Council Takes Time for Re-Set: Rules, DDA

Committees use chance after postponement on council internal rules and DDA tax capture ordinance to sort through issues; also, council calls for work on 1,4-dioxane cleanup standards, community solar pilot

Ann Arbor city council meeting (Sept. 3, 2013): Two significant items on the council’s agenda were postponed so that more committee work could be done on the issues: revisions to the ordinance (Chapter 7) regulating tax increment finance (TIF) capture by the Ann Arbor Downtown Development Authority; and revisions to the council’s internal rules.

Sumi Kailasapathy (Ward 1), Sabra Briere (Ward 1) and Sally Petersen (Ward 2)

Sumi Kailasapathy (Ward 1), Sabra Briere (Ward 1) and Sally Petersen (Ward 2). Despite Ann Arbor’s reputation, on this occasion councilmembers appeared to be leaning to the right. The meeting featured public commentary that recalled a standard political joke about Ann Arbor during football season: “Fake left, run right.” (Photos by the writer.)

Both issues also had been postponed from previous meetings. However, the committees that were supposed to have provided more specific recommendations to the full council prior to Sept. 3 did not accomplish that work.

After the Sept. 3 council meeting, both of the relevant committees subsequently met. An update on their work is included in this council meeting report.

The DDA ordinance revisions have already been given initial approval by the council and are awaiting a final vote. The amendments to Chapter 7 include various changes to governance, including term limits for board members, as well as clarifications to the existing language on TIF capture. The amendments would enforce the existing language of the ordinance in a way that has an impact on the DDA’s TIF revenue that would roughly match the DDA’s projected revenues in its 10-year planning document.

However, since that 10-year document was last updated, the amount of new construction in the DDA district has resulted in significant increases in the taxable value on which TIF is computed. About $1 million a year is at stake – which would be distributed to the other jurisdictions whose taxes the DDA captures, instead of being collected by the DDA. The joint committee of DDA board members and city council members met on Sept. 10, and the group appeared to be ready to recommend that the council table the initially-approved ordinance changes and start from scratch, likely shedding the proposed changes to governance.

The approach the committee is now taking would remove the current Chapter 7 language expressing restrictions on the DDA’s TIF revenue, and replace it with a “cap” that would have a built-in annual increase. Among the scenarios the committee is weighing would be a cap set at a high-enough level that it would likely have no impact on the amount of the DDA’s TIF revenue, compared to the amount the DDA is receiving under its own current interpretation of the ordinance, which is disputed.

While the Sept. 3 postponement of the DDA-related ordinance was dispatched quickly, later in the meeting the council engaged in a substantial debate on an appointment to the DDA board – that of Al McWilliams. With only nine councilmembers present and his confirmation dubious – because it needed six votes on the 11-member council – mayor John Hieftje withdrew the nomination.

The council’s rules committee also met on Sept. 10 and reviewed revisions that had previously been recommended. Basing its work on a debate that the entire council had on July 15, 2013, the committee decided that none of the council rules on the length of speaking turns (for the public or for councilmembers) or for reserving time to speak at the start of meetings would be changed from the current rules. Among the proposed changes that survived committee discussion included: (1) adding public commentary at work sessions, (2) re-ordering the agenda to place nominations and appointments near the start of the meeting, and (3) prohibiting use of personal electronic communications devices while at the council table.

The council will take up the DDA ordinance as well as the internal rules issue at its next meeting on Sept. 16.

Other business handled by the council on Sept. 3 included passage of a resolution calling for work on better cleanup standards for 1,4-dioxane – which came only after lengthy debate about possibly postponing it in order to strengthen the language and seek the advice of additional stakeholders.

The council also passed a resolution recommended by the city’s energy commission, to direct city staff to develop a pilot program with DTE for a “community solar” project. Another resolution recommended by the energy commission failed to win council approval, however. It would have directed the city’s employment retirement system to divest from fossil fuel companies.

In land-related business, the council approved the city’s participation in two deals related to the city’s greenbelt program. Councilmembers also gave approval to a Hampton Inn project on Jackson Road and initial approval to a drive-thru to be constructed at a Shell/Tim Hortons at Eisenhower and Ann Arbor-Saline Road.

As part of city administrator Steve Powers’ report to the council, he mentioned that a memo on the review of the city’s crosswalk ordinance would be forthcoming. That memo was subsequently released.

Downtown Development Authority Ordinance

On the council’s Sept. 3 agenda was a final vote on revisions to the Ann Arbor city code regulating the Ann Arbor Downtown Development Authority’s tax increment finance (TIF). At stake is around $1 million or more a year in tax revenue.

DDA Ordinance: Background

A joint council-DDA committee was appointed on July 1, 2013 with a charge to begin meeting immediately to work out a recommendation on possible legislation that would clarify the ordinance.

Ann Arbor DDA TIF Revenue projections

Ann Arbor DDA TIF revenue projections. The vertical line indicates the year when the clarified calculations would be implemented. The red line is the amount of TIF revenue assumed by the DDA in its FY 2014 and FY 2015 budgets, and in its 10-year planning document. The blue line is the estimated TIF revenue under the proposed clarified ordinance calculations. The yellow line is the estimated TIF revenue that the DDA would receive if the DDA continued to interpret the city’s ordinance in its own way. (Numbers from the city of Ann Arbor and DDA. Chart by The Chronicle.)

However, that committee did not convene until eight weeks later, on Aug. 26. The committee met on just that one occasion before the Sept. 3 council meeting. The postponement until Sept. 3 had come at the council’s May 6, 2013 meeting.

The council had given initial approval of an ordinance change at its April 1, 2013 meeting. The change would clarify the existing language in the ordinance – which outlines how the DDA is supposed to return excess TIF revenue to other taxing jurisdictions – to the extent that the revenue exceeds projections in the DDA’s TIF plan.

Until two years ago, the existing limitation expressed in the ordinance had never been applied. But in May 2011, the city treasurer called the issue to the DDA’s attention, characterizing it as a roughly $2 million issue, dating back to 2003. However, when the DDA retroactively calculated its revenue, as well as rebates to other taxing jurisdictions, it applied a methodology chosen to minimize the amount of “rebate” owed to other taxing jurisdictions, reducing the amount to roughly $1.1 million.

When challenged on its method of calculation, the DDA subsequently changed its position, claiming that the money it had already paid back to other taxing jurisdictions was a mistake. The DDA’s new position was to claim an interpretation of a clause in Chapter 7 as providing an override to limits on TIF revenue – if the DDA has debt obligations, which it does. So in 2012 and 2013, the DDA did not return any of its TIF capture to other taxing authorities. In addition to the city, those taxing authorities are the Ann Arbor District Library, Washtenaw County, and Washtenaw Community College.

The proposal as approved at first reading by the council on April 1, 2013 would essentially enforce the language that is already in the ordinance, but disallow the DDA’s interpretation of the “debt override” clause. Compared to the DDA’s own 10-year planning document, revenue to the DDA under the ordinance change would be roughly similar. The minimal impact compared to the planning document depends on the enactment of the ordinance to apply beginning with fiscal year 2015. However, the 10-year planning document in question did not include a large amount of new construction in the downtown area, which has already generated higher TIF revenue than estimated in the 10-year plan.

The ordinance revision as approved at first reading also includes term limits for DDA board members, and would make the appointment of the mayor to the board of the DDA contingent on a majority vote of the council. Without majority support, the mayor’s spot on the board would go to the city administrator.

Serving on the joint council-DDA committee for the council are: Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), Sally Petersen (Ward 2) and Jane Lumm (Ward 2). Representing the DDA are Sandi Smith, Joan Lowenstein, Bob Guenzel, and Roger Hewitt.

The Aug. 26 committee meeting was dominated by political squabbling. The only substantive concept that was batted around briefly at that meeting was the idea of defining some kind of fixed cap on TIF revenue. This approach would replace the existing ordinance language, which calibrates the DDA’s TIF capture with projections in the TIF plan. But the discussion never went as far as to include dollar amounts for the fixed cap.

DDA Ordinance: Public Commentary

During public commentary reserved time on Sept. 3, Jim Mogensen began by saying that municipal finance is “broken” particularly as it relates to cities. In the context of the spirited conversation that’s going on about the DDA, he wanted to comment on the topic of municipal finance. He categorized Michigan cities in different ways. As Category A he described cities like Pontiac, Benton Harbor and Detroit, which have their own concerns related to municipal finance. In Category B, he said, there are cities like Lansing, Ann Arbor and Ypsilanti – because they have lots of governmental non-taxable land and that creates its own set of issues. In Category C, he put, Northville, Birmingham, and Gross Pointe.

Mogensen noted that Ypsilanti is in Category B, but has sprinkles of Category A as part of its challenges. Ann Arbor, Mogensen continued, is in Category B, but has sprinkles of Category C. Oftentimes, he said, Ann Arbor tries, as does the general public, to deny these challenges exist, Mogensen said, when it comes to setting the budgets and making things work. Some people say, “Well, you know, it must be those liberals – they’re always making us spend money on things that we shouldn’t be spending money on!” He alluded to the old quip about Ann Arbor, particularly during the football season: “Fake left, run right.” The reality is that there’s not much of that kind of spending in the budget, he said.

When people look at the city, they overemphasize perceived mismanagement, and underestimate those structural problems, Mogensen said. So when people think about the DDA, people overestimate and overemphasize perceived management prowess, Mogensen said, and they underestimate the tremendous set of conditions the DDA has, which include: limited scope of responsibility, very high density, and the ability to capture taxes. When you look at all that, he said, it’s obvious why some things happen. Coming out of this conversation, there should be a way to make sure the city can function well. There should be a way of making that happen without discrediting people who are a part of different organizations, he said.

DDA Ordinance: Council Deliberations

Stephen Kunselman (Ward 3) led off the deliberations, recalling the history of the proposal, and mentioning the meeting of the committee on Aug. 26. Not enough information was available to the committee when it met, he said. Staff had been directed to come up with draft language, he said. Kunselman told the council that he wanted to postpone action again, so the committee could meet again and bring back a recommendation that had more substance.

Sumi Kailsaspathy (Ward 1)

Sumi Kailasapathy (Ward 1).

The initial inclination was to postpone action until Oct. 7. Sally Petersen (Ward 2) reacted to that date, saying she might be out of town at that meeting. Kunselman asked city administrator Steve Powers if draft language could be ready as soon as the Sept. 16 council meeting. The joint council-DDA work session on Sept. 9, 2013 was floated as a possibility when the issue could be addressed. But Powers indicated that the Sept. 9 work session would be focused on the topic of the parking agreement – between the city and the DDA, under which the DDA manages the public parking system. He ventured it could be a challenge to schedule that many people to meet on an additional occasion. Mayor John Hieftje suggested postponing action until the next meeting, on Sept. 16, and assessing how things stand at that time.

Sumi Kailasapathy (Ward 1), who’s a member of the council’s audit committee, noted that she’d requested that a review of Chapter 7 compliance be included in the city’s annual audit. [The DDA is a component unit of the city.] The answer that had come back from the auditor, Kailasapathy said, was that the ordinance language was unclear.

Sabra Briere (Ward 1) asked if the DDA needed to be able to vote on something before the council acted. [The DDA board meets on the first Wednesday of the month, with its next regular meeting scheduled for Oct. 2.] Hieftje, who sits on the DDA board, indicated that he didn’t think the DDA would necessarily need to vote on anything before the council acted.

Outcome: The council voted to postpone the DDA ordinance until its next meeting, on Sept. 16.

DDA Ordinance: Joint Committee Meeting – Sept. 10, 2013

The meeting of the council and DDA board joint committee – held the week after the council’s Sept. 3 session – was not attended by Jane Lumm (Ward 2) on the side of the council or by Bob Guenzel for the DDA. [Lumm was out of town due to a death in her family.]

The Sept. 10 meeting was different in tone from the Aug. 26 meeting, which featured bickering back and forth between councilmembers and DDA board members. The Sept. 10 session focused on a specific alternative to the current Chapter 7 language, which currently reads [emphasis added]:

If the captured assessed valuation derived from new construction, and increase in value of property newly constructed or existing property improved subsequent thereto, grows at a rate faster than that anticipated in the tax increment plan, at least 50% of such additional amounts shall be divided among the taxing units in relation to their proportion of the current tax levies. If the captured assessed valuation derived from new construction grows at a rate of over twice that anticipated in the plan, all of such excess amounts over twice that anticipated shall be divided among the taxing units. Only after approval of the governmental units may these restrictions be removed.

The last sentence of that section indicates that removal of those restrictions on TIF revenue to the DDA would require approval of the other taxing jurisdictions. However, the committee did not discuss that aspect of the current law, and appeared comfortable with the idea that the language could simply be replaced with a different conceptual approach – without approval or consultation with the other taxing jurisdictions.

The different conceptual approach would establish a basis level for the maximum captured taxable value in the DDA district and then set some clearly defined annual increase, keyed to a specific percentage or some variant of a consumer price index (CPI).

For example, the current taxable value on which the DDA captures taxes is roughly $137,000,000. That yielded roughly $3.76 million in TIF revenue to the DDA in fiscal year 2013, which ended on June 30. If that $137,000,000 were used as a basis for the cap, then a 3% increase applied annually would give the DDA a maximum of $5.063 million in 2023. In any given year, the DDA would receive the lesser of two values: (i) the unconstrained TIF captured on the taxable value; or (ii) the value of the cap.

The working document used by the committee showed two basic scenarios, one with a basis of $137,000,000 in taxable value for FY 2013, and a second one starting a basis of $167,000,000 for the following year, in FY 2014. The second one received more interest from the committee:

2. The maximum captured taxable value shall be fixed 
at a base value of $167,000,000 for tax year 2014. Each tax 
year thereafter, the maximum captured taxable value shall be 
increased by (CPI, 3%, 5%) per annum.

DDA TIF Capture Cap.
TIF value in millions with $167 million 
taxable value basis in FY 2014.
Columns correspond to yearly value of cap
assuming the increase indicated in the 
column header.
FY    CPI         3%     5%    10%
2013  $3.767  $3.767  $3.767 $3.767 (Actual)
2014   4.500   4.500   4.500  4.500
2015  tbd      4.635   4.725  4.950
2016  tbd      4.774   4.961  5.445
2017  tbd      4.917   5.209  5.990
2018  tbd      5.065   5.470  6.588
2019  tbd      5.217   5.743  7.247
2020  tbd      5.373   6.030  7.972
2021  tbd      5.534   6.332  8.769
2022  tbd      5.700   6.649  9.646
2023  tbd      5.871   6.981  10.611


The DDA would be projected to capture around $4.5 million in TIF this fiscal year (FY 2014), even on the Chapter 7 amendments given initial approval by the council. But under those amendments, the DDA’s TIF capture in FY 2015 would be $3.68 million, which compares to $3.75 million in the DDA’s 10-year planning document from earlier this year.

At the Sept. 10 committee meeting, not much interest was shown in defining the escalator in terms of a CPI. Sally Petersen (Ward 2) ventured that it might be appropriate to use 2.2% as an escalator – as that’s the figure used for the DDA’s 10-year planning document. DDA board treasurer Roger Hewitt objected that this was a fairly conservative number. Board chair Sandi Smith argued that any choice of a percentage would be “random” and that the choice of the escalator should be considered in the context of its implications for the DDA’s ability to complete projects described in a draft list of projects the DDA has recently assembled.

The development of the draft list came partly in response to pressure from the city council – dating back to April of this year – asking the DDA to explain what projects would not be undertaken if the DDA didn’t continue to receive TIF revenue based on its preferred interpretation of the city’s ordinance. An ordinance amendment included in the revisions given initial approval by the council would require closer integration of the DDA’s projects with the city’s capital improvements plan. The amendment was put forward by Sabra Briere (Ward 1).

The authority shall submit their capital budgets to incorporate them into the City’s Capital Improvement Plan (CIP). The authority shall at the time they submit their budget for Council approval identify that portion of the budget which is operating and that which is capital projects.

The project list was introduced at the Sept. 4, 2013 DDA board meeting. [.pdf of draft five-year plan]

Based on the committee conversation, the next step for the DDA appears to be comparing the different definitions for the escalator to its 10-year planning document and to the draft five-year project list. And based on that analysis, the DDA would come back with a recommendation for how the escalator should be defined.

For the council, the consensus appeared to be that the council will delay again at its Sept. 16 meeting – either by postponing or tabling a vote. Stephen Kunselman (Ward 3) indicated a willingness to start with a fresh draft of ordinance changes, which would allow the council to shed the changes in the original proposal that would affect DDA board governance, including term limits. That would reset the requirement that the council approve the ordinance revisions at a first reading and then again at a second reading at a subsequent council meeting.

There’s an outside chance that a fresh first reading of the ordinance changes could be brought to the council for its consideration by Oct. 7, the first meeting in October. Even if a fresh first reading is not ready until Oct. 21, the second council meeting in October, an approval then would set up the council to give final approval on Nov. 7. That follows the Nov. 5 election, but the current composition of the council would still be at the table, no matter the general election outcome. So even if independent incumbent Jane Lumm were not to prevail in the Ward 2 race – which is also contested by Democrat Kirk Westphal and independent Conrad Brown – she would still be able to vote on Nov. 7.

Appointments to Boards, Commissions

At its Sept. 3 meeting, the Ann Arbor city council was asked to confirm just three of the four nominations made at the council’s previous meeting on Aug. 19.

One nomination that had been made on Aug. 19 – for Leigh Greden’s reappointment to the Ann Arbor housing commission – was withdrawn prior to the start of the Sept. 3 meeting.

Two nominations from Aug. 19 were confirmed: Devon Akmon’s appointment to fill a vacancy on the public art commission; and Logan Casey to fill a vacancy on the human rights commission. Akmon is an Ann Arbor resident and the new director of the Arab American National Museum in Dearborn. Casey is a graduate student at the University of Michigan.

Considered separately was the nomination of Al McWilliams’ appointment to the board of the Ann Arbor DDA.

Appointments: Background

The nomination of former city councilmember Leigh Greden to the Ann Arbor housing commission had been withdrawn before the Sept. 3 meeting, around 2:30 p.m. that same day.

Ann Arbor mayor John Hieftje

Ann Arbor mayor John Hieftje.

No conversation took place at the Sept. 3 meeting about Greden’s nomination. His initial appointment to the AAHC board in January 2011, replacing Jayne Miller, had been unanimous.

Earlier this year, at the council’s April 1 meeting, Nickolas Buonodono had been nominated to replace Greden on the AAHC board, after Greden had reached the end of his first term. Buonodono is an attorney, and a member of the Washtenaw County Democratic Party executive committee. However, that nomination was not on the council’s April 15 meeting agenda for confirmation. According to AAHC executive director Jennifer Hall, who spoke to The Chronicle in a telephone interview in mid-April, Greden was going to seek reappointment for a second term if he could accommodate his schedule to the meeting times. The housing commission is undergoing a major transition to a project-based voucher system, which the council authorized at its June 3, 2013 meeting on a unanimous vote.

The nomination of Al McWilliams to the Ann Arbor DDA also came forward from mayor John Hieftje with a wrinkle. Before he was nominated at the council’s Aug. 19 meeting, McWilliams’ name had appeared on an early version of the list of nominees for the council’s Aug. 8 meeting. The final version for that meeting, however, did not include his name.

McWilliams is founder of Quack!Media, an ad agency located in downtown Ann Arbor. Quack!Media lists the Ann Arbor Area Transportation Authority on its website as one of its clients. McWilliams has written advocacy pieces for bicycling on his blog.

Appointments: Council Deliberations – DDA

Mayor John Hieftje led off the conversation by noting that there are currently some openings on the DDA board. He asked for the council’s support on Al McWilliams’ nomination. Hieftje said he had wanted to find someone representing the Main Street business district and the entrepreneurial community, and he thought that McWilliams fit that description.

Sumi Kailasapathy (Ward 1) indicated that she’d asked for a list of those who’d applied for the appointment to the DDA. She’d been told that the person in charge of the list was on vacation, but the list would be provided next week.

The second issue, she continued, was that McWilliams’ company, Quack!Media, is a vendor for the AAATA. The DDA grants money to the AAATA, she said, calling that a conflict of interest.

Hieftje told Kailasapathy that his assistant was out of town, and he had not had time to “rustle up those files” of applications. [Former DDA board member and local developer Ed Shaffran has indicated a willingness in serving again on the DDA board.]

Hieftje reviewed the fact that the process calls for him, as mayor, to make nominations. And he’d wanted to nominate McWilliams after reviewing the applications on file. Hieftje noted that there is an additional seat open on the DDA board, and that he’d be looking forward to bringing a nomination to fill that additional seat to the council’s next meeting. [The two seats that currently need to be filled are those of Newcombe Clark, who made an employment-related move to Chicago after serving out a four-year term on the board, and Nader Nassif, who resigned from the board this summer after being arrested for sexual assault.]

Sabra Briere (Ward 1) reported that she’d asked the city attorney about the conflict-of-interest question. Briere indicated that she didn’t think it was clear that a conflict of interest arose out of the situation that Kailasapathy had described. Briere asked city attorney Stephen Postema to comment on the question.

Postema essentially indicated that he didn’t think there’s an inherent conflict for McWilliams in serving on the DDA board, but if any conflict-of-interest issue arose while serving on the board, it could be dealt with when it came up.

Postema stressed that if there are two public entities involved, it’s not considered to be a conflict under the statute. Sally Petersen (Ward 2) said that even though the state doesn’t define it as a conflict, the council has rules on the question. She didn’t think the state law is stringent enough. She ventured that McWilliams would need to recuse himself quite frequently, possibly including votes on the DDA budget.

Responding to Petersen, Postema indicated that the state statue is not as stringent as many people would like it to be. Postema noted that while Petersen might perceive a conflict, he was looking at it as a matter of state law.

By way of background, one state statute on conflicts of interest for a public official is Act 317 of 1968 “Contracts of Public Servants with Public Entities.” It’s the state statute to which DDA legal counsel Jerry Lax had appealed at the DDA board’s meeting three and a half years ago – on May 5, 2010. It involved a question about whether mayor John Hieftje and then-councilmember Sandi Smith should participate in a vote to allocate $2 million to the city of Ann Arbor, given the fact that they’re paid salaries as elected officials by the city of Ann Arbor.

The statute prohibits the public servants from soliciting contracts with entities by whom they are employed:

(2) Except as provided in section 3, a public servant shall not directly or indirectly solicit any contract between the public entity of which he or she is an officer or employee and any of the following: (a) Him or herself. (b) Any firm, meaning a co-partnership or other unincorporated association, of which he or she is a partner, member, or employee. [...]

In analyzing the situation for Hieftje and Smith in 2010, Lax pointed out that there was a specific exemption for contracts between two public entities [emphasis added]:

15.324 Public servants; contracts excepted; violation as felony. Sec. 4. (1) The prohibitions of section 2 shall not apply to any of the following: (a) Contracts between public entities.

Under that statute, Lax concluded it was not a problem for Hieftje and Smith to participate in the deliberations and vote on the resolution that the DDA board was considering.

Later in the May 5, 2010 meeting, however, the resolution considered by the DDA was proposed to be altered so that the $2 million payment was not described as part of any contract – because at that point the existing parking agreement between the city and the DDA had expired, and no money was owed under that contract. At that point, Lax indicated that the state statute did not provide an exemption – because the DDA was contemplating a grant. So Lax expressed his view that Hieftje and Smith should sit out the vote on amending the resolution, which they did. The attempted amendment failed, however, and the two subsequently returned to the table to vote on the resolution.

So in considering whether Al McWilliams would be able to participate in a vote to allocate money for getDowntown, for example – given that AAATA is a client of his company – it’s not obvious at first glance that Act 317 of 1968 would apply. If the money allocated to the AAATA’s getDowntown program takes place outside of a contractual agreement, then the inapplicability of the statute could be based on the same reasoning Lax used in the May 5, 2010 vote involving Hieftje and Smith.

However, based on the annual signed agreements that AAATA provided to The Chronicle in response to a request under Michigan’s Freedom of Information Act, some basic getDowntown program funding is granted to AAATA by the DDA under that annual signed contractual agreement. Funding for getDowntown’s go!pass program, which was $479,000, does not appear to be covered by that annual contract. [.pdf of 2013 getDowntown agreement]

Christopher Taylor (Ward 3), Sumi Kailasapathy (Ward 1) and Sabra Briere (Ward 1)

Christopher Taylor (Ward 3), Sumi Kailasapathy (Ward 1) and Sabra Briere (Ward 1).

During the council’s Sept. 3 deliberations, Christopher Taylor (Ward 3) contended that there’s no conflict at all for McWilliams. As an example, Taylor cited employees of the University of Michigan who serve on the council. [Stephen Kunselman (Ward 3) is currently an employee, as is Hieftje. Marcia Higgins (Ward 4) was previously, but is no longer a UM employee.] Using the same standard would require the recusal of these councilmembers on any UM-related matter, Taylor contended.

If there were an actual conflict on a particular occasion, then it’s well established that someone can simply stand down for a particular vote, Taylor said. [Taylor has himself on occasion asked that councilmembers vote to excuse him from votes the council has taken, for example, when a bar that is a client of his law firm – Hooper Hathaway – had requested a special event street closure that required council approval.]

At that point in the deliberations, Kunselman asked if the other nominations to be considered that night could be separated out. Hieftje proposed voting on the confirmations of Devon Akmon and Logan Casey separately, which the council did.

Outcome: The council voted to confirm Akmon to the public art commission and Casey to the human rights commission.

Kunselman said he appreciated the fact that the issue had been raised about the appearance of a conflict, even if there’s not a legal conflict. However, Kunselman asserted that he had the prerogative to vote as he liked. So Kunselman was interested in confirming the appointment to the DDA board of someone who might be able to accept some “reform” of the DDA. And Kunselman didn’t think that McWilliams, as a DDA supporter, would be open-minded with respect to following city ordinances. So Kunselman stated that he would vote against the appointment of McWilliams.

Hieftje asked Kunselman if he’d met with McWilliams. No, Kunselman replied, but he’d read McWilliams’ public statements.

Briere said she has not met with McWilliams, but she’d talked with Maura Thomson, director of the Main Street Area Association, who was very enthusiastic about McWilliams being appointed. Briere then talked about the issue of perceived conflict of interest. Briere said she’s heard that she could have a conflict due to her spousal relationship. [Briere is married to local attorney David Cahill.] She’d heard that she’d had a conflict when she worked for a nonprofit that received city funding. If the council gets interested in the question of whether someone is even just “dimly friendly” with someone, then that will shrink the pool of those who are eligible to serve, Briere said.

Stephen Kunselman (Ward 3)

Stephen Kunselman (Ward 3).

Briere noted that there were two former mayors who were UM faculty. She was surprised that people are considering this kind of thing to be a conflict. If a councilmember feels a nominee falls short of the mark, then they should be voted against based on the merits, she said.

Taylor added that if one of the goals is to have people who are involved in local business to be involved in civic life, then this level of relationship can’t be a prohibitive factor. The council’s conversation that night was already doing damage to the possibility that others will want to step forward, Taylor ventured.

By way of background, by state statute a 12-member DDA board must include either the mayor or the city administrator, and at least seven members having an interest in property located in the DDA district or be an officer, member, or trustee, principal, or employee of a legal entity having an interest in property located in the downtown district. And at least one of the DDA board members is required to be a resident of the downtown district. Three at-large members fill out the other seats.

Chuck Warpehoski (Ward 5) stated there are three questions to consider: qualifications, perspective, and conflict. He was not upset that the council was discussing any of these questions. Warpehoski reported that he’d met McWilliams only once. Based on that interaction, he said McWilliams has a sharp mind. So Warpehoski concluded McWilliams is qualified. Warpehoski wasn’t familiar with McWilliams’ perspective on the DDA, except for what Kunselman had reported earlier during deliberations.

On the question of conflict, Warpehoski stated that McWilliams should not vote on contracts that his company would service – but he didn’t think there would be that many votes fitting that description. He thought that the question of conflict is still a fair one to ask.

Margie Teall (Ward 4) said she was supportive of McWilliams’ nomination. Responding to Kunselman’s point about McWilliams’ attitude toward the DDA, Teall said that it’s natural that someone who wants to serve on the DDA would be supportive of the DDA.

Kailasapathy was skeptical that there would be only a few votes from which McWilliams would need to refrain. She stated that she thought there was a direct conflict of interest.

Hieftje asked for the ability to withdraw the nomination, so that some of the issues that had been raised could be explored.

Outcome: The council did not vote on McWilliams’ nomination because Hieftje withdrew it. The council’s vote looked like it might have failed on a 5-4 vote with Kunselman, Petersen, Kailasapathy, and Anglin possibly voting against it.

Council Rules Changes

The council’s Sept. 3 agenda included an item related to changes to its internal rules. This revision to the set of council rules was first presented to the council on June 17, 2013. However, a vote was postponed at that meeting.

The revisions were prompted by a desire to allow for public commentary at council work sessions – to eliminate any question about whether councilmembers were engaged in deliberative interactions at those sessions. By allowing for public commentary at work sessions, the council would ensure compliance with Michigan’s Open Meetings Act. The council’s rules committee also recommended additional changes, including a shortening of the individual speaking turns for public comment as well as shortening of time for councilmembers. Those additional changes were included in the June 17 version of the rules.

After again postponing a vote at its July 1, 2013 meeting, the council used its following meeting, on July 15, 2013, to eliminate one of the proposed rule changes – the shortening of public speaking turns. But the council postponed further revisions and a vote until Sept. 3.

The council’s rules committee – consisting of Marcia Higgins (Ward 4), Sabra Briere (Ward 1), Stephen Kunselman (Ward 3), Christopher Taylor (Ward 3), and mayor John Hieftje – was supposed to meet before the Sept. 3 meeting to consolidate input from other councilmembers and perhaps present a clean slate of proposed revisions. However, in the interim, the rules committee did not meet.

Among the other changes that were part of the proposed revisions was the addition of a rule to disallow the use of mobile electronic communication devices at the council table. Another possible change would affect the council’s standard agenda template by moving nominations and appointments to boards and commissions to a slot earlier in the meeting, instead of near the end.

Council Rules Changes: Public Commentary

During public commentary reserved time at the start of the meeting, Thomas Partridge introduced himself as a 2010 Michigan senate candidate and 2012 candidate for the Michigan house of representatives, who’s now a write-in candidate for Ward 5 city council this year. He spoke as an advocate supporting Martin Luther King Jr.’s agenda. Partridge called for emphasis on affordable housing, public transportation, and fair access to public meetings. He called for 3- to 5-minute public participation time. There should be no reductions in the amount of time offered to the public, he said. A forward-looking city council would look for new ways to increase public participation time, not to constrain it, he concluded.

During public commentary time at the end of the meeting, Partridge called on the council to be aware of the need for greater public participation. He complained that there’s been scant information on a recent murder of a UM student.

Mark Koroi reminded councilmembers that he’d spoken to the council previously on the topic of public commentary at working sessions. He said he wants to see the issue taken care of. He noted that Marcia Higgins (Ward 4) was not in attendance at that night’s council meeting and referred to her a “the invisible woman.” More public commentary means that the council will hear more from Thomas Partridge and Blaine Coleman, Koroi allowed, adding that the U.S. Constitution and the Michigan Open Meetings Act should be upheld.

Council Rules Changes: Council Deliberations

Christopher Taylor (Ward 3) recited the history of the proposal, but observed that time is the enemy of all and so the committee had not met. He reported that the rules committee was committed to meeting in a swift fashion. He suggested postponing the vote.

Chuck Warpehoski (Ward 5) noted that part of the rationale offered for postponing until that night’s meeting – instead of waiting until Sept. 16 – was to change the rules to require public commentary at work sessions in time for the Sept. 9 work session. Warpehoski asked if postponement would preclude allowing public commentary at the Sept. 9 meeting.

City attorney Stephen Postema indicated that public commentary wouldn’t be precluded. From Postema’s remarks on Sept. 3 [emphasis added]:

You could just simply direct that public notice be given that there will be public commentary, if you wanted to put that as a part of the motion with a further direction I suppose to, in setting the agenda that public commentary will be listed. There’s certainly no prohibition of adding public commentary. Without it, I think what you’re focusing on, without it, the council rule says nothing about work session, and on the other hand the issue really is what’s going to be done at that meeting.”

Warpehoski asked that a postponement include direction to notice the public that public commentary will be provided and that it be added to the work session agenda.

By way of background, the actual wording of the current council rules contradicts Postema’s assertion that the council rule on agenda setting says nothing about work sessions. The rule actually sets forth an order of business for the council’s meetings and work sessions [emphasis added]:

RULE 3 – Agenda
3A – Preparation of the Agenda
The agenda for each Regular Council meeting and Council Work Session shall be prepared by the City Administrator. A resolution approving a contract shall only be included on the agenda if the City Attorney has reviewed the contract and the result of that review is included or with the proposed resolution.
The agenda will be prepared in accordance with the following order of business:

Moment of Silence
Pledge of Allegiance
Roll Call of Council
Approval of the Agenda
Public Commentary – Reserved Time
Communications from Council
Public Hearings
Communications from Council
Approval of Council Minutes
Consent Agenda
Ordinances – Second Reading
Ordinances – First Reading
Motions and Resolutions
Council Business
Boards and Commissions
Communications from the Mayor
Communications from Council
Communications from the City Administrator
Communications from the City Attorney
Clerk’s Report of Communications, Petitions and Referrals
Public Commentary – General

Specification of an order of business – as opposed to required elements of any agenda – makes the listing as suitable for either work sessions or regular meetings.

As deliberations continued, Sumi Kailasapathy (Ward 1) asked if signing up would be required to speak at the work session. Postema indicated that he imagined it would simply be general time.

Outcome: The council voted to postpone the change to council rules, but indicated it would allow public commentary at its next work session on Sept. 9. At that session, Thomas Partridge and Jim Mogensen addressed the council during public commentary time.

Council Rules Changes: Committee Meeting – Sept. 10

The rules committee met on Sept. 10. Mayor John Hieftje, Christopher Taylor (Ward 3), Sabra Briere (Ward 1) and Stephen Kunselman (Ward 3) attended the meeting. Hieftje reported that the committee chair, Marcia Higgins (Ward 4), had texted him that she would not be able to attend.

In reviewing the proposed changes, the committee determined that based on the July 15 full council deliberations, some rules proposed initially to be changed should be left intact. At the July 15 meeting, the council had voted explicitly to leave the duration of all types of public commentary speaking turns (public hearings, reserved time, general time) at three minutes.

And at the Sept. 10 committee meeting, the view of committee members was that the general sentiment of the council on July 15 indicated little enthusiasm for changing speaking times for councilmembers, or for changing the way that public speaking time is reserved.

Among the substantive changes that will likely be presented by the committee to the council at its Sept. 16 meeting will be: adding public commentary to work sessions; changing the order of the agenda to move nominations and appointments to earlier in the meeting; prohibiting the use of personal electronic communications devices while at the council table.

Pall-Gelman Plume

The council considered a resolution directing staff to explore actions available to the city on the issue of cleanup standards for an existing 1,4-dioxane plume on the city’s west side. Those options include meeting with the Michigan Dept. of Environmental Quality and petitioning the U.S. Environmental Protection Agency, to help set cleanup criteria for the carcinogen 1,4-dioxane in Michigan.

Map by of Pall-Gelman 1,4-dioxane plume. Map by Washtenaw County. Black arrow added to indicate baseball field at West Park.

Map of Pall-Gelman 1,4-dioxane plume, by Washtenaw County. Black arrow added to indicate baseball field at West Park. The yellow region is the estimated plume area where the 1,4-dioxane concentration is greater than 1 ppb (parts per billion). That area encroaches well into the city of Ann Arbor and extends outside the well prohibition zone (red border).

The actions to be undertaken by staff can be related to the Pall-Gelman plume or also site specific criteria for the Pall-Gelman plume. The goal would be to improve the cleanup standard for 1,4-dioxane. [.pdf of resolution as amended and approved] The resolution was sponsored by Sabra Briere (Ward 1), Chuck Warpehoski (Ward 5) and mayor John Hieftje.

The history of Gelman Sciences, which caused the 1,4-dioxane contamination, goes back 40 years. The company was based in Scio Township and later acquired by Pall Corp. The MDEQ’s current 1,4-dioxane generic residential drinking water cleanup criterion was set at 85 parts per billion (ppb). But an EPA criterion set in 2010 was for 3.5 ppb.

The MDEQ was supposed to re-evaluate its own standards by December 2012, based on the EPA’s 2010 toxicological review. It missed that deadline, and according to the council’s resolution, is anticipated to miss a new deadline set for a year later in December 2013.

Pall-Gelman Plume: Public Commentary

During public commentary reserved time at the start of the meeting, Roger Rayle introduced himself as chair of Scio Residents for Safe Water. He spoke in support of the resolution on the agenda calling on the Michigan Dept. of Environmental Quality to tighten up the standards for the Pall-Gelman 1,4-dioxane cleanup. When the standards were loosened back in 1985, he said, it happened overnight. Implicitly addressing the potential criticism that the resolution might not be strong enough, Rayle noted that this doesn’t have to be the last resolution on this topic.

Rayle was glad that the council’s attention is back on this topic, he said. Ann Arbor’s water system could eventually be threatened, he observed, noting that a “new hit” was recorded on a well where nobody expected it. He described his work with GoogleEarth to show how the plume has spread. He called on Gov. Rick Snyder to get involved and to get the MDEQ straightened out, as well as the state attorney general’s office.

During public commentary time at the end of the meeting, after the council had acted on the issue, Kai Petainen thanked the council for passing the Pall-Gelman 1,4-dioxane resolution. But he called it insulting that some councilmembers weren’t previously aware of the issue, asking them where they’ve been. He complimented the city for its disclosure of a raw sewage spill recently.

Pall-Gelman Plume: Council Deliberations

Sabra Briere (Ward 1) led off the deliberations by describing the chemical properties of 1,4-dioxane. She also described the long history of the problem. Briere noted that some people had voiced concern that the people who have been involved in advocacy should have been involved in the drafting of the resolution – specifically, the Coalition for Action on Remediation of Dioxane (CARD). Briere agreed with that sentiment. So she said she had a substitute resolution she wanted the council to consider. She described the changes as minor, but noted that they included an added “whereas” clause.

That added clause was as follows:

Whereas, Thousands of residents of The City of Ann Arbor and neighboring municipalities including Scio Township, Ann Arbor Township, have been working for over 20 years for the protection of the surface and ground waters of the State from the continuing threat and actual contamination from 1, 4-dioxane contamination originating at the Pall/Gelman Sciences, Inc. (“PGSI”) Wagner Road facility, and for effective containment and proper treatment of waters already impacted by the contamination; [.txt of original resolution] [.txt of modified resolution]

Briere described the MDEQ as eager to talk to the city about the issue and as welcoming the resolution.

Mayor John Hieftje, who’d co-sponsored the resolution with Briere and Chuck Warpehoski (Ward 5), indicated that the city’s lobbyist, Kirk Profit, has been working hard to keep the issue in front of the state. Margie Teall (Ward 4) thanked Briere and Warpehoski for their work on the resolution. Teall said she was glad there might be some movement on the part of the MDEQ.

Sally Petersen (Ward 2) complained that the resolution came to the council only late last week. She characterized the resolved clauses as not having “enough teeth.” The language could be strengthened by defining specific cleanup criteria, defining, goals and consulting the expertise of CARD members, Petersen said. So she wanted the resolution postponed.

Briere asked assistant city attorney Abigail Elias to explain the “teeth” of the resolution. Elias described the settlement between the city and Pall-Gelman related to the northwest supply well. Elias was not sure what might be added to strengthen the resolution any further.

Sumi Kailasapathy (Ward 1) said she didn’t want to bring up the issue, but as long as Petersen had done so, she was going to pursue it – that of involving those who’ve been advocating on the issue for a long time. She described herself as a social-scientist-turned-CPA, and thus valued the input of more people. She had mixed feelings about the process used to develop the resolution.

Petersen indicated she wanted to move to postpone the resolution. Hieftje asked city environmental coordinator Matt Naud to approach the podium.

Hieftje ventured that the resolution was about as strong as it could be made at this time. Naud responded by describing the Pall situation as very complicated. CARD has worked hard on the issue and there’s a long list of things they’d like done, Naud said. What’s clearly expressed in this resolution, Naud said, is that the federal government, the EPA, now thinks 1,4-dioxane is more cancer-causing than the EPA previously thought. The state of Michigan’s job is to take that and promulgate it under the Clean Water Act, but that hasn’t been done, Naud said.

Matt Naud

Environmental coordinator Matt Naud answered questions from the podium.

Naud said the resolution is a message to the MDEQ. Changing the standard would radically change the attention being paid to the Pall-Gelman site, he said. Michigan has had an 85 ppb standard for a very long time, when everyone else has had a much lower [that is, more demanding or stronger] standard, Naud says.

Petersen asked what the risk would be in using the resolution language to identify a specific standard for cleanup as a goal. Naud explained that he wasn’t sure what number would come out of the state of Michigan’s algorithm. Naud went on to describe part of the problem as getting access to data, and noted that some of Rayle’s work has included hand-entering data from paper copies. Petersen wanted to postpone a vote on the resolution, in order to add CARD’s “wish list” to the resolution.

Stephen Kunselman (Ward 3) asked Naud why the state is dragging its feet. Naud indicated that it’s a broader problem than just the 1,4-dioxane issue.

Kunselman asked what the city is doing in the way of contingency planning – in the event that a 1,4-dioxane plume reaches Barton Pond, which is the source of most of the city’s drinking water. That’s the question that needs to be addressed, Kunselman said. “What would we do?” Would the city have to filter out the 1,4-dioxane before pumping drinking water to residents? He had no problem postponing or voting on the resolution that night. But he wanted the city to think about what it’s doing itself, as opposed to asking others to do something.

Mike Anglin (Ward 5) and Chuck Warpehoski (Ward 5)

From left: Ward 5 councilmembers Chuck Warpehoski and Mike Anglin.

Mike Anglin (Ward 5) characterized the problem as one of court decisions, saying that the courts are generally going to find in favor of Pall-Gelman. He said that when he started serving on the council, he attended some CARD meetings and it was very confusing. Anglin said he wanted the city council to hold a work session on the topic of the 1,4-dioxane plume. He pointed out that the issue had arisen in connection with the City Apartments project: Who would be responsible if the 1,4-dioxane contamination were to penetrate to that site? Anglin indicated he was in favor of postponement, because of the magnitude of the issue. But he thanked Briere and Warpehoski for their effort.

Briere characterized the issue as “not a new emergency,” saying that it’s an ongoing problem. The first step seems to be to get MDEQ to act, Briere ventured. Naud indicated some agreement with that idea. The change at the federal level should have trickled through to the state level, Naud said. But it hasn’t and so Pall-Gelman says that currently they don’t have to worry about areas that have concentrations below 85 ppb.

Briere said she had assumed that other councilmembers were already up to speed on the issue, and she thought that the opportunity to achieve something should be seized. Naud said there’s no question that the state should have acted in some way, and that’s why the resolution focuses on that.

Petersen asked if the purpose of the resolution was just to put MDEQ on notice. Naud indicated basic agreement with that characterization. Petersen ventured that a delay of two more weeks shouldn’t be a problem, saying she wanted to hear from CARD on the question, to see if the language can be strengthened. She then formally moved for postponement.

Hieftje said he didn’t think that the resolution could be strengthened and characterized it as providing a start to a conversation. The resolution would give the city’s lobbyist something to work with, Hieftje said. He was impressed that Roger Rayle had been consulted and had spoken in favor of the resolution during public commentary. So Hieftje indicated he’d vote against postponement.

Kunselman expressed concern that the city is “going it alone.” Briere says she’s talked to other elected representatives – county commissioners, Scio Township representatives, and members of the state legislature. She said it’s not Ann Arbor going it alone, but rather Ann Arbor taking the first step. Taking that first step, she says, seems to be vital. She’d attended a briefing with Evan Pratt, Washtenaw County water resources commissioner, and the message at that briefing was that the first step is for MDEQ to change the 85 ppb number. [Based on remarks made at the most recent meeting of the Washtenaw board of commissioners, the board will be considering a similar resolution on 1,4-dioxane at its Sept. 18, 2013 meeting.]

Christopher Taylor (Ward 3) asked for a basic status report on how things stand with respect to the city’s water supply. Naud indicated that when 1,4-dioxane was detected in the city’s northwest supply well in 2003, the city stopped using that well.

Naud described various locations where the city tests for 1,4-dioxane. Taylor described himself as delighted the proposers had brought the resolution forward, saying that a revised version might be a “scootch” more detailed. He indicated that he didn’t think that a delay of two weeks would matter.

Teall asked about the testing locations. Naud described how there are a couple hundred monitoring wells. Anglin asked about the city’s conversations with the EPA.

Warpehoski indicated he was going to violate the council rules by sending the media Briere’s revisions to the resolution via email. [Because Warpehoski did that, The Chronicle was able to include the revised resolution in its brief on the resolution filed from the meeting.]

Warpehoski supported the approach that Briere had taken as “more surgical” than to try to hang a bunch of wish-list items on it, as if the resolution were a Christmas tree. He summarized the intent of the resolution as saying to the MDEQ: “Do your job!” Warpehoski indicated that Briere had done a lot of heavy lifting on the resolution.

Outcome on postponement: On a 4-5 vote, the motion to postpone failed. Voting against postponement were Teall, Warpehoski, Anglin, Hieftje and Briere. Voting for postponement were Kailasapathy, Petersen, Taylor and Kunselman. Lumm and Higgins were absent.

The council continued with deliberations on the resolution. Kunselman indicated he’d support it. He ventured that if the city’s water system were compromised, then Ann Arbor would connect to the Detroit system. But responding to a question from Briere, Naud indicated that he wasn’t sure that connecting to Detroit would be the city’s first option. Kunselman noted that it’s important to hear what the contingency plan is.

Kunselman asked what the criteria would be for shutting down Barton Pond as a water source. City administrator Steve Powers indicated he’d follow up on that. Hieftje stated that shutting down Barton Pond is not imminent. Briere asked Naud if there’s any imminent risk. Naud replied that the geology in this area is complicated. There’s a lot of science and research that would need to be done to determine if the plume could get to Barton Pond and if so, how fast, Naud said. He allowed that 1,4-dioxane has shown up in places where it was not expected.

Outcome: The council voted unanimously to direct city staff to take action related to helping set cleanup standards for 1,4-dioxane.

Energy Commission Recommendations

Two resolutions sponsored by the city’s energy commission were considered by the council on Sept. 3. The first called on the city’s employee retirement system to divest from fossil fuel companies. The second directed city staff to work with DTE to create a community solar pilot project.

Energy Commission Recommendations: Fossil Fuels

An energy commission resolution passed on July 9, 2013 recommended that the city council urge the city’s employee retirement system board to cease new investments in fossil fuel companies and to divest current investments in fossil fuel companies within five years. The resolution defined a “fossil fuel company” to be any of the top 100 coal companies or top 100 gas and oil extraction companies. The top three coal companies on the list are: Severstal JSC; Anglo American PLC; and BHP Billiton. The top three gas and oil companies on the list are: Lukoil Holdings; Exxon Mobil Corp.; and BP PLC. The basic consideration of the resolution is the importance of the role that greenhouse gas emissions play in global warming.

The resolution cited the city of Ann Arbor’s Climate Action Plan, which has a goal of reducing greenhouse gas emissions by 25% by 2025 and 90% by 2050. The resolution warned that fossil fuel companies have enough fossil fuel reserves that, if burned, would release about 2,795 gigatons of CO2. That’s five times the amount that can be released without causing more than 2°C global warming, according to the resolution.

Energy Commission Recs: Fossil Fuels – Public Commentary

During public commentary reserved time at the start of the meeting, Mike Shriberg spoke on behalf of the city’s energy commission, asking the council to support the community solar resolution and the fossil fuel divestment resolution. He mentioned Seattle, San Francisco, State College and Boulder as examples of cities that have divested from fossil fuel companies. He described the increased financial risk as minimal.

Christopher Taylor (Ward 3) and Stephen Kunselman (Ward 3)

From left: Ward 3 councilmembers Christopher Taylor and Stephen Kunselman. Visible in the audience is Jeff Hayner.

Monica Patel also spoke in support the resolutions on community solar and fossil fuel divestment – on behalf of the Ecology Center. She delivered the council petitions signed by Ann Arbor residents in support of the resolutions.

During public commentary reserved time, Jeff Hayner – who’s running as an independent for city council in Ward 1 against incumbent Democrat Sabra Briere – talked about the balance between vision and common sense. He spoke in support of the community solar resolution. He also spoke in support of the divestment of fossil fuels companies, but urged caution and warned of possible financial losses. Is social gain worth the financial risk? he asked. Hayner thanked Roger Rayle for speaking during public commentary about the 1,4-dioxane resolution, saying that it’s a complex problem that is not going away.

During public commentary time at the end of the meeting, Kai Petainen said it doesn’t make sense to divest from an entire sector of the economy – a reference to the fossil fuel divestment resolution. [.pdf of statement from Kai Petainen emailed to The Chronicle following the Sept. 3 meeting]

Energy Commission Recs: Fossil Fuels – Council Deliberations

Mayor John Hieftje led things off by saying, as a member of the energy commission, he could say that the issue had been thoroughly reviewed and researched. Sabra Briere (Ward 1) referred to Jeff Hayner’s public commentary, which indicated that there could be a financial impact. Have there been any other examples of divestment along these lines? Briere asked.

City administrator Steve Powers indicated that the last time it came up was in connection with South Africa. So it was a long time ago, Briere concluded. Briere asked Nancy Walker, executive director of the retirement system, to come to the podium and comment. Briere wanted to know if Walker would be concerned if the council were to approve the resolution.

Walker said the board had been made aware of the resolution and had some discussion at its meeting just that afternoon. The board had not taken a position, she said, but would certainly consider a council resolution. She indicated that there would be some financial implications. Right now, the trustees have made a conscious effort over the last several years to shift the investments away from separately managed accounts, to either co-mingled funds or mutual funds – particularly indexed funds. That’s a very low-cost way to invest the money, she said. For example, 25% of the fund is invested in domestic large cap equity, and on that, the blended rate is about 2.5 basis points – on more than $100 million.

On initial investigation, Walker said, there really aren’t any indexed funds that exclude fossil fuel companies. If the city were to pull more money out of an indexed fund and put it into a separately managed fund, there would probably be a fee of 20-30 times the fees for an indexed fund.

There are really three separate considerations, Walker explained: fiduciary duty (beneficiaries are the primary concern); cost impact; and consideration of other options. Some of the other options included environmentally-friendly, socially-responsible, corporate-governance type funds. There are not a lot of such funds out there, Walker said, based on initial investigation.

Sumi Kailasapathy (Ward 1) wanted to know what the differential would be of an indexed fund compared to a socially-responsible fund. Walker indicated that they had not gotten to that point of being able to say. But assuming that the return was equal, Walker said, you could anticipate a 30-40 basis point differential on the return, just due to the increased cost of fees.

Outcome: A 5-4 vote fell short of the six-vote majority needed to pass on the 11-member council. Voting against the resolution were Stephen Kunselman (Ward 3), Margie Teall (Ward 4), Mike Anglin (Ward 5) and Sally Petersen (Ward 2). Jane Lumm (Ward 2) and Marcia Higgins (Ward 4) were absent.

Energy Commission Recommendations: Community Solar

The second energy-related resolution also stemmed from an energy commission recommendation – that the council direct city staff to work with DTE to develop a “community solar” pilot program. A “community solar” program would allow people to invest in a solar energy system, even if the energy that’s generated would be located off-site from their own electric meter.

The goal is to create a program that would assist the work of the Great Lakes Renewable Energy Association (GLREA), which has a grant to work statewide, investigating the feasibility of and constraints facing this collective approach to alternative energy generation. As an example of this approach, the council resolution cited the Cherryland Electric Cooperative in Traverse City. The resolution asked that details of a pilot program be ready for consideration by the Michigan Public Service Commission by March 31, 2014.

The goal of community solar is to allow people who don’t own the property where they live, or whose own property is shaded or poorly oriented for solar energy production, to support the production of solar energy.

Outcome: The council voted to direct staff to work with DTE to develop a community solar pilot program.

Ann Arbor Greenbelt

The council considered two deals adding land to the city’s greenbelt program. The program is funded by the voter-approved open space and parkland preservation millage.

The Sheldon and Wolf property is indicated in red. The green highlighted area denotes area already protected as a part of Ann Arbor's greenbelt program. The heavy green line is the boundary encompassing eligible properties. This is the northwest corner of the boundary area.

The Sheldon and Wolf property is indicated in red. The green highlighted area denotes area already protected as a part of Ann Arbor’s greenbelt program. The heavy green line is the boundary encompassing eligible properties. This is the northwest corner of the boundary area.

The first deal – the Sheldon and Wolf property – involved 20 acres in Webster Township. It’s located on Zeeb Road, next to active farmland and other property that has already been protected by the city’s greenbelt program.

The purchase price, after deducting a $6,500 landowner donation, is $47,500. Webster Township is contributing $2,000 and Cherry Republic is contributing another $2,300, leaving the city’s share of the purchase price at $43,200. Due diligence, closing costs and a contribution to the endowment brings the city’s total contribution to $82,067.

Outcome: The council voted to approve the acquisition of development rights on the Sheldon and Wolf property.

The second deal involved participation in the acquisition of two pieces of land owned by DF (Domino’s Farms) Land Development LLC. The appraised value of the land is $322,000, of which the city would contribute up to $32,200. The lead agency on the deal is the Washtenaw County parks & recreation commission, which voted to approve the purchase of the two parcels at its Aug. 13, 2013 meeting. The city’s greenbelt advisory commission recommended the city’s participation at its July 11, 2013 meeting.

According to the city administrator’s report from the Sept. 3 meeting, there will be a motor coach tour of the city’s greenbelt program’s protected properties on Saturday, Sept. 21 from 10 a.m. to 1 p.m. The cost is $10. People can register by calling 734.794.6000 ext. 42798.

Outcome: The council voted to authorize the city’s participation in the acquisition of the DF Land Development property.

Hampton Inn on Jackson Road

The council considered a proposal to build a new Hampton Inn at 2910 Jackson Ave., across the street from Weber’s Inn.

Hampton Inn, Ann Arbor planning commission, The Ann Arbor Chronicle

A drawing of the proposed Hampton Inn on Jackson Avenue – next to the larger existing Clarion Inn – was shown to planning commissioners at their July 2 meeting. The design includes improved pedestrian features.

The four-story hotel, located on an 8.8-acre site north of Jackson and south of I-94, will include 100 bedrooms and 51,608 usable square feet. A 163-room Clarion Hotel stands on the same site, east of the proposed new hotel.

The planning commission gave this “planned project” a recommendation of approval at its July 2, 2013 meeting.

Planning commissioners had discussed the proposal at length during their June 18, 2013 meeting. Ultimately, they unanimously voted to postpone action on that occasion, instead asking the developer to address concerns over pedestrian access within the site.

The planned project status was sought so that the existing foundation can be used. In 2008, an earlier site plan had been approved, but nothing beyond the foundation was built. At the time, no maximum front setback had been required. Now, however, a maximum front setback of 50 feet is required on at least one of the site’s three front property lines. A planned project status would allow that requirement to be waived.

Hampton Inn: Public Hearing

Thomas Partridge told the council that he is wary of the planning commission’s approval of the project. We don’t want more pedestrian casualties or deaths, he said. Many people use this stretch of Jackson Road to deliberately speed, he contended.

Andy Wakeland with Giffels-Webster Engineers of Washington Township, Mich. – the civil engineer for the Hampton Inn project – addressed the council. He discussed the pedestrian issues, calling it a pedestrian-friendly site and said, “We’re pretty proud of it.”

The architect for the project – Jeff Ryntz of Victor Saroki and Associates – also addressed the council. He recalled how the project was started several years ago, and the foundations had been completed. In the interim, the city had changed its area, height and placement zoning ordinance, and those concerns had to be addressed. He noted the planning commission voted 8-0 to recommend approval.

Hampton Inn: Council Deliberations

Chuck Warpehoski (Ward 5) asked city planning manager Wendy Rampson to answer questions. He asked if there’s any plan to install signalization of crosswalks like HAWK or rapid flashing beacons. No, she answered. He asked for some explanation of the traffic analysis. Rampson reported that city planner Jill Thacher and traffic engineer Pat Cawley had visited the site. The location of the crossing was the best one available, Rampson explained.

Warpehoski ventured that of the bad options, he can see how this could be the best one. But as consultations with MDOT continue and as the project goes through the building permit phase, he wanted attention paid to the issue, and urged that every appropriate analysis and protection is put in.

Sabra Briere (Ward 1) noted that the planning commission [on which she serves as the city council representative] delayed the project, asking for additional pedestrian amenities within the site. However, the crosswalk had been a part of the initial proposal, she says.

Mike Anglin (Ward 5) suggested that he and Warpehoski could meet with Ann Arbor Area Transportation Authority staff about the bus stop.

Stephen Kunselman (Ward 3) asked about the stormwater detention pond. He ventured that the overflow discharge goes to the expressway. Yes, and that will need to be approved by MDOT, explained a representative of the developer. Kunselman asked if MDOT would dictate the signage on the crosswalk. Rampson was not sure if the signs would be different from the other signs next to crosswalks in the city.

Mayor John Hieftje noted that Ann Arbor has the highest hotel occupancy rate in the state.

Outcome: The council voted to approve the Hampton Inn planned project.

Tim Hortons Drive-Thru

The council was asked to give initial approval to a drive-thru at the Shell station and Tim Hortons at the northeast corner of Ann Arbor-Saline Road and Eisenhower Parkway.

The requested changes to the PUD (planned unit development) regulations would allow for a drive-thru restaurant within the existing convenience store, where a Tim Hortons is already located. The businesses are located on a 1.44-acre site.

The project includes constructing a 109-square-foot drive-thru window addition and access driveway on the north side of the building. Access to the drive-thru lane would be off of the site’s existing entrance from Ann Arbor-Saline Road. A PUD had previously been approved by the council at its July 2, 2012 meeting, but without plans for a drive-thru restaurant. The city planning commission had unanimously recommended approval of the request for a revision at its July 16, 2013 meeting.

Tim Hortons: Council Deliberations

Chuck Warpehoski (Ward 5) led off deliberations by asking for a representative of the project to come forward. He noted that the area plan doesn’t support a car wash. But possible use of a car wash was left in the PUD description, so Warpehoski said he wanted it removed. The developer’s representative did not have any objection. Warpehoski also wanted to strike the language that described the ability for someone to get food and beverage without leaving their vehicle as a public benefit.

Chuck Warpehoski (Ward 5)

Chuck Warpehoski (Ward 5).

One of the requirements of the rezoning allowed on a discretionary basis by the city council under a planned unit development (PUD) is that the project have some public benefit. Warpehoski objected to inclusion of the drive-thru as a public benefit: “To say that somebody now doesn’t have to spend the 10 extra calories between getting out their car to get their salt-sugar-fat fix?! I don’t see that as a public benefit and I don’t want us to list that as some big thing that we’re modifying our zoning for in our ordinance.”

Warpehoski also didn’t like the idea of describing the drive-thru as a “gateway.”

Margie Teall (Ward 4) followed Warpehoski’s turn with questions of the developer’s representative. She ventured that the adherence to architectural design standards would ensure appropriate development of the “gateway site.” All that was being requested at this point, the developer said, was a small drive-thru window, which amounted to 109 square feet of space. Teall wanted to make sure the design of the window fit the architecture. The developer indicated that he proud of the building’s appearance.

Sabra Briere (Ward 1) recalled the planning commission discussion. [She serves as the council's representative on the commission.] She asked for an explanation of why the proposed seating area is an appropriate place for such an area.

The developer indicated that the location can be a welcoming symbol or a “gateway.” At the citizens participation meeting, they were told there was quite a bit of pedestrian and bicycle traffic in the area – so the seating area was thought to be a good amenity. Briere asked city planning manager Wendy Rampson to comment on the number of residents in the area. Rampson indicated that there are a lot of people who cross through the area. So there’s a lot of pedestrian travel, in addition to the auto travel, Rampson said.

Briere ventured that confusion results from the fact that there’s a list of eight items of benefit, and it’s not clear if each item is a discrete benefit. So she had no problem removing an item from the list. Briere asked Rampson to explain how it’s determined what counts as a public benefit for the purpose of evaluating a PUD.

“It’s fairly unusual to have a gas station PUD,” Rampson replied. The property was originally owned by the school district, she reported. She said that the planning commission felt that as a whole, the items were felt to be a benefit. Stephen Kunselman (Ward 3) asked about the previous iterations of the PUD. Did more public benefits get added to the list each time? Kunselman questioned whether an amendment to a PUD really requires an additional benefit above and beyond the original public benefit.

Kunselman stated that if the word “gateway” were removed, he’d be fine with everything else. Rampson reported that the owners of the project have expressed concern about making a substantive change, which would require an additional reading and approval by the city council. City attorney Stephen Postema ventured that the proposed change by Warpehoski wouldn’t be substantial enough to require additional council approvals.

Sabra Briere (Ward 1), Sally Petersen (Ward 2)

From left: Sabra Briere (Ward 1) and Sally Petersen (Ward 2).

Briere said that the advantage of putting items in the PUD language is that the developer can be held accountable for those items.

Teall appreciated Briere’s remarks about accountability. She didn’t have a problem with stating more benefits or with the word “gateway.” She appreciated the attention to detail the developer was giving the project. She said she wouldn’t support Warpehoski’s proposed amendments to the language. [The property is located in Ward 4, which Teall represents.]

Mayor John Hieftje said he didn’t think the change was substantial. Sally Petersen (Ward 2) thought it was important to consider the gas station as a gateway based on its entry location. She also pointed out that Tim Hortons has healthy choices on its menu. Anything that helps beautify the corridor should be supported, Petersen said.

Warpehoski suggested separating his proposed amendment into the part about the car wash and the part about the public benefits.

Outcome on amending the public benefits language: The council approved that amendment over dissent from Teall, Anglin, and Petersen.

Outcome on amending out “car wash”: The council approved eliminating the word “car wash.”

Outcome on changes in the Tim Hortons/Shell PUD: The council voted to give initial approval to the PUD changes. The council will need to vote again at a subsequent meeting, after a public hearing, to give the changes final approval.

Communications and Comment

Every city council agenda contains multiple slots for city councilmembers and the city administrator to give updates or make announcements about important issues that are coming before the city council. And every meeting typically includes public commentary on subjects not necessarily on the agenda.

Comm/Comm: Crosswalk Ordinance

During council communications time, Sumi Kailasapathy (Ward 1) reported that she’s been working with city staff on getting a report from a professional traffic engineer regarding a recommendation for the city’s crosswalk ordinance.

Ann Arbor city administrator Steve Powers

Ann Arbor city administrator Steve Powers.

She indicated that she might bring forward a resolution at the next meeting calling for an independent review of the crosswalk ordinance and the associated infrastructure.

During his report to the council, city administrator Steve Powers indicated that he’ll be providing an update to the council on the review of the new crosswalk ordinance, and of the sanitary sewer overflow in the Arboretum that had taken place at the start of the weekend.

That memo was released subsequent to the meeting. [.pdf of crosswalk memo] [.pdf of WMU study mentioned in memo]

Comm/Comm: Regional Transit Authority

During communications time toward the end of the evening, mayor John Hieftje noted that an October city council work session [likely to be set for Oct. 14] will include representatives from the southeast Michigan regional transit authority (RTA).

Comm/Comm: Fuller Road Station

During council communications time, Stephen Kunselman (Ward 3) alerted his council colleagues that he’d be bringing forward a resolution that would rescind the memorandum of understanding between the city and the University of Michigan in connection with the Fuller Road Station. [Rescinding the memorandum of understanding is something that Kunselman talked about during his Democratic primary re-election campaign, at a June 8, 2013 candidate forum. Kunselman prevailed in the Aug. 6 primary over challenger Julie Grand.]

Comm/Comm: North Main Huron River Corridor Task Force

Sabra Briere (Ward 1) gave an update on the work of the North Main Huron River Corridor task force. Their final report has been submitted. [It's now on the Sept. 16 council agenda as a resolution that would formally accept the report.]

The report includes some before-after photos depicting possible improvements, like a pedestrian bridge across the Huron River connecting the Argo berm to the DTE-MichCon property. The task force was established at the council’s May 7, 2012 meeting, and a report had been due at the end of July. But Briere had apprised the council at previous meetings of the slight delay.

Briere apologized for the delay in the delivery of the report. She hoped there would be a presentation at the next council meeting on Sept. 16.

Comm/Comm: D1 Zoning Review

During her council communications, Sabra Briere (Ward 1) reported that the D1 zoning review could be delayed. More public meetings have been added than were originally planned.

Comm/Comm: Sensory Garden

During council communications, Sally Petersen (Ward 2) announced that on Sept. 15 at 1 p.m. a Sensory Garden will be dedicated at Liberty Plaza – the downtown park at Division and Liberty. It’s a project of the Ann Arbor commission on disability issues, in collaboration with the city’s adopt-a-park program and the University of Michigan Matthaei Botanical Gardens. A ceremony will be held to honor former commissioner Pamela Baker-Trostle.

Comm/Comm: Anti-Israel Protests

During public commentary reserved time, Henry Herskovitz cited two news articles about the protests in front the Beth Israel Congregation on Washtenaw Avenue, in which he regularly participates. He noted that at the previous council meeting [on Aug. 19, 2013], the council had been asked to express its displeasure about the protests. He objected to comments made by mayor John Hieftje and other councilmembers. Herskovitz noted that Hieftje had indicated that the city had tried all legal methods to stop the protests, which Herskovitz feared could be interpreted by some to mean that now illegal methods should be used. He reported that three days earlier, someone had spat on a protestor. A police officer had come out to investigate and to view video of the incident, Herskovitz said.

Present: Mike Anglin, Margie Teall, Sabra Briere, Sumi Kailasapathy, Sally Petersen, Stephen Kunselman, John Hieftje, Christopher Taylor, Chuck Warpehoski.

Absent: Jane Lumm, Marcia Higgins.

Next council meeting: Sept. 16, 2013 at 7 p.m. in the council chambers at 301 E. Huron. [Check Chronicle event listings to confirm date]

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  1. By Steve Bean
    September 15, 2013 at 11:38 am | permalink

    “If the city were to pull more money out of an indexed fund and put it into a separately managed fund, there would probably be a fee of 20-30 times the fees for an indexed fund.”

    I suspect that a US Treasuries fund might have much lower costs—starting with short-term bonds and later moving to longer term ones after rates have risen. They’re the best investment option for weathering deflation (aside from cash equivalents, which mainly protect the principal: when prices are denominated in dollars and all prices are dropping, the value of the dollar necessarily rises).

    After deflation has played out over the next few years it won’t be much longer before fossil fuel companies come to an end due to negative net-energy extraction conditions. There will likely be a price jump in between where investors could find positive returns, but it likely wouldn’t last for more than a year or two. I think we could forego that in favor of any number of more sane alternatives during that time.

  2. September 15, 2013 at 2:36 pm | permalink

    Re (1): I am not an economist, but from what I understand about basic concepts of supply and demand, I find your comment curious. Specifically, you said:

    “After deflation has played out over the next few years it won’t be much longer before fossil fuel companies come to an end due to negative net-energy extraction conditions.”

    There will always be demand for petroleum. Even if peak oil theorists are correct, we will not reach a point where no petroleum is found, extracted and supplied. Instead, what we are likely to find is that the growing demand far exceeds the ability to produce. If the price of extraction exceeds current prices for oil, the industry won’t just stop producing oil. Instead, we are likely to see significant price increases. If recent history of increasing fuel prices is of any value, it would appear that as prices increase even more dramatically, fossil fuel companies will make even greater profits than they do today. They will not cease to exist any time soon.

    Extreme fuel price increases are more likely to convert our energy use from fossil fuels to renewables than any policy of divestment. Divestment is just a feel-good policy that will have little market impact. Any gallon of oil we are unwilling to purchase will quickly be snapped up by China or other developing nations. Our unwillingness to invest in fuel companies will not change the consumption habits of other countries (or even U.S. residents).

    I think that what Japan’s lost decade of deflation has demonstrated is that while the whole economy may suffer, the price of energy is unaffected. While real estate and consumer goods have long term price softness in Japan, the Japanese pay the same price for a barrel of oil on the world market as the rest of us do.

    More important to the issue of divestment from oil companies is the issue of fiduciary responsibility. The City has huge unfunded retiree liabilities. Moving funds from fossil fuel companies to low return bonds or high-fee individual equities means the City will earn less on their investments right at that point in time when we need to earn more.

  3. September 15, 2013 at 4:06 pm | permalink

    What I dislike in local legislative bodies (or perhaps anywhere) is bringing forth a measure that that has symbolic significance but no practical effect. Not only is it a waste of everyone’s time, but it allows those bringing the measure to check that issue off with a great feeling of having done something, when in fact they have only managed what I call a “feel-good” moment. In other words, it is worse than no action at all, because it masquerades as action and possibly prevents something of more substance happening later.

    In my opinion, there were two of those at this session. I agree with Jack both in his estimation of the economic effect of the fossil fuel divestment and in his conclusions.

    I also believe that the resolution on the dioxane plume was one of these. It is a toothless exhortation to the MDEQ to do their job (which they doubtless thought they were doing). I had hoped that it could be postponed so that more thought could go into a resolution that actually achieved something. It is difficult to go against our local saint on this subject (Roger Rayle), who has contributed so much to our understanding, but his political sense was off on this one when he said that this didn’t have to be the last resolution on the subject. I’m sympathetic to the feeling of frustration both at the council and the BOC in the lack of options on this subject, but passing symbolic resolutions will have no effect other than putting it back on the shelf for another period.

  4. By Steve Bean
    September 15, 2013 at 5:35 pm | permalink

    @2: “I am not an economist”

    You’re also not a physicist. :-)

    Peak “production” (as it’s erroneously called) of fossil fuels is relevant but less so than energy returned on energy invested (EROEI), or “net energy”.

    Extracting fossil fuels requires energy—increasing amounts over time as the most accessible deposits are used up and only the deeper and lower quality (i.e., less energy dense) ones remain. When the energy required to extract equals the energy available from what’s extracted—again, which is *declining*—the extraction will become pointless. Because profit is required, those activities will end before the ratio gets to 1:1.

    What I was referring to in #1 is that we’re not far from that point. For petroleum, whereas the ratio of return to investment in energy terms was above 100:1 a century or so ago, it has declined for the most part ever since, and is currently around 7:1 or less on average worldwide. (I haven’t checked lately to see where that stands.) When it drops below 3:1, according to Nicole Foss (, we’ll no longer be able to fuel an industrial society anywhere near what we currently have. We’re years, not decades, away from that point. Could it drag on longer? Maybe, but it wouldn’t matter much if it were at a fraction of what we currently use.

    Since petroleum is the fuel we use to drill for natural gas, mine for coal and uranium, not to mention mine (as in tar sands and oil shale) and drill for oil, its net-energy demise will be that of all the rest, as well as wind and solar (aside from what’s been installed by that time), which haven’t been developed to the point where they can be used to run society let alone power the production of more panels and turbines and aren’t likely to be by then. (E.g., consider an (unrealistic?) annual doubling scenario for renewables, starting with a(n unrealistic) base of 1%, carried out for five years: 1%, 2%, 4%, 8%, 16%, 32%. If we have a couple more years—64%, 128%—maybe we’ll get there. I highly doubt it.)

    Obviously, some countries will be better off than others in the near term, but ours is not one of them. The shale oil and gas hype is based on reserves, not what can be justified in economic or energy terms. The drilling is already beginning to decline (during supposed “recovery” yet). That and the rapid (70% or more in just a few years) decline rate of those wells are signs that we’re already approaching the end of those sources. Most of that fuel will be left in the ground.

    The economic factors you mention will have become irrelevant by that time. In the meantime they’ll be the primary driver, but in a non-intuitive way due to the impacts of deflation. As the economy follows the stock market down, employment levels will decline, the price of labor will fall along with other prices, and the price of even gasoline and natural gas will as well (with possible brief exceptions) due to the decreased industrial, commercial, and, ultimately, residential demand. As Nicole Foss has pointed out, demand is not a measure of what we want, it’s what we can afford. She has explicitly stated (early this year) that within five years most people won’t be able to afford petroleum products. That would be due to the post-deflation price spike I referred to.

    That’s my best off-the-cuff attempt to describe this complex situation succinctly. I’d be glad to expand on any of it or try to answer questions.

    Regarding Japan: energy prices are global, so Japan’s depression has little relation to them. The coming depression will be global, and the impacts on energy prices will reflect that.

    I appreciate you engaging on this, Jack. It’s a first for a council candidate or member.

  5. September 15, 2013 at 7:25 pm | permalink

    Steve Bean and Jack Eaton, I am a physicist and will comment as such. (CV: I spent my early years at General Atomic working on fusion energy generation programs, I ended my involvement with the U.S. Govt as the Head of the physics department at Ann Arbor’s own KMS Fusion.)

    Question: Are we running out of traditional underground petroleum? Answer: It depends on what your mean. It has been clear since M. King Hubbert’s first presentation (1949) that oil will never generate that sucking sound of a straw pulling the last drop from an empty pop bottle. The issue is that the price of oil will slide up and out of the range of most users. Since the “peak” appearance in the production curve depends on lots of political factors, my own analysis has been – when did classical historical growth (the exponential kind) end? I posted my own results here: [link].

    Jack and Steve are both right, we are currently entering the crisis mode in our energy. The issue was well stated by Alexander Graham Bell in his 1917 essay. What will happen is that oil usage will drift upwards in the economic scale of user?

    The economics of this was recently well discussed by Tverberg, someone with firm economics grounding. Her explanations were really solid. Go to [link] for her post.

    Everyone in the world faces the same issue. New fields can be opened up but at high price. Russia wants to drill in the arctic (USGS: location of 25% of undiscovered reserves). What are the costs associated with a massive oil leak there?

    One last quibble. When I was young the US got 100 energy units out of every energy unit expended to produce oil. Now it is about 10. It does make sense to pump even when return on investment falls below 1 because the users will be the population of those earning in excess of maybe 300,000 (2013 dollars). They will still want to visit their multiple houses, sail their yachts, travel where ever they wish. As oil costs continue to drift higher and higher, a viable market will not go away.

  6. By Dan Ezekiel
    September 15, 2013 at 8:43 pm | permalink

    @Steve Bean, your own economic prognostications have been less than perfect. In January, you included this in an FAQ attached to a personal email you sent me and many others:

    “The first leg down for the Dow and S&P is anticipated to be approximately 20-25% by late February to early April.”

    At the time, I offered you a wager on this prediction, which you declined. You would have lost, and the Dow is just off its current all time high presently.

    Like you, I am an environmentalist who has all kinds of questions about the future and sustainability of our current economic model. However, I think apocalyptic prognostications often fail to pan out. I believe the future is more random and weird than any current theory can forecast.

  7. September 16, 2013 at 9:16 am | permalink

    It is my understanding that there has been a request to have the divestment issue reconsidered at tonight’s meeting. I certainly hope that if it is reconsidered it will not find the support to pass. I am sympathetic with everyone who wishes an end to our dependence on fossil fuel as an energy source; I have a chemist friend who believes we should be saving all our petroleum for manufacturing of plastics instead of burning it for it’s energy value.

    However, as I said at the last meeting (as paraphrased above), the fiduciary responsibility to our retirement system outweighs whatever benefit might be gained from the symbolic gesture of requesting divestment. While it is true that Ann Arbor is looked upon as a leader of communities in our nation, it is a primary function of the city council to create policy that serves the people of Ann Arbor first. Raising our taxes in the future to compensate for poor investment decisions made now would not serve the people of Ann Arbor. Acting responsibly towards our seriously underfunded pension liability does, and would also be seen as leadership in the community of cities, would it not?

  8. September 16, 2013 at 9:46 am | permalink

    Re (7) If there is a move to reintroduce the fossil fuel resolution, how is that to be done according to parliamentary process? I understand that it is the people on the prevailing side who are able to request reconsideration. But in this case the majority of votes was not adequate to pass the measure, so in a sense the opposing votes prevailed. How would that work?

    I’d like to draw a contrast between this vote and the South Africa vote, when Ann Arbor together with many other local and state governments voted to disinvest from companies based in South Africa. That was a political statement aimed at a political goal (changing South Africa’s apartheid regime). The nationwide disinvestment was, as I recall, one of the factors that did ultimately change the course of that regime.

    In divesting from fossil fuel companies, is it indicated that these companies will take note and stop producing fossil fuel? I don’t think so. There is no political goal here, other than to assert some sort of virtuous moral stance. That might be very well if all of us also immediately stop using fossil fuels, but otherwise this is one of those wholly symbolic votes that I discussed earlier.

  9. September 16, 2013 at 10:31 am | permalink

    Re: “I understand that it is the people on the prevailing side who are able to request reconsideration. But in this case the majority of votes was not adequate to pass the measure, so in a sense the opposing votes prevailed. How would that work?”

    In this case the prevailing side are the four who voted against it: Stephen Kunselman (Ward 3), Margie Teall (Ward 4), Mike Anglin (Ward 5) and Sally Petersen (Ward 2). The move to reconsider would need to come from one of those four.

    After the result of the initial voice vote wasn’t readily apparent, Hieftje asked for a roll call. That night it started with Taylor, who voted for it, but Kunselman followed with a vote against it. Teall’s turn was next. If hers was a tactical vote against it – to ensure that she had the right to bring it back for reconsideration – then in 20/20 hindsight, that wasn’t the best move (because it would have passed with her support). But at the point when Teall had to vote, it wasn’t clear how things were going to turn out.

  10. By Steve Bean
    September 16, 2013 at 11:04 am | permalink

    @5: “It does make sense to pump even when return on investment falls below 1 because the users will be the population of those earning in excess of maybe 300,000 (2013 dollars). ”

    So if I gave you $10,000 to get me some oil, you’d spend $11,000 to do it? (Hey, want to paint my house and give me $1000?) And what would you spend that $11,000 on, anyway, natural gas? Would $11,000 even be enough to buy sufficient natural gas to drill, pump, transport, refine, transport again, and sell retail that $10,000 of oil? No one gets paid? No one gets a profit? No one gets taxes?

    Currently natural gas is being used to obtain oil from tar sands at nearly a 1:1 energy ratio. Nicole Foss calls it an arbitrage, that is, a trade off. It’s made feasible by the added value of petroleum’s liquid form relative to natural gas’s, uh, gaseous form, and the fact that our transportation system is vastly reliant on liquid fuels. That arbitrage “opportunity” (I’d say mistake) can only last for so long before it begins to impact natural gas availability (and price) for home heating and electricity generation and the economy overall. We’re just about there.

    And is it really even relevant what the super rich might be doing while the rest of us are doing without? I’m not planning on getting a job working on that oil rig in the arctic, are you?

    The whole point of my drawing attention to these matters is so that our community can sanely prepare for what’s to come, not stand by and treat it like some reality show on TV.

    @6: “At the time, I offered you a wager on this prediction, which you declined. You would have lost, and the Dow is just off its current all time high presently.”

    The weather changes daily, yet the winter is coming. Or do you think that natural cycles like the seasons are not predictable, Dan?

    The stock market follows cycles as well. I made a call (based on what the experts considered to be the most probable interpretation of the current wave pattern at that time) and that prediction was wrong.

    The current has slowed, but there’s still a waterfall ahead. Do you feel more secure than you did earlier this year? Are you at all interested in the other indicators that the falls are ahead or will you continue to focus on my mistake in saying that they would be around the last bend in the river and not the next one? Would you give me that importance in determining your future?

    There’s no good way or time to forewarn others of calamity. If you think there is, tell me how and when. Better yet, you do it for us. Or else insure us against its coming. Not willing to take that bet? Me neither.

  11. September 16, 2013 at 11:23 am | permalink

    Re: “It is my understanding that there has been a request to have the divestment issue reconsidered at tonight’s meeting.”

    That item has now been added to the online agenda: “Motion to Reconsider Fossil Fuel Resolution”

  12. September 16, 2013 at 11:39 am | permalink

    Re (4): Steve, you are correct that I am neither an economist nor a physicist. Therefore I am not capable of discussing the probability that the prophecies of Nicole Foss will come to be.

    I would, of course, be interested in any previous prediction where Ms. Foss made an important prediction about matters similar to her beliefs about the consequences of “net energy” on oil production. Has she ever used her methodology to predict something that thereafter actually happened?

    I think that if your prediction that within the next few years we will see energy companies “come to an end” (per your comment #1), the issue of fossil fuel divestment will not matter. Complete cessation of fossil fuel production will have such a devastating impact on the entire world economy that no investment would be safe.

    I tend to agree with Mr. Armentrout that we will always have some oil production. We may need to deploy huge solar farms to power the extraction of oil, but we will certainly not forgo fossil fuels entirely. And, that very expensive extraction of oil will cause very high fuel prices that will generate very high oil company profits.

    Divestment will not alter the circumstances that you believe will lead to the end of oil companies. Divestment will not protect our investments from the collapse of the world’s economy that would follow the cessation of oil production. Divestment would just make some locals feel good and allow them to claim to be more “green” than others.

  13. By Steve Bean
    September 16, 2013 at 11:48 am | permalink

    @8: “That might be very well if all of us also immediately stop using fossil fuels, but otherwise this is one of those wholly symbolic votes that I discussed earlier.”

    In other words, government only leads in political matters. In other matters we are left to take the lead ourselves (or not).

    I appreciate the effort of those calling for and calling attention to the divestment decision. My wife and I divested from all non-home-energy-efficiency and non-self-reliance (e.g., fruit trees) investments a couple years ago based in part on the thinking that any such investment, whether directly in fossil fuel companies or not (and, as noted by Nancy Walker at the meeting, they’re impossible to avoid in an indexed fund, and even in some so-called socially responsible ones as well), would promote economic growth, which currently requires the combustion of fossil fuels and the subsequent GHG emissions. (The exceptions were some retirement funds that we’re not able to withdraw, and those are in short-term US Treasuries funds. We also invest almost exclusively in local farmers by buying their produce.)

    Upcoming investments of retirement funds at our home include an efficient electric, air-source heat-pump water heater (to replace an old gas water heater), an air-source heat pump (to replace our old A/C unit and gas boiler)—we’ll be off natural gas at that point—and then a rooftop PV array. I suppose we could have left our money in the market and enjoyed the 30%+ return on an indexed fund and then watched it lose all that value and more in the next couple years without cashing it out at the top, but we took the “risk” of bypassing that “opportunity”.

    interested Chronicle readers and your friends, neighbors, etc. have an open invitation to visit our still-in-development permaculture system. Just email me to make arrangements: sbean at berginc daht kahm. There’s also a chance that we’ll be hosting a tour here during the U-M Permaculture LAUNCH Weekend on Sept. 28. TBD by the organizers.

  14. September 16, 2013 at 11:52 am | permalink

    Re (11) and as you suggested might be possible, the motion for reconsideration is by Margie Teall.

    Another parliamentary inquiry: Am I correct in supposing that the motion to reconsider must first pass, and then the main motion reconsidered? So a person who voted for the item in the past might choose not to reconsider without voting on the substance again?

  15. By Steve Bean
    September 16, 2013 at 12:00 pm | permalink

    @12: “Therefore I am not capable of discussing the probability that the prophecies of Nicole Foss will come to be.”

    And yet you go on to make your own predictions without basis.

    You’ve got it backwards, though, Jack. The financial assets are going to lose most of their value first, then the fossil fuel extraction will come to an end.

    But then, the randomness of events that Dan referred to might mess with that scenario, so how about we argue about it for a few more years until we see how it plays out rather than preparing for some version of it? At least we’d get to still feel right in the meantime.

    On second thought, I’m going to keep preparing. Maybe I’m done sounding the alarm, though.

  16. By Steve Bean
    September 16, 2013 at 2:38 pm | permalink

    @12: I didn’t mean to ignore your request about more info on Nicole Foss, Jack.

    From her LinkedIn page, for example: “We [at The Automatic Earth web site] began by predicting the financial crisis of 2008/09 and have since been providing readers with the tools to prepare for harder times to come.” Her CV doesn’t invoke any doubts in my mind about her qualifications to make the case that she does, nor does the content of her writings and talks.

    You might also look into how EWP expert Robert Prechter, Jr. called the top in 2000, the bottom in 2003, the top in 2007, and the bottom in 2009. He’s occasionally been wrong on timing in the past, but he also predicted the bull market that began in the early 1980′s when everyone else was pessimistic. He’s been widely dismissed, it seems, but I suspect that that’s because professional investors would rather maintain their advantage or simply due to their own proclivity to herding and the (mass) psychology that drives it.

    “We may need to deploy huge solar farms to power the extraction of oil, but we will certainly not forgo fossil fuels entirely.”

    Those solar farms couldn’t be deployed without lots of oil and other fossil fuels to power their production, transport and installation. I actually made that point in #4, including how it’s very unlikely that the solar industry will develop sufficiently before the economy collapses and we’re unable to adequately invest in it.

    We most certainly will forego fossil fuels when the laws of physics dictate that we will. (By the way, I’m not a physicist either, but it was my major in the LSA Honors College at U-M for 2 1/2 years before I transferred to study ecology in the School of Natural Resources—now “and Ecology”.) Of course, if you want to engage in speculation on the development of liquid-fuel thorium reactors (that’s right, nuclear), I’ll go along. (I wonder if anyone reading this has even heard of that technology. Maybe we can ask the city to invest in it.)

    I agree that this divestment resolution doesn’t mean much. But the logic behind the resolution is sound. Characterizing it as a means for supporters to feel good insults their integrity, and I think you might consider your motive for doing that. If rather you mean to question the sincerity of our city government, go right ahead. Every question is a step toward the truth. Mainly, though, my comments have been about the bigger picture of circumstances that we’ll face as a community.

  17. September 16, 2013 at 2:52 pm | permalink

    Re: [14] Right. First the council votes on the motion for reconsideration. Councilmembers aren’t bound by their previous votes, when that vote on the motion is taken. If it passes, then the council will consider the fossil fuel resolution.

    Note that the threshold for tonight’s motion to reconsider – because it conforms with the council rule on reconsideration (that a motion for reconsideration must be brought at the same or next regular meeting) – is a simple six-vote majority. The council has in the past taken a vote first on suspending the rules (requiring a 2/3 majority of those present, that is, 8 members if all councilmembers attend), then entertaining a motion to reconsider, and then considering the matter at hand. That happened on July 6, 2010, when the rule to be suspended was the one about who can bring back the question for reconsideration. On that occasion, with 10 councilmembers present, seven votes in favor of suspending the rules – to allow Stephen Rapundalo to bring back Heritage Row for reconsideration, even though he was not on the prevailing side – were enough to achieve suspension of the rules. The motion on reconsideration then passed, also on a 7-3 vote. And then the vote on Heritage Row failed on a 7-3 vote, because Heritage Row needed an eight-vote majority, given the successful petition that raised the threshold for approval of that PUD.

  18. By Steve Bean
    October 21, 2013 at 5:14 pm | permalink

    At 10:04 AM today the S&P 500 appears to have topped at 1747.79, completing an ending diagonal with a throw over and ending the long bear-market rally “b” wave that began in March 2009. The Dow index appears to have topped back in September. The Elliot wave principle predicts that the ensuing “c” wave will carry the Dow down to or below the lower range of the previous wave 4 of one lower degree, which was the low of (the year) 1974. The S&P similarly. Prechter still calls for the bottom in mid 2016.

    From last Friday’s Elliott Wave Theorist newsletter:

    “The May 22 issue of EWT called for a peak in the Dow on that day, and stocks turned down immediately. The August 2 issue of EWFF called for a peak on that day, and again stocks fell immediately. These were the right calls to make. After a one-day new high on the Fed’s ‘no-taper’ day of September 18, the Dow fell again. Despite lots of noise, the Dow remains below both its May and August peaks. …

    “By this analysis, the S&P should make its final high today or Monday, no higher than 1749. The Dow Industrial Average, shown at the bottom of the chart, is lagging significantly, suggesting that our previous calls will hold and the Dow’s October rally is just wave [ii circle--SB] in a new bear market.

    “Wave c, which will be the biggest decline in U.S. stock market history, is coming one way or another. Right now it seems it should start next week in most averages and resume in the Dow. Important: If instead the S&P significantly surpasses [1749--SB], the near-term bearish potential of this form will be immediately negated, and some other pattern will lead us to a later top.”

    This is roughly the scenario I shared back in January that Dan referred to in #6 (and which obviously developed differently after that point). For those interested in seeing if the predictive ability of the EWP holds up in the short term, the drop that follows an ending diagonal typically brings the price back to the beginning of the fifth wave (in this case for the S&P that would be the June 24, 2013 low of about 1573) in roughly one third to one half the time of the development of the fifth wave, which was roughly four months. So watch for the S&P to drop below 1573 by some time between Thanksgiving and Christmas.

  19. By Dan Ezekiel
    October 21, 2013 at 6:43 pm | permalink

    @18 “So watch for the S&P to drop below 1573 by some time between Thanksgiving and Christmas.”

    Again I question whether anyone can predict market fluctuations confidently. Do you drink beer, Steve? I’ll buy you a pitcher at the Old Town if this prediction comes true, if you agree to buy me one if it doesn’t.

  20. By Steve Bean
    October 21, 2013 at 7:08 pm | permalink

    That’s a wager I can’t pass up, Dan. Except a pitcher’s way more than I’d drink. :-) I assume you’d share it with me in either case, right? I’ll connect with you the first week of January. I’ll draw wave diagrams on napkins and bore you to death.

    Seriously though, as I’ve stated before, this is intended as a longer term heads up. The markets have demonstrated consistently throughout history that they move in cycles, and this is a time to be thoughtful about protecting financial assets rather than chasing returns, at both the individual and the government level.