not likely be as high as $345 million, according to the county’s bond counsel, John Axe of Axe & Ecklund. To set the specific amount of the bond issue, the county needs updated actuarial information – but those reports won’t be ready until late June.

The board has been briefed on this proposal most recently at a May 2 working session. [See Chronicle coverage: "County Board Debates $345M Bond Proposal."] At that time, Axe had indicated a timeline that included giving initial approval to two other bond-related resolutions on May 15, in addition to the notice of intent.

Those other resolutions were: (1) a resolution setting the bond’s maximum amount; and (2) a continuing disclosure resolution that’s standard for all bond issues over $1 million, indicating that the county will provide updated financial information annually during the term of the bond. However, neither of those two other resolutions were on the May 15 agenda when it was made available to the public prior to the meeting.

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. 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 bond, for a total of $583 million in combined interest and principal.

County administrator Verna McDaniel is advocating for this move, in part to make long-term budgeting easier by having predictable bond payments. The bonding is also linked to new 10-year labor deals approved earlier this year, which closed 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. However, closing the plans also triggered the dramatic increase in contributions to those plans, which has prompted the bond proposal.

Bonding Proposal: Public Commentary

During the two times for public commentary on May 15, former county commissioner Wes Prater expressed concern about the proposed bonding. He pointed out that the total debt service is estimated at $583 million over 25 years, and that the first 18 months of payment is $25 million for interest only and no principal. Total interest is about $239 million – an average of $9.5 million annually that could be supporting county programs and services, Prater noted. It amounts to about 14% of the county’s tax revenue, just to make interest payments, he said.

Prater also noted that the bond proceeds wouldn’t immediately pay off the pension and retiree healthcare obligations, but would go into an intermediate trust that would make investments using the bond proceeds.

From left: Former county commissioner Wes Prater and current commissioner Kent Martinez-Kratz (D-District 1).

There’s another approach that the county could take, Prater said – a deficit recovery plan. It would require changing some policies and “you’d have to live within your means,” he said, which means the county couldn’t spend more revenue than it takes in. “That’s what this county has been doing for a long, long time.” [Prater had raised the suggestion of a deficit recovery plan at a May 2, 2013 working session of the county board, focused on the bond proposal. At that meeting, Kelly Belknap – the county’s finance director – stated that such a plan is only required for local governments that have fund deficits. She said none of the Washtenaw County funds have a deficit, so there’s no requirement to submit a deficit elimination plan to the state.]

Later in the evening, Prater again addressed the board. He suggested that commissioners put the proposal on the ballot for voters to decide, saying “it would certainly stop the controversy and it would certainly satisfy most everybody that I know of, including myself.” He hoped commissioners would at least talk about the pros and cons of doing that. Whenever the bond proposal is discussed, supporters of it talk about all the positive things, Prater said. No one talks about what would happen if “the market dunks – what happens then? Who’s holding the bag?” It’s a global economy, he noted, with a lot of uncertainty.

Bonding Proposal: Board Discussion – Postponing Notice of Intent

Near the start of the May 15 ways & means committee meeting, board chair Yousef Rabhi announced his decision to pull the bond-related resolution from that night’s agenda. He said the schedule for moving ahead with the bonding process had been “aggressive.” Because he believes the public should have a full voice and full access to information, he added, the board had also set an aggressive public engagement schedule. It included a May 13 press conference, as well as a to-be-scheduled public presentation on the issue, and future public hearings, he said.

Despite that, Rabhi noted that there were concerns about the timeline being too aggressive, and the public not having time to consider the information. So in consultation with other commissioners, Rabhi said, he decided it was appropriate to postpone action on the bond’s notice of intent until after the county receives the actuarial report at the end of June.

The resolution will be brought back for consideration at the ways & means committee meeting on July 10. Rabhi stressed that it was not a decision that he made alone. The overwhelming sentiment among commissioners was that the public needs more time to evaluate the information, discuss it, and fully understand its implications. “This is one of the most important issues that we will be dealing with as a board, and perhaps that this board has dealt with for many boards past.” It deserves full consideration by both the board and the community, he said.

Rabhi also stressed that issues underlying the motivation for this bond proposal are real, and must be dealt with. It’s an issue that many other governments face nationwide, he noted. “We must address this issue – it is a critical issue.”

He thanked residents who have contacted the county and given their input already, and he urged people to continue to share their concerns and to not jump to conclusions. “I don’t think that anything is a done deal here,” Rabhi said. “We are discussing this in an honest and open way, and we want your feedback. We want your participation and we want your questions. We want you to understand what we’re looking at and the information we have and the context of the decisions that we have to make.” He urged people to approach the issue with an open mind.

Rabhi, one of the commissioners representing Ann Arbor, also announced a series of coffee hours that he’ll be holding for constituents. Called “Bonding Over Coffee,” the series will start on Tuesday, May 28 from 4-6 p.m. in the basement of Elixir Vitae (formerly Café Ambrosia) at 326 Maynard St. in Ann Arbor. [.pdf of "Bonding Over Coffee" press release]

County commissioners Alicia Ping (R-District 3) and Ronnie Peterson (D-District 6).

Later in the meeting, Ronnie Peterson asked about the voter referendum process. If the board issues a notice of intent in early July, and residents are successful in collecting the 15,000 signatures needed to place a bond proposal on the ballot, what’s the earliest election at which that proposal might be put before voters?

Hedger replied that he thought it might be possible to put it on the Nov. 5 ballot, assuming that the notice of intent expires in August. It certainly couldn’t be on the August primary ballot, he said.

Peterson noted that people might think “that this is Ronnie instigating something, but this has happened before.” When the county proposed issuing a bond to fund the expansion of the county jail a few years ago, residents were able to gather the required number of signatures to put the proposal on the ballot in 2005. Voters subsequently defeated the bond proposal at the polls.

It doesn’t take much to get that many signatures, Peterson said. He also noted that commissioners hadn’t received the kind of negative feedback about the jail expansion as they have about the current bond proposal.

Bonding Proposal: Board Discussion – Special Meeting

Rabhi also announced a resolution to set a special meeting on July 24. Typically during the summer months of June, July and August, the board holds only one meeting – on the first Wednesday of those months. The July 24 meeting would give commissioners more opportunity to discuss the bonding proposal and vote on it, he said.

Specifically, the resolution stated that the meeting ”shall be convened to only discuss and vote on the following items: (1) resolution to issue retiree health care and pension bonds; (2) resolution of continuing disclosure related to that bond; and (3) resolution to consider the comprehensive financial plan related to the bond.” [.pdf of resolution setting special meeting on July 24]

Responding to a question from Peterson, Rabhi clarified that at the first meeting in July – on July 10 – commissioners would likely be asked to take an initial vote on these items, with a final vote on July 24. Also on the July 10 agenda would be the notice-of-intent resolution that had been pulled from the May 15 meeting.

Peterson said he appreciated how Rabhi was handling this issue, and noted that he had previously voiced concerns about the process. Peterson stressed that he was committed to honoring the county’s obligations to its retirees. “How do we get there is open for discussion,” he added.

Peterson wondered when the board would receive the documents that they’d be voting on in July. County administrator Verna McDaniel replied that documents – including the actuarial reports – would be provided “well in advance” of the July 10 meeting.

Peterson said he didn’t want to “throw a brick through a window,” but he wanted to know when the board would see a copy of the debt retirement schedule. After consulting with Curtis Hedger, the county’s corporation counsel, McDaniel said the debt schedule would be among the materials provided to commissioners prior to July 10.

Dan Smith also thanked Rabhi for postponing the timetable, and thanked the administration and staff for adjusting their budget development to fit the new timeline. If the board decided to take both initial and final votes on these bond-related issues on July 10, he wondered what the process would be if the board then decided to cancel the July 24 meeting.

Hedger clarified that the board could cancel the July 24 meeting at its July 10 meeting – if a majority of commissioners wanted to do that. Hedger noted that it only takes three commissioners to call a special meeting, according to state law.

Felicia Brabec (D-District 4) is chair of the county board’s ways & means committee and part of the county’s budget task force.

Peterson wanted to make sure that the public has plenty of opportunity to weigh in prior to a board vote. He hoped there would be at least two formal opportunities for the public to give input to the board.

Hedger replied that it would be possible to do two public hearings – one on June 5, before the actuarial information is received, and another one on July 10. Rabhi indicated that he would like to do that.

Andy LaBarre reported that the board’s June 6 working session will focus on the bonding proposal, and will provide another opportunity for public input and commissioner discussion. [LaBarre chairs the working sessions and sets those agendas.] Rabhi requested that the administration put a list of dates, times and locations on the county’s website, to let the public know when the board would be focusing specifically on the proposal, and what opportunities there would be for public commentary.

Peterson asked if any worst-case scenarios had been developed, to show what the county’s obligations would be if the stock market tanked. The financial consultants hired by the county should show the board “the good, the bad and the ugly,” he said. With only $16 million in general fund reserves, the county doesn’t have a lot of flexibility if things go bad, he added. If he had known the full range of possibilities for his own investments a few years ago, Peterson joked, he would have taken all his money and put it in a mattress. “I’m not instigating tonight,” he added. “I’m advocating.”

Rabhi assured Peterson that those discussions are happening now. He said LaBarre has been asking for that kind of information too, and administration is working on putting that together. Noting that Wes Prater had raised concerns about the county making just interest-only payments in the first years of the bond, Rabhi said the administration is also looking at options for paying down principal in the beginning years, too.

Outcome: The board unanimously approved setting a special meeting on July 24 to handle the bond resolutions. Also set are public hearings related to the bond proposal on June 5 and July 10.

First-Quarter Budget Update

County financial analyst Tina Gavalier gave the first-quarter budget report, for the period from Jan. 1 through March 30, 2013. She began by noting that with just three months of information, it’s still early to tell how finances are trending this year. [.pdf of Gavalier's presentation]

On the revenue side, she reviewed the news – delivered at the board’s April 17, 2013 meeting – that property tax revenues will be higher than expected this year, with a surplus of about $2.3 million compared to the original 2013 budget projections. The clerk/register of deeds office is also projecting a surplus of about $254,000 from higher-than-expected real estate transfer taxes and fee revenues. However, the 14A district court is projecting a revenue shortfall of about $297,000, with lower-than-anticipated court fines and fees. New case filings have declined for five consecutive years, she reported.

From left: County finance director Kelly Belknap and finance analyst Tina Gavalier.

Projected expenses are $438,739 more than budgeted, with the largest over-expenditure – of $482,031 – coming from the sheriff’s office for inmate food and medical services, as well as law enforcement operating supplies. The district court is also reporting over-expenditures of $259,000 for overtime and contracts related to magistrate and mediation services. Those over-expenditures are offset by lower expenses from the trial court and support services.

Gavalier also highlighted a projected surplus of about $483,000 from tax appeals and refunds. So far this year, the county has spent about $42,000 for tax appeals and refunds based on board of review and tax tribunal decisions. The budgeted amount for this category is about $1.5 million for 2013.

Overall for 2013, the county’s financial staff is now projecting a $818,999 shortfall for the year – the difference between $102,364,815 in projected general fund revenues and $103,183,814 in projected expenditures. That shortfall is lower than the $3.03 million shortfall that was originally projected for 2013. The county had anticipated covering that $3.03 million by tapping its fund balance, but it’s now expected that the county will need $2.21 million less than that from the fund balance to cover the shortfall. The projected fund balance at the end of 2013 is expected to be about $16 million. [.pdf chart of 2013 budget as of March 30, 2013]

Gavalier told commissioners that the finance staff will be monitoring several items, including the impact of federal sequestration cuts, fringe benefit trends, personal property tax reform, actuarial valuations, and the county’s annual cost allocation plan. The board will get a second-quarter budget update in August.

First-Quarter Budget Update: Board Discussion

Dan Smith thanked the staff and department heads for keeping the budget “not only on track but above track.” Noting that there are three more quarters to go, Smith said the initial trends look good. He highlighted the projected $16 million fund balance by year’s end. Having that kind of fund balance allows the organization to be pro-active in managing its future, he said, rather than reactive.

Ronnie Peterson asked a question about the court budgets, joking that he wasn’t trying to get in trouble with the judges. “Whatever they want, give it to them,” he said. But he wondered how to address the budget fluctuations, especially if the county moves to a four-year budget process. Budgets for the jail, law enforcement and general criminal justice services are “almost uncontrollable,” he said, because those areas are responding to crisis needs. Sometimes the estimates are far off, he noted, and those shortfalls must be made up somehow. He’d rather see a more conservative projection when the budgets are developed.

Peterson contended that $16 million wasn’t a lot for a county the size of Washtenaw to have in reserves. “Any major crisis could make us spend a great portion of that,” he said.

Andy LaBarre asked Gavalier if she saw anything in the first quarter that would be a red flag – something that she hadn’t mentioned in the report, and that commissioners should be aware of. No, Gavalier replied. It’s important to “keep pressure on the organization,” she added, and to continue to monitor and collaborate with each department as the year progresses.

In response to a question from Felicia Brabec regarding the sheriff’s budget, Gavalier said the finance staff looks at expenditures and revenues separately, in reporting shortfalls or surpluses. The variance that she’s reporting is between the budgeted amounts and the first-quarter actual revenues and expenditures, Gavalier explained. When preparing the budget, the staff looks at the previous five years of expenditures to help project future expenses. It’s more difficult to project revenues for each unit, she noted, because that amount depends in large part on the overall county general fund revenue – the largest portion from property taxes. Gavalier added that more detailed budget figures are monitored at the departmental level, compared to what’s presented to the board.

State of the County

The board received a second budget-related update from county administrator Verna McDaniel, as part of developing a four-year budget from 2013 through 2017. [.pdf of McDaniel's presentation] At its May 1, 2013 meeting, the board had approved development of a four-year budget.

Washtenaw County administrator Verna McDaniel.

McDaniel reviewed the county’s current financial foundation, noting that the main guiding principal is fiscal stability. She cited the county’s AA+ rating from credit agencies, the building of its general fund reserves above the board’s policy of 8%, and the organization’s low debt ratio of 0.83% compared to the allowable level of 10%. She highlighted reductions that have been made since 2002, reflecting declines in property tax revenues as well as state shared-revenue funding. Most county departments have been reduced by at least 20% in the past five years, she said.

Unions have made concessions in their contracts, McDaniel added, and non-union employees have seen reductions as well. Personnel accounts for about 67% of the county’s general fund budget, or $65 million. Fringe benefits now equal about 66% of salaries, on average.

She pointed out that the county made $17.5 million in reductions for the 2012 and 2013 budgets, but not all of those were structural.

McDaniel noted that some general fund revenue sources – like property taxes and state revenue-sharing, which is now tied to performance measures – appear to be stabilizing. However, there are other areas of uncertainty, particularly with state and federal funding that support non-general fund programs. Also uncertain is the future of personal property tax replacement revenues. The tax will be phased out starting in 2014 through 2022. As part of that change, a statewide voter referendum is slated for August 2014 to ask voters to authorize replacement funds from other state revenue sources. It’s unclear what will happen if voters reject that proposal.

On the expenditure side, 72% of general fund dollars support public safety and justice operations. Those areas include the sheriff’s office, trial court, 14A district court, prosecuting attorney’s office, and public defender. About 70% of the county’s services are mandated, she noted, but the county has discretion over how those mandates are fulfilled.

McDaniel outlined key revenue assumptions that the administration is making in developing its budget projections. [.pdf of budget major assumptions] That includes an estimated 1% annual increase in tax revenues, state revenue-sharing reinstated at 75% of its previous levels, and police services contracts increasing by 1% in 2014 and 2015, but showing not increasing in the following two years.

Assumptions on the expenditure side include wage increases of 2% in 2014, 1% in 2015, and 2% in both 2016 and 2017. Fringe benefit packages will be changed for employees hired after Jan. 1, 2014, with defined contribution plans replacing defined benefit plans.

Looking at the period from 2014-2017, McDaniel told the board that she hopes to identify $6.99 million in structural cuts in the first year of that four-year period. [In 2014, the general fund budget is projected to be $107.429 million, according to McDaniel's preliminary report. That does not include the hoped-for $6.99 million in structural cuts.] That $6.99 million represents a slight increase from the $6.88 million in structural changes that McDaniel targeted in her previous budget briefing, delivered at the board’s Jan. 16, 2013 meeting.

If the $6.99 million in structural changes can be identified in that first year, it would eliminate compounded, projected deficits over the four-year period that would otherwise total $34.45 million. [.pdf of 2014-2017 budget estimate] The projections do not factor in a possible major bond proposal that the board is considering.

The approach to addressing this $6.99 million target depends on whether the county moves ahead with the bond proposal, which would cover the county’s pension and retiree healthcare obligations. [See Chronicle coverage: "County Board Debates $345M Bond Proposal."] If the board does decide to bond for those obligations, McDaniel said, then the goal in 2014 is to reduce operating costs by $1.83 million, cut $100,000 from outside agency funding, and realize $5.06 million in cost savings from bonding for obligations for the county’s pension and retiree healthcare.

If the board decides not to bond for those obligations, however, then McDaniel said that most of the $6.99 million would need to come from a reduction in operating costs, as well as $100,000 in cuts to outside agency funding. Finding the $6.99 million in cuts would be very challenging, she said, given the amount of reductions that have already occurred in the past few years. Serviceability levels and major programs would be affected.

Both scenarios assume an additional $2.4 million in revenue for 2014. It’s expected that will be achieved primarily from an increase in property tax revenues, as property values in the county climb.

McDaniel told the board that she and her staff need direction in terms of setting priorities and identifying core services. She indicated that the county can no longer provide the broad range of services that it has in the past, and structural changes are still needed.

The strategy to approach these changes includes a continued focus on internal collaboration, looking for alternative ways to deliver services that might generate revenue, and maximizing outside funding whenever possible, McDaniel said. The county needs to talk with community partners to see if there are services provided by the county that can be shifted to others, and to look for services that can be eliminated because the county can’t afford to provide them.

McDaniel also noted that 327 county FTEs now have healthcare benefits that the federal government defines as a “Cadillac plan.” If that remains in place, in 2018 the county will face a 40% federal excise tax on those benefits.

In closing her remarks, McDaniel said the administration will continue meeting with departments to review business plans and define budget targets for 2014-2017, with the goal of providing a budget proposal to the board in September. The coming months will also include town hall meetings with employees.

In seeking direction from the board, McDaniel asked that commissioners consider three questions:

• Do current budget allocations have the impact that commissioners desire?
• Should the general fund respond when there are federal/state revenue reductions in non-general fund programs?
• What community areas (internal and external) should have the greatest impact?

McDaniel told the board that the administration’s approach is to be very conservative. “It is very dangerous to not be conservative,” she said. “If you underestimate the magnitude of the problem, you will have an even bigger problem.”

She also cited the importance of finding structural solutions. If that doesn’t happen, then the board and administration will be facing these same problems year after year, she said. “It’s time for us to face our problems and deal with them effectively.”

State of the County: Board Discussion

Felicia Brabec described the situation as daunting. Andy LaBarre, characterizing the presentation as sobering, asked when the county had been at its peak, in terms of employees. Verna McDaniel replied that the county employment levels were highest “just before the economy went bad” in 2008. She noted that 650 current employees – about half of the county’s total workforce of 1,350 – are supported with general fund dollars. Other employees rely on federal and state funding, she said.

From left: County commissioners Dan Smith (R-District 2), Kent Martinez-Kratz (D-District 1), and Rolland Sizemore Jr. (D-District 5).

LaBarre noted that the county isn’t alone – saying cuts have been made statewide. “It just scares the heck out of me to think about more cutting,” he said, adding that employees are there for a reason – to provide services to taxpayers.

Alicia Ping referred to the data point that 72% of the county’s general fund budget is spent on public safety. Ping said it would be helpful to see the history of funding for the trial court and district court, which receive lump sum amounts from the county’s general fund. She was curious about whether the courts had cut in the same way that other county units had cut. “I’d like to know that we’re all in the game together,” Ping said. [The county's finance staff subsequently provided that data: .pdf of historical funding for public safety & justice operations]

Dan Smith asked for elaboration on the fact that fringe benefits equal 66% of salaries, on average. Kelly Belknap, the county’s finance director, replied that the percentage includes healthcare costs (medical and dental), pension contributions, workers compensation, Social Security and taxes. If someone’s salary is higher, then the percentage for benefits would be lower, she said. For employees with lower salaries, that percentage is higher.

D. Smith also noted that health care costs are estimated to increase 8% annually. Has the county been able to take into account the changes in federal and state law that aim to put downward pressure on healthcare costs? Belknap said that the county is self-insured, though it uses Blue Cross/Blue Shield as a provider. Some changes that the county has made in its healthcare benefits have kept costs down, but she said it’s still too soon to know the impact of federal and state legislation.

McDaniel added that nationally, healthcare costs have been increasing at about 12% annually. The county has been trending at 8% annual increases. “We’ve done some work, and it’s paid off,” she said. At the state level, McDaniel noted, Public Act 152 of 2011 put a cap on the amount that local governments can pay for healthcare benefits. On the federal level, the Affordable Care Act will institute an excise tax on “Cadillac” plans in 2018, she continued, so the county will need to deal with that.

D. Smith highlighted the board’s decision – as part of the negotiated 10-year labor contracts that were approved on March 20, 2013 – to close the county’s defined benefit pension and retiree healthcare plans for employees hired after Jan. 1, 2014. The decision to close those plans will result in dramatic increases to the county’s required contributions to those plans in the next few years, which is driving some of the healthcare cost increases, Smith noted. But that had been a board policy decision, he said.

Kent Martinez-Kratz asked whether the line item of “personal services” for the next four years included the upcoming contributions to the pension and retiree healthcare funds. [The line item represents salaries and benefits, and is projected to be $71.68 million in 2014, growing to $77.64 million by 2017.] [.pdf of chart showing budget projections] Finance analyst Tina Gavalier replied that those contributions are factored in, but only for general fund employees. Martinez-Kratz expressed some surprise that the increase per year wouldn’t be higher.

Brabec asked a question related to bonding for pension and retiree healthcare obligations, saying she was trying to understand the implications of that decision. She noted that McDaniel’s presentation had indicated that in the past, there were some county units that hadn’t seen reductions. Brabec asked for more details. McDaniel replied that the prosecuting attorney’s office and equalization department were two areas that haven’t been cut, as examples. “We have to be realistic about where we can cut without just really crippling a department or a service,” she said.

Brabec also asked about another assumption on the expenditure side – an estimated $1.5 million for information technology, with a projected 10% increase. Was that increase annual or over the four-year period? When McDaniel indicated that it was an annual increase, Brabec said it seemed “awfully high.” Gavalier reported that industry standard increases are closer to 20%. The county has IT maintenance contracts on huge systems, McDaniel added, which costs a lot to maintain and operate.

Outcome: This was not a voting item.

Budget Process Update

During the May 15 meeting, Felicia Brabec – chair of the board’s ways & means committee and a member of the budget task force – gave an update on the budget development process. The county’s finance staff is meeting with departmental staff – those will continue through early July, she said.

Regarding the bonding proposal, a press conference was held on Monday, May 13, she noted. Three members of the media asked questions of bond counsel John Axe and county administrator Verna McDaniel. Brabec reported that she and four other commissioners also attended: Alicia Ping, Yousef Rabhi, Rolland Sizemore Jr. and Andy LaBarre. She said she found it to be very educational.

Brabec noted that the resolution about the notice of intent had been pulled from the May 15 agenda, and the county awaits more information from its actuaries, which is expected to be ready by late June. At the board’s July 10 meeting, there will be several resolutions related to the bond that will be considered for initial approval, including the bond proposal itself and the creation of an intermediate trust. If passed, those resolutions could be considered for a final vote at the board’s special meeting on July 24, or the board could decide to take a final vote at the July 10 meeting, she noted.

May 16, 2013 Board Budget Retreat

During his report as board chair on May 15, Yousef Rabhi reviewed the plan for a second budget retreat the following day. The board had held its first budget retreat on March 7, 2013, where commissioners talked about big picture issues and engaged with other elected officials and department heads, he said. “Now, it’s time to drill down a little bit, to go into detail about what our weighted priorities are.”

Commissioners convened on May 16 at the county’s Learning Resource Center at 4135 Washtenaw Ave., near the county jail complex. The meeting, which was open to the public and videotaped for broadcast on Community Television Network, was attended by seven of the nine county commissioners and about a dozen staff members, including nearly all of the senior administrative staff. Also attending as observers were two of the five countywide elected officials: sheriff Jerry Clayton and prosecuting attorney Brian Mackie.

County administrator Verna McDaniel did not attend, due to a conflict with her daughter’s graduation from George Washington University. The two commissioners who did not attend represent districts in the Ypsilanti and Ypsilanti Township area: Rolland Sizemore Jr. (D-District 5) and Ronnie Peterson (D-District 6).

The retreat was facilitated by Lisa Brush, executive director of the nonprofit Stewardship Network. She is also the sister of Andy Brush, who leads the county’s IT unit and was on hand to help with technical support at the retreat. Also attending to help provide support was Mary O’Hare, who facilitated the March 7 retreat. [.pdf of O'Hare's summary from March 7, 2013 retreat]

At the March 7 retreat, commissioners had engaged in a broad discussion of possible areas of investment. O’Hare had provided summaries of five key areas that emerged from that retreat, framed as “success statements”:

• Ensure that Washtenaw County government has a sustainable & effective labor force. What success could look like: (1) Washtenaw County government attracts and retains talented and committed employees; (2) Washtenaw County makes ongoing investments in the professional development and education of its workforce; (3) Washtenaw County develops deep leadership “bench strength” to effectively lead the organization into the future.
• Mobility in Washtenaw County. What success could look like: (1) Washtenaw County has excellent roads, bridges, and related infrastructure to facilitate efficient movement of county residents and local goods and services, and/or; (2) Residents in Washtenaw County can travel easily and affordably throughout the county, using motorized or non-motorized routes and connections.
• Robust economic & workforce development. What success could look like: (1) Washtenaw County has the highest state employment rate, including communities on the eastside, and/or; (2) Entrepreneurs and local businesses have access to capital, talent, and supports needed to grow and thrive, and/or; (3) Housing and transportation costs will be affordable to residents earning less than 80% of the area’s median income, and/or; (4) Washtenaw County has safe and stable neighborhoods, with high rates of homeownership, and/or; (5) Washtenaw County, local communities, and private and corporate partners work together to strengthen the local economy, and/or; (6) All Washtenaw County residents have access to broadband internet connection.
• Ensure a community safety net (health & human services). What success could look like: (1) Washtenaw County residents have ready and affordable access to primary care for mental, oral, and physical health, and/or; (2) Children in Washtenaw County will have access to the care, support, and developmental tools they need to be ready for kindergarten, and/or; (3) Youth in Washtenaw County will graduate from high school, ready for college or career, and/or; (4) Residents of Washtenaw County will be food secure, and/or; (5) Poverty rates throughout Washtenaw County, including on the eastside, will be the lowest in the state, and/or; (6) Low-income residents have access to affordable transportation options.
• Reduce environmental impact. Success could look like: (1) Residents in Washtenaw County can easily travel throughout the county, using motorized or non-motorized routes and connections, preserves, parks and open spaces; and/or, (2) Residents in Washtenaw County can easily access parks, natural areas, and open spaces; and/or, (3) Washtenaw County government will be carbon neutral.

The main exercise at the May 16 retreat entailed commissioners allocating their spending priorities in these five areas. They were given two packets of fake money – one bundle representing the finite amount of revenues in the county’s general fund budget, and another bundle representing revenue from outside sources, such as federal grants or additional taxes. Commissioners were instructed to allocate their dollars into the five priority areas, to indicate how much they’d like to spend on each area. The intent, Lisa Brush explained, is to begin developing a “collective vision” that will help inform budget decisions.

Alicia Ping (R-District 3) allocates fake money to indicate her spending priorities, as part of an exercise at the county board’s May 16, 2013 budget retreat.

Some commissioners raised concerns with this approach. Alicia Ping noted that in the category of mobility, there was no way to distinguish her specific priority – widening US-23, for example – with the priority of someone like commissioner Conan Smith, who might want that money to be spent on rail transit.

Ping also wanted to talk about where funding could be cut. She felt the exercise was focused on spending and on non-mandated services, but in fact the board needs to look at mandated services too. The mandated public safety & justice services – including lump sum payments to fund the courts – account for 72% of the general fund budget. Ping said the board needs to look at areas that in the past they’ve funded without question. They need to look at the entire budget, she said.

Dan Smith observed that about 70% of services in the county’s general fund budget are mandated. So the discretionary amount is relatively small. He said some of the things that are important to him – some mandated services that he’d be inclined to spend more money on – aren’t included in the five key areas identified from the previous retreat.

Andy LaBarre suggested that instead of looking at the fake money as funding, the paper could be viewed as “value tokens” that simply indicate how much weight each commissioner gives the five key areas that emerged from the first retreat. Ping replied that for her, those five areas didn’t match up with where she wanted to put her money: “My value bucket is missing from this picture.”

Yousef Rabhi, who as board chair led the planning for the retreat, responded by saying that this session was just another step to help narrow and weight the board’s priorities. It could lead to another retreat, working session, or discussions at a regular board meeting. He suggested that for this exercise, commissioners could write on their extra packet of fake money to indicate that it represented cuts from mandated services, or funding that could be shifted to from mandated to non-mandated priorities.

Commissioners spent the next portion of the retreat making their priority decisions by portioning out their fake money into boxes that represented each of the five key areas from the first retreat. Staff then compiled the results.

Overall, the safety net/human services funding and workforce/economic development categories each received about 30% of the fake money/value tokens. The remaining three categories received the following percentages: maximizing mobility (18%), environmental impact (15%) and effective labor force (8%).

Lisa Brush reported that the extra packets – representing grants, taxes or other revenue sources – were divided roughly in the same way, although about a third of the fake money in that category had been designated by commissioners as “don’t spend.”

Dan Smith reported that his decision was easy, since he didn’t favor funding any new activities. Instead, he put large chunks of his fake money into two categories: (1) workforce/economic development, where he designated it for making the county’s neighborhoods safe; and (2) mobility, where he designated the money for roads.

Conan Smith made an argument for looking at possible new millages, especially for safety net services, where federal funding is in decline, and for roads. The board and administration need to start talking to the community about how much citizens want to invest, he said.

Felicia Brabec wanted to look at how this exercise could translate into the real budgeting process. What would the 30% priority for safety net services look like, as part of the budget? Ping suggested looking at how the existing budget lines up with these key areas. Is the county currently allocating money in the areas that commissioners believe are priorities? It would be interesting to see where the budget is “out of whack” with those priorities, she said. Ping wanted to see numbers attached to the discussion.

From left, standing: Lisa Brush of the Stewardship Network, who facilitated the May 16 retreat, and Mary Jo Callan, director of the county’s office of community & economic development. Seated are Andy Brush, the county’s IT manager, and Mary O’Hare, who facilitated the board’s March 7 retreat. They were compiling results from the board’s priority-setting exercise.

Andy LaBarre continued that thought, saying he’d like to see numbers and scenarios that show him how much “pain” will result from these decisions.

Dan Smith noted that the board is facing $6.99 million in structural reductions for 2014, and there are huge decisions to be made that don’t relate to the priorities they’ve been discussing so far at the retreat. Those structural changes “need to be at the top of our list,” he said.

Brush indicated that the next step would be to identify the outcomes that commissioners would like to see, based on their priorities.

LaBarre stressed the need to get input from the two commissioners who didn’t attend the retreat – Sizemore and Peterson.

Conan Smith advocated for organizing into small committees, structured around the service areas that were formerly known as “communities of interest.” [Those are civic infrastructure, economic development, emergency preparedness and response, health and human services, land use and environment, public safety and justice, and support services.] The committees would consist of a few commissioners and staff, and could develop recommendations to bring to the full board, he said.

Others talked about having an additional retreat or working session discussions. Ping suggested meeting in different parts of the county, to make it easier for citizens to participate. But Conan Smith said he wasn’t interested in another session like this. “We’re not getting down to brass tacks,” he said, adding that it’s not possible for the group of nine commissioners to talk about the entire budget and get anything done.

Conan Smith also recommended that the board review the strategic plans, investment priorities and outcomes that other units of the county – like the sheriff’s office and office of community & economic development – have already developed. He noted that legally, it’s the responsibility of the county administrator to prepare and deliver a budget for the board to consider and approve. He’s heard some commissioners indicate they want a stronger hand in the budget process, but they’re going down a path where soon it will be hard to have a major influence.

Ping agreed with C. Smith. It seems like the budget is developed and brought to the commissioners, then they have only two meetings to make changes and adopt it, she said. Approving the budget is really the only responsibility of the board, she noted. Ping wants a hand in the budget process because otherwise, she said, the only way she can voice her opinion is to vote no on the budget after it’s presented.

C. Smith noted that the other option is to spend those two meeting at the end of the process arguing over $100,000 in a $200 million budget. [He was referring to both the general fund budget of roughly $100 million, as well as the non-general fund portion of the budget.]

Both LaBarre and Kent Martinez-Kratz highlighted the bonding proposal as the other big piece of this year’s budget process that needs to be settled. LaBarre also expressed support for the small committee approach, but said he worried that not all commissioners would participate – or perhaps they all wouldn’t have the chance to participate – and as a result those commissioners might not support the outcome of the process.

LaBarre also said that ultimately he didn’t care what process they used. He just wanted to “get something here that we can really chew on.” It’s helpful to talk about priorities, he added, but now it’s time to see some hard numbers.

In wrapping up the retreat, Rabhi noted that in the past, the chair of the board’s ways & means committee – currently Brabec – has typically been the board’s voice in budget planning. But he’s hearing that commissioners want more involvement, so he’d work with the Brabec and other board leadership to figure out an appropriate way to proceed.

Millage Rate

At their meeting on May 15, commissioners were asked to give initial approval to the 2013 county general operating millage rate at 4.5493 mills – unchanged from the current rate.

Several other county millages were authorized and are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (0.2353 mills and 0.2367 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate to 5.6768 mills, a rate that’s also unchanged from 2012.

From left: Pete Simms of the county clerk’s office talks with corporation counsel Curtis Hedger.

This is an annual procedural action, not a vote to levy new taxes. With a few minor exceptions, the county board does not have authority to levy taxes independently. Millage increases, new millages or an action to reset a millage at its original rate (known as a Headlee override) would require voter approval.

The rates would be included on the July tax bills for property owners in Washtenaw County.

A related resolution set a public hearing for the millage rate at the board’s June 5 meeting. Curtis Hedger, the county’s corporation counsel, noted that this is commonly known as the “truth in taxation” hearing. The notice regarding the public hearing includes the county millage rates as well as rates for other taxes that the county receives revenue from via the state – specifically, the alcohol and cigarette tax.

When the state changed the timing of the levy from December to July, the county has been running into issues related to getting information from the state about alcohol and cigarette tax rates. This year, the state hasn’t yet provided those numbers, Hedger said. The board can still pass this resolution to set the county millage rates, Hedger said, but the county clerk will be directed not to publish the notice of a public hearing until the information on alcohol and cigarette tax rates is received.

Legally, he said, the notice of the public hearing – including the proposed millage rates – doesn’t have to be published until six days before the actual hearing. The hearing has to be held on June 5 because that’s the only time that the board meets, he noted, unless commissioners want to call a special meeting.

Outcome: The board unanimously gave initial approval to set the millage rate, with a final vote expected on June 5, when a public hearing is scheduled.

Medicaid Expansion

Commissioners were asked to consider a resolution expressing support for the state of Michigan to expand the federal Medicaid program, as part of the Affordable Care Act – informally known as Obamacare. The resolution of support was brought forward by commissioner Andy LaBarre (D-District 7).

Expansion of the Medicaid program would cover individuals and families earning up to 133% of the federal poverty level, and provide coverage for over 10,000 Washtenaw County residents who are not currently eligible. The resolution cites additional reasons to support the action:

Without the expansion, approximately 5,000 Washtenaw Health Plan (WHP) members will have no coverage options at all because their income is below 100% of poverty, thus by law, these individuals cannot buy subsidized coverage through the insurance exchange; and

WHP funding will be significantly cut on January 1, 2014, and ultimately eliminated completely, regardless of whether or not the state expands Medicaid, thus Washtenaw County’s ability to provide services to this population will be severely limited and these residents will be left to seek care in hospital emergency rooms, adding additional economic burdens to Washtenaw County residents who must indirectly pay those costs;

Republican Gov. Rick Snyder supports the expansion, but it’s not clear whether the Republican-controlled Michigan legislature will approve it.

Medicaid Expansion: Board Discussion

Dan Smith asked that the resolution be pulled out from the consent agenda and voted on separately. He thanked LaBarre for making this resolution very specific to Washtenaw County, with information about impacts to local residents.

Commissioners Alicia Ping (R-District 3) and Andy LaBarre (D-District 7).

He added that he gets emails from people urging him to contact state legislators to oppose the expansion, while the governor supports it. Clearly it’s a complex issue that Lansing is dealing with, he said, “and I have my hands very full dealing with things that are in front of this board.”

Smith said it’s been his position all along that weighing in on something like this as a body isn’t appropriate. He felt it would be more effective to work with legislators individually, “rather than interfering in Lansing’s business in a resolution of this form.”

[By way of background, at its Jan. 2, 2013 meeting, on a 5-4 vote the board voted to remove the ability of a commissioner to abstain from a vote. The question of abstaining from votes has related primarily to resolutions on state or federal issues, over which the county board has no direct control. In early 2012, Dan Smith had successfully convinced a majority of commissioners to add to the board rules the ability to abstain. That action was reversed by the majority of the newly elected board on Jan. 2 of this year.]

During the discussion on Medicaid expansion, LaBarre noted that he was following up on an issue that he had mentioned at the board’s previous meeting. LaBarre reminded commissioners that he serves as the county’s liaison to the Area Agency on Aging 1-B board board, which recently passed a similar resolution.

He said that if it would put Smith’s mind at ease, Macomb County also passed a similar resolution, and one of their commissioners (Toni Moceri) helped LaBarre with the resolution. Washtenaw County “wouldn’t be breaking new ground,” he noted, adding that he understood Smith’s position.

Felicia Brabec thanked LaBarre, noting that Medicaid expansion is important to the community with dire impacts on people who really need it. She serves on the board of the Washtenaw Community Health Organization (WCHO), which sees the need “in a very real way,” Brabec added. Without the expansion, a lot of residents will go without care.

Outcome: The resolution was approved on a 6-0 vote. Dan Smith (R-District 2) left the room prior to the vote. Conan Smith (D-District 9) and Rolland Sizemore Jr. (D-District 5) were also not in the room during the vote.

Grants for Workforce Development

Two items were on the agenda for initial approval for grants administered by the county’s office of community & economic development (OCED).

An additional $55,000 in funds was available for the Food Assistance Employment and Training (FAE&T) program, bringing the program’s fiscal year 2013 budget to $139,783. According to a staff memo, the program was established through the federal Food Stamp Act of 1977 to help people who are receiving food stamps get training that will lead to regular employment. Locally, this program is administered by OCED through the Michigan Works office in Ypsilanti. These extra funds are available because other entities did not use their allocation of funds, and the money is being redistributed.

The second item was an additional $73,300 for the Dislocated Worker program, bringing that budget to $586,398. That program, which is operated out of the Michigan Works Career Transition Center in Ypsilanti, provides training and services to help workers who have been displaced from their jobs.

Grants for Workforce Development – Board Discussion

Dan Smith commented that grants or other items from the OCED are on the agenda for almost every meeting, and address specific needs of the community. He thanked OCED director Mary Jo Callan and her staff for their work, including dealing with “fairly onerous” federal regulations associated with these grants.

In response to a question from Felicia Brabec about the dislocated worker grant, Callan explained that the state – which receives the federal funds and passes those on to local governments – provides supplemental allocations near the end of the fiscal year, using money that’s unspent at the state level or by other communities that receive these grants. It’s possible to carry over these funds into the next budget year, she said. For the purposes of the dislocated worker grant, the fiscal year starts July 1. The county intends to carry over the funds into the next fiscal year, to help offset federal sequestration cuts. For workforce development programs in Michigan, cuts will range from 16-25%, Callan said. In Washtenaw County, cuts will average 17-18%.

Outcome: Acceptance of both grants received initial approval by the board. A final vote is expected on June 5.

Urban County Plan

Washtenaw Urban County’s five-year strategic plan through 2018 and its 2013-14 annual plan was on the May 15 agenda for final approval. The board gave initial approval on May 1, 2013. [.pdf of draft strategic and annual plans]

The Urban County is a consortium of Washtenaw County and 18 local municipalities that receive federal funding for low-income neighborhoods. Members include the cities of Ann Arbor, Ypsilanti and Saline, and 15 townships. “Urban County” is a designation of the U.S. Dept. of Housing and Urban Development (HUD), identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, entitling them to an allotment of funding through a variety of HUD programs. The Urban County is supported by the staff of Washtenaw County’s office of community & economic development (OCED).

Two HUD programs – the Community Development Block Grant and HOME Investment Partnership – are the primary funding sources for Urban County projects.

The plans indicate that the Urban County area is expected to receive about $2.7 million annually in federal funding, which will be used for these broad goals:

1. Increasing quality, affordable homeownership opportunities

2. Increasing quality, affordable rental housing

3. Improving public facilities and infrastructure

4. Supporting homeless prevention and rapid re‐housing services

5. Promoting access to public services and resources

6. Enhancing economic development activities

A public hearing had been held at the board’s April 17, 2013 meeting.

Outcome: The board gave final approval to the Urban County plans.

Appointments

Board chair Yousef Rabhi made two nominations at the May 15 meeting. He nominated Ed Toth to serve on the police services steering committee, filling the position of police chief for a non-contracting jurisdiction. Toth is chief of policy for the city of Chelsea.

To the county’s food policy council, Rabhi nominated nutritionist and pharmacist Gail Solway for the healthcare position and Lauren Atkins Budde – who publishes the Have Fork, Will Eat blog – for the citizens position.

Outcome: Without discussion, all appointments were approved.

Communications & Commentary

During the evening there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. In addition to issues reported earlier in this article, here are some other highlights.

Communications & Commentary: Michigan Association of Counties

Two representatives from the Michigan Association of Counties (MAC) – executive director Tim McGuire and Ben Bodkin, director of legislative affairs – were on hand to urge commissioners to renew the county’s membership in MAC. In 2011, the board voted to cut membership to the organization, as part of a broad effort to eliminate a budget deficit in 2012 and 2013.

From left: Tim McGuire, executive director of the Michigan Association of Counties, and Ben Bodkin, MAC’s director of legislative affairs, provided handouts and swag for commissioners. County administrator Verna McDaniel takes a look.

McGuire told commissioners that he’d had individual conversations with several of them, but he also wanted to make an appeal to the full board to consider rejoining MAC. Bodkin highlighted some of the issues that MAC has addressed on behalf of the 83 counties in Michigan, including state revenue-sharing and personal property tax legislation. He hoped Washtenaw would consider rejoining MAC to strengthen the county’s voice, protect taxpayer dollars, and get tools that can help make its work more effective.

McGuire spoke again, citing issues like transportation funding, Medicaid and indigent defense as other areas that MAC is working on. The organization has five standing committees that commissioners can participate in. All counties need to work together to make improvements, he said.

Ronnie Peterson said he’d been very active in MAC in the past, and had served on the search committee that had recommended hiring McGuire. He suggested scheduling a formal presentation from MAC, and he wanted to discuss the possibility of rejoining the organization, which he said was highly respected. The county needs to be a player at the state level, he said. The lobbyist that the county pays – Lansing-based Governmental Consultant Services Inc. – does a good job, Peterson added, but he felt that GCSI’s work is focused on specific projects.

Yousef Rabhi said he’d like to continue the discussion. He wondered how the voting worked for MAC – was it one county, one vote? McGuire replied that MAC’s board has 16 members representing different counties, and each member has an individual vote. At the organization’s conventions, it’s one vote per person with regard to electing those board members. There are also five standing committees at MAC: judiciary, taxation, transportation, human services and economic development. County commissioners from across the state serve on those, he said, and make recommendations on legislative stances. Those recommendations are considered by the board of directors, who develop a formal platform each year that’s used as a guide for lobbying.

Rabhi said he didn’t doubt MAC’s leadership capability or value. He noted that two years ago when the 2012 and 2013 budgets were developed, he was the one who proposed eliminating dues to MAC. The money was used instead to fund the county’s homeless shelter, he said, for which funding had been cut dramatically. One of Rabhi’s concerns with MAC is that some counties have higher populations – including Washtenaw – yet are at the table with the same vote as much smaller counties. “When you’re advocating for policy, that might not be representative of the wills of the people in the state and of the people that those county commissioners represent,” he said. It would be valuable to give weight to populations when MAC’s policy decisions are being made, Rabhi added. That’s how SEMCOG operates, he noted. That said, Rabhi indicated interest in further discussing the issue.

McGuire responded, saying that in his experience if something is good for Washtenaw County, it’s probably good for a county with a smaller population – and vice versa. It’s rare not to have consensus on issues that affect all counties, he said. McGuire felt it’s important to have Washtenaw County represented in MAC’s discussions, and he hoped commissioners would re-engage.

In response to a question from Dan Smith, McGuire said the dues for Washtenaw County would be $26,230 annually, based on population and state equalized value. Dues were frozen in 2003, he added, and have only been increased one time since then – by 3% in 2007. MAC recognized the economic situation, McGuire said, and has tried to make membership affordable for all counties by doing more with less.

Communications & Commentary: Corridor Improvement Authority

Dan Smith highlighted a communication that the board had received regarding the intent of Pittsfield Township to establish a corridor improvement authority (CIA) along State Street. [.pdf of Pittsfield communication] The letter indicates that the township would use tax increment financing as a funding mechanism, he noted. A portion of the proceeds from millages levied by the county and county parks & recreation would be captured by such a TIF.

Smith said he has no objections to what Pittsfield Township is doing regarding its CIA, but he noted that the county board needs to have a discussion about TIF. “Trying to deal with [such projects] as just single items makes it very difficult to really look at what we want to do with TIF financing throughout the county,” he said. If commissioners say yes to one and no to another, it looks like they’re playing favorites rather than following a policy. He’d like to discuss a policy so that when items like this come up, the board has a framework in which to act.

Yousef Rabhi offered to work with Smith to develop such a framework, which could then be brought to a working session for the full board to discuss.

The Pittsfield Township CIA would extend along State Street from Airport (just south of Ellsworth) to Campus Parkway (just north of Michigan Avenue). In April of 2013, the Pittsfield Township board approved the intent to establish this CIA. A public hearing is set for May 22 at 6:30 p.m. at the township hall, 6201 W. Michigan Ave.

Communications & Commentary: County Parks & Recreation

Rolland Sizemore Jr. and Dan Smith – who both also serve on the county parks & recreation commission – highlighted work that’s being done by that group, and noted that Rolling Hills and Independence Lake parks will be opening on Memorial Day weekend. Both of those facilities have water parks. The Independence Lake water park, located in Webster Township, is new. The water park at Rolling Hills in Ypsilanti Township has a new 30-foot water slide.

Communications & Commentary: Roads, Transportation

Rolland Sizemore Jr. asked when the county road commission would be coming to brief the board at a working session – he thought that was happening in October. Andy LaBarre, who chairs the working sessions, reported that one of the October working sessions is scheduled for the southeast Michigan regional transit authority, not the road commission. Sizemore replied that whenever the road commission is scheduled, he’d like for representatives from the Southeast Michigan Council of Governments (SEMCOG) to attend as well, since SEMCOG also had managed transportation projects. He noted that as the county board’s liaison to the road commission, he’s participating in a committee that’s evaluating the condition of roads countywide.

Yousef Rabhi reported that SEMCOG’s executive meeting would be held on May 16, when they would be taking up the 2040 long-range regional transportation plan. SEMCOG planners are recommending the expansion of I-94 in Detroit and I-75 in Oakland County. Rabhi characterized the expansion as unwise, and said he’ll be opposing it. Looking toward the future with more sustainable transit and fewer cars, he said, it doesn’t seem wise to expand the highway system and take property by imminent domain. “It’s painful for me to see that this is the direction that our region is choosing to go,” he said, even though he understands that the project would be funded with dollars allocated for roads. It seems like a poor use of taxpayer money, he said, but he asked for feedback from other commissioners and the public.

Communications & Commentary: Young Women Making Washtenaw Better

Several teens from Young Women Making Washtenaw Better, a program of the Washtenaw County sheriff’s office, introduced themselves to the board and spoke about the program, which celebrated its one-year anniversary in May. The program emphasizes leadership, community service and making a positive impact on the community. Also addressing the board was Natalia Harris, community outreach coordinator for the Washtenaw County sheriff’s office, who serves as facilitator for YWMWB. As part of the program’s advocacy focus, she said, members are going to different government groups and introducing themselves. The county board is the first group that YWMWB has attended, Harris said. “So I thank you for being our guinea pigs.”

Harris also invited commissioners to attend an ice cream social celebrating YWMWB’s one-year anniversary. The event is on Tuesday, May 21 at 4:30 p.m. at the sheriff’s office community engagement center, 4101 Washtenaw Ave. – in the community corrections building. She also noted that YWMWB can be a resource for the county, with volunteers working on a variety of community projects. Harris encouraged commissioners to contact her if they needed volunteers in their districts.

Several commissioners thanked the teens for attending the meeting. The county’s two female commissioners – Alicia Ping (R-District 3) and Felicia Brabec (D-District 4) – both offered to meet with the girls to talk about leadership issues.

Communications & Commentary: Thomas Partridge

Thomas Partridge spoke during both opportunities for public commentary. He objected to the fact that the budget retreat was not being held at the county boardroom, saying it was a retreat from the public. He urged commissioners to put forward an agenda that would address serious needs in the county. If they can’t do that, he added, they should step aside so that someone else can.

Attendance at the May 15, 2013 Washtenaw County board meeting was as follows:

Present: Alicia Ping, Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Yousef Rabhi, Rolland Sizemore Jr., Dan Smith.

Absent: Conan Smith was at the meeting when attendance was taken, but did not take his seat for the rest of the meeting and did not participate in any votes.

Next regular board meeting: Wednesday, June 5, 2013 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to confirm date.] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public commentary is held at the beginning of each meeting, and no advance sign-up is required.

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Buttrey had been nominated at the council’s May 6 meeting. She’s an engineer and retired Chrysler executive. She’ll serve out the remainder of Liz Rother’s term, through June 30, 2014.

Baskett currently serves as a trustee on the board of the Ann Arbor Public Schools, an elected position. She’s worked with a committee to replace some school bus routes with AATA service. Her confirmation by the council was 11-0, unlike the 7-4 vote taken a week earlier on May 13, 2013 on Eric Mahler’s appointment to the AATA board. Mahler’s term on the planning commission currently ends this summer and he won’t continue in that position after accepting appointment on the AATA board.

Replacing Mahler on the planning commission is Paras Parekh, whose confirmation was unanimous. Parekh is currently director of marketing and membership for the University of Michigan alumni association. His undergrad degree in economics is from UM. He has worked in marketing for a bit more than a decade, and spent two years as a legislative aide in the U.S. House of Representatives working for Congresswoman Lynn Rivers.

The council also confirmed Jennifer Geer as Tim Doyle’s replacement on the park advisory commission.

Also nominated at the May 20 meeting for service on GAC was Jennifer Fike, who is finance director of the Huron River Watershed Council. She would replace Laura Rubin, HRWC’s executive director, whose term on the commission ends in June. Fike attended the April 4, 2013 meeting of the commission to introduce herself and express her interest in serving. Nominations for GAC are made by the city council, not by the mayor. The procedure followed by the council is to place on the agenda a resolution making the appointment at one council meeting, but postpone it until the following meeting. For mayoral nominations, the names are placed before the council at a meeting as a communications item – on which no council vote is required. The confirmation vote takes place at a subsequent meeting.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow.

In terms of revenue generated to the city, the rate increases are expected to generate 3.55% more for drinking water ($739,244), 4.25% more for the sanitary sewer ($955,531), and 4% more for stormwater ($233,811). [.pdf of complete utility rate changes as proposed]

According to the city, the rate increases are needed to maintain debt service coverage and to maintain funding for required capital improvements. The city estimates that the impact on an average customer will be a $20.66 per year increase in total utility charges.

The city’s drinking water charges are based on a “unit” of 100 cubic feet – 748 gallons. Charges for residential customers are divided into tiers, based on usage. For example, the first seven units of water for residential customers have been charged at a rate of $1.31 per unit and are proposed to be increased to $1.35 per unit. Since 2004 the city has used four tiers of rates, based on usage. For this year, however, the amount charged for the top tier – for usage over 45 units – is proposed to be collapsed into the next lower tier. Currently the top tier is charged at $6.78, but is proposed to drop to the third tier rate of $4.88.

Ann Arbor water utility rates.

Sewer rates are charged as a function of water usage. The commodity rate is proposed to increase from $3.48 to $3.65.

The city’s stormwater rates are based on the amount of impervious area on a parcel and are billed quarterly. For example, the lowest tier – for impervious area less than 2,187 square feet – has been $13.68 per quarter. Under the new rate structure, that increases to $14.20.

Water usage for Ann Arbor city residents is available on the city’s website. [You'll need your account number to access information.]

The increased rates will require a second and final approval from the city council after a public hearing.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow.

The resolution, which the city council approved at its May 20, 2013 meeting, named the city’s representatives to the task force: city administrator Steve Powers, Sally Petersen (Ward 2) and Marcia Higgins (Ward 4). Higgins and Petersen had sponsored the resolution. It had grown out of an idea to establish a task force to review the Ann Arbor DDA in the context of proposed changes to the city ordinance governing the DDA. Those changes, which would clarify existing language in the ordinance that limits the DDA’s tax increment finance capture, have been postponed by the council until Sept. 3.

In more detail, the task force is supposed to do the following:

• Provide clarity, alignment and specificity on economic development policy and objectives for fiscal year 2014 toward accomplishing city council’s success statement for Economic Development.
• Provide for strategic alignment of priorities between the Task Force member entities.
• Highlight cost sharing and maximizing of resource utilization.
• Identify options for sustaining, modifying, or eliminating operations in a financially-responsible manner through efficiencies and/or partnerships as part of a cohesive economic development plan for the city.

The “success statement” mentioned in the resolution was crafted by the city council at a budget retreat held in late 2012. At that retreat, economic development was identified as one of five priorities. The others where fiscal discipline, public safety, infrastructure and affordable housing. The problem and success statements for economic development were as follows:

What is the problem we are solving? Create tax revenue separate from the University of Michigan, and the need to further increase and diversify private sector employment in the local economy.

What does success look like?

1. Creating diverse employment opportunities in various fields and industries.
2. Ann Arbor has an earned reputation as an attractive place to create, relocate, and maintain businesses.
3. Quality of life is maintained and improved.

The task force established at the council’s May 20 meeting is supposed to provide a report of findings and recommendations in December 2013. It’s possible that Higgins, as chair of the task force, might not be serving on the council at that time, because she faces a challenge from Jack Eaton in the Democratic primary election this August.

This brief was filed from the city council’s chambers on the second floor of city hall located at 301 E. Huron. A more detailed report will follow.