Federal Money May Save Bus #5 for Ypsi

Plan to use federal funds assumes a future millage soon
Clipping from April 3, 1973 Ann Arbor News newspaper

A clipping from the April 3, 1973 Ann Arbor News newspaper. Headline was: "Bus System Linking City With Ypsilanti Gets Push"

At a meeting of the Ann Arbor Transportation Authority’s planning and development committee on Wednesday evening – attended by some members of Ypsilanti’s city council, plus the mayor – the possible elimination of Ypsilanti’s bus Route #5 became far less likely.

The committee recommended that federal stimulus money be used to cover a shortfall between the amount that Ypsilanti’s city council allocated to transportation, and the cost of the city’s purchase of service agreement (POSA) with the AATA through June 2011. If the recommendation to use federal dollars is approved by the full AATA board at its Sept.23 meeting, the elimination of Route #5, plus reductions in service on Routes #10 and #11, would not be necessary.

On Sept. 8, Ypsilanti’s city council had voted 5-1 (with dissent from Mayor Paul Schreiber) to propose the service reductions – chosen from a “menu” of options provided by the AATA. The Ypsilanti council resolution also included a request that the POSA rate not increase, and that about $100,000 in federal stimulus dollars – part of a $6.45 million grant to the AATA – be used to make up the remaining difference.

The willingness of the AATA’s planning and development committee to increase the federal dollars allotted to around $200,000 was based on a key condition, which is actually built into the language of the Ypsilanti council resolution: either there will be progress towards a dedicated countywide funding mechanism for mass transportation, or else the city of Ypsilanti will put a millage proposal (a Headlee override) on the November 2010 ballot.

Currently, the AATA’s basic local funding – aside from service agreements with surrounding communities – comes from a 2.5 mill transportation tax passed by Ann Arbor voters on April 2, 1973. The 2.5 mill tax is now levied at a rate of just over 2 mills, due to the effect of the Headlee Amendment, which rolls back the millage to prevent property tax revenues from increasing faster than the rate of inflation.

A Bit of Historical Perspective

The years 1972-73 were not so awfully different from 2008-09.

In 2008, Ann Arbor’s Ward 5 was remarkable because a two-party race for city council (between Carsten Hohnke-D and John Floyd-R) took place there. No other ward enjoyed a choice between two candidates in the general election. And in 1973, The Ann Arbor News reported there was a ward enjoying the same distinction: Ward 3. It was, remarkably, the only ward where actual two-party politics were being practiced, with a Democrat and a Republican running for city council. One small difference. In 1973, Ward 3 was the odd ward – because in the other four wards, three candidates (Democrat, Republican, Human Rights Party) contested each seat.

Until early 2009, Ethel Potts was active in civic life as a planning commissioner. She continues to attend public meetings as a rank-and-file citizen. Back in 1973, Ethel Lewis, who’d not yet married Mr. Potts, was active in civic life as the Democratic candidate for the Ward 4 city council seat. (A volunteer for her ultimately unsuccessful campaign was current city councilmember Sabra Briere.) Lewis got votes 2,925 against Republican Richard Hadler’s 3,290 and Human Rights Party candidate Philip Carroll’s 1,216.

The city council of 2009 faced some similar problems to those confronted by the council of 1973. Ann Arbor residents in early 2009 began to hear increasingly dire reports about the condition of the Stadium Boulevard bridges over State Street and the railroad tracks. There’s a chance that a large chunk of the money for the $22 million bridge replacement project could come from federal funds. [Previous Chronicle coverage in "Council Gets Update on Stadium Bridges."] If not, the city would need to use money from its street repair millage, or possibly follow the example of the 1973 city council, which was also faced with a Stadium bridges repair problem.

In 1973, the council asked voters to approve a bond sale specifically to repair the Stadium bridges – voters said yes. Of the proposed bond sale on the ballot, $800,000 was for creation of a citywide bicycle system using existing streets and new pathways, and $360,000 was designated for repair of the Stadium bridges.

In 1973, one of the arguments for repairing the Stadium bridges, but not widening State Street to accommodate four lanes of traffic, was that the city’s expanded bus system would reduce the need for such a widening. That expanded bus system was called “Teltran” due its planned heavy reliance on a dial-a-ride approach – riders would call and a mini-bus would appear, delivering people door-to-door.

What was going to fund that Teltran system? A transportation tax in the amount of 2.5 mills. That tax was also on the ballot in 1973, along with the bond sale. The transportation tax was approved by voters with no expiration date. In contrast,  the greenbelt millage, passed by Ann Arbor voters in 1999, expires in 2034. Street repair millages are typically passed for a shorter period – most recently in 2006 for the period 2007-11.

Part of the 2009 thinking on the Ypsilanti bus situation – from the perspective of Ann Arbor – is reflected in remarks made by Ann Arbor Downtown Development Authority board member Newcombe Clark at the DDA’s last board meeting. Clark suggested that an express bus route between Ypsilanti and Ann Arbor should be contemplated as part of the general approach to link surrounding communities like Chelsea and Canton.

The day after Ann Arbor’s transportation millage passed in 1973, The Ann Arbor News reported that the county board of commissioners’ planning, recreation and transportation committee had recommended hiring a transportation coordinator to establish a trial bus system between Ann Arbor and Ypsilanti:

The request for the establishment of the position was the result of meetings between the commissioners, Ypsilanti area governments and Pittsfield Township to discuss a possible mass transit system between Ann Arbor and Ypsilanti.

In their “state of the county” message, the Democrats gave top priority to the establishment of an express bus route [emphasis added] between Ann Arbor and Ypsilanti. [George] Goodman, in his first term as Ypsilanti mayor, also said he would work toward the establishment of such a system. The exact date of the initial bus runs has not yet been worked out due to the uncertain nature of the funding for the program.

Certainly a lot has happened in the intervening 36 years. Over much of that period, there’s been bus service between Ann Arbor and Ypsilanti, which reflects that the community found a way to fund it. When Ypsilanti city councilmember S.A. Trudy Swanson appeared before the AATA board at its Aug. 21 meeting, she asked board members to see the current situation in light of 30 years of a successful partnership between AATA and Ypsilanti.

So what is the current situation?

Dedicated Funding of Ypsilanti’s POSA

At Wednesday’s meeting, planning and development committee member Rich Robben wanted to make sure that Ypsilanti was on a path that would lead to a fully-funded purchase of service agreement (POSA). It was a concern echoed by committee chair Ted Annis.

Already in 2006 the prospect of reduced service to Ypsilanti had been contemplated. But the AATA agreed in October of that year to subsidize the bus service by not charging the full cost of the service. [See the Ann Arbor District library's Ann Arbor News archive, which can be accessed with free registration: "Ypsilanti accepts AATA bus subsidy to keep full service."] In a 2006 Ann Arbor News article, then resident and former mayor – and current city councilmember – Peter Murdock is quoted:

Resident Peter Murdock said he is pleased that bus service will not be affected for a year, but that council ought to start thinking about a long-term solution. “What is going to happen next year?” Murdock said. “We need a real solution.”

One possible solution that Murdock did not favor that following year, in November 2007, was the idea of generating additional general fund revenue with a city income tax. Murdock worked with the group Stop the City Income Tax in a campaign against the tax, based partly on the argument that such a tax merely “kicked the can down the road.” A large majority of Ypsianti citizens voted to reject the tax.

A city income tax would have generated additional general fund revenues, not specifically designated for bus funding. And it’s the general fund out of which Ypsilanti pays its POSA with the AATA. That means that in any given budget year, the funding for transportation provided through the AATA is subject to the discretion of the city council, which must operate under prevailing fiscal constraints.

The possible longer-term solution now contemplated is for the Ypsilanti city council to place a ballot question before voters in November 2010 that would override the Headlee Amendment and provide transportation-dedicated funds. Based on current property values, Murdock estimated Wednesday evening that such a millage would generate around $320,000 per year dedicated to fund transportation for Ypsilanti.

Given the $280,000 that AATA wants Ypsilanti to pay in 2010, that sounded initially like Robben’s concern for fully funding the POSA was completely met. But Murdock cautioned that property values were projected to continue to fall, and that the $320,000 might actually be lower. And AATA controller Phil Webb cautioned that the $280,000 figure for 2010 reflected the start of an incremented path to Ypsilanti’s fully funding the POSA, which would reach $340,000 by 2012.

Still, it was close enough to convince the planning and development committee to make a recommendation to use federal money in the interim.

If approved by the full AATA board, there would be no need to eliminate Route #5 into Ypsilanti or end service one hour earlier on Routes #10 and #11, which the Ypsilanti city council voted on Sept. 8 to propose to AATA.

In Ypsilanti, the  campaign for or against a Headlee override with dedicated funds for transportation could include the question of whether that approach really represents a longer-term solution. Based on the projections and costs discussed at the planning and development committee meeting, there is likely to be a shortfall of dedicated revenue for transportation against the cost of the POSA as soon as 2012.

The Chronicle followed up by phone with Paul Schreiber, mayor of Ypsilanti. He suggested that part of the campaign for a Headlee override should include a commitment to use general fund money to make up shortfalls between the dedicated funding and the cost of the POSA. Schreiber’s dissent on the Sept. 8 vote had reflected a desire to use Ypsilanti general fund dollars to pay the POSA – instead of requesting service reductions –  in order to establish a high-priority commitment to funding transportation.

A Countywide Millage?

Whether there’s even a campaign in Ypsilanti for a Headlee override will depend in part on whether there is a proposal to put a countywide transportation millage on the ballot in November 2010. In the fall 2008, there were active discussions by the AATA board about reconstituting the AATA as an Act 196 countywide transportation authority and putting a countywide transportation millage on the ballot as soon as the fall of 2009.

No ballot proposal will appear on this November’s ballot.

But the AATA document prepared for Ypsilanti city council, which outlined the “menu” of service cuts available to them, indicates that the AATA has not forgotten about the idea:

The AATA will be conducting market research in September 2009 to determine voter attitudes toward a millage vote to provide dedicated funding for transit. Based on these results, the AATA Board of Directors will consider whether to proceed with a ballot initiative.

One issue to contemplate is whether Ann Arbor voters will support a countywide millage in sufficient numbers, if the countywide millage is not accompanied with a possibility of reducing the roughly 2 mill transportation tax that Ann Arbor property owners already pay.

The Federal Stimulus Money

At several points during Wednesday’s planning and development committee meeting, Ted Annis made a point of emphasis for his committee colleagues, AATA staff present, and members of the audience: It’s not the AATA that is providing the help to the city of Ypsilanti, it’s the federal government.

It’s also worth pointing out that the resolution likely to be considered by the full AATA board next week would include around $18,000 to bridge a POSA gap for Ypsilanti Township as well as the roughly $200,000 for the city of Ypsilanti.

The planning and development committee is recommending that a total of $220,000 of federal stimulus money (from the American Recovery and Reinvestment Act) be allocated to cover the POSA gaps.

The total amount of stimulus money allocated to the AATA is $6.45 million. How is the AATA planning to spend the money? Here’s what the list looks like in round numbers: $2.5 million for four new hybrid buses; $1.5 million for the Plymouth Road park-and-ride lot, $1 million for facilities expansion at the AATA’s South Industrial location for bus storage; $0.75 million for partial funding of a Central Campus Transit Center with the University of Michigan; $0.46 million for improvements to shelters and sidewalks to address accessibility issues.

Phil Webb, the  AATA’s controller, summarizing the numbers, said at Wednesday’s committee meeting that what’s left over from those capital outlays is $240,000.

That leaves a small buffer as those numbers firm up. For example, the costs associated with the facilities expansion – which have only received a rough estimate and have not been put out to bid – might be higher than expected.

The majority of federal stimulus dollars must be allocated only to capital projects, not to cover operating expenses. The AATA plan to apply them to operating costs in the case of funding the Ypsilanti POSA agreement takes advantage of a provision that up to 10% of the federal funds can be applied to operating costs.