Budget Round 1: Community Services

In the first of a series of meetings on the budget, the Ann Arbor city council on Monday heard from community services area administrator Jayne Miller, who gave a presentation on her part of the city budget, based on information councilmembers had requested at the council’s Dec. 5, 2009 budget retreat.

As to possible measures that could affect the FY 2011 budget, which begins July 1, 2010, Miller focused on several areas: (i) reorganizing the housing commission; (ii) reducing the scope for planning projects and outsourcing planning review and/or collaborating with other municipalities for construction inspection, (iii) cutting human services funding, (iv) reducing maintenance for specific parks and changing the parks maintenance/improvements millage resolution, which specifies how the millage money is allocated.

Some possibilities that were mentioned – but described as unlikely to have an impact on the FY 2011 budget – included allowing a private vendor to operate Huron Hills Golf Course as a combination driving range (where the front nine holes are currently located), plus a 9-hole golf course.

Specific parks were also identified in Miller’s report that would be recommended for sale – if parkland sale were to be used as a strategy. However, that too, said Miller, would be unlikely to have a short-term impact for two reasons: the sale of parkland requires a voter referendum, and the market for land is currently uncertain, given the overall economic climate.

The presentation also served as a bit of a tutorial on which parts of the city’s operations Miller administers, in a job she’ll be leaving on Feb. 11. Sumedh Bahl, unit manager of the water treatment plant, was also on hand Monday night – he’ll be filling in for Miller on an interim basis.

Housing Commission

Jayne Miller reviewed for the council the key point from a Jan. 11 work session regarding the housing commission: a $228,163 gap for the commission that would result from additional staffing and outsourcing of maintenance. [.pdf file of cover memo and materials for housing commission]

Of that amount, the city had already specified $90,000 in its FY 2011 plan, which would still leave a shortfall of $138,163 above and beyond what’s been planned for. As Miller reiterated on Monday, the beefed up staffing was expected over the next two years to recoup an investment in the form of additional grants they’d have staff time to apply for. Further, the housing commission had a variety of strategies it would be using to bridge the gap – but the bottom line was that council could be getting a request for additional funds beyond the $90,000 it had already planned for. [See Chronicle coverage: "Housing Commission Reorganizes"]

Planning and Development

Miller ticked through the basic services provided by planning and development: administration of rental housing inspection, administration of the construction code, and administration of the planning program. [.pdf file of cover memo and materials for planning and development]

Of these, the last item has the highest profile, as it involves site plan review for various projects, as well as the various planning initiatives that entail public engagement: A2D2 (downtown zoning), ZORO (comprehensive zoning code review), AHP (revisions to area height and placement requirements), as well as the current review of the R4C/R2A (residential housing) districts.

Of the various planning initiatives underway, Miller said, some were deemed too far along to consider modifications in schedule or scope. But in order to keep staffing at an already reduced level, she said, reductions in scope of other projects were a possibility. Projects that could be reduced in scope, she said, included the  second phase of master plan consolidation, which could be narrowed in focus to consider just those elements that were outdated.

And the review of the R4C/R2A zoning areas could, said Miller, be reduced in scope by eliminating the R2A (two-family dwelling) from consideration and truncating the review period at six months, instead of taking the entire year originally scheduled. Tony Derezinski (Ward 2), who is the council’s representative to the planning commission, did not embrace the idea of truncating the work of the R4C/R2A task force, saying there were groups that had already expressed some concern about their lack of inclusion in the process.

Other sources inside the task force have indicated that in the 3-4 months of work done to date, they’re really only at the point of gathering stakeholder input – including landlords who had perceived they were being excluded. It seems unlikely that the task force’s work could be wrapped up much short of the originally scheduled year.

In addition to the possibility of reducing the scope of projects, Miller outlined the possibility of outsourcing activities – plan review services, for example. One consideration is that all clerical and inspection staff is unionized, and union contract language would guide any outsourcing.

In the past, the city has had agreements with Washtenaw County and Pittsfield Township for mutual aid in construction inspection services. Those arrangements have been re-implemented, with ongoing discussions of additional opportunities for maximizing service, while minimizing costs.

Based on emails The Chronicle has seen circulated among building tradespeople in late November 2009, there is dissatisfaction in Ann Arbor with the performance of Pittsfield Township construction inspectors – failure rates of 50% are cited, which is high.

A somewhat more dramatic possibility outlined by Miller on Monday night was the possibility of transferring the authority for the enforcement of construction code to the state of Michigan. That would require the city to  substantiate a claim that administering and enforcing the rules would cause certain hardships and undue burdens on it.

Human Services

When the city council last allocated human services dollars – nearly $1.3 million worth in April of 2009 – it did so using a new scoring rubric. There was then already a sense that the following year, this year, things could be grim. From Chronicle coverage:

[Mayor John] Hieftje expressed concern that it was only going to get tougher next year and that to hold the human services funding level this year (as compared to last) was difficult.

For FY 2011, the coming budget year, the number $260,000 crops up multiple times throughout the cover memo on human services issues from Miller to the council. To appreciate the significance of that number, it’s important to understand that the city of Ann Arbor adopts a budget one year at a time, but plans two years at a time.

So when the council adopted the FY 2010 budget, there was a plan for FY 2011 accompanying it as well, even though that FY 2011 plan was not formally adopted.

In that FY 2011 plan, there was a reduction of $260,000 for human services support. So the various alternatives – discussed by Miller on Monday night and outlined in her cover memo – are portrayed in terms of this $260,000 reduction. Among the alternatives would be to restore the $260,000 to bring funding levels up to FY 2010 levels. That would be accomplished by allocating staff costs to federal funds and by not making a $100,000 contribution to the Ann Arbor Housing Trust Fund.

In response to a question from Sandi Smith (Ward 1), Miller reported the current fund balance of the Ann Arbor Housing Trust Fund is $393,000.

Also among the alternatives sketched out by Miller was the possibility of reducing human services funding by more than the $260,000 in the FY 2011 plan.

Stephen Rapundalo (Ward 2) – who was one of the chief architects of the scoring metric for human services allocations – wanted to know if the various nonprofits that had previously received money were aware of the potential for cuts. Miller said they were aware of what had been proposed.

Mayor John Hieftje appeared somewhat dissatisfied with Miller’s comparative portrayal of Ann Arbor materials in the context of five other cities: Lansing, Mich.; Austin, Texas.; Boulder, Colo.;  Fredericksburg, Va.; and Madison, Wisc. Those five cities fund nonprofits at an average rate of 1.45% of their general fund, compared to 1.7% for Ann Arbor. [.pdf file of cover memo and materials for humans services]

[That 1.7% is more than the other five cities – but the average of 1.45% did not include three other cities in Michigan, none of which allocate any of their general fund money to nonprofits: Battle Creek, Grand Rapids, and Kalamazoo. Inclusion of those three zeros in the average would put the contrast at 0.9% average for eight other cities versus Ann Arbor's 1.7%.]

Hieftje concluded that Ann Arbor, compared to other cities in Michigan, was still quite strong with respect to its human services funding.

Parks

Discussion of parks took up more of the council’s time than other parts of the community services area covered on Monday night. [.pdf file of cover memo and materials for parks]

Parks: Open Space Millage

One of the questions that the city council had asked city staff to explore was the possible re-purposing of the open space (a.k.a greenbelt) millage to support the city’s park system. The city issued $20 million in bonds based on the millage, which was passed in 2003 and last through 2033. The debt service on those bonds is roughly $1.2 million to $1.4 million per year through 2033. Revenue from the millage is projected to be a little over $2 million, leaving an estimated $700,000 to $900,000 in available funds per year.

The current fund balance for the open space millage is $18,266,602, of which $6,318,071 has either been recently spent or approved to be spent by the council, leaving a practical balance of $11,948,531.

Neither in the cover memo or during council discussions on Monday night did there seem to be any great enthusiasm for exploring the possibility of re-purposing the open space millage in support of the city park system.

Parks: Do You Golf?

However, the idea of issuing an RFP (request for proposals) to convert part of the Huron Hills Golf Course to a driving range with just a 9-hole course was fairly warmly embraced. Stephen Rapundalo (Ward 2) described the notion as “intriguing” and said that to pursue it, the timing would be “the sooner, the better” in order to get the proposal before the golf advisory task force as well as the park advisory commission.

The RFP would need to be issued by the end of March, thought Rapundalo, in order to be able to factor it into the FY 2011 budget discussion. But Miller cautioned that the end of March would be “pushing it.” City administrator Roger Fraser pointed out that the RFP would ask people to come in with a financial plan and a market analysis. There’d need to be a period of due diligence – he was not sanguine about the expectation that it could be done before the end of the fiscal year.

If it made sense for a private vendor to put in a driving range and operate it, asked Christopher Taylor (Ward 3), why wouldn’t the city undertake that itself? Miller allowed that it was a good question. She explained that the advantage would be that the capital outlay to install the range would be carried by the vendor instead of the city. Miller concurred with Taylor’s conclusion that it would likely be a situation where the risk – but also the reward – would be shared with the private vendor.

It was established through several conversational turns that it’s the front nine holes – near the river – that were candidates for replacement with a driving range. The back nine holes are preferred for play at the course, which was described as more of a community asset used for beginning players. That contrasts with Leslie Park Golf Course, which is more of a “championship” course, said Rapundalo.

Of the two golf courses, it’s Leslie that stands the best chance of eventually breaking even, said Miller. The forecasted losses for both courses in FY 2010 is $517,288. Maintaining (mowing) Huron Hills as open parkland, not as a golf course, would be $320,000.

Parks: Mowing

The materials provided to the council by Miller provide a park-by-park breakdown of possible areas to reduce mowing in order to save money. However, Miller cautioned that it was somewhat difficult to estimate exactly how much money could be saved, because reducing mowing at a site reduced the time spent at a particular park, but the time it took to haul the equipment to the location stayed the same.

Parks: Facility Evaluation

Included in the materials prepared by Miller was a table of data on facilities and their revenue versus expenses, plus number of visitors. It drew praise from Carsten Hohnke (Ward 5), who described it as providing a lot of very useful data.

The table gives data for facilities starting in 2003 through the present for each year, as well as aggregated data for all years. [.pdf file of cover memo and materials for parks]

Parks: Reallocation of Parks Maintenance and Capital Improvements Millage

One possibility covered by Miller was to revisit the resolution of intent associated with the parks maintenance  and capital improvements millage. The millage was passed in November 2006  and combined two previously separate millages.

Its distribution of funding to maintenance versus capital improvements is governed by a council resolution passed in October 2006. The resolution specifies a range of 60-80% for maintenance, with the remainder going to capital improvements. The resolution also calls for any reduction in the overall general fund to be reflected no more severely in parks programs supported by the general fund than in other general fund activities. For example, if the general fund were to suffer a 7.5% reduction, then parks programs supported by the general fund would suffer no greater a reduction that 7.5%.

Sabra Briere (Ward 1) raised the question of whether it would be necessary to go back to the voters in order to revise that resolution – voters had felt that it accompanied the ballot language, she pointed out.

Briere could have been alluding to the controversy after the millage was passed – with its accompanying “hold harmless” clause for parks programs within the general fund – when Leslie Science and Nature Center was spun off as an independent nonprofit. The city initially calculated the baseline for general fund park activity without the Leslie Science and Nature Center, reasoning that the item itself was no longer in the general fund and that it was not a matter of reducing it. However in response to public criticism, funding was put back into parks programs to bring their funding to the level they would have been with Leslie Science and Nature Center as a part of the calculation.

Parks: Use of Volunteers

One of the options presented by Miller was increased use of volunteers – but that, she cautioned, would require some additional staffing in order to coordinate them. One idea for providing that staffing, she said, was to use a still-vacant park planner position [likely Jeff Dehring's position] as a volunteer coordinator.

Stephen Kunselman (Ward 3) asked about the use of volunteers for creating of outdoor ice rinks – there’s a Facebook group that has formed, calling for the city to bring back the Burns Park outdoor ice rinks. In oversimplified form, the technique could be described as turning on a hose and  letting the water freeze.

Craig Hupy, head of systems planning for the city, was on hand Monday night to report that looking back over the temperature patterns for the last three years, there would have been no good opportunities for creating such ice rinks in those years.

Parkland Sale

At the city council’s request, the staff identified parks where further exploration might be warranted:

• Arboretum – possible University of Michigan interest
• Bader – low use, not visible
• Berkshire Creek – potentially buildable
• Depot – only a visual resource, has issues with loitering/trash
• Devonshire – would need to retain path access to Gallup, but may be able to reduce size
• Dicken Park – low use
• Dicken Woods – potential developer interest
• Douglas Park – potentially buildable
• Eisenhower Park – currently numerous encroachment issues
• Ellsworth Park – duplicates SE Area Park uses, especially since University Townhouses installed fence blocking off park from residents
• Foxfire East – low use
• Fuller Park – small triangle west of park is not usable part of park
• Garden Homes Park – there has been some interest in smaller sections of the park for private use
• George Washington Park – property more an extension of right-of-way
• Glazier Way – sell back access easement to homeowners
• Manchester – potentially buildable
• Mill Creek – low use
• Molin Nature Area – back yards of residents
• Pittsview – potentially buildable
• Rose White Park – low use
• South University – underused, but in an area without many parks
• Stone School – low use

But the memo accompanying the list is fairly pessimistic and there were no councilmembers clamoring on Monday night for the sale of parks. From the staff cover memo:

Many parks have deed restrictions so further research would have to be done at a park-specific level should Council wish to further explore this option. It is also worth considering that current land value is much lower than it recently has been. It may be difficult to attract buyers and if a sale was achieved, the land could be undervalued given the current market. Finally, prior to the sale of any parkland, an affirmative vote of Ann Arbor voters would be required.

Charter: Budget Procedure

As city administrator Roger Fraser pointed out, part of the timing for what comes next is specified in the city’s charter:

SECTION 8.2. On or before the first day of February of each year, each City officer and department head shall submit to the City Administrator estimates of revenues and expenditures of their office or department for the next fiscal year. The City Administrator shall … present that proposed budget to the Council at its second regular meeting in April.

SECTION 8.6. Not later than its second meeting in May, the Council shall, by resolution concurred in by at least seven members, adopt the budget for the next fiscal year. …

SECTION 8.8. Should the Council fail to adopt a budget for the next fiscal year at or before the second meeting of the Council in May, the budget proposal as recommended to the Council by the City Administrator, shall be deemed to have been finally adopted by the Council and, without further action by the Council, shall constitute an appropriation of the money needed for municipal purposes during the next fiscal year.

On the city’s website, “budget central” is on the Our Town page, where presentation materials and next meeting dates can be found.

Next up will be a meeting on Feb. 8 to revisit the community services area in earnest before Jayne Miller’s departure from that position three days later. Following that will be a Feb. 22 meeting, when public services will likely be on the agenda.