Ann Arbor Council OKs Transit Agreement

4-party accord still needs OK from Ypsilanti, Washtenaw County

After more than three and a half hours of deliberation ending after midnight at its March 5, 2012 meeting, the Ann Arbor city council gave approval to a four-party transit agreement – with the city of Ypsilanti, Washtenaw County and the Ann Arbor Transportation Authority. The agreement would provide a framework and chronological sequence for the transition of the AATA to a new governance and funding structure. The Ann Arbor approval leaves several steps that would still need to be completed, before such a transition would be possible.


Graphic by The Chronicle, based on AATA's RideTrak website, to which the image links:

The goal of the transition is to provide expanded service in Washtenaw County – both within the city of Ann Arbor, and outside the AATA’s current service area. [.pdf of four-party as initially considered on March 5]

The council considered several amendments to the four-party accord on Monday night, but did not approve all of them. Four of the amendments, all of which failed, were proposed by Jane Lumm (Ward 2) or Stephen Kunselman (Ward 3). Their amendments would have: (1) added a seat for city of Ann Arbor on the board of the new transit authority (giving the city 8 out of 16 seats); (2) added a requirement that the minimum transportation services to the city of Ann Arbor be commensurate with the Ann Arbor millage; (3) required that the parties agree to reconsider the four-party agreement if pending state legislation were to be passed, which would establish a regional transit authority (RTA) for the counties of Washtenaw, Wayne, Macomb and Oakland; and (4) required at least 50% of the jurisdictions in Washtenaw County to participate in the new transit authority as an additional contingency to closing the deal.

None of those four amendments got more than five votes from the 11-member body. [.pdf of document showing all proposed amendments]

The council also considered an amendment put forward by Sabra Briere (Ward 1) stipulating that by signing the agreement the city council was not thereby automatically pledging its full faith and credit to any project undertaken by the new transit authority. That amendment received unanimous support.

Another amendment proposed by Briere was also approved – on a 9-2 vote – which gives the city of Ann Arbor the right to withdraw from the agreement if a funding source is not approved by a majority of Ann Arbor voters. But the amendment does not require the withdrawal unless Ann Arbor voters have not approved a funding source by Dec. 31, 2014.

The vote on the four-party agreement as a whole was 7-4, with dissent from Stephen Kunselman (Ward 3), Jane Lumm (Ward 2), Marcia Higgins (Ward 4), and Mike Anglin (Ward 5).

The new transit governance structure would be provided under Act 196 of 1986 instead of the state statute under which the AATA is currently incorporated – Act 55 of 1963. Called for in the four-party agreement is a 15-member board, to which Ann Arbor would appoint seven members. The AATA currently has a seven-member board.

The other eight slots on the board would be filled as follows: city of Ypsilanti (1); Pittsfield Township (1); an east district that includes Ypsilanti Township (2); a middle south district (1); a middle north district (1); a north east district (1); and a west district (1). [.jpg of map showing districts]

Act 55 was originally conceived to provide public transportation for cities, whereas the subsequent Act 196 was enacted to allow a broader range of political subdivisions to create public transportation systems, including counties. [See "Act 55 versus Act 1986" for more detail.]

Several steps remain before the AATA’s operations could transition to a new governance structure, including: (1) the approval of the four-party agreement by the city council of Ypsilanti and the Washtenaw County board of commissioners; (2) the ratification of articles of incorporation by the city councils of Ann Arbor and Ypsilanti; and (3) voter approval of a funding mechanism for the new transit authority.

Funding: Additional Transit Millage?

Of the steps that remain before the AATA could be transformed into a new transit authority, the most significant one, which is a contingency spelled out in the four-party agreement, would be voter approval of a funding source adequate to pay for the planned expanded service.

The most likely scenario at this point would be an additional transit tax for property owners countywide – or whatever geographic area remains after any political subdivisions choose to opt out of inclusion. Five townships out of 20 in the county have already indicated a preference not to participate. The other townships and the cities of Ann Arbor, Ypsilanti, Chelsea and Saline are participating so far with the unincorporated Act 196 board, which has been meeting since the fall of 2011.

A financial advisory group, which has been providing input to the AATA on the fiduciary aspects of the plan, declined at its Feb. 29, 2012 meeting to recommend that the funding source be a transit millage. But if the funding source were to be an authority-wide transit tax, that group has calculated the required amount to be 0.5 mill. [A mill is $1 for every $1,000 of taxable value on a property. For a house worth $200,000, with a state-equalized value of $100,000, 0.5 mill is $50 per year.] The 0.5 mill tax is estimated to generate around $32 million over five years.

At the advisory group’s Feb. 29 meeting, Dennis Schornack, a special advisor to Michigan Gov. Rick Snyder on transportation issues, characterized the pending legislation recently introduced in the state legislature as likely requiring two to three years to see any practical implementation, even if the bills were enacted swiftly. [See Chronicle coverage: "Michigan Regional Transit Bills Unveiled"]

The calculation that a 0.5 mill tax on property owners authority-wide would be sufficient to fund expanded service is based on a requirement in the four-party agreement – that the current millages levied by the cities of Ann Arbor (a bit over 2 mills) and Ypsilanti (a bit under 1 mill) would remain in place and be passed through to the new Act 196 transit authority.

The entity to place a ballot question before voters would be the new, incorporated Act 196 transit authority. In order for a question to be placed on the ballot for the Nov. 6, 2012 election, it would need to be certified to the county clerk no later than Aug. 28. Calculating backward from that date would need to accommodate the 30-day initial window that local government units in the county have after the articles of incorporation are filed, if they wish to opt out of the new Act 196 authority. And a millage campaign to encourage voters to support the additional tax would likely need a few months of lead time to get organized.

Given Ann Arbor’s approval of the four-party agreement, it could be considered by the Ypsilanti city council as early as March 20 and by the Washtenaw County board of commissioners at their March 21 meeting.

Financial Advisory Group Work

AATA’s financial advisory group is a collection of more than 20 representatives of the public and private sectors, led by McKinley Inc. CEO Albert Berriz and retired Washtenaw County administrator Bob Guenzel. They have met since the fall of 2011.

At the group’s Feb. 29 meeting, the categories of service recommended for inclusion in the first five years of the program include ongoing bus replacements, urban bus network enhancements (including enhancements to the WAVE, a western Washtenaw express), countywide door-to-door and flex services, express bus services, local community circulators, park-and-ride lots, vanpool services, and “superstops” in the Washtenaw Avenue corridor.

A subcommittee that did much of the detail work for the larger group is recommending an average increase for fixed-route fares of $0.50, with the possibility of fare increases for paratransit services as well. [The current basic fare for fixed-route service is $1.50.] Higher fares should be charged for express bus services, with the possibility of distance-based zone fares, according to the subcommittee.

Also, projects like the north-south high-capacity connector, the Washtenaw Avenue high-capacity service, as well as the east-west and north-south commuter rail service are recommended by the financial group to be considered separately. Those projects are not recommended for inclusion for local expenditures in the first five years. It’s also recommended that the Ann Arbor downtown circulator service (previously called The LINK) should be discretionary and should rely on private investment.

Compared to existing levels of funding and the amount of funding needed to support the AATA’s planned expansion of service, the financial advisory group identified a roughly $20 million gap on the operating side and a $12 million gap on the capital side – for the first five years of the plan. So over the first five years of the plan, the group identified a total $32 million funding gap, an average of roughly $6 million per year. The group calculated that this gap could be covered through a 0.5 mill property tax. Within the city of Ann Arbor, 0.5 mill of property tax translates roughly to $2.25 million a year.

[.pdf of budget summary][.pdf of capital budget] [.pdf of operating budget] [.pdf of financial performance data] [.pdf of financial group's final report] [.pdf of financial group's subcommittee report]

Other Steps Before Any Ballot Proposal

Before the Act 196 authority could be incorporated, several other steps would still need to be completed. The four-party agreement would still need to be ratified by the Ypsilanti city council and the Washtenaw County board of commissioners.

According to the four-party agreement, the AATA would also need to publish the details of the funding and expanded service plan in a newspaper of general circulation. And the city councils of Ann Arbor and Ypsilanti would need to approve the articles of incorporation for the new Act 196 authority. Before the AATA would be able to request that Washtenaw County file the articles of incorporation with the state of Michigan, the funding and service plan would need to be published, and the two city councils would need to ratify articles of incorporation. [.pdf of draft articles of incorporation]

The Route to Approval

The four-party agreement nearly failed to appear on the March 5 agenda at all.

By way of background, the council had previously postponed voting on the four-party agreement at its Jan. 9 and Jan. 23 meetings. Thirty-nine people spoke at a public hearing held on Jan. 23.

The council postponed the agreement again at its Feb. 6 meeting. But for that meeting, the AATA itself had requested a postponement until March 5.

The council agreed at its Feb. 6 meeting to postpone the vote until March 5 – but with the proviso that postponement to that date certain would be “contingent upon materials being submitted to City Council by Feb. 29, 2012.” During the deliberations on postponement, councilmembers were content to give the mayor and city administrator the discretion to hold the item off the agenda, if the desired information was not submitted to the council by Feb. 29.

In an email sent to councilmembers on Feb. 24, city administrator Steve Powers wrote: “I do not believe the intent of Council’s motion is met by AATA providing material late on the 29th and prior to the public information session on the 2nd.”

In his email, Powers’ allusion to March 2 was a drop-in session hosted by the AATA in the city council chambers from 4-7 p.m. About half a dozen residents attended who were not affiliated with the AATA. Several AATA staff, members of the AATA board, and members of the financial advisory group were also on hand.

The Feb. 29 reference in Powers’ email was to the meeting of the financial advisory group, co-chaired by McKinley Inc. CEO Albert Berriz and retired Washtenaw County administrator Bob Guenzel.

Powers’ email was countered in a message sent by AATA CEO Michael Ford to Powers and all city councilmembers on Feb. 27: “… we will be sending Councilmembers the Financial Task Force recommendations on Feb. 29 as promised. I believe this will fulfill the intent of Council’s motion. My staff and I continue to plan coming to council on the 5th as previously discussed.”

By the time the financial advisory group had concluded its meeting on the morning of Feb. 29, the council’s agenda had been published online, but did not yet include the four-party agreement agenda item. After the advisory group’s meeting, which was held at the offices of the Ann Arbor Downtown Development Authority on South Fifth Avenue, Ford walked the block to city hall, located at Fifth and Huron.

Later that afternoon, the four-party agreement appeared on the council’s agenda.

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  1. By A2person
    March 6, 2012 at 7:59 am | permalink

    I am curious as to why the amendments offered up by Lumm and Kunselman didn’t garner support? They sound as if they were proposed in an effort to protect Ann Arbor’s interest in the project. Why the dissent?

  2. March 6, 2012 at 8:13 am | permalink

    Briefly put (leaving aside quotations from Shakespeare and analogies to prenuptial agreements), the majority sentiment seemed to recognize and agree with the general intent of those amendments to protect Ann Arbor’s interests. But the majority ultimately concluded that Ann Arbor’s interests were already adequately protected through the language of the agreement, and that by adding the proposed language from Lumm/Kunselman the council was more likely to achieve the unintended consequence of sending the message to other jurisdictions that Ann Arbor was not entering into the endeavor with a cooperative spirit. Otherwise put, the majority felt that whatever additional protection of Ann Arbor’s interests might be provided in the amendments, that would be outweighed by the communication of a fundamental distrust to other jurisdictions that Ann Arbor would like to see participate in the new Act 196 transit authority.

  3. March 6, 2012 at 9:48 am | permalink

    I’m wondering what the “newspaper of general circulation” is going to be. I hope that they also put out tweets, email messages, and web postings so we can run down and find that paper. Fortunately I’m already subscribing to the Washtenaw County Legal News.

    I’d like to note that Federal law (as I understand it from staff explanations) state that “demand” or paratransit services to the disabled must be supplied wherever a fixed-route bus runs, and the fare cannot be more than twice as much than the fixed-route fare. So an increase in the fixed-route fare allows an increase in the paratransit fare as well.

    Also, the requirement for a demand service can be interpreted not to apply to express bus service. Express buses are the main options being discussed for more remote areas like the western part of the county. Thus, running these buses will not necessitate offering demand services.

  4. By A2person
    March 6, 2012 at 10:38 am | permalink

    Thanks, Dave. I see. I must admit, I do wonder whether the other jurisdictions will really care much about the density of busses in Ann Arbor. The bus comes to my nearest stop only once an hour at most times of the day, making it fairly useless for me. And I am definitely watching closely to see how the funding structure will work for this. AA already subsidizes school funding for other areas, I really don’t want to be subsidizing bus service as well.

  5. By Jack Eaton
    March 6, 2012 at 3:10 pm | permalink

    “The council also considered an amendment put forward by Sabra Briere (Ward 1) stipulating that by signing the agreement the city council was not thereby automatically pledging its full faith and credit to any project undertaken by the new transit authority. That amendment received unanimous support.”

    While the 4 party agreement does not require the City to pledge its full faith and credit, it does allow the City to do so. At a previous meeting, Council Member Lumm offered an amendment that would have required voter approval before the City could pledge its full faith and credit.

    Has the City ever used its full faith and credit for any AATA project?

    In public transit, expensive capital projects usually are financed through federal grants, with a local share from the state and the transit authority.

    The only reason I can think of that the City would need to float bonds for the new transit authority would be if the authority wanted to finance an expensive project that the federal government was unwilling to fund. For example, the federal government has already decided that commuter rail service into Ann Arbor cannot generate enough ridership to be viable and has refused to award funds for that service. The new authority could ask the City to float bonds to finance the capital and start-up costs of that commuter service.

  6. March 6, 2012 at 3:20 pm | permalink

    Other suspects are the two connector projects. The North-South connector (a high-capacity line from Plymouth to South State that could be light rail, bus rapid transit, or other – I think a gondola system unlikely) and the Washtenaw Corridor (a high-capacity line from Jackson/Wagner to the Ypsilanti Water Tower) would both be high capital projects that might be susceptible to a public-private approach. I think that has been raised with the Reimagining Washtenaw project, part of the Washtenaw Corridor. The TMP financial report (from the consultants, not the recent FTF) brings up the concept of private investment for some projects, and this might be where.

    The FTF plan suggested that the connector projects should not be part of the 5-year plan, but that doesn’t keep a new authority from doing them.

  7. March 6, 2012 at 3:46 pm | permalink

    @a2person “AA already subsidizes school funding for other areas” – could you elaborate on that?

  8. By A2person
    March 6, 2012 at 4:56 pm | permalink

    Since Propsal A was passed, only 30% of the taxes collected in Ann Arbor go to Ann Arbor schools. The rest go to schools outside our district. Google Proposal A Ann arbor schools. The biggest downside now is that even as a community that seriously values education, we are prohibited from passing general millages that increase our school funding. The Tech Millage is allowed due to some exception, not sure of the details.

  9. By A2person
    March 6, 2012 at 4:59 pm | permalink

    Since Proposal A was passed, only 30% of the taxes collected from Ann Arbor residents go to Ann Arbor schools. The rest go to schools outside our district. Google “proposal A ann arbor schools.” The biggest downside now is that even as a community that seriously values education, we are prohibited from passing general millages to increase school funding. The Tech Millage is allowed due to some exception, not sure of the details.

  10. By A2person
    March 6, 2012 at 5:07 pm | permalink

    oops, sorry

  11. March 6, 2012 at 6:14 pm | permalink

    One of the purposes of Prop. A was to equalize somewhat school spending across the state, so that poor districts such as Ecorse or Kalkaska have roughly the same per student spending as affluent districts such as Ann Arbor or Bloomfield Hills. Prop. A may or may not be a fair way of accomplishing this, but that was the goal, a perfectly admirable one in my opinion. Why should students stuck in, say, River Rouge, which does not and never will have a sizable tax base, be denied the same opportunities as Bloomfield Hills or Ann Arbor students, merely because of location?

    I don’t think the same argument extends to county-wide transportation, however. If outlying areas of the county don’t want to pay for transit, they shouldn’t get it. This will create hardships for lower-income residents, but there should be other ways of solving that problem. But I don’t know what they are.

  12. By Richard Wickboldt
    March 6, 2012 at 8:28 pm | permalink

    Except for four sane council members. The mayor and his council robots are putting all rational reason aside for a make believe mass transit system. What we will get is a Disney World transit system to show off the Land of Oz Emerald Green Belt. The mayor and his cabal are “leading” the county into a boondoggle which will have empty and underutilized buses prancing all over Washtenaw. They are so enamored with this farce that they gave away our majority vote to protect Ann Arbor’s interest and money. Additionally refusing to put in any triggers to stop this process. They have no idea what a mass transit system is and what makes it work. Like the most important key ingredient. A high density mass of people to supply a reasonable ridership. The vote profile last night surely will carry through this whole process. Now let’s hope us voters are more astute than the council and will vote this down when the time comes. I also hope the same voters start voting in new council members. I thank Steve and Mike on the council for their astuteness and rational thinking.

  13. March 6, 2012 at 9:30 pm | permalink

    I would encourage those with the perspective expressed in (12) to turn attention to the Articles of Incorporation. (A link to a draft is given above, though that may not be a final draft.) Sabra Briere and others tellingly put approval of this important document into the process chain. Since Council must approve those, it gives the citizens as well as the council another opportunity to consider this entire package.

    The AOI actually give the new authority the ability to organize. Originally, all of the responsibility for the AOI rested with the Board of Commissioners. My information has been that all four Ann Arbor county commissioners endorse its passage. (This is a good time to discover who your county commissioner is, and to communicate with him/her on this subject.) But by placing an approval step for both city councils into the package, the AOI become much more a negotiation among all three units of government, and presumably the AATA.

    Actually, nothing will happen, presumably, until the Ypsilanti City Council also approves the 4-party agreement. My information is that it is presently on the March 20 council agenda. Of course, they could also amend the agreement, which could mean it comes back to Ann Arbor, and then the BOC must also approve the agreement (not the AOI before the agreement), and…

  14. By A2person
    March 6, 2012 at 10:44 pm | permalink

    Tom… (slightly tangential here, sorry)…. I agree, noble goal. However, the side effect has been that now we need agreement from all the townships and other towns in Washtenaw county to agree to passing most anything to raise money for our schools, and that has proven to be impossible. Ann Arbor voters will consistently vote to invest in education, but the others do not, and so we are stuck with no way to increase local funding even if we want to. We are not allowed as a community to supplement the money we get from Lansing, and under Snyder that money has seriously dwindled.

    So back on topic….. I have similar concerns about the outlying areas voting in our best interests in regards to a regional transportation system as well. When we give up that local control, we don’t really know what the full outcome will be.

  15. March 7, 2012 at 2:24 pm | permalink

    I believe that A2Person is correct in identifying the issue of regionalism as one of the key points of the transit discussion. I reviewed some issues with this concept not long ago. [link]

    I’ve now begun a series on fairness and the transit question. The first installment [link] touches on our perceptions of what is fair in a regional tradeoff where some people pay for benefits received by others.

  16. By Marvin Face
    March 7, 2012 at 2:48 pm | permalink

    Wow, Vivienne. Three links to your blog today in less than 5 minutes (and two in one comment!). Even for you, that seems like a lot. Well done!

  17. By Rod Johnson
    March 10, 2012 at 8:12 pm | permalink

    Vivienne’s contributions, here and on her blog, always add value to the discussion. I’m happy to see them, personally.

  18. By Tom Whitaker
    March 11, 2012 at 11:56 am | permalink

    I agree with Rod. Vivienne’s deep analysis, coupled with the Chronicle’s coverage of meetings and additional information gives the public a very full picture of what is really at issue with the transit plans currently being pushed by AATA, the Mayor, and others. Most importantly, Vivienne is trustworthy because she has no “skin in the game.” She provides well-researched information that is in the public interest without any compensation or political agenda, and puts her real name on it for all to see and criticize if they so choose.

    Thank you, Vivienne. Keep up the good work!