The Act 196 authority, created in mid-2012 and spearheaded by the Ann Arbor Transportation Authority, was for all practical purposes ended late last year when the Ann Arbor city council voted to opt out of the transit authority at its Nov. 8, 2012 meeting. Of the 28 municipalities in Washtenaw County, the city of Ypsilanti is the only one that hasn’t opted out.

The county board’s April 17 resolution rescinds a board resolutions that created the transit authority, and requests that the state legislature also take action to dissolve the Washtenaw Ride, in accordance with Attorney General Opinion #7003. That AG opinion stated that “the dissolution of a transportation authority organized under the Public Transportation Authority Act requires an act of the Legislature and may not be accomplished by the unilateral action of the city in which it was established.” [.pdf of AG opinion 7003]

The county’s role in creating the transit entity had been laid out in a four-party agreement with Ann Arbor, Ypsilanti and the AATA, which commissioners approved on Aug. 1, 2012 in a 6-4 vote. Subsequent revisions involving the other entities resulted in the need for a re-vote by the county board, which occurred on Sept. 5, 2012.

There are two other transit efforts now under way. Washtenaw County is part of a southeast Michigan regional transit authority (RTA) created by the state legislature late last year. The RTA was formed to coordinate regional transit in the city of Detroit and counties of Wayne, Macomb, Oakland and Washtenaw. Conan Smith has been a strong advocate for the RTA, and made Washtenaw County’s two appointments to the RTA board before his term as county board chair ended on Dec. 31, 2012.

Separate from the RTA effort, the AATA has been meeting with representatives of the county’s “urban core” communities to discuss possible expanded public transit within a limited area around Ann Arbor. It would be a smaller effort than the previous attempt at countywide service. The AATA hosted a meeting on March 28 to go over details about where improvements or expansion might occur, and how much it might cost. [See Chronicle coverage: "Costs, Services Floated for Urban Core Transit."]

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

The Act 196 authority, created in mid-2012 and spearheaded by the Ann Arbor Transportation Authority, never gained traction and was for all practical purposes ended late last year when the Ann Arbor city council voted to opt out of the transit authority at its Nov. 8, 2012 meeting. Of the 28 municipalities in Washtenaw County, the city of Ypsilanti is the only one that hasn’t opted out.

The resolution given initial approval on April 3 was similar to one that county commissioner Dan Smith (R-District 2) had considered bringing forward in November of 2012, though he decided not to pursue dissolution at that time. [See Chronicle coverage: "End of Road for County Transit Effort?"] The April 3 resolution rescinds the board resolutions that created the transit authority, and requests that the state legislature also take action to dissolve the Washtenaw Ride, in accordance with Attorney General Opinion #7003. That AG opinion stated that “the dissolution of a transportation authority organized under the Public Transportation Authority Act requires an act of the Legislature and may not be accomplished by the unilateral action of the city in which it was established.” [.pdf of AG opinion 7003]

The county’s role in creating the transit entity had been laid out in a four-party agreement with Ann Arbor, Ypsilanti and the AATA, which commissioners approved on Aug. 1, 2012 in a 6-4 vote. Subsequent revisions involving the other entities resulted in the need for a re-vote by the county board, which occurred on Sept. 5, 2012.

There are two other transit efforts now under way. Washtenaw County is part of a southeast Michigan regional transit authority (RTA) created by the state legislature late last year. The RTA was formed to coordinate regional transit in the city of Detroit and counties of Wayne, Macomb, Oakland and Washtenaw.

Separate from the RTA effort, the AATA has been meeting with representatives of the county’s “urban core” communities to discuss possible expanded public transit within a limited area around Ann Arbor. It would be a smaller effort than the previous attempt at countywide service. The AATA hosted a meeting on March 28 to go over details about where improvements or expansion might occur, and how much it might cost. [See Chronicle coverage: "Costs, Services Floated for Urban Core Transit."]

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

At the Nov. 8, 2012 council meeting, when the Ann Arbor opt-out vote took place, Jane Lumm (Ward 2) described the effort that had gone into planning for The Washtenaw Ride as a colossal waste of time and money. Carsten Hohnke (Ward 5) countered that it had been valuable and appropriate to engage in that effort. And mayor John Hieftje pointed out that a criticism of the recently failed library bond proposal was that there was no specific plan for the new library building – and that the AATA’s approach had relied on first developing a plan, which required an investment of money.

The decision by the Ann Arbor city council ends this particular approach to expanding transportation services in the area by terminating a four-party agreement – between Washtenaw County, the cities of Ann Arbor and Ypsilanti, and the AATA – that would have governed a transition from the AATA to a countywide authority.

The language of the council’s resolution offered some optimism that expanded transportation services might be pursued with some other mechanism than a countywide Act 196 incorporation: “… AATA is encouraged to continue to discuss regional transportation options among Ann Arbor, Ypsilanti, Ypsilanti township, Ann Arbor township, Scio township and Pittsfield township, leading to a better understanding and process for improving local transit options …”

During public commentary, members of Partners for Transit described disappointment at the withdrawal, but urged the council to take the initiative to work toward a new accord on expanded transit, saying they were encouraged by the language of the resolution calling for continued dialogue.

AATA strategic planner Michael Benham was allowed to answer questions from the podium – over dissent from Stephen Kunselman (Ward 3) and Marcia Higgins (Ward 4). Benham indicated he was heartened by the language in the resolution that essentially says “keep going.” He indicated optimism that the community could arrive at a vision of expanded transit for those who need it the most. During questioning, Higgins made clear to Benham that she and other councilmembers had heard repeatedly that basic transportation among neighborhoods was a need that currently isn’t being met.

Kunselman sketched out a possibility of maintaining incorporation under Act 55, which would allow Ann Arbor to maintain control over the AATA, but also mooted the possibility of expanding the AATA board membership to include representatives of communities that have “skin in the game” through purchase-of-service agreements.

The Ann Arbor city council’s decision came in the context of opt-out decisions by most of the other 28 municipalities in the county. Until Ann Arbor’s decision, those jurisdictions still participating in the new authority included more than half the county’s population, and included the county’s largest population centers: Ann Arbor, Ypsilanti, Ypsilanti Township, and Saline.

Ann Arbor had been expected to help lead the initiative, and had been the first of the four parties to ratify the agreement, on March 5, 2012. Since incorporation on Oct. 3, more than one glitch was encountered in the technical implementation. Those included the unclarity about the start of a 30-day opt-out period, and the eligibility of current AATA board members to serve on the board of the new authority.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

Possible action by the Ann Arbor city council this week could lead to dissolution of a newly incorporated Act 196 transit authority – called The Washtenaw Ride – just as it is emerging.

At its Nov. 8 meeting, the Ann Arbor city council is now scheduled to vote on the question of opting out of a newly incorporated countywide transit authority – an initiative that the city of Ann Arbor had been expected to help lead. With Ann Arbor’s withdrawal, this particular approach to expanding transportation services would be effectively ended.

Update: The Ann Arbor city council did decide to opt out of the transit authority, on a 10-0 vote taken at the Nov. 8 meeting.

And the topic of transit has already been raised at the post-election Nov. 7 meeting of the Washtenaw County board of commissioners. Dan Smith, a Republican who represents District 2 covering northern parts of the county, had been prepared to introduce two transit-related resolutions at the meeting, but wound up placing only one of them on the agenda. The one he brought forward was a proposal to rescind support for a metro Detroit regional transit authority (RTA) – which the board had given in September of 2011. Although board chair Conan Smith has been a champion of legislation to enable an RTA, Dan Smith’s resolution passed on a 6-4 vote.

More significantly, Smith had also considered bringing forward a resolution to dissolve The Washtenaw Ride, a new countywide transit authority created under Act 196 of 1986 when the county filed articles of incorporation last month with the state. [.pdf of resolution to dissolve The Washtenaw Ride]

The Oct. 3 filing was undertaken as part of a four-party transit agreement between the county, the cities of Ann Arbor and Ypsilanti, and the Ann Arbor Transportation Authority, which is leading this initiative. Since then, all but five of the 28 municipalities in the county have voted to opt out of the new authority. However, those that are still participating include several of the county’s largest population centers: Ann Arbor, Ypsilanti, Ypsilanti Township, and Saline.

Dan Smith’s resolution indicated that because so few municipalities are participating, the Act 196 authority should be dissolved. He held off introducing it, however, in part because of pending action by the Ann Arbor city council the next day. As The Chronicle reported in mid-October, Ann Arbor city councilmember Stephen Kunselman had said he planned to pursue the possibility of Ann Arbor opting out – because he felt he’d have the required six-vote majority after the new city councilmembers are sworn in on Nov. 19.

But now the city council will take up the issue of withdrawing from the new transit authority at its Nov. 8 meeting. And that withdrawal will be accomplished with the support of at least some of those on the council who previously advocated to expand the AATA’s governance and service area through incorporation of the new authority. A resolution on withdrawal of Ann Arbor from the Act 196 authority was added to the Nov. 8, 2012 agenda the day before the meeting – sponsored by not just Kunselman, but also mayor John Hieftje, and councilmembers Sabra Briere, Christopher Taylor and Marcia Higgins. That indicates the city council’s resolution on withdrawal is almost certain to pass.

Under the terms of the four-party agreement, once the city of Ann Arbor withdraws from the Act 196 authority, the city can terminate the entire agreement. The council’s resolution indicates encouragement to the AATA to continue to work towards regional transportation, but not with the mechanism of this Act 196 authority. 

Dissolving The Washtenaw Ride

The county board has never been unified in its support of the current approach to a broader public transit entity, an effort that the Ann Arbor Transportation Authority has been working on for more than two years.

The county’s role in creating the transit entity was laid out in a four-party agreement with Ann Arbor, Ypsilanti and the AATA, which commissioners approved on Aug. 1, 2012 in a 6-4 vote. Subsequent revisions involving the other entities resulted in the need for a re-vote. That second vote occurred on Sept. 5, 2012, and it also drew just six supporting votes on the 11-member board. Alicia Ping, Wes Prater and Dan Smith voted against it, and two commissioners were absent.

Commissioners had understood that the county’s only role in connection to the new authority would be to file articles of incorporation with the state under Act 196, which occurred on Oct. 3. But during their Oct. 17 meeting, commissioners learned that the county would be sending out additional notification letters to local jurisdictions about the new transit authority, called The Washtenaw Ride. That had come as a result of some disagreement between legal counsel for the various parties about when the 30-day opt-out period actually began – upon incorporation, or at some later time. For the county to send letters prompted concern among some commissioners, including from those who had opposed the county’s participation.

Since the incorporation of the new authority on Oct. 3, 2012, the second wave of letters has not been the only glitch. Another challenge was the composition of the new authority’s board. The initial expectation had been that the seven current members of the AATA board would also serve on the 15-member board of the new transit authority. But when views of legal counsel to various parties diverged on the ability to render simultaneous service on the two boards, the city of Ann Arbor elected to pursue a strategy of appointing different board members to the new authority. That appointment process is already partly underway.  [See Chronicle coverage: "Positions Open: New Transit Authority Board" and "Ann Arbor Mayor: Need Transit Board Members"]

Also since incorporation, the majority of jurisdictions have already opted out of the new authority, even if a majority of the county’s population would remain. The resolution that Dan Smith had considered bringing forward at the Nov. 7 board meeting cited complications arising from the number of municipalities that have opted out of the authority, stating that it will require a change to the articles of incorporation. The resolution also pointed to the availability of other options to provide public transit:

WHEREAS, municipalities throughout the county continue to provide transit services utilizing W.A.V.E., People’s Express, and Purchase of Service Agreements with AATA; and

WHEREAS, as an Act 55 of 1963 entity, AATA may form an Act 196 Authority on its own and without any involvement of the board; and

WHEREAS, the five remaining political subdivisions may form an Act 196 Authority on their own and without any involvement of the board;

The idea of continued service echoes the language of the city council’s upcoming Nov. 8 resolution, encouraging the continued effort to expand service, which reads in part:

Resolved, That AATA is encouraged to continue to discuss regional transportation options among Ann Arbor, Ypsilanti, Ypsilanti township, Ann Arbor township and Pittsfield township, leading to a better understanding and process for improving local transit options;

The language about continued provision of service in the resolution of both bodies implicitly addresses a condition of termination in  four-party agreement, which states: “No such termination or dissolution shall be effective unless and until provision for continued transportation services to Ann Arbor and Ypsilanti is in place, operational and all liabilities on the New TA have been satisfied.”

Dan Smith’s resolution would have rescinded previously approved board resolutions authorizing the county’s involvement.

However, it does not appear that the county board actually has the ability to dissolve the Act 196 authority known as the Washtenaw Ride. One way the authority could be dissolved is a scenario where no funding is identified before the end of 2014. From the four party agreement:

12. Termination of Agreement.
…
b. Discretionary Dissolution or Withdrawal Conditions. The Washtenaw County Board will also be allowed to dissolve the New TA if there is no Authority-wide voter approved funding passed before December 31, 2014, or voter approval passes Authority-wide but the same is defeated in the City of Ann Arbor.

But because it’s still well before Dec. 31, 2014, the necessary time has not elapsed for the board of commissioners to dissolve the transit authority under 12 (b).

The authority could also be dissolved based on which political subdivisions opt out. From the articles of incorporation:

SECTION 10.02: DISSOLUTION OF THE AUTHORITY 
The Authority may be dissolved in accordance with the provisions of Act 196 and as provided for in Section 12 of the Public Transportation Agreement referenced in section 3.01. If the City of Ann Arbor is the only political subdivision in the County remaining within the Authority after the expiration of the statutory 30-day withdrawal period, the Authority shall be dissolved.

However, the condition for dissolution in Section 10.02 isn’t met, because the city of Ann Arbor is not the only political subdivision in the county remaining in the authority after expiration of the 30-day withdrawal period – in part because the period isn’t over, and in part because the city of Ypsilanti, Ypsilanti Township, and the city of Saline have not withdrawn.

The resolution that Dan Smith had considered bringing forward also stated: “… that pursuant to Attorney General Opinion #7003 (December 23, 1998) the Washtenaw County Board of Commissioners requests the Michigan Legislature to dissolve ‘The Washtenaw Ride.’”

The Attorney General opinion cited in the resolution notes that an act of the legislature would be required to achieve the dissolution: “It is my opinion, therefore, in answer to your second question, that the dissolution of a transportation authority organized under the Public Transportation Authority Act requires an act of the Legislature and may not be accomplished by the unilateral action of the city in which it was established.” [.pdf of AG opinion 7003]

Ultimately, it’s not clear if any action by the board of commissioners would be necessary to end the approach to expanding transit  –  if the Ann Arbor city council approves the resolution that’s on its Nov. 8 agenda to opt out of The Washtenaw Ride.

It’s possible that the board of commissioners might pass a version of Smith’s resolution that calls upon the state legislature to dissolve the transit authority, once the Ann Arbor city council has acted. A member of the state legislature who’d be called upon to act is former Washtenaw County commissioner Jeff Irwin, who on Nov. 6 won re-election as representative of the 53rd District of the Michigan House. Irwin had been instrumental over the last few years in helping to shepherd the proposal to incorporate a new transit authority.

Rescinding Support for the RTA

At the county board’s Oct. 17, 2012 meeting, commissioner Wes Prater had asked for an update about proposed state legislation regarding creation of a regional transit authority (RTA) for southeast Michigan – the city of Detroit and the counties of Washtenaw, Wayne, Oakland and Macomb. Conan Smith has been an advocate for that effort, both as chair of the county board and in his role as executive director of the Michigan Suburbs Alliance.

About a year ago, at its Sept. 21, 2011 meeting, the board unanimously passed a resolution of support for the RTA. From then until the Oct. 17 meeting, little discussion of the RTA has taken place a commission meetings, and several commissioners seemed unaware of the county’s level of involvement in that effort.

So on Nov. 7, Dan Smith brought forward a resolution to rescind the board’s previous support. [.pdf of resolution to rescind support of the RTA]

The resolution also stated that the board opposes any other legislation that would involve Washtenaw County in an RTA:

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners opposes legislation which would include Washtenaw County in a Regional Transportation Authority, which does not protect:

• The ability of county entities to manage designated transportation funding.
• The right of county entities to independently mange a transit system.

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners supports the concept of a Regional Transportation Authority to enhance interconnectivity among the communities of the southeast Michigan region, but feels that Washtenaw County and the voters thereof should determine when to join the Authority.

Smith’s original draft – which was distributed to commissioners – had included references to specific pending state legislation. After a sidebar discussion with Conan Smith, Dan Smith revised the language to eliminate the citations to HB 5309 and SB 909. During deliberations, Conan Smith and Yousef Rabhi both thanked Dan Smith for “softening” the resolution, though both said they couldn’t support it, despite that change.

Rabhi and Conan Smith were joined by Felicia Brabec and Rolland Sizemore Jr. in voting against the resolution. However, six commissioners supported it – Dan Smith, Leah Gunn, Barbara Bergman, Rob Turner, Alicia Ping and Wes Prater – which was sufficient to pass the measure. Ronnie Peterson was absent.

Discussion on the topic might continue at the board’s Nov. 8 working session. That meeting includes an update on the RTA from Gary Owen with Governmental Consultant Services Inc., the Lansing-based firm that serves as the county’s lobbyist on state issues.

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Many commissioners expressed surprise at the county’s involvement in this way. Previously, the expectation was that the county would not be involved in the process after filing articles of incorporation – which occurred on Oct. 3 at the request of the Ann Arbor Transportation Authority. The Washtenaw Ride is an Act 196 authority, and is intended to create a much broader transit system than the current AATA. The process of creating a larger transit system has been in the works for more than two years.

There’s been some confusion and differing legal views regarding the process of forming the new transit authority. Letters of notification sent by the AATA in late September to all jurisdictions in the county referred to a statutory 30-day window starting with the filing of the articles of incorporation. But Act 196 also requires that the new transit authority itself notify jurisdictions, which also triggers a 30-day window for opting out. The statute makes clear that it’s the later of the two windows that is relevant. Because the new transit authority does not yet have a seated board, it has not yet acted to notify jurisdictions countywide. For a more detailed report on this issue, see Chronicle coverage: “Positions Open: New Transit Authority Board.”

At their Oct. 17 meeting, Hedger told commissioners that AATA had approached the county, as the incorporator of the new transit authority, and asked the county to send official letters instead of waiting for the new transit board to be formed. The county would do so as soon as the articles of incorporation become operational in early November, he said. That means letters would go out likely by Nov. 8, he said, which would create a 30-day “opt out” window that would close in early December. Jurisdictions are automatically a part of the new authority until they officially notify the authority of their intent not to participate. Since early October several township boards have already voted to opt out, including the townships of Salem, Manchester, Superior, York, and Augusta.

Hedger said he expects the letter, which hasn’t yet been drafted, will indicate that the new authority will honor the opt-out decisions that have already been made. But it also will inform municipalities that they could change their minds and rejoin the authority until the 30-day window closes in early December, he said.

Commissioners Dan Smith and Rob Turner, who have previously expressed reservations about the process, both noted that the county was not supposed to incur any costs in setting up the new authority – saying its only role was to officially file the articles of incorporation. They noted that this had been laid out in the four-party agreement between the county, AATA, and the cities of Ann Arbor and Ypsilanti. Now, it appears that staff time and postage costs will be paid by the county.

Hedger indicated that he doesn’t expect to spend a significant amount of time on drafting the letter, and will use the previous one sent out by AATA as a template. Commissioner Conan Smith noted that the county had pledged to ensure that municipalities would be notified, and if that simply means sending out 28 letters, then “I think we can foot the bill.”

There was some discussion about the need to notify each elected official individually, rather than just sending a notice to each of the township, village or city clerks in the 28 jurisdictions. That would significantly increase the number of letters that would be sent.

Hedger also noted that if the Washtenaw Ride board is appointed by early November, then that entity could take over the notification process. ”But it doesn’t look like that will happen at this point,” he said.

Before any AATA assets would be transfered to The Washtenaw Ride, voters would need to approve a funding source – likely a millage that could come as early as May 2013. The requirement of voter approval is part of a four-party agreement – between Washtenaw County, the city of Ann Arbor, the city of Ypsilanti and the AATA – that governs the possible transition to The Washtenaw Ride.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor, where the board of commissioners holds its meetings. A more detailed report will follow: [link]

Simultaneous service on the 15-member Washtenaw Ride (Act 196) board and the seven-member AATA board generated legal questions. (Illustration by The Chronicle.)

It was previously assumed that the seven Ann Arbor appointments to the new authority’s 15-member board would serve simultaneously on AATA’s board. Now, it appears that different appointments will be made.

Responding to an emailed query from The Chronicle, Ann Arbor mayor John Hieftje wrote late Friday afternoon: “On Monday night [at the council's Oct. 15 meeting] I will put out a call for applications to serve on the 196 Board. I will not be appointing anyone to that board who would also sit on the AATA Board.”

An application for all city boards and commissions is available on the city clerk’s website.

An informal 15-member group has been meeting as the board of the unincorporated authority for around a year. Some members of the AATA board and many others had assumed that upon incorporation, the informal group would become automatically installed as the board of the new Act 196 authority. However, that won’t be the case. Ann Arbor’s seven representatives to the new authority’s board first need to be nominated by the mayor and confirmed by the city council – under terms of a four-party agreement ratified between the cities of Ann Arbor and Ypsilanti, Washtenaw County and the AATA.

More significantly, according to several sources, the apparent current view of the Ann Arbor city attorney’s office is that service on the AATA board is not legally compatible with simultaneous service on the board of the new transit authority. So appointing seven Ann Arbor members to the new authority’s board would require nominating seven individuals who are different from those who might continue to serve on the seven-member AATA board.

Another issue apparently identified by the city attorney’s office is the fact that Act 196 of 1986 refers to an additional 30-day window for a jurisdiction in the county to opt out of inclusion in the new transit authority – a window that has not yet opened. Letters of notification sent by the AATA in late September to all jurisdictions in the county referred to a statutory 30-day window starting with the filing of the articles of incorporation. But Act 196 also requires that the new transit authority itself notify jurisdictions, which also triggers a 30-day window for opting out. The statute makes clear that it’s the later of the two windows that is relevant. Because the new transit authority does not yet have a seated board, it has not yet acted to notify jurisdictions countywide.

In any case, some jurisdictions have already opted out of the new Act 196 authority. The Northfield Township clerk’s office responded to a Chronicle phone query with confirmation that on Oct. 9, the township board decided to withdraw from the new authority on a 4-0 vote. The Chronicle has as-yet-unconfirmed reports that the boards of Salem Township and Manchester Township have also voted to opt out.

Another wrinkle: The change in composition of the Ann Arbor city council after the Nov. 6 election. Councilmember Stephen Kunselman (Ward 3) has told The Chronicle that he would like to pursue the possibility of Ann Arbor opting out – and he thinks there might be six votes on the new council to accomplish that. If Ann Arbor opted out, it would effectively end the initiative.

Delay in Decision: Implications for Board Makeup

The question of whether the same individual could simultaneously serve on the boards of the two transit authorities has been under discussion by attorneys for the city of Ann Arbor and the AATA for the past week. On Oct. 8, mayor John Hieftje – in a response to an emailed query from The Chronicle – could not offer anything definitive on the board compatibility question. And AATA board chair Charles Griffith wrote on the same day that “… we are still seeking clarification with [legal counsel] but are confident we will resolve and move forward. We do think that the city’s best interests are served by ensuring continuity from one entity to the next.”

In the interest of promoting continuity, it’s conceivable that some members of the current AATA board could resign their positions on that board, in order to become eligible for appointment on the new Act 196 board. Hieftje’s statement would allow for that possibility.

Boards for both organizations will need to exist until a possible transfer of assets is made from the AATA to The Washtenaw Ride. That transfer can’t happen until all conditions of the four-party agreement are met – including a voter-approved funding source for expanded services that are to be offered by the new transit authority.

Ann Arbor’s regular appointment process for a board or commission stipulates that candidates are nominated by the mayor, then confirmed by the full city council. That confirmation can’t take place until at least the next regular meeting of the council after the nomination has been made – unless approved by an eight-vote majority on the 11-member body. Based on Hieftje’s written statement, nominations for Ann Arbor’s members to the board of The Washtenaw Ride could not be made any sooner than Nov. 8 – the next council meeting after Oct. 15.

So under the city’s regular appointment process, confirmations would then come no sooner than the council’s Nov. 19 meeting – which will be the first meeting of the newly-constituted city council following the Nov. 6 election. Departing from the council will be three councilmembers who could have reasonably been expected to support the nominations made by the mayor: Carsten Hohnke (Ward 5), Sandi Smith (Ward 1) and Tony Derezinski (Ward 2).

So the additional lag in time has potential implications for the actual makeup of the new authority’s board.

Opt-Out Window

The additional time lag also has implications for the possibility that Ann Arbor itself would opt out of the new authority, as well as for the timing of any millage vote. More detail on that is included below.

Incorporation under Act 196 initially includes by default every jurisdiction in Washtenaw County. But the statute provides more than one way of opting out of inclusion.

Opt-Out Window: Which Window?

The working assumption for many observers has been that the trigger of a 30-day timeframe for a jurisdiction to opt out was the event of incorporation. But the language of the act itself ties a possibly different timeframe to the notification of jurisdictions in the county. [.pdf of Act 196 of 1986]

Section 8. (5) A political subdivision or other entity that is part of a public authority under this act may withdraw from the public authority until the expiration of the thirtieth day following the date the public authority is incorporated or until the expiration of the thirtieth day after receiving notification under subsection (7), whichever is later, without meeting the conditions listed in subsection (1) or (2).

And according to the statute, the notification in subsection (7) is properly done by the new authority:

Section 8. (7) An authority that forms under this act on or after May 1, 2006 shall notify all political subdivisions or portions of any city, village, or township that are included in the authority that the political subdivision or portion of the political subdivision is included in the authority. The authority shall include in this notification notice of the right to withdraw from the authority under this section. The political subdivision or portion of the political subdivision that is notified has 30 days after receiving the notification to withdraw from the authority pursuant to subsection (5).

Although the AATA sent letters of notification on Sept. 27 to every jurisdiction in the county – of the intent to file the articles of incorporation – that does not satisfy the requirement in subsection (7). Those letters did satisfy a requirement in the Washtenaw County board of commissioners’ resolution ratifying the four-party agreement – commissioners had required that notification letters of an intent to file be sent.

When the new transit authority eventually sends out letters of notification to all jurisdictions – stating that those jurisdictions are included in the authority – only at that point will the later relevant 30-day window open.

Opt-Out Window:  Implications for Ann Arbor’s Participation?

If Ann Arbor board appointments are delayed for another few weeks and the relevant 30-day window does not open until December or later, it’s conceivable that the complete picture of which jurisdictions are participating in The Washtenaw Ride might not be finalized until next year.

The extension of the 30-day window well past the November election also has implications for the possibility of the city of Ann Arbor opting out of new Act 196 authority. While the current edition of the city council almost certainly does not have the six-vote majority necessary to opt out, the council will seat three new members after the election. Carsten Hohnke (Ward 5) and Sandi Smith (Ward 1) chose not to seek re-election, and Tony Derezinski (Ward 2) did not win the Democratic primary in August.

The council approved the four-party agreement on just a 7-4 vote – and three of the seven votes of approval were cast by outgoing councilmembers. Ann Arbor councilmember Stephen Kunselman (Ward 3) has told The Chronicle that he would like to pursue the possibility of Ann Arbor opting out – and he thinks there might be six votes on the new council to accomplish that.

If the city of Ann Arbor opted out of the new Act 196 authority, that would effectively end the initiative. The four-party agreement does not appear explicitly to contemplate the possibility that Ann Arbor would opt out. But by its terms, the city would withdraw from the agreement if Ann Arbor opted out – because as residents of a non-participating jurisdiction, Ann Arbor voters would necessarily fail to approve any millage that the new Act 196 authority requested. Excerpted from the four-party agreement:

If Ann Arbor voters fail to approve the NEW TA [transit authority] Act 196 funding source before December 31, 2014, regardless of whether it is approved or not by the other voting jurisdictions, then the City shall withdraw from this agreement without penalty, shall veto any attempted termination by AATA of the AATA-City operation agreement, and shall refuse to designate and/or assign its millage under Section 3(a).

Opt-Out Window: Implications for Millage Vote Timing?

The AATA has indicated that a possible funding scenario is to ask voters in Washtenaw County to fund the new transit authority with a property tax of 0.584 mills. A millage proposal might be put on the ballot as early as May 2013.

But given the now-extended timeframe for seating the new board, a May 2013 millage vote presents an increasingly challenging timeframe for an effective millage campaign to be mounted.

Even before the additional delays were apparent, Tom Heywood, director of the State Street Area Association, feared that a millage would not pass if voted on that soon – because he thought there would not be adequate lead time for a millage campaign. Heywood made the remarks at a Sept. 25 meeting of Ann Arbor’s district advisory committee (DAC), which helped advise the unincorporated authority and will continue to do that.

Incompatible Offices

It’s been widely assumed that the current seven members of the AATA board would serve as Ann Arbor’s representatives to the new transit authority’s board. However, according to multiple sources, the view of the Ann Arbor city attorney’s office appears now to be that simultaneous service on the two boards is disallowed, because such service would violate the state’s statute that characterizes incompatible offices. [.pdf of Act 566 of 1978 (Incompatible Public Offices)]

Incompatible Offices: Transit Authority Exemption

By way of background, the statute on incompatible offices provides an explicit exemption from applying the statute’s key clause (Sec. 2) for certain types of transit authorities. The Washtenaw Ride and the AATA don’t have the kind of relationship to each other that is exempted by the statute. But the argument that simultaneous service is not allowed on the two boards doesn’t depend on the failure to meet the exempted condition. Here’s the specific exemption:

Sec 3. (11) Section 2 does not prohibit a public officer or public employee of an authority created under the public transportation authority act, 1986 PA 196, MCL 124.451 to 124.479, from serving as a public officer or public employee of another public transportation authority if each public transportation authority has members consisting of identical political subdivisions.

For reference, Sec. 2 is fairly short:

Sec. 2. (1) Except as provided in section 3, a public officer or public employee shall not hold 2 or more incompatible offices at the same time.

It’s clear that the two transit authorities in question – the AATA and The Washtenaw Ride – don’t meet the condition for the exemption in subsection (11), because they consist of different political subdivisions. From that, however, it does not necessarily follow that the two offices are incompatible.

But because the exemption criterion is not met, the definition of “incompatible offices” as provided by the statute has to be applied.

And according to the statute, here’s what “incompatible offices” means:

‘Incompatible offices’ means public offices held by a public official which, when the official is performing the duties of any of the public offices held by the official, results in any of the following with respect to those offices held:
(i) The subordination of 1 public office to another.
(ii) The supervision of 1 public office by another.
(iii) A breach of duty of public office.

So the question becomes: Are the offices of AATA board member and Washtenaw Ride board member incompatible under (i), (ii), or (iii)?

Incompatible Offices: Subordination, Breach

It seems clear that if the two offices are incompatible, then it’s not because of (ii) – because AATA board members will not be supervising Washtenaw Ride board members, or visa versa.

But under (i) or (iii) it’s now apparently the view of the Ann Arbor city attorney’s office that simultaneous service on the two boards is not allowed. The new transit authority’s board might be analyzed as subordinate to the AATA board, because the new authority has no assets. And without assets, the new authority’s board cannot perform the most basic of duties assigned to it by Act 196 – notifying jurisdictions in the county that they are included in the authority, which starts the 30-day window for opting out. In order to complete that required task, the AATA would presumably need to appropriate money to the new transit authority to cover the cost of materials and postage associated with that notification. That could conceivably make the new authority’s board dependent on, and therefore subordinate to, the AATA board.

A breach of duty generally would result from a conflict in the fiduciary responsibilities between offices. The two entities – the Washtenaw Ride and the AATA – are separate, so it’s conceivable that there’s a separate fiduciary responsibility to them. But it’s also conceivable that a counterargument could be made – that in this case, the fiduciary interests of the two entities are completely aligned.

The fact that the discussion among the various legal counsel extended over several days is consistent with a divergence of views on the matter. But Hieftje’s statement – that he’ll seek applications so that the new authority’s board can be filled without requiring simultaneous service on the AATA board – makes the matter essentially academic.

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Several members of the unincorporated Act 196 board attended the AATA’s Sept. 5 special board meeting. Clockwise from the near left corner of the table: Bob Mester (U196 West District – trustee, Lyndon Township); David Read (U196 North Middle District – trustee, Scio Township); Peter Murdock (U196 Ypsilanti District – councilmember, city of Ypsilanti); Roger Kerson, Charles Griffith, and Jesse Bernstein (AATA board members); Michael Ford (AATA CEO), David Nacht (AATA board);  Karen Lovejoy Roe (U196 Southeast District – clerk, Ypsilanti Township); and Bill Lavery (U196 South Middle District – resident, York Township).

According to a press release announcing the 5-year service plan’s final draft, a millage to support The Washtenaw Ride could be placed on the ballot by May 2013.

The estimated cost of the service in the plan is now 0.584 mills, an increase of 0.084 mills compared to the estimated cost in a draft plan that was released in April. Compared to the draft plan, the final version also includes several additional services, which were added based on input from district advisory committees (DACs).

The 5-year service plan includes: (1) countywide demand-responsive services and feeder services; (2) express bus services and local transit hub services; (3) local community connectors and local community circulators; (4) park-and-ride intercept lots; and (5) urban bus network enhancements. For Ann Arbor, the program includes increased bus frequencies on key corridors, increased operating hours, and more services on weekends. According to the Sept. 5 press release, Ann Arbor and Ypsilanti will get a 56% increase in service hours compared to current levels.

The possible transition from the AATA to The Washtenaw Ride will take place under the framework of a four-party agreement between the city of Ypsilanti, the city of Ann Arbor, Washtenaw County and the AATA.

The other vote taken by the AATA board at its Sept. 5 meeting stemmed from a formal protest in connection with the AATA’s award of a contract for handling advertising on its buses – to CBS Outdoor Advertising of Lexington, New York. The contract previously had been held by Transit Advertising Group Ann Arbor (TAG).

TAG president Randy Oram addressed the board during public commentary at the Sept. 5 meeting. Also during the meeting, AATA CEO Michael Ford pointed the board to his written response to the protest and asked board members to uphold his decision to award the contract to CBS. The board voted in a formal resolution to support the advertising contract award to CBS.

5-Year Transit Program

The special meeting of the board had been called specifically for the purpose of releasing the final draft of a 5-year transit program. An earlier draft had been released in April of this year.

5-Year Transit Program: Background

Publication of a 5-year transit program and a plan to fund it is one requisite to incorporation of The Washtenaw Ride under Act 196 of 1986. That’s not a requirement of the state statute, but rather a stipulation in a four-party agreement, ratified between the city of Ann Arbor, the city of Ypsilanti, Washtenaw County and AATA. [The Washtenaw County board of commissioners again had the agreement on its agenda for its Sept. 5 meeting – and voted again to approve its side of the agreement. See "Washtenaw Board to Re-Vote Accord" for a preview.]

That four-party agreement establishes the legal conditions under which assets of the AATA could be transferred to The Washtenaw Ride. A key condition is a voter-approved funding source adequate to pay for the services outlined in the plan released on Sept. 5. While the draft plan issued in April stopped short of recommending a millage as the funding source, the AATA now indicates that a millage vote could take place as soon as May 2013.

The four-party agreement also calls for the cities of Ypsilanti and Ann Arbor to direct the proceeds of their current transportation millages to the new authority. If approved by voters, the 0.584 mills from a new millage would be paid by property owners in those cities in addition to the existing transit taxes. Current transit taxes are about 1 mill for Ypsilanti and about 2 mills for Ann Arbor.

Washtenaw County’s role will be to file the articles of incorporation for the new transit authority. The articles would be filed with the state of Michigan under Act 196 of 1986. But that filing would come only after a request from the AATA and only after the AATA publishes details of the service and funding plan for the authority in newspapers of general circulation in Washtenaw County. This is the current phase of the possible transition.

At the point of incorporation, jurisdictions throughout Washtenaw County would have the ability to opt out of the new transit authority. If their governing bodies don’t opt out, those jurisdictions will be included in the new authority. Residents of jurisdictions that choose to stay in the new authority – and do not decide to opt out – would participate in a vote on any millage placed on the ballot to fund The Washtenaw Ride.

5-Year Transit Program: From 0.5 mills to 0.584

The estimated gap between revenues ($184.2 million) and expenses ($223 million) for a 5-year period of the program is $38.8 million. That gap could be covered with a tax on the participating jurisdictions of 0.584 mills. A popular vote on that tax could come as soon as May 2013.

One mill is $1 for every $1,000 of taxable value on a property. So for a house worth $200,000, with a state-equalized value of $100,000, an 0.584 mill transit tax would cost that property owner about $58 per year. For an Ann Arbor resident with a $200,000 house, adding the 0.584 mill tax to the existing city transit tax of roughly 2 mills works out to a transportation tax burden of about $258 a year.

AATA expects The Washtenaw Ride to add 3.6 million rides to the existing 6 million rides that the AATA already provides.

A previous estimate of 0.5 mill as sufficient to cover the operating gap of a new authority’s 5-year plan had been generated by a financial advisory group led by McKinley Inc. CEO Albert Berriz and Bob Guenzel, retired Washtenaw County administrator. That group had worked with the AATA’s consultant on the project, Steer Davies Gleave, to generate the estimated cost.

The current revised estimate is the result of service additions to the 5-year plan made since the draft was released earlier this year. After the Sept. 5 meeting, AATA strategic planner Michael Benham, who has led the project for the AATA, responded to a question from The Chronicle by saying that the new calculations were done by AATA staff, building on the work already done by Steer Davies Gleave. Benham indicated that he hoped the financial advisory group would also be able to convene to review the revised plan and figures.

At the AATA board’s Aug. 16, 2012 meeting, Benham had sketched out in broad strokes some of the changes that had been made since the draft service plan had been released in April. For example, the urban bus network – in Ann Arbor and Ypsilanti – has been expanded compared to the draft. In the draft plan, it was based on a 16-hour day, while now it’s based on an 18-hour day for some routes. That will involve a number of select routes operating until midnight. Some routes will also operate a little bit earlier in the morning, starting at 6 a.m. instead of 6:30 a.m.

Connectors and circulators for Milan have been added. The Northfield Express has been extended to Brighton. Also at the Aug. 16 board meeting, Benham also indicated the AATA is thinking about extending service to Lincoln Consolidated Schools in August Township, using a combination of flex service and limited extensions of the already-proposed Route #46. They’re also looking at a park-and-ride proposed in Pittsfield Township – and they’re thinking about either adding an additional park-and-ride, which would be further east, or perhaps just taking the existing one and moving it.

5-Year Transit Program: Board Response

During his oral report to the board, Michael Ford – the AATA’s CEO – noted that the document reflected a lot of hard work. The AATA had begun with a 30-year vision, which had been refined to a 5-year implementation program. A lot of work had been done with the district advisory committees over the last two years, he said, taking in comments and suggestions and making sure that the AATA had heard what people had to say.

CEO of the AATA Michael Ford takes bound copies of the 5-year plan out of a box before the Sept. 5 board meeting.

During the month of September, Ford said, the AATA is going out to the districts again to get full support and concurrence on the document. He emphasized that it’s a very detailed document – as it goes through a lot of layers of detail to provide people the best information to make an informed decision about whether to participate. He called it a very important document and reiterated that a lot of hard work has gone into it.

Ford took a moment to acknowledge some staff members individually – Sarah Pressprich-Gryniewicz, Mary Stasiak and Chris White. He singled out strategic planner Michael Benham as having done a yeoman’s job, which prompted a round of applause.

Board chair Jesses Bernstein then delivered some remarks, giving his personal perspective. That week marked the start of his 45th year in Ann Arbor and Washtenaw County, he said. During that period, he had worked for the county government, started two businesses, worked in a lot of other settings and volunteered in a lot of places. He had never seen a process and an outcome like the AATA had produced with this 5-year program.

The AATA has a 30-year vision and a 5-year program to implement it, Bernstein said. One of his favorite sayings, he continued, is “If you don’t know where you’re going, you’re never going to get there. … We know where we’re going.” He allowed that the road would not be straight and smooth, and there would be twists and turns and curves. Bernstein said he is very proud to have been on the board while the AATA had undertaken the effort. He added his personal thanks to the staff for their incredible work that they’ve done – including nights and weekends – saying it has been just an unbelievable effort. He concluded his remarks by saying, “And as the song says: We’ve only just begun.”

Charles Griffith appreciated that the document has evolved to the point that it has, noting that it’s the result of a lot of good work and thought. He appreciated the fact that it is still a “living document.” He ventured that it probably won’t ever be final because the AATA will always be adjusting and tweaking it and making it better – as it does currently with its existing system. The AATA changes its service plans, altering routes on an ongoing basis to make sure the AATA has the most efficient system that it can have. The new transit authority will continue to that. He stressed the fact that the AATA will continue to need to work on this.

David Nacht ventured that anybody who’s been paying attention in Michigan understands that there are communities in the state that have taken a “parochial view” of their role – such communities imagine that they are an island and can function without connection to their neighbors. These communities are either being taken over by the state government or are in danger of being taken over by the state government, Nacht said.

But Ann Arbor sees itself differently, Nacht said. Ann Arbor views itself as part of the surrounding environment, which includes different communities that are different from Ann Arbor, but are connected to it. It’s an environment where people live and work and participate in the economic life of Ann Arbor. Nacht continued by saying it is in Ann Arbor’s interest to reach out to its neighbors in an open way, to transparently say: Let’s be connected in a way that we think is reasonable and fair, that works for people no matter what part of the county they live in.

Nacht observed that he had been a part of this process for a long time – there were people on the board just talking about expanding service countywide, when he joined the AATA board nine years ago. Michael Ford, he said, has led a team to bring the AATA to this point. Nacht did not think the process was perfect, and he did not think that the outcome was perfect. But he called it an outstanding political and policy result for a public entity.

For a public entity, “This is as good as it gets,” Nacht said. He agreed with Bernstein, in that he’d been through a lot of projects at different levels of government and in the private sector, and he was very proud of the AATA’s work. The AATA is offering the community a choice to move forward to take care of those who need transportation services, to help the environment, and to prosper, Nacht said. Ultimately, Nacht said, if we move people around better, everyone will prosper.

Roger Kerson echoed what had been previously said. He added that it’s the easiest thing in the world to say, “Let’s work together,” but it’s in fact very hard to do. It’s a real testament to the staff work that so many different jurisdictions are cooperating and participating.

Kerson addressed some remarks to those board members from the as-yet-unincorporated board of The Washtenaw Ride who were at the table – thanking them for participating in an enterprise that was still not completely 100% defined. He thanked them for attending meetings where they don’t get to vote yet. And he thanked them generally for helping the AATA in the process.

Kerson felt that the existing board would be able to do its job better as a steward of the AATA’s resources, when the board gets bigger – and when it has more input and more ideas and more knowledge of the communities that the AATA is trying to connect with. Right now, the AATA is running buses to Ypsilanti and Chelsea, he pointed out – places where board members don’t live. The AATA will be able to provide service more effectively and efficiently when the team is expanded. He looked forward to a time when everyone at the table also had a voice and a vote.

Outcome: The board voted unanimously to release the 5-year plan. A series of district advisory committee meetings will be now be held in different areas of the county to go over the plan. Ann Arbor’s meeting will take place on Sept. 24, 2012 from 6:30-8:30 p.m. at the Mallets Creek branch of the Ann Arbor District Library. A complete meeting schedule is available on the MovingYouForward.org website.

Bus Advertising

At its Sept. 5 meeting, the board considered a resolution upholding a previous decision to award a contract for handling advertising on the sides of AATA buses to CBS Outdoor Advertising.

Bus Advertising: Background

At its Aug. 16, 2012 meeting, the AATA board authorized a three-year contract with CBS Outdoor Advertising of Lexington, New York, to handle placement of ads on its buses and bus stops. The contract had been held by Transit Advertising Group Ann Arbor (TAG) for the last seven years, but that contract had expired. So the AATA solicited bids for a new contract. The AATA selected CBS Outdoor Advertising from seven respondents to an RFP (request for proposals).

The AATA’s advertising program currently accounts for about $80,000 a year in a budget for fiscal year 2012 that calls for $29.4 million in total revenues. In the past, the advertising program has netted up to $169,000 a year.

When first implemented in 2005, the program was expected to generate $200,000 a year [.pdf of 2005 Ann Arbor News article: "Some AATA Buses to Be Used as 'Movable Billboards'"] Ann Arbor News coverage from that era documents some controversy associated with the decision to offer advertising on buses, as well as the initial implementation that allowed for complete wraps. [.pdf of 2007 Ann Arbor News article: "AATA to Review Bus Ads"]

An ad rejected by the AATA for placement on its buses prompted a lawsuit filed last year on Nov. 28, 2011. The text of the ad included the words “Boycott ‘Israel’” and featured an image of a scorpion-like creature. In the most recent court action connected with that lawsuit, TAG and its president Randy Oram were dropped as defendants in the case by mutual agreement of the parties. The court has not yet ruled on the substance of the case, but an evidentiary hearing was held on July 23.

The lawsuit was not related to the routine process of putting the advertising contract out for renewal.

Bus Advertising: Protest, Commentary

In his written protest about the award, TAG president Randy Oram detailed a number of objections, among them a contention that the proposal from CBS did not actually respond to the AATA’s request for proposals. TAG also points to the recent elimination of a CBS staff position for someone who’s named in the CBS proposal as a person who would be part of a team fulfilling terms of the contract.

For its part, the AATA maintains that it followed its RFP procedures, that it violated no laws, and that CBS was able and willing to meet the requirements of the RFP but that TAG, based on its proposal, was either unwilling or unable to meet those requirements. TAG felt that the contingencies it had included in its proposal – based on its experience as the vendor over the last seven years – had been held against it in the AATA’s evaluation of the proposal. [.pdf of TAG protest and AATA response]

Randy Oram, president of Transit Advertising Group Ann Arbor, addressed the board on Sept. 5.

Oram addressed the board during public commentary at its Sept. 5 meeting. He told the board that TAG had been proud to serve the AATA as the exclusive agent for bus advertising services since 2005. He appreciated the opportunity to partner with the AATA in that endeavor. TAG had always served the AATA and its constituents to the best of its ability and with fidelity, he said. He appreciated the efforts of the board in hearing the appeal he was making concerning the denial of the contract award to TAG and the award the contract to a different vendor.

Oram allowed that the process had required a lot of time and effort on the part of the AATA staff so far. A clear understanding of the contract requirements at the onset, he continued, will benefit the AATA and an agency in evaluating all the proposals that have been made. He felt that the board needs to understand clearly what the issues are before making a final recommendation.

In honoring its past contract in partnership with the AATA, TAG had prepared a proposal that was detailed and knowledgeable in operating a bus advertising system according to the contract, Oram said. That knowledge, he said, appeared to be the key in TAG’s failure to be recommended for the award of the contract. TAG’s proposal reflected its understanding of the contract and past operations, and that was faithfully spelled out as part of the request for proposals. TAG is not trying to create any more difficulties, he assured the board.

If the eventual awardee can comply with each and every one of the requirements in the request for proposals, with no exceptions or deviations, exactly as the RFP is written, that firm would be deserving of the contract regardless of which company it is, Oram said. It’s important for TAG that the AATA understand that TAG’s proposal was not an indication that TAG was unwilling or incapable of performing the contract. It was a proposal that reflected the application of the past performance of the contract and the forethought, recognition and planning for contingencies – which should have been seen as a strength, not a weakness, he said.

Shortly before Oram concluded his remarks – as he was pushing past the limits of the two-minute speaking time – board chair Jesse Bernstein asked Oram if he had much more to say. Oram indicated he had just two more sentences and then he would “pass out.” Board member David Nacht joked that Oram surely meant that he had a “hand out,” not that he was actually going to pass out. Nacht’s remark generated chuckles around the board and from Oram.

Oram concluded by thanking the board members and the staff for considering TAG’s appeal. He hoped that the board would consider delaying the award of the contract until all of the issues could be examined.

Bus Advertising: CEO & Board Response

Michael Ford, the AATA’s CEO, responded to Oram’s remarks at the meeting by telling board members that he had taken time to write out a detailed response. After review and consultation with the staff, Ford said he felt the AATA had responded appropriately. He asked the board for their support to uphold his decision to affirm the contract award to CBS.

He felt that the AATA’s RFP evaluation team had done its due diligence, and he felt that he had answered Oram’s questions very thoroughly. He was confident and comfortable upholding the decision. Roger Kerson sought confirmation that CBS Outdoor Advertising also had experience with handling advertising with transportation agencies. Ford indicated CBS  had such experience.

AATA CEO Michael Ford, right, approaches TAG president Randy Oram after the Sept. 5 board meeting.

David Nacht followed up by asking if Ford was confident that the AATA had followed all relevant procedures in the contract award process. Ford indicated he was confident. Nacht noted that the AATA’s legal counsel – Jerry Lax, of Pear Sperling Eggan & Daniels, P.C.  – was attending the meeting. Nacht asked if Lax thought there was anything else the board should be aware of. Lax did not think there was  – beyond what was in their information packet.

Nacht indicated that as a general matter, he thinks it’s healthy for a public agency to follow processes, and for the board not to take a role in selecting contractors who get public dollars. Instead, the board has a role of making sure that the process was followed, he said. The CEO and the legal counsel for the agency had assured the board that processes were followed. And Nacht said he had a chance to review what had just been handed to him, so he supported the resolution to uphold the decision.

Outcome: The board voted unanimously to uphold the decision to award the advertising contract to CBS Outdoor Advertising. 

Present: Charles Griffith, David Nacht, Jesse Bernstein, Roger Kerson.

Absent: Eli Cooper, Sue Gott, Anya Dale.

Next regular meeting: Thursday, Sept. 20, 2012 at 6:30 p.m. at the Ann Arbor District Library, 343 S. Fifth Ave., Ann Arbor [Check Chronicle event listing to confirm date]

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Once again on the agenda for the Washtenaw County board of commissioners meeting on Sept. 5 will be the articles of incorporation for a new transit authority. It’s expected to be a stamp of approval for some administrative changes, not a chance to change the document or rescind the board’s previous decision to approve the document.

Instead, the point of re-introducing the agenda item is to provide an opportunity for the board to affirm the administrative changes to the articles of incorporation that took place after the board’s Aug. 1 vote.

The administrative changes were already included in the documents by the other three parties to the four-party agreement when they subsequently ratified the document. Those parties are the cities of Ann Arbor and Ypsilanti, and the Ann Arbor Transportation Authority, which is leading this effort. The Ann Arbor city council voted (for a third time) to approve the articles of incorporation at its Aug. 9, 2012 meeting; the Ypsilanti city council voted at its Aug. 14 meeting (also for a third time); and the AATA board voted (for a second time) at its meeting on Aug. 16.

News of the agenda item came from an email sent by Washtenaw County board chair Conan Smith to other commissioners on the evening of Aug. 22. It’s not entirely clear whether the board will: (1) take a vote that affirms the administrative (non-substantive) nature of the changes that were made after the board approved the document on Aug. 1; or (2) take a vote that amends the document to match the version approved by the other three parties.

Previous re-votes have been driven by substantive amendments made by one of the parties to the agreement. For example, the Ypsilanti city council amended the four-party accord after the Ann Arbor city council first voted, on March 5, 2012. That amendment involved service charges applied to the respective cities’ existing millages. When the agreement went back to the Ann Arbor city council, that body amended the document further – which meant that it returned to the Ypsilanti city council for its approval again. The AATA board then ratified the agreement.

It was expected to be approved by the Washtenaw County board of commissioners without further substantive amendment. But on Aug. 1 the board made a change to the size of the majority needed, in order for the new transit authority’s board to change the articles of incorporation – from 2/3 to 4/5 of the 15 board members. That triggered the most recent round of approvals by the various bodies.

But those approvals incorporated some changes that were driven by a desire to harmonize the county board’s amendment with the rest of the document, as well as with Act 196 of 1986 – the act under which the new transit authority will be incorporated. For example, the 4/5 majority requirement for changes to the articles of incorporation is at apparent odds with one kind of change to the articles specifically mentioned in Act 196 – a change in jurisdictions that are part of the authority. Act 196 explicitly indicates that a 2/3 vote is required. So an administrative change undertaken after the board’s Aug. 1 meeting was to add the clause: “… unless another vote of Board is required under the terms of these Articles or provided for in Act 196.”

The view of legal counsel for the four parties was apparently that it’s not actually necessary for those changes to be explicitly re-voted and affirmed by the county board of commissioners. However, there is at least some sentiment on the county board that the changes might be construed as substantive and contrary to the intent of the county board, which could become an unnecessary point of contention down the road.

The AATA is current finalizing the details of a five-year service plan that will need to be published as one of several conditions that must be met before the AATA could transition into the newly incorporated authority, to be called The Washtenaw Ride. This week, the AATA board called a special meeting for Sept. 5 to unveil that service plan.

Earlier in the year, the AATA had hoped to be in a position to possibly place a transit millage proposal on the ballot this November. But at this point, that won’t be possible. Any transit millage proposal will come at a later election.

After the jump, this report describes the administrative changes in question and possible misinterpretations.

Text of the Changes

The Washtenaw County board of commissioners made the following change to the articles of incorporation on Aug. 1:

SECTION 10.01: AMENDMENTS
These Articles of Incorporation may be amended only upon a two-thirds (2/3) four-fifths (4/5) vote of the directors appointed and serving on the Authority. [Amendment by Washtenaw County board]

That drove additional changes made by city of Ann Arbor legal staff before the Ann Arbor city council voted on the amended document. The staff memo from the council’s Aug. 9, 2012 meeting characterized the nature of the additional changes as following logically from the amendment that the county board had made on Aug. 1: ” … however, the implementation of 4/5th requirement necessitated changes to Section 5.01 to recognize no change was being made to the 2/3 vote of the Board related to budgets and since amendments are referenced in Section 5.01 the inclusion of the change to 4/5 vote for amendments.”

Text of Changes: Ordinary Votes

The first administrative change involves the basic rule that decisions of the board of the new transit authority require a simple majority – with two exceptions: (1) votes on the budget, and (2) votes to change the articles of incorporation. Because the Washtenaw County board changed the threshold from 2/3 to 4/5 on amendments to the articles in a subsequent section, the following section was changed to be consistent with that intent. Added text is in bold italics. Deleted text is in strike-through.

SECTION 5.01: PUBLIC MEETINGS
… Each director shall have one vote. Decisions of the Board require a majority vote of the directors appointed and serving at a Board meeting having a quorum present, except approval of the budget which requires approval of 2/3rds of all directors and amendment of the articles each which requires approval of 2/3rds 4/5th of all directors. [Administrative change.]

Text of Changes: Conflicts with Act 196

The second administrative change is related to the clause in Act 196 that describes how a local governmental unit not originally a part of the authority can join it. Here’s the section from Act 196:

124.457 Membership after formation of public authority; resolution; approval, execution, filing, and publication of amendment to articles. Sec. 7.
A political subdivision or a portion of a city, village, or township bounded by lines described in section 4 may become a member of a public authority after the public authority’s formation under this act upon resolution adopted by a majority vote of the members elected to and serving on the legislative body of the political subdivision requesting membership for all or a portion of the political subdivision and upon resolution adopted by a 2/3 vote of the members serving on the board of the public authority approving an amendment to the articles of incorporation of the public authority adding all or a portion of the political subdivision. The amendment to the articles of incorporation shall be executed by the clerk of the political subdivision, all or a part of which is being added and shall be filed and published in the same manner as the original articles of incorporation.

So that section of Act 196 explicitly calls for a 2/3 vote for changes to the articles that involve the addition of another political subdivision. The amendment made by the Washtenaw County board of commissioners raises that threshold for all votes on the articles. The administrative change interprets the board’s intent as not to raise the threshold to 4/5 for that specific type of change to the articles of incorporation, by adding a kind of savings clause:

SECTION 10.01: AMENDMENTS
These Articles of Incorporation may be amended only upon a four-fifths (4/5) vote of the directors appointed and serving on the Authority unless another vote of Board is required under the terms of these Articles or provided for in Act 196.

Potential for Misunderstanding

The second administrative change depends on one interpretation of the county board’s intent – that it did not mean to lump the membership decisions into the kind of votes that would require a 4/5 majority. But the legislative record of that body might support the contention that the county board’s intent was, in fact, to apply the 4/5 majority requirement to all decisions involving the articles of incorporation – even those involving admission of an additional political subdivision into the transit authority.

That legislative record includes the following amendment, which was considered by the county board but rejected on July 11, 2012:

Unless otherwise specifically allowed by law, these Articles of Incorporation may be amended only upon a two-thirds (2/3) vote of the directors appointed and serving on the Authority. All amendments must comply with applicable state and federal laws. All amendments to the Articles of Incorporation become effective only after they are executed jointly by the Chairperson and by the Secretary of the Board of the Authority, ratified by each member political subdivision and the Washtenaw County Board of Commissioners, filed with the recording officer of the Washtenaw County Clerk, and filed and published in the same manner as the original Articles of Incorporation.

Based on that rejected amendment – which was supported by only 4 of the 11 county commissioners – it’s possible to imagine an argument that the board’s failure to include the savings clause in a later amendment, which it actually passed, was in fact a conscious and deliberate choice by the board.

Had the board made that conscious choice, and had the other three parties ratified the articles without that savings clause, it’s possible to imagine a dispute arising out of the following scenario:

Township A opts out of the new Act 196 transit authority when it’s initially formed. Later, the township board of Township A decides that it would like to be admitted into the new authority – and takes a unanimous vote. Then the board of the new transit authority votes 10-5 to admit Township A into the authority.

Does Township A get in?

The board of Township A might well argue that under 124.457 Sec. 7 of Act 196, the conditions have been met for admission into the transit authority, and that it’s therefore entitled to be admitted. But a resident of Township A, who is opposed to paying the associated property tax, might well argue that the requirement in the articles of incorporation that a 4/5 majority be achieved has not been met for changing the articles of incorporation – a change made necessary by the admission of Township A.

That kind of legal dispute would be settled through interpretation of Act 196. Does Act 196 set forth conditions under which a political subdivision is entitled to be admitted into the transit authority? Or does Act 196 set forth minimum conditions that must be met before a political subdivision can be admitted into the transit authority?

The administrative change made by city of Ann Arbor legal staff eliminates the possibility of that kind of dispute.

And by taking some kind of vote on Sept. 5, the Washtenaw County board of commissioners has an opportunity to make its intent absolutely clear.

Coda

The text of the document attached to the Ann Arbor city council’s agenda on Aug. 9, which the council voted to approve, was the following, including the trailing extra period:

These Articles of Incorporation may be amended only upon a four-fifths (4/5) vote of the directors appointed and serving on the Authority unless another vote of Board is required under the terms of these Articles or provided for in Act 196..

It’s not clear if on Sept. 5 the county board will undertake an administrative change to eliminate the extra punctuation, and if so, which one of the two periods will be struck from the text.

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Publication of the service plan is one of the conditions that must be met before Washtenaw County can be asked by the AATA to file the articles of incorporation for the new transit authority. A draft of the plan was released on April 26, 2012.

At the AATA’s most recent regular board meeting, held on Aug. 16, 2012, strategic planner Michael Benham described a number of revisions to the service plan that had been made since April, based on input from the district advisory committees and others. Those revisions included extension of service to later hours (in some cases until midnight) in the urban bus network area – Ann Arbor and Ypsilanti.

At the Aug. 16 board meeting, the AATA board also gave its final approval to the four-party agreement and articles of incorporation that will provide the legal framework for the possible transition of AATA to a new authority incorporated under Act 196. The parties to that agreement are: the city of Ann Arbor; the city of Ypsilanti; Washtenaw County; and the AATA. After incorporation, a requirement for the transition of capital assets and existing millages to the new authority is a voter-approved funding source for the new authority that is adequate for the service plan.

Although the AATA hoped to be in a position to have the option of placing a transit millage on the Nov. 6 ballot, the timing didn’t work out, because the four-party agreement has just now been given final approval by all the parties.

The special meeting will be held at the AATA headquarters at 2700 S. Industrial Hwy. in Ann Arbor.

From left: Michael Ford, CEO of the Ann Arbor Transportation Authority, talks with county commissioner Dan Smith after the June 14, 2012 special working session of the county board, which focused on a plan for regional public transit. Smith put forward several amendments to a four-party transit agreement and articles of incorporation that were discussed at the session. (Photos by the writer.)

A three-hour working session was intended to be a chance talk through these issues prior to a formal board of commissioners vote on a four-party transit agreement and articles of incorporation for a new Act 196 transit authority. That vote might take place as soon as the county board’s July 11 meeting. These documents would set the framework for a broader public transit authority than currently exists in the county.

Washtenaw County is one of the parties to the four-party agreement, but with a unique role compared to the other three entities: the cities of Ann Arbor and Ypsilanti, and the Ann Arbor Transportation Authority, which is spearheading this effort. Unlike those entities – whose governing bodies have already approved the transit documents – the county would not be contributing assets (AATA) or a millage (Ann Arbor and Ypsilanti). Nor would the county board be asked to put a countywide millage request on the ballot.

Rather, the county clerk would be asked to file articles of incorporation with the state – an action to create a transit authority under Michigan Act 196. When formed, the Act 196 board would have authority to put a funding proposal on the ballot for voters to consider. A financial advisory group that’s been working on this effort has suggested that revenues equivalent to a 0.5 mill tax would be needed to cover the cost of expanded services for the first five years. [.pdf of financial advisory group report]

Most of the comments and questions from commissioners at the working session related to issues of local versus regional control; the process by which local communities could opt-out or opt-in to the new transit authority; parity between Ann Arbor and other municipalities; and how details of the service and funding plan would be communicated. Dan Smith was the only commissioner who put forward specific proposals for amendments to the documents, which were discussed at the working session and covered many of these broad issues.

The original intent of the working session was to review any possible amendments from commissioners and take a straw poll to gauge the board’s sentiment on those amendments. Any consensus could then be reported back to the other three parties, for possible action prior to formal consideration by the county board.

Although eight of the 11 commissioners attended the June 14 session, two of them – Leah Gunn and Rolland Sizemore Jr. – left before straw polls were taken. Not attending were Rob Turner, Ronnie Peterson and Barbara Bergman.

Three possible amendments were considered to have sufficient consensus to discuss with a separate committee that helped develop the draft documents, which includes representatives from all four parties as well as an unincorporated Act 196 board. The three amendments relate to these questions: (1) Should the Act 196 authority be dissolved if a vote on funding fails in any of the jurisdictions? (2) What restrictions should be placed on board membership? and (3) Who should have the power to amend the articles of incorporation?

The outcome of that committee meeting, held on June 18, was to let the current four-party agreement and articles of incorporation stand for now. At the Ann Arbor city council’s June 18 meeting, councilmembers Sabra Briere and Christopher Taylor – who participated in a committee meeting earlier that day – reported to their council colleagues this consensus: AATA, Ypsilanti and Ann Arbor would not consider any further amendments to the documents before a vote by the county board.

Wes Prater described Dan Smith’s amendments overall as being “absolutely necessary” to ensure proper oversight of the new authority. If the changes aren’t made, he said, there will come a time when the board will regret it: “Mark my words.”

Although it’s unclear which of the amendments might have traction, at this point it seems likely that there are sufficient votes on the county board to pass the four-party agreement and articles of incorporation in some form.

AATA Presentation

The working session began with a presentation by Michael Ford, CEO of the Ann Arbor Transportation Authority. He noted that he’s spoken to the board five times in the past 18 months, and though there have been some minor changes during that time, the effort is essentially on the same path. [For Ford's most recent county board presentation at a March 22, 2012 working session, see Chronicle coverage: "County Board Updated on Public Transit Plans." For additional background, see: "Ann Arbor Council Re-OKs Transit Docs" and “AATA Board OKs Key Countywide Documents.”] Additional information is also available on the Moving You Forward website devoted to the expanded transit effort.

Ford’s presentation on June 14 covered much of the same ground that’s been presented at previous meetings of the county board, the city councils of Ann Arbor and Ypsilanti, and the AATA board. [.pdf of Ford's slide presentation] He highlighted recent service upgrades and increases in ridership for AATA, as well as a rider survey indicating interest in increased frequency and more direct routes.

Ford also reviewed highlights of the proposed five-year service plan for a broader transit authority, as well as key aspects of the four-party agreement and articles of incorporation. He outlined the process for creating a new, broader transit authority, and stressed that the county’s role would be limited.

The county board would vote to approve the four-party agreement and articles of incorporation, and the county clerk would file the articles of incorporation with the state. The county’s actions would not force any community to participate, Ford said. Nor would it entail offering the full faith and credit or bonds to the new authority, and or automatically create the authority. Rather, the board’s action is part of a process that allows local communities to choose to participate, he said.

Ford noted that there is no perfect way to create regional transit. The Act 196 approach is one way to do it, allowing local communities to be involved in the process. He said he was happy to answer questions, and would definitely be back for the board’s July 11 meeting, when he hoped a formal vote on the four-party agreement and articles of incorporation would take place.

The bulk of the three-hour working session consisted of questions and comments from commissioners, which were fielded by Ford, community outreach coordinator Sarah Pressprich Gryniewicz, and Jerry Lax, who’s providing legal counsel for the AATA in this process. Commissioners also discussed amendments proposed by Dan Smith, and took a straw poll on those amendments.

There was considerable overlap among the issues raised by commissioners. This report organizes the wide-ranging discussion thematically. [.pdf of four-party agreement, as amended by the Ann Arbor and Ypsilanti city councils] [.pdf of articles of incorporation] [.pdf of Act 196]

General Comments

Yousef Rabhi began the discussion by thanking two Ann Arbor city councilmembers – Sabra Briere and Jane Lumm – for attending. [Briere stayed for the entire working session. Lumm left after about an hour.] Rabhi hoped that by the end of the board discussion, commissioners could take a straw poll on various amendments and the overall agreement, to give a general indication about where they stand.

Leah Gunn noted that the issue of countywide transit had been discussed for a long time. She observed that every time the board votes on a resolution, the staff memo accompanying it indicates the budget impact for action related to the resolution. In the case of the four-party agreement and articles of incorporation, “this will have no impact on our budget,” Gunn said. It’s simply creating an authority – the voters will decide on whether to approve funding, she said.

Ann Arbor taxpayers have been paying a transit tax since the 1970s, she noted, that’s been rolled back over the years to about 2 mills, because of the Headlee Amendment. The investment in public transit infrastructure and operations, funding the Ann Arbor Transportation Authority, has come from Ann Arbor taxpayers, “who have been very generous indeed,” she said. More recently, AATA has formed partnerships with entities that pay for transit services, she noted, like the city of Ypsilanti, which has its own transit millage. Gunn again emphasized that board action would not cost the county government one penny, “and therefore I’m thoroughly in support of it.”

Rolland Sizemore Jr. said he appreciated AATA adding more bus stops in Ypsilanti Townships, and in working to get more information to residents about public transit. He expressed general support for the agreement.

Sizemore also noted that while he was glad to see the two Ann Arbor councilmembers at the working session, he wished that other representatives from Ann Arbor, Ypsilanti and AATA – the other three parties in the four-party agreement – would have attended. “I don’t want any whining after we do this,” he said.

Sizemore added that he wasn’t happy to have the four-party agreement and articles of incorporation on the July 11 agenda for both the board’s ways & means committee meeting and its regular board meeting. [Resolutions are considered and voted on first at ways & means, a committee on which all commissioners serve and which meets immediately prior to the regular board meetings. Typically those resolutions are considered for a final vote at the regular board meeting two weeks later. However, the board only meets once a month during the summer, so it's more likely that resolutions will be given both initial and final votes on the same night.]

Governance

Rolland Sizemore Jr. asked if a county commissioner could serve on the Act 196 board. Yes, as a non-voting representative, Sarah Pressprich Gryniewicz replied. However, if a commissioner wanted to serve as a voting member, they would need to be appointed by one of the eight districts that would be designated as part of the Act 196 board.

Sizemore also wondered about the distribution of board members. Of the 15 members on the Act 196 board, seven would be designated to represent the Ann Arbor district. What if one of the other districts drops out? Would that mean that there would only be 14 members – essentially giving Ann Arbor control of the board?

In that scenario, Gryniewicz said the board membership would be shuffled as needed, based on the current way that membership is being determined – such as the amount of funding that is contributed.

[In some cases, districts comprise several townships or other jurisdictions. On the proposed Act 196 board, Ann Arbor would have seven seats, the city of Ypsilanti would have one seat, and a district that includes Ypsilanti and August townships would have two seats (the southeast district). Pittsfield Township would constitute a district. The other four seats would come from districts labeled as follows: west, north central, northeast, south central. [.jpg of map showing board composition of Act 196 transit authority]

Opting-Out, Opting-In

Rolland Sizemore Jr. asked if a municipality can opt out of the transit authority before a millage vote. Yes, Sarah Pressprich Gryniewicz replied. The first opt-out opportunity comes during a 30-day period after the county clerk files articles of incorporation with the state. There’s another period to opt-out before a vote on funding is taken.

Opting-Out, Opting-In: Bonds

Dan Smith offered an example using Northfield Township, which is one of the jurisdictions he represents on the county board. Suppose that Northfield Township participates in the Act 196 authority and the authority issues a 10-year bond supported by a five-year millage. What happens if Northfield Township decides to opt out when the first five-year period ends, before a vote on the millage renewal? Are township taxpayers still on the hook for another five years, or would the terms of the bond indicate that there’s no liability for the township in that case?

Sarah Pressprich Gryniewicz indicated that the township taxpayers would not be liable for a share of the bond payments. In that case, Smith replied, it sounds like that’s a bond no one would want to buy. Gryniewicz noted that no other Act 196 authorities have bonded. Smith said that’s likely because all of the participating communities could opt out, and the bondholders would lose their money.

Conan Smith said that to him, the setup makes perfect sense. The bonding entity would be the new Act 196 authority, which would be able to take on debt and liabilities. The new Act 196 authority would begin with extensive assets, he noted – transferred from the AATA. Local units of government would be protected if they decided to opt out. He likened the situation to county parks and recreation. If the county bonded for a new recreational facility but voters didn’t subsequently approve a millage renewal, the county would be on the hook for bond payments, backed up by its assets.

Dan Smith countered that when school district boundaries are altered, voters that were inside the former district boundaries but are outside of the new boundaries still have to pay for bonds that were issued before the boundary change occurred. That seemed like an analogous situation, he said, adding that he’d like to see more information on this issue, to understand exactly how it would work.

Leah Gunn suggested that there’s a reason why Act 196 authorities haven’t bonded – it’s because they’re using millage revenues instead. AATA already has assets and infrastructure, she noted. A millage would add to that infrastructure, and provide operational funds. The new authority wouldn’t necessarily need to bond.

Opting-Out, Opting-In: Governing Boards vs. Voters

Dan Smith said he didn’t want to split hairs, but it’s important to be crystal clear when talking about how decisions get made. When organizers of countywide transit refer to “local community,” what they mean is the local board or city council. The community doesn’t really have a say-so, Smith said – it’s the members of each governing body who determine whether the municipality will participate. All the other residents of Northfield Township might be against it, for example, but if the township board doesn’t listen and doesn’t opt out, then that community participates in the Act 196 authority, he said.

To him, that’s an important distinction. Some townships work well, others don’t, Dan Smith said. If the county board approves the four-party agreement and articles of incorporation, then Northfield Township – by way of example – is participating, unless the township Northfield Township board takes action to opt out, he said.

Leah Gunn, who represents one of the four county districts in Ann Arbor, observed that we live in a representative democracy. Those township trustees represent the residents of the township. If they’re not doing a good job, then residents “need to vote the rascals out,” she said.

The problem, Dan Smith replied, is that a new government entity is being created, with the ability to tax. That’s a big distinction.

Opting-Out, Opting-In: Ann Arbor’s Exception

Felicia Brabec, whose district covers Pittsfield Township, asked about Section 9 of the four-party agreement. She wanted to clarify her understanding – if Ann Arbor residents vote against a ballot initiative for a funding option, such as a millage, then the city could opt out of the agreement?

Section 9 reads as follows:

9. Ann Arbor Approval. Notwithstanding anything in this Agreement to the contrary, if voters in the City of Ann Arbor fail to approve the NEW TA [Transit Authority] Act 196 funding source at any interim vote prior to December 31, 2014, regardless of whether it is approved or not by the other voting jurisdictions, then the City shall have the right to, but is not required to (i) withdraw from this Agreement without penalty; (ii) veto any attempted termination by AATA of the AATA-City operation agreement; and (iii) refuse to designate and/or assign its millage under Section 3(a). If Ann Arbor voters fail to approve the NEW TA Act 196 funding source before December 31, 2014, regardless of whether it is approved or not by the other voting jurisdictions, then the City shall withdraw from this agreement without penalty, shall veto any attempted termination by AATA of the AATA-City operation agreement, and shall refuse to designate and/or assign its millage under Section 3(a).

Sarah Pressprich Gryniewicz indicated that Brabec’s understanding was correct. If a funding ballot initiative passed overall, but failed in Ann Arbor, then this provision kicks in. It’s an unlikely scenario, Gryniewicz said. [The subsequent deliberations reported below, as Conan Smith would later point out, initially conflated two different issues: (1) Ann Arbor's ability to out of the requirement that the millage and assets be assigned to the new Act 196 Authority; and (2) opting out of participation in the Act 196 authority. ]

Why isn’t this provision available to all communities? Brabec asked. Michael Ford replied that Ann Arbor has invested heavily in public transit over the past decades. Those assets will be moved to the new authority. That’s unique compared to other communities, so the city is given special consideration, he said.

Brabec said she understood that Ann Arbor was contributing its assets, but she still didn’t see why other communities can’t opt out if a majority of voters in their jurisdiction vote against a funding ballot initiative.

Gryniewicz noted that the goal is to have real regional transit, and function as a region. When you start parceling out these decisions, then you don’t have a true regional system and communities aren’t working together. She noted that it’s virtually impossible that this provision will kick in, so it’s not a logistical concern.

Conan Smith, chair of the Washtenaw County board of commissioners, represents one of four county districts in Ann Arbor – District 10.

Conan Smith, who also represents Ann Arbor on the county board, said he looked at it as being parallel to a countywide structure. It would be possible for the county board to create a countywide transit authority and put a countywide transit millage on the ballot. The process that’s being pursued instead is more complicated, he noted, but it allows the local governing boards to voice their concerns and have input.

The county is the representative government that’s responsible for creating the new authority, Conan Smith said. The voters who would be voting on a funding mechanism will be voting as residents of the county, not of their individual township, village or city. It’s a regional decision, he said, not one based on a collection of decisions by local governing boards.

Regarding Ann Arbor’s special opt-out provision, Conan Smith said the asset issue is an important and challenging one. The transfer of more than $200 million in assets is a lot to give away, he said, and a lot of control to cede. It’s fair for the Ann Arbor community to be a bit trepidatious. But it’s not an automatic opt-out, he noted – it thrusts control back to city council, if the funding vote fails within the city of Ann Arbor. It’s the same question that all local governments are being asked during the 30-day opt-out period, he said. Ann Arbor has been driving this effort, so if its voters say no to a funding mechanism, the city council should be afforded the opportunity to look at the question again, he said.

Wes Prater disagreed. Ann Arbor is getting three bites at the apple, he said, while other communities that are being forced into this by the county are only getting one chance to opt out. It’s patently unfair to the townships, he said. And it’s not by the townships’ choice – it will be an action of the county board that puts the townships into this situation, he added. In order for this to be fair, everyone should have the same opportunity as Ann Arbor.

If a community doesn’t opt out within 30 days after the articles of incorporation are filed, there are only two other ways to opt out, Prater said, based on his understanding of Act 196. [.pdf of Act 196] One way is for two-thirds of the Act 196 authority board to approve a request to opt out. Prater said it’s not clear whether that request has to come from an individual township, or from the entire transit district to which the township belongs. The other way is a petition drive:

(b) Subject to subsection (6), a petition that bears the signatures of registered electors of the entity equal to at least 20% of the number of votes cast in the political subdivision or portion of a city, village, or township for all candidates for governor in the last general election in which a governor was elected and that requires the governing body of the entity by resolution to submit the question to its electors at the next general or special election is filed not less than 60 days before the election with the clerk of the entity presenting the question.

In either case, Prater said, it’s not easy. He said he supports public transit, but not the process that’s being used to achieve it.

Dan Smith asked for an opinion from the two attorneys – Jerry Lax, who’s been working on the Act 196 issue for AATA, and Curtis Hedger, the county’s corporation counsel. Is there a solid legal opinion that this Ann Arbor opt-out clause would hold up?

Lax clarified that the four-party agreement is a binding contract between the four entities – the cities of Ann Arbor and Ypsilanti, Washtenaw County, and the AATA. The contract sets the terms for transferring assets and assigning millages to the new authority. The ability of Ann Arbor to opt out is not a function of Act 196, Lax noted, but of the contractual agreement.

Dan Smith then noted that if it’s a contractual arrangement, it can be done for each municipality. Lax pointed out that each municipality would need consideration, and he didn’t know that it would be the same for other municipalities. ["Consideration" in this sense is a legal term, indicating that something of value has been promised in order to be part of the contract.] Smith replied that a dollar would be enough to take care of that.

From left: Jerry Lax, an attorney working for the AATA on the proposed broader transit authority, and Curtis Hedger, corporation counsel for Washtenaw County.

Lax said that someone could propose it, but the premise of this entire arrangement is to create an authority in which everyone is in it together.

Brabec wondered what would happen if Ann Arbor voters voted against a funding proposal. What would that look like for the rest of the county? What would happen to AATA’s assets?

Gryniewicz said the likely scenario is that AATA would remain in operation as it is now. The assets and Ann Arbor millage would remain with AATA, and not be transferred to the new authority.

Prater said he wanted to amend Section 9 so that it would apply to all communities, not just Ann Arbor. Lax noted that it’s a four-party agreement – an agreement among four parties, not all of the communities. Amending the agreement in that way “wouldn’t fly,” he said.

Prater said he respected Lax’s opinion, but it’s worthwhile to talk about these things. If Ann Arbor doesn’t agree to remove Section 9, he added, “then I’m coming at it.”

Yousef Rabhi pointed out that the county board also has the option to dissolve the Act 196 authority. He read from Section 12 (b) of the four-party agreement:

12. Termination of Agreement.
…
b. Discretionary Dissolution or Withdrawal Conditions. The Washtenaw County Board will also be allowed to dissolve the New TA if there is no Authority-wide voter approved funding passed before December 31, 2014, or voter approval passes Authority-wide but the same is defeated in the City of Ann Arbor. The City of Ann Arbor may also withdraw from the new TA Agreement using any of the methods authorized by MCL 124.458. In the event the City of Ann Arbor exercises any of the foregoing rights, the City of Ann Arbor may immediately terminate this agreement upon written notice to the other parties.

At this point, Conan Smith noted that the discussion was conflating two issues. If the Act 196 is created and a transit millage passes, Ann Arbor can’t get out of the Act 196 authority – they’re in it like everyone else, even if the majority of Ann Arbor voters don’t approve the new millage.

The four-party agreement addresses the transfer of assets, Conan Smith said. Under Section 9, Ann Arbor would have the opportunity to do three things if city voters don’t approve a millage: (1) withdraw from the four-party agreement; (2) veto any attempt by the AATA to terminate its agreement with the city; and (3) refuse to assign the existing millage to the new transit authority. All three of those options relate to existing assets.

Under this scenario, the new Act 196 authority could still collect a 0.5 mill tax – that would serve as its funding base. But the importance of this four-party agreement is that the 0.5 mill funding base would likely be insufficient to operate the services that are articulated in the proposed five-year plan, Conan Smith said.

Brabec wanted to know why the agreement is just between four parties – why not include all the communities? Gryniewicz replied that the agreement relates to existing assets, and involves the entities that have those assets, or that (in the county’s case) would need to file the articles of incorporation to create the Act 196 authority. Other communities don’t have existing transit assets to contribute at this point.

Opting-Out, Opting-In: Joining Later

Alicia Ping said her question is the flip side of the opting-out discussion. Most communities in her district – which covers parts of southern and southwest Washtenaw County – aren’t planning to participate, she said. But she was recently asked what the process would be if they wanted to join later.

Gryniewicz referred to the relevant section of Act 196:

124.457 Membership after formation of public authority; resolution; approval, execution, filing, and publication of amendment to articles.
Sec. 7. A political subdivision or a portion of a city, village, or township bounded by lines described in section 4 may become a member of a public authority after the public authority’s formation under this act upon resolution adopted by a majority vote of the members elected to and serving on the legislative body of the political subdivision requesting membership for all or a portion of the political subdivision and upon resolution adopted by a 2/3 vote of the members serving on the board of the public authority approving an amendment to the articles of incorporation of the public authority adding all or a portion of the political subdivision. The amendment to the articles of incorporation shall be executed by the clerk of the political subdivision, all or a part of which is being added and shall be filed and published in the same manner as the original articles of incorporation.

So it’s a simple Act 196 board action, Gryniewicz said. A request to join would have to be negotiated and receive a two-thirds majority of board votes to join at any time.

Ping said she had planned to vote against the four-party agreement and articles of incorporation, but now she thinks it might be good to have the Act 196 authority in place – in case municipalities in her district decide they’d like to join in the future.

She asked Gryniewicz eventually to provide a summary in layman’s terms that describes how entities might opt-in or opt-out. Gryniewicz indicated she would do that.

Region vs. Municipality

Dan Smith argued that the way that voters would be asked to approve a funding mechanism was essentially doing an end-around the Headlee Amendment. Headlee was designed to let voters decide whether to be taxed, he noted. By allowing each municipality’s governing board to decide whether to opt-in or opt-out, it’s taking the issue out of the voters’ hands.

Conan Smith disagreed, saying that voters are still deciding – by voting on whether to approve the millage or other funding mechanism. Dan Smith countered that Northfield Township and voters in other small communities are being lumped in with Ann Arbor. The Headlee Amendment specifically tried to prevent that, he said.

County commissioner Wes Prater directs his question to Michael Ford, CEO of the Ann Arbor Transportation Authority.

Leah Gunn said other communities would be paying only 0.5 mill. Ann Arbor residents would also be paying that amount, plus the 2 mills they currently pay for public transit. The burden is really on Ann Arbor taxpayers, she said, who are also handing over the assets of AATA.

Conan Smith said he wanted to reiterate that voters will be acting as one region, not as Ann Arbor voters or Northfield Township voters. He pointed out that if the funding question went to the entire county, Northfield Township would be lumped in with Ann Arbor in the same way. With this process, each municipality gets the option not to participate. That’s highly unusual, he said, and is actually the reverse of what Dan Smith had described.

Dan Smith responded, stating again that there’s no way for Northfield Township voters to avoid being part of Act 196 if the township board decides to join. That’s the same for any community, he said. And if they’re part of Act 196, their votes on a funding proposal will be lumped in with Ann Arbor voters.

Conan Smith argued that a Northfield Township resident’s vote counts exactly the same as an Ann Arbor resident’s vote. The only way to get taxed is by a vote of the people, he said, not by the local governing board. This isn’t a Headlee workaround. It’s simply a vote by people in a common region, asking if they want to tax themselves for public transportation services, he said.

Wes Prater wondered if we’re all one people, why is Ann Arbor getting an extra opportunity to opt out? And don’t tell him it’s because of Ann Arbor’s assets, he said. The AATA has a roughly $30 million budget, and only about $9 million comes from the Ann Arbor millage, he said. A lot of the rest is from federal funding, Prater said, which comes from his federal tax dollars. Everything needs to be put on the table if these issues are going to be resolved, he said.

Communication Issues

Wes Prater pointed to Section 2 of the four-party agreement, which refers to AATA publishing “details of the service and funding plan in newspaper(s) of general circulation…” The entire section states:

2. Authority Formation. The County, upon the AATA’s written request, will create a new Act 196 authority by approving, signing and filing articles of incorporation (“Articles”) in substantially the form attached as Exhibit A. Prior to the submission of any request by AATA to County to initiate formation of a public authority all of the following must occur: (i) AATA will publish details of the service and funding plan in newspaper(s) of general circulation in the Washtenaw County, (ii) the Articles of Incorporation in the form presented for approval by the County shall be separately adopted by Ann Arbor and Ypsilanti by affirmative vote of the respective governing bodies. No transfer of assets to the New TA from AATA shall occur unless and until all contingencies stated in Section 4 of this Agreement and any and all conditions which may be established in the Articles of Incorporation have been met.

“I don’t think that’s been done yet,” Prater said, referring to publication of the service and funding plan.

Michael Ford replied that the plan’s details are still being finalized. When that happens, the details will be published in a wide range of publications, he said, including Patch.com, AnnArbor.com, The Ann Arbor Chronicle, and the Heritage papers. Responding to a follow-up query from Prater, Ford said the notifications in local publications will happen prior to a request to the county to file the articles of incorporation. “That’s the answer I wanted,” Prater said.

Felicia Brabec said she’s talked with the Pittsfield Township supervisor, Mandy Grewal. The township also has a five-year transit plan, Brabec noted, and it doesn’t match the proposed Act 196 plan. What kind of communication is there between the Act 196 organizers and Pittsfield Township? Does the Act 196 plan address the township’s needs? she wondered.

Ford replied that they’re working to incorporate more of Pittsfield’s plan into the Act 196 plan, and he’s confident that the final Act 196 plan will address the township’s transit needs.

Prater asked if details of the service plan would be published in local newspapers prior to the county board’s July 11 meeting. Yousef Rabhi replied that the publication needed to happen before the articles of incorporation are filed, not necessarily before the board votes on the articles and the four-party agreement. Ford indicated that Rabhi was correct.

Prater didn’t think that’s what the four-party agreement stipulated, and accused Ford of “making up rules as you go along.”

Dan Smith said it depends on how you interpret the phrase “initiate formulation of a public authority.” Very broadly interpreted, it could mean the process of voting on the four-party agreement, he said. More narrowly, it could mean filing the articles of incorporation.

Conan Smith contended that the county won’t take formal action until the board sees a funding and service plan. As a board, they can just make that determination and hold themselves accountable to it, he said.

In response to a question from Rabhi, Ford said the five-year plan will likely be finalized by late July or early August.

Conan Smith stated that since the county board will have a resolution to approve the four-party agreement, they can add a resolved clause stating that the county won’t file the articles of incorporation until the five-year plan has been publicized.

Prater asked what else would be included in the resolution. Smith said he didn’t know yet, but they can include whatever contingencies they want.

Rolland Sizemore Jr. said he wanted to see the resolution well before the July 11 meeting, “or we’re gonna have a real good time at ways & means.” [Sizemore is chair of the ways & means committee, where resolutions get an initial vote before being forwarded to the regular board meeting for final action.]

Funding Issues

In addition to the funding questions reported earlier in this article, several other funding-related issues were discussed during the working session.

Funding Issues: Municipal Service Charge

By way of background, the Ann Arbor and Ypsilanti city councils amended the four-party agreement so that the city of Ann Arbor will continue to collect a municipal service charge, which is intended to reimburse the city for handling the collection and transmission of money levied for Ann Arbor’s transportation millage. In Ann Arbor, that tax is 2.5 mills as provided by the Ann Arbor city charter, but it has been reduced by the Headlee Amendment to around 2 mills. In Ypsilanti, the charter transit millage is .9789. The Ypsilanti city council decided not to collect a municipal service charge, but rather to forward those funds to the new transit authority.

Translated into dollars, the service charge would be roughly $90,000 for Ann Arbor – that’s the amount that Ann Arbor will now keep. For Ypsilanti, the amount would be about $3,000 – it would return that amount to the transit authority.

At the June 14 working session, Rolland Sizemore Jr. asked about the 1% municipal service charge. Michael Ford explained that Ypsilanti didn’t want to charge the transit authority, while Ann Arbor does. Sizemore asked whether Ypsilanti Township would have to pay the charge. No, Ford said. Sizemore said he didn’t understand why one community had to pay it, while others didn’t. [The municipal service charge in question is a charge that the cities of Ann Arbor and Ypsilanti can apply to their existing millages. Ypsilanti Township, in contrast, does not currently levy a transit millage.]

Funding Issues: Millage Renewal

Yousef Rabhi asked what happens if an initial transit millage is approved, but voters don’t renew it after five years. Michael Ford replied that existing services in Ann Arbor and Ypsilanti would be maintained, as outlined in the four-party agreement. Beyond that, it’s not clear what would happen, he said, though clearly services would be reduced, compared to the levels in the first five years.

Rabhi wondered if Section 12(c) would still apply if a millage isn’t renewed. That section states:

c. Effective Date, Continuity of Services. No such termination or dissolution shall be effective unless and until provision for continued transportation services to Ann Arbor and Ypsilanti is in place, operational and all liabilities on the New TA have been satisfied.

Sarah Pressprich Gryniewicz said that’s why the Ann Arbor and Ypsilanti millages are so important – those millages guarantee that services in Ann Arbor and Ypsilanti will be maintained.

If that’s the case, Rabhi noted, then it’s likely that transit service outside of the Ann Arbor/Ypsilanti area would be cut back. But the Act 196 board would still include members from those outside areas. Yes, Gryniewicz said. That would be challenging. One option might be to try to put the millage on the ballot again, she said.

Leah Gunn observed that Ann Arbor had been very clever in the 1970s in making its transit millage a charter millage that doesn’t require renewal. It’s permanent, she said.

Funding Issues: Other Resources

Felicia Brabec wondered where funding will come from for costs that aren’t covered by a transit millage. Michael Ford said they are continuing to refine the service plan, but for the first five years it would likely be covered by the millage. Beyond that, they’d look for state and federal funding sources.

Funding Issues: Legal Challenges

Wes Prater wanted to know if the Act 196 tax levy had ever been challenged in court. Curtis Hedger, the county’s corporation counsel, wasn’t aware of any legal challenges, but he said he’d look into it. “Is there something I should know about?” Hedger asked, eliciting laughs.

Prater said he was also concerned about lingering responsibility for the county – that’s something else for legal counsel to look into. He noted that there’s a 60-day period after the articles of incorporation are filed, during which legal challenges to the Act 196 formation can be made.

Jerry Lax, the attorney representing AATA in this effort, confirmed that this is part of Act 196. The relevant section states (emphasis added):

124.455 Articles of incorporation; endorsement as evidence of adoption; publication; filing; operative public authority; effective date of articles; validity of incorporation conclusively presumed; exception.
…
(2) The articles of incorporation shall be published by the person or persons designated in the articles at least once in a newspaper designated in the articles and circulated within the area proposed to be served by the public authority. One printed copy of the articles of incorporation shall be filed with the secretary of state, the clerk of each county to be served by the public authority, and the director of the state transportation department by the person designated to do so by the articles. The public authority shall become operative and the articles of incorporation effective at the time provided in the articles of incorporation. The validity of the incorporation shall be conclusively presumed unless questioned in a court of competent jurisdiction within 60 days after the publication of the articles of incorporation.

Articles of Incorporation

Yousef Rabhi noted that the articles of incorporation allow for the new authority to provide services to areas outside of the authority’s boundaries. How does that work now?

Michael Ford gave examples of express services that AATA provides to Chelsea and Canton. He said AATA is working to get those communities to contribute to the cost.

Rabhi said he feels that efforts like the Canton express bus and the WALLY north/south commuter rail are subsidizing people who live outside of Washtenaw County. It’s providing incentives for people who aren’t living in this county. He hoped communities would be required to bring money to the table in order to get transit service.

Amendments

Dan Smith was the only commissioner who proposed formal amendments to be discussed at the June 14 working session. [Added language is in bold italics; deleted language is indicated with strike-through.]

After all the proposed amendments were discussed, the group took a straw poll to gauge support for each item. By that time, only six commissioners were in attendance: Dan Smith, Conan Smith, Felicia Brabec, Wes Prater, Alicia Ping and Yousef Rabhi. The results of the straw polls are indicated after each item.

Four-Party Agreement Amendments: Notification

This amendment aims at being more specific in how details of the service and funding plan would be communicated.

2. Authority Formation.
The County, upon the AATA’s written request, will create a new Act 196 authority by approving, signing and filing articles of incorporation (“Articles”) in substantially the form attached as Exhibit A. Prior to the submission of any request by AATA to County to initiate formation of a public authority all of the following must occur: (i) AATA will publish details of the service and funding plan as shown in attached Exhibit B in newspaper(s) of general circulation in Washtenaw County, including the paper of record for each political subdivision, (ii) the Articles of Incorporation in the form presented for approval by the County shall be separately adopted by Ann Arbor and Ypsilanti by affirmative vote of the respective governing bodies. No transfer of assets to the New TA from AATA shall occur unless and until all contingencies stated in Section 4 of this Agreement and any and all conditions which may be established in the Articles of Incorporation have been met.

a. Upon creating the new Act 196 authority, the County shall send notice of such by registered mail to Clerk and the personal address of each individual board member for all political subdivisions in the county. Such notice, as shown in Exhibit C, shall detail the “opt out” mechanism and deadline.

Dan Smith said about a dozen publications would be included in Exhibit B. Conan Smith asked if this proposed amendment could be handled in an agreement directly with the AATA, as a memorandum of understanding, rather than as an amendment to the four-party agreement. Dan Smith said he didn’t care how it was handled – he just wanted it to be done. Michael Ford agreed that the communication would be handled as Dan Smith proposed.

Dan Smith also wanted to make sure the communication comes from the county. Curtis Hedger, the county’s corporation counsel, noted that Act 196 specifies that the authority itself must communicate the information. Dan Smith said his main concern is that the communication be sent to individual members of a governing body, not just to the town hall or city hall as an entity.

Yousef Rabhi suggested that the county could send out a letter too, in addition to communication from the new authority. He said this could be laid out in the board’s resolution regarding the four-party agreement.

Straw poll: Commissioners agreed that this action would be incorporated into a board resolution regarding the four-party agreement.

Four-Party Agreement Amendments: Ballot Language

Dan Smith wanted to include in the four-party agreement the ballot language that would be used to seek funding, and stated that the same 100 clear words would be used countywide. [A ballot proposal is limited to 100 words.] He said he wanted that to happen sooner rather than later, because he thinks it will be difficult to come up with 100 words that will be clear while providing all the necessary information.

Straw poll: This was a suggestion – not a specific amendment at this point.

Four-Party Agreement Amendments: Automatic Termination

Dan Smith said this proposed amendment would get the county out of the middle of the agreement. Unless one-third of all communities participate, it wouldn’t be considered a countywide transit entity, he said.

12. Termination of Agreement.
a. Automatic Termination. This Agreement will terminate automatically if (i) Closing does not occur before December 31, 2015, or if (ii) after incorporation of the Authority and the expiration of the statutory withdrawal period from the public authority, the City of Ann Arbor is the only participating political subdivision in Washtenaw County in the New TA, or if (iii) after incorporation of the Authority and the expiration of the statutory withdrawal period from the public authority, less than one third (10 of 28) of the political subdivisions in Washtenaw County are participating. It is recognized by all the parties that if any either of these conditions occur the stated objectives of Act 196 and this Agreement will not have been met and the Agreement shall be null and void.

b. Discretionary Dissolution or Withdrawal Conditions. The Washtenaw County Board will also be allowed to dissolve the New TA if there is no Authority-wide voter approved funding passed before December 31, 2014, or voter approval passes Authority-wide but the same is defeated in any participating political subdivision the City of Ann Arbor. The City of Ann Arbor may also withdraw from the new TA Agreement using any of the methods authorized by MCL 124.458. In the event the City of Ann Arbor exercises any of the foregoing rights, the City of Ann Arbor may immediately terminate this agreement upon written notice to the other parties.

Conan Smith said he didn’t like the amendment. The idea of a countywide entity is aspirational, he said. And the fact is that the Act 196 authority is an agreement among units of government, whether it’s two or 20 – the statutory language is the same.

Dan Smith argued that if fewer than a third of governmental units in the county want to create an Act 196, they could do it separately. Conan Smith said he wouldn’t want to see this long process start over again. He’s tired of reading about it in the paper, and is ready to vote on it.

Alicia Ping said she thought the county was out of it anyway, after the articles of incorporation are filed. Jerry Lax, the attorney working on this project, said that the county would still technically be a “member” of the Act 196 authority. But the authority’s articles of incorporation specify that its governing body would be formed with other local units of government, not the county.

Dan Smith pointed out that the county is creating the authority – they’re causing it to come into existence. The county is filing the articles of incorporation. He said his amendment is stating that if fewer than a third of local units in the county want to participate, then they can do it on their own and create their own authority, and the county’s involvement would end.

Straw poll on automatic termination: This item drew support only from Dan Smith. It was opposed by Felicia Brabec, Conan Smith and Yousef Rabhi. Both Wes Prater and Alicia Ping indicated they didn’t have an opinion on it at this point.

Straw poll on discretionary dissolution or withdraw: This was supported by Dan Smith, Wes Prater and Alicia Ping. Felicia Brabec indicated she hadn’t formed an opinion yet. It was opposed by Conan Smith and Yousef Rabhi.

Articles of Incorporation Amendments: Director Removal

Dan Smith indicated that the intent of this amendment is to leave the removal of directors in the hands of the local units.

SECTION 4.04: RESIGNATIONS, VACANCIES, AND REMOVALS
A director may resign at any time and such resignation shall become effective upon the Authority’s receipt of a written resignation notice, unless the notice specifies a later date. The Authority Board may, upon a 2/3rds vote of its other directors, remove a director prior to the expiration of that director’s term of office for persistent failure to perform the duties of that director’s office, gross misconduct in office, other reasons as specified in the bylaws, conviction of a felony involving extortion, or financial misconduct. A director may be removed from office with or without cause at any time by the same local body or process that appointed the director.

Conan Smith said he wanted to hear from AATA about this amendment. If a local unit appoints a public transit “hater” to the authority board, he said, then there might be value in allowing a two-thirds majority of the board to remove that person.

Yousef Rabhi is chair of the county board's working sessions.

Sarah Pressprich Gryniewicz noted that if someone is really inappropriate, the idea was to have a reasonable process in place to deal with that.

Wes Prater said he’d never seen any other articles of incorporation like this. There’s absolutely no oversight of this Act 196 board, he said. He’d never seen any other body that had the authority to turn out one of its members. He also pointed out that there are no elected officials on the board – only appointees. A board like this can get into “big, big trouble,” he said.

Jerry Lax noted that the last sentence of this section does allow for elected officials – the groups that appoint members to the Act 196 authority board – to remove a director with or without cause. He suggested that this might address Prater’s concern about oversight.

Prater wondered why this Act 196 authority just didn’t use the AATA articles of incorporation as a model. Members of the districts that appoint the Act 196 board aren’t held accountable by the people they represent either, he said.

Yousef Rabhi said his understanding is that appointments will work in a similar manner to appointments of the AATA board. [AATA board members are nominated by the mayor of Ann Arbor and confirmed by the full city council.] For the Act 196 board, appointments would be made from local districts, whose members are elected officials, Rabhi said.

Dan Smith said his intent is to put the appointments squarely in the hands of elected officials, not the Act 196 board. Rabhi replied that there’s a clause stipulating that the board can’t remove members without cause. Smith countered that there are catch-all phrases defining cause – “persistent failure to perform the duties of that director’s office, gross misconduct in office, other reasons as specified in the bylaws” – that could be broadly interpreted.

Straw poll: Yousef Rabhi was the only person opposed to this. It drew support from Dan Smith, Conan Smith, Wes Prater, Alicia Ping and Felicia Brabec.

Articles of Incorporation Amendments: Qualifications

Dan Smith said he didn’t like this section. He wanted to ensure that the people appointed to the Act 196 board are residents of the districts that they were appointed to represent.

SECTION 4.06: BOARD QUALIFICATIONS
All Authority directors shall be residents of a member political subdivision for the appointing local body Washtenaw County, at least eighteen years old, and shall be representative of public transportation interests as they exist in the County and other qualifications as detailed in the Bylaws of the Authority. Notwithstanding the above, any of these requirements may be waived by a governing body authorized to appoint directors under section 4.01 by resolution concurred in by not less than 2/3rds of that governing body’s directors. Directors may not hold office in violation of Michigan’s Incompatible Offices Act, MCLA 15.181-.185, or other similar law.

Rolland Sizemore Jr. asked how many people on the AATA board are residents of Washtenaw County. Michael Ford, AATA’s CEO, wasn’t sure. From the audience, Sabra Briere – an Ann Arbor city councilmember – reported that two AATA board members lived outside of Ann Arbor, and one of those also lived outside of Washtenaw County. She noted that there’s no current residency requirement for the AATA board, and that the entity provides services beyond the city’s boundaries.

Sizemore indicated that he would want members of the Act 196 board to be county residents, at least. Briere observed that some people are appointed to the AATA board because of their knowledge of transit issues, even if they aren’t local residents. [Eli Cooper, for example, is a recent AATA board appointee who does not live in Washtenaw County. He is the city of Ann Arbor's transportation program manager.]

Conan Smith didn’t like restricting appointees to Washtenaw County residents. He said his inclination is to go for the best possible talent – people with integrity and skills. “Where they happen to sleep at night is less of a concern for me,” he said. Perhaps a major business owner or taxpayer would be useful to have on the board, for example. The amendment would create an artificial boundary, he said. Certainly the districts can appoint whoever they want, but he wasn’t sure why the articles of incorporation need to be restrictive.

Sizemore asked Conan Smith how he felt about hiring a company from England to do the consulting work for this transit effort. [Sizemore was referring to Steer Davies Gleave (SDG), a transportation consultant based in London with offices worldwide, that has been contracted by AATA to help with this transit effort.]

Conan Smith said he loved that decision. Sometimes you have to look outside the region for necessary expertise, he said. His mindset is that he wants the best – that’s being a good steward, he said.

Sizemore said that reflected that he and Conan Smith have different values. Sizemore’s priority is taking care of people in this community and this country, he said, particularly since many people are unemployed. He couldn’t believe that no other company in the U.S. had the expertise to do the consulting work.

Dan Smith said he agreed with some of Conan Smith’s sentiments. But in this case, a new government unit with taxing authority is being created. That’s a big difference for him, and he believes that the people on the Act 196 board should be residents of the communities they’re supposed to represent, Dan Smith said.

Prater pointed out that when Conan Smith used the term “best,” it’s very subjective.

Straw poll: This amendment was opposed only by Conan Smith. Felicia Brabec was undecided, saying she could see both sides. Indicating support were Yousef Rabhi, Dan Smith, Alicia Ping and Wes Prater.

Articles of Incorporation Amendments: Standing

This amendment would create a new section in the articles of incorporation. Dan Smith indicated that it was designed to avoid a common legal trick, in which standing – the right to file a lawsuit – is the first thing that’s challenged. He said he hopes it never comes up, but it’s important to be clear.

SECTION 6.03: STANDING
Any member political subdivision shall be deemed to have proper and sufficient standing to file suit against the Authority or otherwise contest the Authority’s actions.

Alicia Ping pointed out that there are some communities in Washtenaw County that are known to be “less reasonable” than others. Perhaps it would be better not to make it easier for them to sue, she said.

Dan Smith said he was just trying to remove that as a question. Curtis Hedger, the county’s corporation counsel, indicated that the courts would still have authority to decide the issue of standing, regardless of what the articles of incorporation state.

Straw poll: This amendment drew support only from Dan Smith and Wes Prater.

Articles of Incorporation Amendments: Tax Levy

Another new section that Dan Smith proposed would stipulate that increases in a tax could only be on the ballot in November of even-numbered years. This would ensure that such a ballot proposal would be voted on by the maximum number of people, he said.

SECTION 7.03: TAX LEVY
Any question to the electors of the Authority that will result in an increase in revenue for the Authority shall be placed on the November ballot of an even numbered year.

Conan Smith said he had two objections. The first was philosophical – the idea that a larger election is a better election “doesn’t fly with me.” In a presidential election year, for example, turnout is higher but there’s a significant drop-off in votes for ballot proposals. For elections with lower turnouts, he said, you might get more informed voters. So restricting the timing of ballot proposals based on highest turnout might not be the best way to go, he said.

His other objection related to the tight timeline that this effort is facing. This amendment leaves one opportunity for the new authority to put a funding proposal on the ballot. [The four-party agreement stipulates that if a funding mechanism isn't approved by December of 2014, the authority would be dissolved.]

Conan Smith cited a “powerful” example of a situation in which an initial millage vote failed – to fund county parks and recreation. The second attempt at a parks and recreation millage was successful, he said, and it’s been renewed ever since. So he’s disinclined to add that restriction.

Straw poll: This amendment drew support from Dan Smith and Wes Prater. Alicia Ping indicated that she didn’t yet have an opinion on it. Opposed were Conan Smith, Yousef Rabhi and Felicia Brabec.

Articles of Incorporation Amendments: Handling Amendments

Dan Smith said this amendment removes the Act 196 board’s authority to amend the articles of incorporation, and gives that authority back to the participating governmental units.

SECTION 10.01: AMENDMENTS
These Articles of Incorporation may be amended only upon approval of each member political subdivision a two-thirds (2/3) vote of the directors appointed and serving on the Authority. All amendments must comply with applicable state and federal laws. All amendments to the Articles of Incorporation become effective only after they are executed jointly by the Chairperson and by the Secretary of the Board of the Authority, filed with the recording officer of the Washtenaw County Clerk, and filed and published in the same manner as the original Articles of Incorporation.

Yousef Rabhi agreed that the Act 196 board shouldn’t have the power to amend the articles of incorporation. But he believed that power should rest with the county board, since the county will be filing the articles of incorporation with the state.

Dan Smith replied that the county would be out of the process at that point. Wes Prater added that the entities that are “paying the bills” should have the power to make changes.

Straw poll: Supporting this amendment were Dan Smith, Wes Prater and Conan Smith. Yousef Rabhi and Felicia Brabec offered conditional support, if it were rewritten to give only the county the ability to make amendments. Alicia Ping opposed it.

Closing Remarks

Wes Prater described Dan Smith’s amendments as being “absolutely necessary” to ensure proper oversight. If the changes aren’t made, he said, there will come a time when the board will regret it: “Mark my words.”

Conan Smith said he’d like to know what the other members of the four-party agreement think about these amendments. He wondered if AATA representatives could communicate with members of the city councils for Ann Arbor and Ypsilanti, and report back. He told Michael Ford, AATA’s CEO, that Ford could call or email him and he would relay that feedback to the rest of the county board.

Ford said it would not be a problem to contact the other parties, but he wondered what the county board was envisioning would happen at its July 11 meeting.

Yousef Rabhi said the intent of this working session was to give an indication of the amendments that might be brought forward at the July meeting, as well as an indication of how the majority of board members might be inclined to vote. The hope was to gauge the board’s sentiment on these issues, Rabhi said. However, he didn’t know if that was possible at this point.

Conan Smith joked that he could sense Ford’s pain. Ford replied that he just wanted to leave the meeting knowing what the board wanted him to do.

Smith said there were a couple of weighty issues that Dan Smith had raised, and it would be good if the other parties would also recognize the importance of those issues. Hopefully, quick amendments could be made by the other parties, if necessary. Otherwise, Smith said, the four-party agreement and articles of incorporation would be considered by the county board in July unchanged, and they’d see if there are enough votes to pass.

Next Steps

On Monday morning, June 18, board chair Conan Smith sent a follow-up email to all county commissioners. He reported that he had met on Friday with Michael Ford and Sarah Pressprich Gryniewicz to debrief about the June 14 working session. Based on that discussion, they agreed to meet with the committee that has helped develop these Act 196 documents to discuss three possible amendments.

Members of the committee are: Sabra Briere and Christopher Taylor (Ann Arbor city council); Paul Schreiber and Pete Murdock (Ypsilanti mayor/city council); Conan Smith and Alicia Ping (Washtenaw County board); Jesse Bernstein and Charles Griffith (AATA board); David Read and David Phillips (U196 board).

The three amendments that Smith said the committee will discuss relate to: (1) in the four-party agreement, Section 12(b), should the Act 196 authority be dissolved if a vote on funding fails in any of the jurisdictions? (2) in the articles of incorporation, Section 4.04, what restrictions should be placed on who can serve on the board? and (3) in the articles of incorporation, Section 10.1, who should have the power to amend the articles of incorporation?

Smith stated that some of the proposed amendments discussed at the working session didn’t require follow-up action because they either (1) don’t appear to have sufficient board support to pass, or (2) don’t have support of the four parties. In the latter case, he stated that the county commissioners will need to decide themselves if the issues are serious enough to prevent them from approving the four-party agreement.

Smith’s email indicated that the Act 196 committee meeting would occur on Monday, June 18, and that he would send an update to commissioners after the meeting.

Also on Monday morning, Smith sent an email to committee members, outlining his hope for their discussion later that day:

From: Conan Smith
Sent: Monday, June 18, 2012 4:57 AM
Subject: Re: Transit Articles committee: MEETING MONDAY at 4pm

Hi all,

The County’s name is going on these incorporation documents and the body has a duty to ensure that something created this way has the fairest governing structure possible. Moreover, at the finance committee we discussed the potential of using the governors proposed vehicle registration fee as a revenue stream. If that passes it will be a tool of the County. It behooves us to ensure the Board of Commissioners is comfortable with the governing structure so that if that ask comes down the road we don’t face a situation like we did with road commission funding last year. Let’s be sure not to dismiss any of these requests from the BOC out of hand.

I think this proposal about who removes board members is pretty serious and merits discussion. No community should want the risk of having its representative dismissed by the other participants – that should be a decision by the local government that appoints that person to represent them.

Politically thinking, it might be good for us to create some protection equity in the documents for those communities that may be taxed despite their residents voting against a funding proposal. The way we are crafting the Authority circumvents the citizen protections built in to Act 196, so allowing the County to play that role might create a small measure of comfort for those communities that we want to be in the Auhority but who also face less supportive electorates. I say let the people blame the BOC for taxing them and provide the locals some political cover.

Sarah has done an excellent job of paring down the point to three significant issues. I don’t think it will be burdensome to give them their due consideration.

Conan

Smith also included a summary and analysis of the working session that Gryniewicz had compiled. [.pdf of working session summary/analysis]

The outcome of the committee meeting was a consensus that the three other parties – the city of Ann Arbor, the city of Ypsilanti and the AATA – would not consider any amendments to the transit documents at this time, before a vote by the county board of commissioners.

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