County Responds to Sylvan Twp. Debt Crisis

Also: Head Start gets 1-year extension; Project Grow on Platt site

Washtenaw County board of commissioners meeting (May 2, 2012): The agenda was a light one, but several items of information resulted in some lengthy discussions.

Ronnie Peterson, Rob Turner

From left: County commissioners Ronnie Peterson and Rob Turner. Turner has been the board's point person for dealing with a debt crisis in Sylvan Township. (Photos by the writer.)

Chief among those was a report on the debt crisis in Sylvan Township. The county picked up a $175,000 interest payment on May 1 that the township couldn’t afford to make, related to $12.5 million in bonds that were issued 11 years ago – and backed by the county’s full faith and credit – to build a water and wastewater treatment plant there.

Rob Turner – who represents District 1 on the county’s west side, where the township is located – reported that township officials hope to seek voter approval in August for a 20-year, 4.4 mill tax to cover the remaining payments. However, some commissioners expressed skepticism that township voters would approve a tax now, after rejecting a similar proposal in November. The county is also pursuing legal action for breach of contract, and is working with the township to reach a consent agreement that can be submitted to the court to outline a repayment strategy. If the millage doesn’t pass, it will be up to a judge to determine a tax levy. Commissioners were told that township residents will be assessed for the debt, one way or another.

In another report to the board, county administrator Verna McDaniel told commissioners that the county had agreed to a one-year extension to continue administering the Washtenaw Head Start program, through July 31, 2013. As part of the budget process last year, the county board had voted to relinquish its 46-year administration of the program on July 31, 2012. But the process to find another entity to administer Head Start has taken longer than expected, so the county reached an agreement with federal officials to operate the program another year.

McDaniel reported that the agreement waives a 20% local match of about $750,000 that the county had previously been required to provide. Because of that decrease there will be program changes, though details haven’t yet been worked out. While several commissioners praised the decision for easing the eventual transition to a new Head Start administrator, Ronnie Peterson expressed concern that the program’s high standards would be compromised.

The board also got an update on ongoing efforts to address how the county handles animal control services, in preparation to issue a request for proposals (RFP) later this year. Those services are currently being handled through a contract with the Humane Society of Huron Valley, which ends on Dec. 31, 2012. Board chair Conan Smith passed out a schedule for the board’s animal control policy task force meetings, with the first one set for Wednesday, May 9 from 8-10 a.m. at the county’s Learning Resource Center, 4135 Washtenaw Ave. The policy task force meetings will be open to the public.

Financial reports were also on the May 2 agenda, including the 2011 audit and an update on long-term liabilities. Wes Prater voiced concern that the county now has dramatically more in long-term liabilities than it did just five years ago. Total legacy liabilities, including pension and retiree health care benefits, have increased from $302.198 million at the end of 2007 to $346.572 million at the end of 2011.

Other items addressed during the meeting included: (1) an update from Yousef Rabhi on plans to put Project Grow gardens on the county-owned Platt Road site of the former juvenile justice center; (2) approval of up to $270,000 in bonds to fund an extension of the Sugar Creek drainage district in York and Augusta townships; (3) a resolution of support for the U.S. Clean Air Act; and (4) public commentary regarding the dangers of DTE Energy’s “smart” meters.

Commissioners also honored Hazel Bowman for her 25 years of volunteer service in the county’s foster grandparent program, giving her a standing ovation.

Sylvan Township Bond

Verna McDaniel introduced the topic of Sylvan Township’s bond payments during her county administrator’s report, but asked commissioner Rob Turner to elaborate. Turner represents the district where Sylvan Township is located – District 1, on the county’s west side.

Sylvan Township Bond: Background

In 2001, $12.5 million in bonds were issued – backed by the county’s full faith and credit – to build a water and wastewater treatment plant in Sylvan Township that was intended for future development. Under a contract with the county, the township is obligated to make the bond payments. [.pdf of June 20, 2001 county board resolution authorizing the bonds] The township expected that connection fees from developers would cover those payments, but the development never materialized and the township has been struggling to make payments.

Township officials put a millage proposal on the November 2011 ballot to levy a 4.75 mill, 20-year tax that would fund the bond payments. But Sylvan Township residents rejected the millage by a vote of 475 to 328.

As soon as the millage failed, it became clear that Sylvan Township – located west of Ann Arbor, near Chelsea – would not be able to make its payment in May of 2012. Because the county had backed the bonds with its full faith and credit, it is ultimately responsible for making the payments, even if it isn’t reimbursed for those payments by the township.  The county has an interest in making the bond payments to avoid having its AA+ bond rating negatively affected.

Even if the millage had passed, proceeds alone would not have been sufficient to cover the entire cost of the bond payments, however – forcing the county to tap its capital reserves as well. The millage proceeds were also intended to repay the county to cover any amount used from the county’s capital reserves, as well as interest. The proceeds would also have been used to repay the county treasurer’s office, which advanced about $1.2 million to the township in 2007 and 2008 related to this project.

At their Oct. 19, 2011 meeting, county commissioners gave final approval to a contract with Sylvan Township related to the township’s bond repayment schedule. However, the contract was contingent on voters passing the 4.75 mill tax, so the contract was nullified in the wake of the November 2011 vote. A staff memo accompanying the contract resolution indicated that if the millage failed, the county could file suit against the township for breach of contract in failing to meet its debt repayment obligation. Such legal action could result in a court-ordered assessment on township residents.

Currently $9.7 million in principal is owed, plus interest – another $175,000 in November and two payments totaling $350,000 in 2013 – and the $1.2 million that was advanced by the county treasurer. In total, $11.425 million is owed.

Sylvan Township Bond: Board Discussion

Rob Turner reported that as expected, Sylvan Township failed to make its May bond payment of $175,000, and that payment was made by the county. [McDaniel later clarified for The Chronicle that the payment was made out of the county's capital reserve fund, which has an available balance of about $4.7 million.] The county’s legal counsel had met with the township’s legal counsel to start working on a consent agreement related to repaying the county.

Meanwhile, Turner said, the township board plans to make another effort to pass a millage. However, the millage will be set at a lower rate – 4.4 mills – because property values are higher than previously expected. The news about property values was released in April, as part of the county’s annual equalization report.

Everything else, including the payment structure and contract with the county, would be the same as what was previously approved prior to the November vote, Turner said. Any new contract with the county would also be contingent on voters approving the millage, which township officials plan to place on the Aug. 7 ballot. That contract would require approval by both the township and county boards.

Curtis Hedger, Conan Smith

From left: Washtenaw County corporation counsel Curtis Hedger and board chair Conan Smith. Hedger has been on medical leave – this was the first meeting he has attended since January, and he received a round of applause from commissioners for his return.

Ronnie Peterson asked for further explanation of the township’s default, saying he couldn’t recall this kind of situation happening here in the past. Curtis Hedger, the county’s corporation counsel, reviewed the history of the bond and said that by not making its May 1 payment, the township breached its contract with the county. He explained that parallel paths are being pursued: the county is taking legal action against the breach of contract, and the township is planning to ask voters for a millage.

In response to another query from Peterson, Hedger clarified that the county made the $175,000 payment on May 1.

Turner reported that May 15 is the deadline for putting a millage question on the Aug. 7 ballot – that’s the preferred approach. If the millage fails, they’d still have time to get a court judgment that would assess a millage on township residents on their December tax bills.

Turner pointed out that this potential outcome has been discussed – it was a situation that has been known. If the millage fails again, it would be better to have a consent agreement filed with the court for approval, to avoid additional legal expenses on both sides.

Peterson – who represents a district that covers most of Ypsilanti – then said that because people like to dip into his community’s business, “let me dip a little, too.” Why hasn’t a consent agreement been reached before now? An obligation has been called, he said. Sylvan Township should be knocking on the county’s door. ”There’s nothing to negotiate – you’re in default,” he said. All communities are hurting badly, Peterson said, but this situation is non-negotiable.

Turner replied that township officials did approach the county several months ago. They knew well ahead of time that they wouldn’t be able to make their payments. But the county’s legal advice was to wait until that non-payment actually happened. The township isn’t fighting this, Turner said – they want to work it out with the county.

Alicia Ping asked what would happen if the millage fails again. What would be assessed on each property owner in the township?

Hedger replied that the point of the consent agreement is to determine that amount. He explained that the consent agreement, reached between the county and township, would be presented to a judge as a recommendation. If there’s no agreement, it’s in the hands of the judge to determine how much to levy.

Ping wondered why the judge couldn’t order 4.4 mills to be levied now, so that it could go on the June tax bills, rather than wait until the county had to make another $175,000 payment. All of the commissioners had sat around the table and made budget decisions, Ping said, and they understand that $350,000 is a lot of money. She didn’t have confidence that Sylvan Township voters would approve a millage they had rejected in November. So why not just ask for a judgment now?

Hedger said the county is pursuing  dual tracks – taking legal action over the breach of contract, while trying to reach a consent agreement that can be presented to the judge. He cautioned that the judge might not accept the recommendation in a consent agreement. Ultimately, it would be the judge who determines the amount to levy.

Ping said the county is asking other residents to be very patient. She asked whether this approach is the fastest way to get money out of Sylvan Township. It is, Hedger said.

Conan Smith said he wanted to highlight the work that Turner had done. Turner has regularly updated the board about the severity of the problem and the consequences of the millage failure, he said, while at the same time being cognizant of the residents and of the damage to their quality of life if the county were to unilaterally demand full payment. The county is taking a measured course, he said. They’re partners. It’s not exclusively the fault of the developer or the township board – the county board played a role too. They need to find a way to get through this situation that keeps the county whole but doesn’t create a dire situation for residents who are already feeling financial stress.

Smith told commissioners he felt content with the process. He doesn’t want to end up with the county picking up the tab, nor should the county try to punish the township. It was great that Sylvan Township’s leaders came forward and are willing to try again with the millage. The right course of action is to get through this without undue hardship while keeping finances stable, he concluded.

Felicia Brabec asked Turner if he had any sense that the voters’ mood had shifted on this issue since November. That’s a good question, Turner replied. There’s a group that has organized against the millage, but they’re also against any payment, he said. Last year, voter turnout was very low. The hope is that if there’s a larger turnout and people are better informed, the millage might pass.

Brabec asked if there are plans for further education before the millage vote. Turner said he’ll make himself available for another town hall meeting, though he said the township’s legal counsel doesn’t want to hold such a meeting. Prior to the November 2011 vote there were three public forums, with about 100 people attending each one, Turner said. The exchanges became personal against the township board. While Turner said he was treated with respect, a lot of anger was directed at township board members. The township’s legal counsel is also a resident of the township, which puts him in a difficult situation, Turner said.

Greg Dill, Dan Smith

From left: Greg Dill, the county's infrastructure management director, talks with county commissioner Dan Smith.

Dan Smith said he was happy that the county made the bond payment, and maintained the county’s good credit rating. That’s important, he said, because a good credit rating lowers the cost of funding activities like the Sugar Creek drainage project they were voting on that night.

Smith said he also approved of efforts to minimize the impact on Sylvan Township residents. A judgment issued every year could result in widely varying millage rates, he said. At least a voter-approved millage or a court-ordered consent agreement would provide some stability, and help with planning and budgeting.

It’s disappointing that no member of the Sylvan Township board has attended any county board meeting, D. Smith said. [Current trustees are Robert Lange, Luann Koch, Arlene Grau, Reuben Lesser Jr. and Scott Cooper.] This has been an extremely public matter involving tax dollars, he noted, and is fairly unique because public bodies are involved in negotiations. But the county board has heard nothing directly from the township – it would have been nice if they had come to a meeting two weeks ago or a month ago, and let commissioners know about the situation in person.

D. Smith then directed a question to Hedger, asking whether Hedger’s advice stems from the fact that the only ways additional taxes to repay the bond can be extracted are through a judgment issued by the court, or through a voter-approved millage. That’s exactly right, Hedger replied. In that case, Smith noted, it binds the hands of the county board as well as the township board, in terms of actions they can pursue.

Peterson said he’d appreciate it if information about situations like this would be shared prior to the meeting. If he were a resident of Sylvan Township, Peterson said, he’d be upset that people had been aggressive in the past but now “I’m paying the bill.” He wondered how the county board could have approved loaning money to an entity that didn’t have a way of guaranteeing repayment.

[According to minutes of the July 2001 meeting, when the board gave final approval to the Sylvan Township project, Peterson seconded the motion for all three resolutions related to the project – including issuance of the bonds. All three resolutions passed unanimously. The minutes do not record any discussion that might have occurred. In addition to Peterson, current commissioners who also served at that time are Barbara Bergman, Leah Gunn, Wes Prater and Rolland Sizemore Jr., who was absent at that July 2001 meeting. Other commissioners at that time were Vivienne Armentrout, Dillard Craiger, Richard DeLong, Jeff Irwin, Martha Kern, Larry Kestenbaum, Christina Montague, Suzanne Shaw, Steve Solowczuk, and Joe Yekulis. Bob Guenzel was serving as county administrator.]

Peterson said the board should review its policies regarding when the county grants its full faith and credit to a project. If you don’t have cash reserves or assets to cover the payments, he said, you shouldn’t be borrowing money – that’s what caused the nation’s housing crisis. The board should have said no to the project, Peterson said. “We’re in it to our neck, but part of it is our fault.”

Turner responded to Peterson, saying “Amen!” He said he totally agreed, but at the time, everyone felt that the housing growth wasn’t going to correct itself. “That is an assumption that should never have been made,” Turner said.

The money will be paid back to the county, Turner said. It will be paid back by some people who didn’t even live in the township when this project was approved. It’s even more hurtful that residents could be forced to pay it without a vote. [That is, if a millage fails to win voter approval, a judge will make a ruling to assess residents instead.] The situation has a long and complex history – “it’s a mess,” Turner said. This could have been a successful project, he said, but everything went against it. His heart breaks for the people of Sylvan Township and the burden they’ll have to carry, he said.

Referring to the county’s May 1 payment on the bond, Rolland Sizemore Jr. said he didn’t know how the administration could write a check for $175,000 without informing him, and he hoped it didn’t happen again. He asked whether the county would recoup its legal expenses. Hedger said it’s not automatic, but they could ask to be reimbursed. Sizemore wrapped up the discussion by saying that he’d be very upset if something like this happens again.

Sylvan Township Bond: Board Discussion – Coda

Later in the meeting, Rob Turner said he didn’t want to beat a dead horse, but he wanted to clarify that everyone was in agreement about the plan to work with Sylvan Township on a contract similar to the one they had approved last year, laying out a plan for repayment if the millage passes. No one responded, which Turner took to mean assent.

Wes Prater said he thought Turner was doing the right thing, and that he knew Turner had spent a lot of his personal time working on this situation. Prater said he believed Turner was making headway. “Maybe the third or fourth time [the millage vote] will be successful, Prater quipped. He added that he really hoped it would work out this time.

Head Start Update

During her county administrator’s report, Verna McDaniel told commissioners that the county had agreed to a one-year extension to continue administering the Head Start program, through July 31, 2013.

Verna McDaniel, Diane Heidt

County administrator Verna McDaniel, left, talks with Diane Heidt, the county's human resources and labor relations director.

By way of background, last year – as part of the budget process – the county board voted to relinquish its 46-year administration of Washtenaw Head Start on July 31, 2012. The plan is for federal Head Start administrators to issue a request for proposals (RFP) to seek other interested entities that could take over the program.

The RFP wasn’t issued until April 19, McDaniel reported, and the selection process typically takes 8-12 months. That meant that on Aug. 1 of this year, an interim agency would have taken over the program, running it until federal officials selected a new grantee.

Rather than have two transitions, the county negotiated to extend its administration of Head Start until the next grantee is selected, McDaniel said. This will allow for a smoother transition and avert an interim management period. In exchange, federal officials have agreed to waive a required 20% local match. The program will be funded only through $3.8 million in federal dollars, for which the county must apply for as it has done every year. [McDaniel later clarified for The Chronicle that the match amounted to about $750,000, which the county has previously funded through a combination of cash and in-kind contributions.]

McDaniel said that her staff had met with union representatives earlier in the day to discuss the change, and the union is being very cooperative.

Head Start Update: Board Discussion

Ronnie Peterson wanted details about the impact of eliminating the 20% match. Classroom size is important to him, he said, as is the teacher-to-student ratio. The county has a nationally recognized program because of its high standards, Peterson noted. He did not want those standards to be compromised, and asked for regular reports during this transition period.

McDaniel said that eliminating the 20% match would not result in lower standards or reducing the number of students that participate.

Board chair Conan Smith noted that every year, the county must apply for federal funding to operate Head Start. County staff had not intended to do that for the coming year, but now they will, he said. The application must articulate any program changes, and the staff is working on that now. Because the 20% match is being eliminated, there will almost certainly be program changes “to the negative,” he said, but those details are still being worked out.

Smith pointed out that the will of the board last year had been to relinquish the program to save money. If they now decided they wanted to maintain the program in its same form, they’d need to spend hundreds of thousands of dollars, he said. So there will be changes to the program’s scope and delivery of services. The number of children in the program won’t be cut, and the county hopes to partner with other institutions like the Washtenaw Intermediate School District. If that happens, they might even be able to serve more children, he said. But the reality is the program will likely change, and the staff is working on a plan for that.

The alternative, Smith noted, is that an outside organization would come in and take over with fewer resources and inevitably the program would offer fewer services. Extending the county’s involvement gives commissioners the chance to guide the process, he said, and ensure that the children are taken care of. “Is it going to be the program we had last year? No, it is not,” Smith said. But they knew that when they made the decision during the budget process. No one feels good about the situation, he concluded, but that’s the reality of it.

Felecia Brabec said she echoed Peterson’s concerns, and she appreciated the hard work that was focused on the transition. She wondered if it would be possible to find out which entities respond to the RFP. McDaniel replied that typically, the federal officials receive four or five proposals, and she’d try to get details for the board.

Brabec pointed out that there are many educational institutions in this county that would be a good fit for Head Start. It would be good to support those applications, she said, rather than proposals from outside the area.

Yousef Rabhi described the extension as a great course of action, to ensure the program only goes through one transition, not two. It will preserve the program’s leadership and make less of an impact during the transition, he said.

Peterson then spoke at length about his concerns for the “county’s babies” who are born into poverty, and how he feels responsibility for their welfare. He hoped that the county would bring in Head Start experts to act as consultants and guide the county through this transition period.

Animal Control Services

During the May 2 meeting, commissioners were updated on ongoing efforts to address how the county handles animal control services.

Rob Turner, who serves on an animal control services work group led by sheriff Jerry Clayton, reported that a meeting for May 1 had been cancelled and rescheduled for May 15. The work group includes representatives of the county, the Humane Society of Huron Valley, and other municipalities that have animal control ordinances. That group was created by the county board earlier this year and is tasked with developing a methodology to determine the cost of providing animal control services.

At the board’s April 18, 2012 meeting, commissioners had discussed the need for a policy task force on animal control issues to also convene. On Wednesday, board chair Conan Smith passed out a schedule for the task force meetings, with the first one set for Wednesday, May 9. He noted that the resolution passed by the board at their Feb. 15 meeting had set a May 15 deadline for an initial report from the task force. But since its first meeting will be just a few days before that, he said he wasn’t sure what kind of report they could make.

Six meeting dates are scheduled for the policy task force, all on Wednesdays from 8-10 a.m. at the county’s Learning Resource Center, 4135 Washtenaw Ave.: May 9, May 23, June 13, July 25, Aug. 22 and Sept. 12.

Smith described the approach he wanted to take as a bit experimental, using the kind of interest-based process that the county uses in its labor negotiations. He has asked that the meetings be facilitated by staff of the Ann Arbor-based Dispute Resolution Center.

Topics to address include defining the county’s state-mandated services, selecting the non-mandated services they’d like to offer, and identifying the revenue sources available to fund those services. For example, if the county wants to provide animal control services for cats – which the county considers a non-mandated service – then they’d need to find out how much it costs to do that, and what revenues are available to pay for it, Smith said. Serviceability levels are important, he added, because that will be included in the request for proposals (RFP) that the county eventually issues. If the county learns that the desired service levels cost more than its ability to pay, some decisions will need to be made about that.

Another issue is to set policies for pursuing repayment through the courts for animal abuse cases. Smith said he hoped to have preliminary recommendations from the task force in August, with final recommendations in September.

The board had previously set a deadline of Sept. 15 for the sheriff’s work group to complete their recommendations, with a final task force report to be made by Oct. 15. Ronnie Peterson pointed to the amount of meeting time scheduled for the task force, indicating that six two-hour meetings seemed like a lot. Smith hoped it wouldn’t take that long to do the work – if it’s done sooner, “I’d be delighted,” he said.

Noting that there are two parallel tracks – the work group and the task force – Felicia Brabec asked how those two entities would communicate. Smith said he didn’t know yet, but that he planned to communicate with the sheriff, county administrator Verna McDaniel, and commissioner Rob Turner, who all serve on the work group. It’s important that the two entities are “cross-communicating,” Smith said.

Yousef Rabhi reiterated the importance of communication. He noted that the purpose of the May 15 initial report from the policy task force was to provide some direction to the sheriff’s work group. Smith replied that at the first policy task force meeting, they should clarify the scope of their work, which might help the sheriff’s work group to prioritize its research.

Wes Prater clarified with Smith that these meetings will be open to the public and noticed in accordance with the state’s Open Meetings Act. He felt that the work of the policy task force should be simple – establishing the types of services the county will provide, and the level of service. They should start with mandated services and go from there, he said.

Turner cautioned that the recommendations will need to be reviewed at a work session, followed by an initial vote at a ways & means committee meeting, then a final vote at a board meeting. After that, the RFP will be issued, and there needs to be time to receive proposals, review them and make a decision about awarding a contract. All of this needs to happen before the end of the year, when the current contract with the Humane Society of Huron Valley ends. The board needs to be sensitive to this timeframe, Turner said. Otherwise, they’ll find themselves in the same position as they were last year.

2011 Finance, Audit Reports

There were three presentations at the May 2 meeting related to the county’s finances.

Mark Kettner, Pete Collinson

Mark Kettner of the accounting firm Rehmann.

In what’s become an annual ritual, Carla Sledge, Wayne County’s chief financial officer and past president of the Government Finance Officers Association, presented the county with a certificate of achievement for excellence in financial reporting for its fiscal year ending December 2010. The award is based on the county’s timely completion of its state-mandated comprehensive annual financial report, or CAFR. This is the 21st year that Washtenaw County has received a certificate of achievement.

Pete Collinson of the county’s finance department then gave a brief presentation of a set of financial reports: (1) a schedule of fund balances and net assets as of Dec. 31, 2011; and (2) a schedule of long-term liabilities over the last five years.

Collinson noted that the board had received a detailed report on 2011 year-end finances at its March 21, 2012 meeting. The county had used nearly $800,000 from its fund balance for the year, but the good news is that the amount was considerably less than anticipated. [The finance staff had originally projected that $5.3 million would need to be drawn from the general fund balance for the year – the board had approved the 2011 budget based on that assumption.]

The county also received favorable news from the equalization report in April, Collinson said, which means that 2012 property tax revenues will be higher than expected. He pointed out that the county also has $14.5 million in the fund balance for its general fund – or 14.2% of annual expenditures, “which is very good,” he said. [The total for all of the county's fund balances stood at $111.743 million at the end of 2011.]

Looking at the schedule of long-term liabilities, Collinson observed that the county’s bonded debt has decreased but its legacy liabilities – including pension and VEBA (Voluntary Employees’ Beneficiary Association) – are growing. [VEBA is a 501(c)9 trust established to pre‐fund retiree health care benefits. Total legacy liabilities have increased from $302.198 million at the end of 2007 to $346.572 million at the end of 2011.]

Collinson said there were no significant findings in the audit report, and that all other issues raised in the audit had been addressed.

He highlighted the county’s state revenue-sharing reserve fund, which stands at $10.8 million. About $6.8 million of that will be used in 2012, with the remaining amount to be used in 2013. At that point, the fund will be depleted, he said, but it’s hoped that the state legislature will reinstate revenue-sharing at some level beyond that.

Collinson reported that the county staff had a conference call in late April with Standard & Poor’s and have been told that the county’s AA+ bond rating will remain unchanged – a very favorable rating, he said.

In wrapping up, Collinson noted that this report is coming to the board a little later in the year than usual. He pointed to significant finance staff turnover in 2011, as well as the fact that finance director Kelly Belknap had been “borrowed” by the administration during the year. [Belknap began serving as interim deputy administrator a year ago, following the medical leave, then resignation, of deputy administrator Bill Reynolds.]

Collinson introduced Mark Kettner from the accounting firm Rehmann, who briefly reviewed the 2011 audit and fielded questions from commissioners.

[2011 comprehensive annual financial report (CAFR)] [communication from Rehmann to board] [building authority 2011 financial statement] [department of public works 2011 financial statements] [water resources commissioner 2011 financial statements] [employee retirement system 2011 financial statements] [money purchase pension plan (MPPP) financial statements] [VEBA financial statements] [2011 Michigan single audit]

2011 Audit Report: Board Discussion

Wes Prater noted that the financial status looks good, with the exception of long-term liabilities. It’s of concern to look at the last five years and see that the county now has nearly $50 million more in long-term liabilities than it did in 2007, he said.

“That’s a tough nut,” Kettner replied, adding that he agreed it was a scary outlook. Those are challenges that are going to survive the people in this room, he said. Previously, the county had a defined contribution plan, he noted, but shifted to a defined benefit plan – that was a policy decision that had an impact on long-term liabilities. To offset that, changes have been made in labor agreements, shifting more of the costs to employees. But benefit programs remain the county’s primary liability, he said.

Alicia Ping, Wes Prater

County commissioners Alicia Ping and Wes Prater.

Prater said that it’s troubling to see such a dramatic increase over the past five years. The county owes its employees for the work they’ve done, he said, but the long-term liabilities are an issue the board needs to address.

Kettner noted that part of the issue is tied to workers taking retirements earlier than anticipated. That’s a strategy that helps the county’s short-term financial situation by removing people from its payroll, he said, but people then start drawing their retirement benefits sooner. Perhaps it’s time to start asking whether the county’s actuarial assumptions – as well as assumptions about interest rates and investment returns – are realistic, he said. These are challenges for everyone, Kettner said, and no one has the answers.

Rob Turner said that assumptions of 7.5% investment returns are nearly impossible. Even if those returns are in positive territory at 3-4%, he said, the system is still in a hole because it was based on getting much higher returns. He said the county’s VEBA and pension boards are looking into this, and will be hiring a new actuary.

The employees’ retirement system liabilities stood at $40.49 million at the end of 2007 and are now at $84.2 million, Turner noted. Just in the last year, those liabilities had increased by $14 million. It’s also important to work with the labor unions representing county employees to address this issue, Turner said, adding that there are “handcuffs” related to that, too. It was addressed in the last labor negotiations, he said, and will be an ongoing issue.

Sugar Creek Drain Bonds

Acting on a request from water resources commissioner Janis Bobrin, commissioners were asked to give initial approval to pledge the county’s full faith and credit for up to $270,000 in bonds to fund an extension of the Sugar Creek drainage district.

The project – which in total is budgeted at $349,899 – was requested by the Washtenaw County road commission. It entails relocating a portion of the county drain, including a section of 1,850 feet adjacent to Platt Road between Judd and Stoney Creek roads in York Township. A second phase includes removing sediment and vegetation, as well as making wingwall repairs, at the drain crossings of US-23, McCrone Road, and Gooding Road.

The Sugar Creek drainage district covers parts of York Township, Augusta Township and the city of Milan. The bonds will be repaid in part by assessing property owners in the district – 70% of the cost of the bonds will be paid in this way. [.pdf map of drainage district] The remainder of the funds will come from York and Augusta townships, the city of Milan, Washtenaw County, the Michigan Dept. of Transportation, and two railroads – Ann Arbor Railroad and Norfolk Southern Railroad. The county’s share of the cost is $24,203 – half of that will be paid by the county road commission.

A contract for the work has been awarded to Mead Brothers Excavating of Springport, Mich., the lowest responsible bidder.

Sugar Creek Drain Bonds: Board Discussion

Wes Prater said he felt the board needed an explanation, since this was a “pretty big project.” Janis Bobrin, the county’s water resources commissioner, described it as a standard construction project, aimed at protecting the road from continued degradation. She noted that her office had been petitioned by the road commission to do the work because of drain problems related to erosion on the county road. The process had involved quite a bit of time negotiating with a property owner in the area where the work will be done, she said.

Prater pointed out that the project showed cooperation between two county departments, though he noted that the road commission is an autonomous unit. [The road commission operates independently from the county, but its three commissioners are appointed by the county board. The water resources commissioner is an elected position.] Prater noted that the project is located in his district – District 4 – and the work is needed.

Bobrin described the relationship between her office and the road commission as a great partnership. Prater agreed, quipping that “it took a while to get there.”

Outcome: Commissioners unanimously authorized bonding for the Sugar Creek drain project. A final vote is expected at the board’s May 16 meeting.

Support for Clean Air Act

A resolution on the May 2 agenda expressed support for the U.S. Clean Air Act, and opposed “attempts to weaken, dismantle, overrule or otherwise impede the Environmental Protection Agency from enforcing or implementing” the act.

The resolution was requested by Dick Fleece, director of the county’s public health department. A staff memo accompanying the resolution notes that since the Washtenaw County Clean Indoor Air Regulation was implemented in 2003, the number of county residents using tobacco has dropped from 18% in 2003 to 12% in 2012. The memo notes that “supporting the Clean Air Act, along with national standards can provide protection from traveling air pollutants,” including emissions from Michigan’s 19 coal-fired power plants.

The only discussion on this item came from Yousef Rabhi, who said: “The Clean Air Act is awesome!” When the vote was taken, Rob Turner said he was voting against it because of concerns about the impact on business and employment.

Outcome: The resolution supporting the federal Clean Air Act passed on a 6-1 vote, with dissent from Rob Turner (R-District 1). Dan Smith (R-District 2) abstained. Barbara Bergman (D-District 8) and Leah Gunn (D-District 9) were absent, and Rolland Sizemore Jr. (D-District 5) had left the meeting early and was not present for the vote.

Food Policy Council Appointment

The May 2 meeting included a resolution to appoint Yousef Rabhi, a commissioner representing District 11 in Ann Arbor, to serve on the new Washtenaw Food Policy Council.

Yousef Rabhi

County commissioner Yousef Rabhi.

The county board approved the creation of the council at its March 21, 2012 meeting. The council’s goal is to support local “small and mid-sized farmers by fostering policies that encourage local food purchasing and production,” according to a staff memo. Among other activities, the council could also: recommend policy changes at the local, state and national levels; provide a forum for discussing food issues; encourage coordination among different sectors of the local food system; evaluate, educate, and influence policy; and launch or support programs and services that address local food needs.

Partners who have been working on this initiative include the Y of Ann Arbor, Growing Hope, Food Gatherers, the Food System Economic Partnership (FSEP), Slow Food Huron Valley, Eat Local/Eat Natural, Michigan Farmers Union, Ypsilanti Food Coop, and the Washtenaw County public health department.

The council will have a 15-seat membership roster, with members drawn from the following sectors: agriculture, nutrition, education, emergency food system, health care, food services, food manufacturers and distributors, waste management, planning or transportation, retail/business or economic development, human services, faith-based organizations, local governments (board of commissioners), public health, and at large community member(s). The county public health department will be responsible for recruiting members. A draft set of bylaws has also been developed. [.pdf of food policy council draft bylaws]

The council will initially use grant funds from the Michigan Dept. of Community Health, passed through to the Washtenaw County public health department. The council eventually expects to secure financial support from private grants and philanthropic funds. The project will also seek significant in-kind and volunteer support, according to a staff memo.

Outcome: Commissioners unanimously approved the appointment of Yousef Rabhi to the Washtenaw Food Policy Council.

Urban County Annual Plan

A public hearing on the annual plan for the Washtenaw Urban County took place during the May 2 meeting. Only one person spoke: Thomas Partridge.

The annual plan describes how the Urban County expects to spend the federal funding it receives from the Community Development Block Grant (CDBG), HOME Investment Partnerships Program (HOME) and Emergency Shelter Grant (ESG) programs, operated by the U.S. Dept. of Housing and Urban Development (HUD). [.pdf of 2012-2013 draft annual plan] [.pdf of list of planned projects]

The Washtenaw Urban County is a consortium of local municipalities that receive federal funding for projects in low-income neighborhoods. Current members include the cities of Ann Arbor and Ypsilanti, and the townships of Ypsilanti, Pittsfield, Ann Arbor, Bridgewater, Salem, Superior, York, Scio, and Northfield. An additional seven municipalities will become part of the Urban County as of July 1, 2012: the city of Saline, the village of Manchester, and the townships of Dexter, Lima, Manchester, Saline, and Webster.

“Urban County” is a HUD designation, identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, making them entitled to an allotment of funding through a variety of HUD programs.

The Washtenaw Urban County executive committee meets monthly and is chaired by county commissioner Yousef Rabhi. The program is administered by the staff of the joint county/city of Ann Arbor office of community and economic development.

During the public hearing, Partridge said he was very interested in the plan because the Urban County receives state and federal resources for affordable housing. He was disappointed that the county board chair, Conan Smith, and other commissioners hadn’t personally invited constituents of the Urban County areas to speak at the public hearing. The meetings of the Urban County are out of the public view, Partridge said – the meetings are held at the Washtenaw County Learning Resource Center, 4135 Washtenaw Ave., and are not recorded by Community Television Network (CTN).

Partridge advocated for getting an extension on the deadline for submitting the annual plan, because public input on it had been inadequate. No one had been on hand to explain the plan, he said, and it’s almost completely devoid of specific goals for adding additional rental and single-family housing units. Partridge concluded by calling for more public hearings held at locations throughout the county, including in Ann Arbor.

Communications and Public Commentary

There are various opportunities for communications from commissioners as well as general public commentary. These are some highlights.

Communications: Project Grow

Yousef Rabhi reported progress that’s been made on an effort to put Project Grow gardens on the county-owned Platt Road site of the former juvenile justice center. He said he was approached by Eric Meves, a Project Grow board member, who had expressed interest in the property. [Meves attended the May 2 board meeting, but did not formally address commissioners. He had previously made a presentation about Project Grow during public commentary at the April 17, 2012 meeting of the Ann Arbor park advisory commission.]

The nonprofit already has 80 gardens at the nearby County Farm Park, Rabhi said. He pointed out that about 40 people are on a waiting list to get Project Grow plots, and the Platt Road property is available. The county wouldn’t need to do anything, because Project Grow volunteers would come in and till the soil, and install a separate meter on the water hookup so that they could pay for their water use. Project Grow would also add the county to its insurance coverage, so there would be no concerns about liability, he said.

Rabhi said it’s a great way to use the property until the county decides what to do with it, and that Project Grow understands that gardeners might need to leave at some point. [The possible disposition of the property at 2270 and 2260 Platt Road – which includes a vacant 42,320-square-foot building on 10 acres of land – was discussed at a March 8, 2012 board working session.] In this interim period, Rabhi said, having Project Grow gardeners on the site will help the county with security and lessen the likelihood of vandalism there.

Hazel Bowman

Hazel Bowman was honored for her work with the county's foster grandparent program.

Communications: Hazel Bowman

During the May 2 meeting, commissioners passed a resolution honoring Hazel Bowman for her 25 years of work through the county’s foster grandparent program. County administrator Verna McDaniel read the resolution, stating that Bowman ”strengthens the fabric of our community through her work, gracious spirit and unfailing support of others.”

Bowman’s work over the years has included acting as a mentor, tutor and caregiver for children and youth with special needs at Clark Road Group Home, Jefferson Head Start, Henry Ford Elementary, and the Willow Run Early Learning Center.

Bowman received a standing ovation from commissioners and others in attendance.

The foster grandparent program connects qualified volunteers – U.S. citizens who are 60 or older, meet income guidelines, and are able to work 20 hours a week – with special needs children in public schools, hospitals, and day care centers. The foster grandparents receive a $212 monthly stipend, transportation assistance to the site, one meal each day of service, and a free annual physical.

Communications: Public Commentary – Smart Meters

Nanci Gerler told commissioners that she had spoken to the Ann Arbor city council about the growing problem of  DTE’s smart meters, which are now being installed in Michigan and other states, even though some customers don’t want them. There are protests and injunctions against the installation of smart meters in other communities, she said, but those aren’t widely publicized. It’s extremely critical that people are aware that these meters are unsafe, she said. Some people who are sensitive to electromagnetic frequencies see the effects immediately, with headaches, ringing in the ears and sleep disorders. Cost issues are another concern – some people have seen their electric bills increase dramatically after the meters are installed. The meters have also resulted in fires from faulty wiring, she said. “It’s going to impact every one of us,” she concluded.

Communications: Public Commentary – Most Vulnerable Residents

Thomas Partridge spoke during the two opportunities for public commentary. He described himself as an advocate for the vulnerable residents in the county, and urged commissioners to adopt a framework for supporting affordable housing, health care, transportation and education, especially targeted to the most vulnerable population. He criticized some county agencies for not having the best interest of residents at heart, citing specifically the Project Outreach Team (known as PORT), the Community Support & Treatment Services (CSTS), and the Washtenaw Community Health Organization (WCHO). Staff is too often neglectful and have callous attitudes toward residents, he contended.

Partridge also endorsed president Barack Obama for another term, and urged Obama to run on a more people-oriented platform to address unmet needs in health care, education, public transportation and housing, as well as giving emphasis to the needs of the disabled, senior citizens and college students with undue financial burdens.

Present: Felicia Brabec, Alicia Ping, Ronnie Peterson, Wes Prater, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith, Rob Turner.

Absent: Barbara Bergman, Leah Gunn.

Next regular board meeting: Wednesday, May 16, 2012 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. [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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  1. May 7, 2012 at 10:24 am | permalink

    During the Head Start discussion, was there any reference to fact that two Head Start Managers were put on administrative leave back in December [link]. Seems the lack of leadership for HS could be a problem during the transition.

  2. By Vicki Murdock
    May 7, 2012 at 12:17 pm | permalink

    I wish to thank the author for a very well written, researched and in depth article about the Sylvan Township Crisis. The facts of whom are involved and the related comments from the meeting were very thorough. It is enlightening to see who were involved in the decisions from the very beginning. We all need to make sure our government at all levels are held accountable. Honesty and transparency are of utmost importance from our elected officials. Unfortunately Sylvan Township has kept too much behind closed doors for too many years. It is time for a change.

  3. May 7, 2012 at 3:52 pm | permalink

    Thank you for the background on the Sylvan Township sewer bonds. What you did not mention was that I am on record as having moved those resolutions.

    I would like to comment on the history of those bonds in a different moment, but first a procedural note regarding customs at the BOC when I served.

    If you look at the minutes appended, you will see that I moved all items on the agenda, from communications to resolutions to claims, and Cmr. Peterson seconded them. This is because the custom was for the chair to call for someone to move the agenda. That night it happened to be me, and it happened that Cmr. Peterson seconded it. The BOC did not move each resolution separately, but instead placed the entire agenda on the table simultaneously. Thus it is entirely possible for a commissioner to have moved a resolution which he or she then opposed during discussion and/or the vote. The making of the motion itself does not indicate anything about support.

    Another custom on the BOC was that most items (I’ll just guess at 98%) were passed unanimously at the Board business session. This was often in spite of dissent in previous discussions and votes. It was not part of the culture for commissioners to be the single or one of a few dissenting votes except in highly contentious circumstances. It was basically considered grandstanding to vote “no” on something after consensus had been reached, though that happened rarely.

    In the Sylvan Township case, my own vote in assent was only after months of opposition. But that’s another story.

  4. By Mary Morgan
    May 7, 2012 at 4:27 pm | permalink

    Re. Head Start managers: At the county board’s Jan. 18, 2012 meeting, county administrator Verna McDaniel told commissioners that former Head Start director Patricia Horne McGee had retired as of Dec. 31, 2011. Lovida Roach, Head Start’s senior management assistant and Horne McGee’s second-in-command, was to remain on administrative leave using personal time she had accrued, and would then retire.

    Cassandra Sheriff, site director for the Ypsilanti Head Start location, was appointed interim director late last year. Last week, McDaniel told me that Sheriff will remain as interim director throughout the transition.

  5. By Douglas E Fuller
    May 7, 2012 at 6:52 pm | permalink

    Ms Morgan
    as always, when I read something in the Chronicle, I always feel that I’ve read something worthwhile, that was informative and useful. Thank you. def

  6. By Jeff Harris
    May 8, 2012 at 11:23 am | permalink

    Having just moved into Sylvan Township in March, this was very enlightening on how we got to where we are today. Thank you to the Chronicle for the in-depth reporting.

    I find it amusing that Mr. Peterson “…wondered how the county board could have approved loaning money to an entity that didn’t have a way of guaranteeing repayment”, when he was on the BOC at the time.