From left: Raman Patel, Washtenaw County’s equalization director, greets Leila Bauer, chief deputy treasurer who is retiring after 41 years with the county. (Photos by the writer.)

After several years of reporting declining tax revenues, Raman Patel – the county’s equalization director – gave commissioners a report showing stronger signs of economic recovery, reflected in a 1.68% increase in taxable value. That translates into an estimated $2.327 million more in property tax revenues for county government than had been budgeted for 2013. [.pdf of Patel's presentation]

Also related to the budget, commissioners gave initial approval to a four-year budget planning cycle, a change from the current two-year cycle that’s been in place since 1994. Voting against the item was Ronnie Peterson (D-District 6). He and other commissioners expressed a range of concerns, including the fact that commissioners are elected every two years and therefore might not be able to contribute adequately to setting budget priorities. Although Peterson remained unconvinced, several commissioners observed that the annual budget affirmation process acted as a fail-safe, allowing the board to make adjustments based on changing priorities.

Another item that could have a dramatic impact on the county’s budget was only briefly mentioned: A proposal to issue up to $350 million in bonds to fully fund the county’s pension and retiree healthcare plans. It would be by far the largest bond issuance in the county’s history. County administrator Verna McDaniel plans to make a formal presentation about the proposal at the board’s May 2 working session. She distributed materials on April 17 to help commissioners prep for that meeting. [.pdf of bond proposal handout]

Commissioners also took a final vote officially to dissolve a countywide public transit authority known as the Washtenaw Ride. There was no discussion, but Conan Smith (D-District 9) – a vocal advocate for public transit – cast the sole vote against the resolution.

Other action handled by the board included a federal weatherization grant, a public hearing for the Urban County strategic plan, and resolutions honoring county employees and residents. Among them was Leila Bauer, the county’s chief deputy treasurer who is retiring after 41 years with the county. She received a standing ovation from the board.

County Bonding Proposal

County administrator Verna McDaniel passed out information to commissioners on April 17 regarding a major bonding proposal. She plans to make a formal presentation at the board’s May 2 working session. [.pdf of bond proposal handout]

The proposal is for a 25-year bond issue of up to $350 million to fully fund the county’s pension and retiree healthcare plans – the Washtenaw County Employees’ Retirement System (WCERS) and Voluntary Employees Beneficiary Association (VEBA).

Washtenaw County administrator Verna McDaniel.

Although commissioners were alerted to the possibility of this bonding proposal earlier in the year, the communication from McDaniel was the first time it had been formally raised at a public board meeting. She told commissioners that the material she was providing outlined six key points, including the purpose and objectives of bonding, and cost comparisons between estimated payments of debt service compared to the county’s annual required contribution to its pension and retiree healthcare funds.

She also provided a summary of relevant provisions in Public Act 329 of 2012, which the Michigan legislature passed in October of 2012. [.pdf of Public Act 329] The law enables municipalities to issue bonds to cover unfunded accrued pension and retiree healthcare liabilities, but has a sunset of Dec. 31, 2014.

The material distributed by McDaniel also lists benefits and risks of bonding, and a comparison of budgets based on bonding or not bonding.

Benefits cited by McDaniel include:

• Easier long-term budgeting provided by having predictable bond payments, rather than fluctuating amounts each year to cover pension (WCERS) and retiree healthcare (VEBA) costs. For example, the current combined WCERS and VEBA contributions in 2014 are estimated at $23.5 million. A bond payment is estimated at $18.6 million. [These annual lower payments don't take into account the higher amounts paid in interest over the life of the bonds, however. Details on the interest payments were not provided.]
• The complete elimination of the WCERS and VEBA obligations after 25 years.
• Proceeds from the bond, held in an intermediate trust, could be used to call the bonds after nine years, if some future event eliminates the WCERS and VEBA liabilities.
• Current rates for issuing bonds are at an historic low. Average debt service is estimated at 4%.

McDaniel also listed a few risks of bonding, including the size of the debt load, the uncertainty of market conditions, and the impact of defaulting, which would have consequences for the county’s credit rating and ability to issue bonds for other purposes.

The timetable proposes an initial board vote to approve the bond issuance on May 15 at its ways & means committee meeting, with a final vote on June 5. The board would vote on July 10 to approve the final bonding amount. During the summer months of June through August, the board typically holds only one regular board meeting each month.

McDaniel is also recommending that the county set up an intermediate trust to receive net proceeds from the sale of the bonds, and to invest and distribute the assets.

“This is an important and critical issue,” she said, “and we wanted to make sure you had as much information as possible in advance.”

Based on the county’s most recent comprehensive annual financial report (CAFR), Washtenaw County’s total outstanding debt at the end of 2012 was $60.877 million, up from $35.67 million in 2003. In 2012, the county paid $8.77 million in principal on its debt, $2.69 million in interest and other charges, and $166,892 related to bond issuance costs. [.pdf of debt data from 2012 CAFR]

County Bonding Proposal: Board Discussion

Ronnie Peterson (D-District 5) confirmed with McDaniel that the county’s legal counsel and bond counsel, John Axe, would attend the May 2 working session. [Axe has been advising the county on this proposal, and likely would be paid based on a percentage of the bonded amount.]

Peterson wondered if this proposal would impact the county’s current bonding capacity and ability to borrow for other needs.

McDaniel replied that this amount would be “well within our capacity.” The rating agencies allow the county to bond up to 10% of the county’s taxable value. According to the equalization report that was presented earlier in the meeting, the county’s taxable value is $14.416 billion.

Peterson asked McDaniel to provide more information at the May 2 working session about the county’s current bonding ability, as well as the impact that a $350 million bond issuance would have on the county’s ability to bond beyond that.

From left: Washtenaw County commissioners Dan Smith (R-District 2) and Kent Martinez-Kratz (D-District 1) review materials prior to the start of the county board’s April 17 meeting.

Dan Smith (R-District 2) said he was very interested in the impact that this bond would have on other communities in Washtenaw County. Rating agencies look at the total debt throughout the county, he noted. Communities have different levels of debt and taxable values, and he wanted to know how that would be affected regarding the “debt overhang.” [Debt overhang refers to the point at which debt is so great that an entity is unable to take on additional debt.]

The bond issuance that’s being proposed would add a substantial amount of debt on a per-capita basis, D. Smith said. Based on the data from the current equalization report and on the county’s current debt as provided in the most recent comprehensive annual financial report (CAFR), the county’s total debt – for all municipalities – is 9.2% of the county’s total taxable value.

Kent Martinez-Kratz (D-District 1) confirmed with McDaniel that the assumptions built in to her calculations factor in the new labor contracts, which eliminated defined benefit plans for new employees hired after Jan. 1, 2014. [See Chronicle coverage: "New Labor Contracts Key to County Budget"] He also highlighted a chart that showed “savings” that the county would see from this bond issuance, and indicated that he’d like more information about how those amounts are calculated. [.pdf of budget projection charts]

Yousef Rabhi (D-District 8) encouraged commissioners to email their questions to the administration prior to May 2, so that the financial staff would have adequate time to prepare responses. “It’s a big decision,” he said, “and we want to make sure we’re walking into this with a body of supporting information, both from professionals and from others in the community, to make sure we’re making the right decision on this.”

Rabhi said he had asked the administration to provide this material prior to the May 2 working session, so that commissioners would have time to review it and ask questions.

Equalization Report

Raman Patel, the county’s equalization director, made his annual presentation to the board on April 17. He began by noting that he has worked on 42 of the 55 equalization reports that the county has produced over the past few decades. [.pdf of Patel's presentation] [.pdf of equalization report]

Equalized (assessed) value is used to calculate taxable value, which determines tax revenues for the county as well as its various municipalities and other entities that rely on taxpayer dollars, including schools, libraries and the Ann Arbor Transportation Authority, among others.

After several years of reporting declining tax revenues, this year’s report showed stronger signs of economic recovery, reflected in a 1.68% increase in taxable value.

For 2013, taxable value in the county increased 1.68% to $14.2 billion. That’s an improvement over declines seen in recent years, when equalized value fell 0.76% in 2012, 2.85% in 2011 and 5.33% in 2010. It’s also an improvement over projections made when the county administration prepared its 2013 budget. The general fund budget was approved with a projection of $60.9 million in tax revenues. But actual revenues, based on 2013 taxable value, are now estimated at $63.236 million – for an excess in 2013 general fund revenues of $2.327 million. Patel stressed that at this point, the taxable value is a recommendation and must be approved at the state level.

Patel also presented tentative taxable values for specific jurisdictions. The city of Ann Arbor shows a 3.34% increase in taxable value, while the city of Saline’s taxable value is a 3.97% increase over 2012. All but six municipalities showed an increase in taxable value. Those municipalities with decreases include the city of Ypsilanti (-0.38%) and Ypsilanti Township (-2.53%).

Properties in the Ann Arbor Public Schools district – which includes the city of Ann Arbor and parts of surrounding townships – will see a 2.32% increase in taxable value. Properties taxed by the Ann Arbor District Library, covering a geographic area that in large part mirrors the AAPS district, increased in value by 2.11%. [.pdf of taxable value list by jurisdiction]

Taxable value is determined by a state-mandated formula, and is the lower of two figures: (1) a parcel’s equalized (assessed) value; or (2) a capped value calculated by taking last year’s taxable value minus any losses (such as a building being torn down), multiplied by 5% or the rate of inflation (whichever is lower), plus the value of any additions or new construction. This year inflation is 2.4%.

Patel reported that the county’s millage rate will not be rolled back this year. The state’s Headlee Amendment rolls back millage rates to prevent property tax revenues from increasing faster than the rate of inflation. That won’t happen this year, because the inflation rate of 2.4% is higher than the increase in taxable value.

In 2013, several categories of property saw increases in equalized value for the first time in years, according to the report. Commercial property showed a 2.2% gain in equalized value, compared to a 3.84% decline last year. It was the first increase in commercial property values since 2009. Residential property value – the largest classification of property in the county – showed an increase of 2.37%, gaining in value for the first time since 2007. Last year, the equalized value for residential property had dropped 0.57%, and had registered a 2.74% drop in 2011. The average residential sales price in February 2013 was $216,220 – up from a low of $154,015 in 2009.

Personal property values also increased, growing 3.15% compared to 2012.

Last year, agricultural property had been the only category that showed an increase. Growth continues in 2013, but at a slower pace. Agricultural property registered an 0.67% increase in equalized value this year, compared to an increase of 3.54% in 2012.

Industrial and developmental property values continue to struggle. Those were the only categories to register a decline in 2013. Industrial property showed a drop in equalized value of 4.78%. That compares to a 3.99% drop in value last year. Over the past few years that category has lost significant value, falling from an equalized value of nearly $1 billion in 2007 to this year’s value of $421.72 million. Developmental property – a relatively small category that covers properties not yet developed – had a 7.12% drop in equalized value.

Patel also highlighted the value of new construction in the county – $368.1 million, a 30% jump over the value of new construction in 2012. But most of the new construction is happening in DDA districts, he reported, so the full increase in tax revenue isn’t going directly to the taxing jurisdictions.

From right: County commissioners Rolland Sizemore Jr. (D-District 6), Ronnie Peterson (D-District 5), Andy LaBarre (D-District 7) and Alicia Ping (R-District 3).

Patel noted that countywide, about $418 million is captured by local downtown development authorities (DDAs), local district finance authorities (LDFAs), brownfield tax increment financing, and other entities that are allowed to capture funds from taxing jurisdictions. For Washtenaw County government alone, $2.405 million goes to these other tax-capturing entities that would otherwise be revenues for the county’s general fund. He noted that although the official taxable value for Washtenaw County increased by 1.68%, the net increase is just 1.35% – after subtracting the amounts captured by DDAs and other tax-capturing entities.

Another factor is the impact that the Headlee amendment has had since the state’s voters approved that measure in 1978. The county was originally authorized to levy 5.5 mills, but since 1978 that rate has been rolled back to 4.5493 mills, Patel noted. In order to levy its full rate of 5.5 mills, the county would need to ask voters for a Headlee override.

Compared to surrounding counties, Washtenaw is faring well, Patel reported. Taxable values were flat in Oakland and Lapeer counties, and Livingston County showed a modest increase of 1.18%. But values in other counties continue to decline, including Wayne (-1.20%), Macomb (-0.55%) and Genesee (-2.43%).

Though the news for Washtenaw was generally positive, Patel cautioned that the loss of the state personal property tax – which Michigan legislators repealed last year – could ultimately result in a loss of more than $5 million in annual revenues for the county government alone, and more than $40 million for all taxing jurisdictions in Washtenaw County. The tax will be phased out starting in 2014 through 2022. As part of that change, a statewide voter referendum is slated for 2014 to ask voters to authorize replacement funds from other state revenue sources. It’s unclear what will happen if voters reject that proposal.

The county also hasn’t recovered from a loss in property value over the past few years. Although the $14.21 billion in total taxable value this year is higher than 2012, it’s 9.2% lower than the taxable value of $15.65 billion in 2008. “Even with the improved market, it will take a number of years to regain the valuation status,” Patel said.

Equalization Report: Board Discussion

Several commissioners praised the work, thanked Patel and his staff, and generally applauded the news. There were also several questions.

Dan Smith (R-District 2) asked how Patel got the comparative data with other counties. Patel replied that there are 83 counties in Michigan with 83 equalization directors. “We get together every month,” he said. “This is my job, because I want to make sure that my county is going to equalize property just like every other county.” Every assessment should reflect uniformity and equity – that’s his responsibility, Patel said, adding that the state Constitution is very clear about this equalization process.

D. Smith also asked about tax tribunal cases, and wondered what the impact might be on appeals made regarding this year’s assessments. Patel reported that the county has about $800 million in taxable value that’s in contention. That doesn’t mean that the county will have to refund $800 million worth of tax revenue, he explained. Often the original assessments aren’t changed, even if they are challenged.

Responding to another query from D. Smith, Patel explained that the “developmental” category is used to classify property that would eventually be developed. At the point when it’s developed, the property will be reclassified – as commercial or residential, for example, depending on its use. So the developmental category fluctuates considerably from year to year. It’s a category “parking spot,” he said.

D. Smith also clarified with Patel that the total amount of tax dollars levied countywide – including all municipalities, school systems, libraries, etc. – was $632.299 million, based on 2012 millage rates. Yes, Patel said. The amount will likely change only slightly for 2013.

Yousef Rabhi (D-District 8) thanked Patel and called the report wonderful news. After years in recession and making budget cuts “down to the bone,” Rabhi said, it’s good to hear that the county will be taking in more revenues than it budgeted for. But he noted that the federal government is cutting back on its funding, and budget cuts at the state level are expected to continue. He wanted to highlight the fact that the county now has a potential opportunity to help sustain some of the ongoing community investments that would otherwise be damaged or cut back due to federal and state funding cuts.

Rabhi noted that Washtenaw County is doing well compared to other areas in Michigan, and a lot of that is due to government investments, he said – through the county, the universities, and other local entities. “We’re putting money back in our community for economic development,” he said, “and we’re building the economy here in Washtenaw County. I don’t think it’s just a coincidence that we’re seeing a return in property values.”

Conan Smith (D-District 9) noted that the county is still seeing fairly significant losses in industrial property values. He wondered if it was due to properties being taken out of that classification, or because those industrial properties continue to decline in value. Patel replied that these properties continue to decline in value. As an example, he noted that General Motors had removed personal property from its closed Willow Run plant in Ypsilanti Township, which contributed to the property’s loss in value.

C. Smith said it might be something to talk about with Ann Arbor SPARK, this region’s economic development agency. Even though several classifications are seeing a turnaround, he noted, that hasn’t yet happened for industrial properties. In order for that to occur, the properties need to become competitive in the marketplace, he said. SPARK is really the county’s “go-to partner” in terms of recruiting tenants for those buildings, he added, so perhaps that effort should be given more weight in SPARK’s strategic plan.

County administrator Verna McDaniel reported that Paul Krutko, SPARK’s CEO, is very active in working on GM’s Willow Run plant as well as other industrial facilities in the county. “I think he knows that that’s a huge concern,” she said. [Both McDaniel and Conan Smith serve on the executive committee of SPARK's board of directors. The county allocated $200,000 to SPARK in the 2013 budget.]

C. Smith asked Patel to provide a list of the top 10 industrial parcels in the county, based on valuation, as well as the 10 parcels that are experiencing the greatest loss in value. This information would help in targeting any marketing that might be done, he noted.

Alicia Ping (R-District 3) thanked Patel, noting that this was the first good news the equalization staff has delivered since she was elected in 2010. “I’m surprised you aren’t all out there doing the happy dance,” she joked.

Outcome: Commissioners unanimously voted to accept the 2013 equalization report.

Four-Year Budget Process

Commissioners were asked to give initial approval to a four-year budget planning cycle, a change from the current two-year cycle that’s been in place since 1994.

From left: Washtenaw County commissioner Felicia Brabec (District 4) and county administrator Verna McDaniel.

The board had been briefed on the issue at a Feb. 21, 2013 working session. County administrator Verna McDaniel has cited several benefits to a longer budget planning cycle, saying it would provide more stability and allow the county to intervene earlier in potential deficit situations. [.pdf of McDaniel's Feb. 21 presentation] State law requires that the board approve the county’s budget annually, but a quadrennial budget would allow the administration to work from a longer-term plan.

With a two-year approach, larger cuts must be made within a shorter timeframe to address anticipated deficits. A four-year plan would allow the administration to identify potential deficits at an earlier date, and target savings that would compound over the longer period, making the overall budget more manageable.

The county is currently working on a new budget starting in 2014. Earlier this year, the county administration projected a $24.64 million general fund deficit over the four-year period from 2014 through 2017. A much smaller general fund deficit of $3.93 million is projected for 2014, but McDaniel hopes to identify $6.88 million in structural changes for that year – a combination of new revenues and cuts in expenditures – in order to eliminate the cumulative deficit going forward. These numbers will be revised in light of the county’s equalization report, which estimates that the county will receive $2.327 million more in 2013 tax revenues than had originally been budgeted.

Four-Year Budget Process: Board Discussion

Dan Smith (R-District 2) said he thought it was a step in the right direction, though he still had some concerns. He’s talked with county administrator Verna McDaniel about this process, and sees more positive than negative things coming from the change.

His basic concern is that commissioners are elected on a two-year cycle, which is in “direct conflict with a four-year budget,” he said. Although McDaniel has plans to accommodate that, he said, there’s no getting around the basic fact. However, he noted that countywide elected officials are on a four-year election cycle, which would synch well with a four-year budget. [Countywide elected positions are the sheriff, treasurer, county prosecuting attorney, clerk/register of deeds, and water resources commissioner.]

D. Smith said he’d like a more intense budget discussion with the county departments. The board is rather removed from that department-level discussion, he noted. One way to intensify that discussion would be to institute zero-based budgeting, he said. On a four-year cycle, each department would wipe its slate clean and be required to justify each item in its budget. Doing this every four years might not be as onerous as doing it every one or two years, he said.

Ronnie Peterson (D-District 5).

Ronnie Peterson (D-District 5) clarified with McDaniel that the four-year budget process would begin with the budget that’s being developed, from 2014-2017.

Peterson then said that although his politics often differ greatly from Republican Dan Smith’s, he respected Smith as an individual and in this case he shared some of Smith’s concerns. Peterson stressed that this was the first time he had participated in a discussion about a four-year budget. [Peterson did not attend the Feb. 21 working session when McDaniel and the county's financial staff briefed commissioners on this approach.]

The responsibility for the county’s budget rests with the elected board of commissioners, he noted. Sometimes they just come to meetings “because we somewhat enjoy each other’s company,” he joked. But often there are pressing items related to appropriations, he added, citing the allocation of funds in the wake of last spring’s tornado touchdown in the Dexter area.

This responsibility is entrusted to the board, he said. In recent years, because of the economy, the board has made difficult decisions that sometimes resulted in residents not getting the services they need, he said, like the decision to stop administering the HeadStart program. [The responsibility for the Washtenaw HeadStart, which the county has administered since the 1960s, is in the process of being handed over to another to-be-determined entity.]

It’s not the board’s role to micromanage, Peterson noted, and the county would run quite well even if the board met only once every six months. Commissioners set the millage rate, accept the equalization report, make key hires – and set the budget, he said.

Earlier this year, the board approved new labor contracts that will determine the wages and benefits of employees for the next 10 years. As part of that, the board has the obligation to “right the ship,” Peterson said, and he didn’t know if commissioners could do that with a four-year budget cycle. They haven’t yet assessed some of the programs and structures that have been in place for years – programs and structures that need to be re-evaluated, he said.

Peterson told commissioners that they hadn’t really started the process for the next budget year, let alone for four years. He said he wouldn’t be supporting a four-year budget. The board needed to have a retreat to discuss it, he said, adding that perhaps others have already met and made that decision. The public should have input too, he said.

Peterson concluded by saying that even for a two-year budget, things can change – either because of the economy, or because of changing priorities among commissioners. “If you can count to a majority, you can change the budget,” he said.

Andy LaBarre (D-District 7) spoke next, indicating that he shared concerns about the impact of elections on the budget process. But he said he’d support a four-year budget. Everything the board and administration has done so far this year has been with the goal of providing more stability and predictability, he said. A four-year budget process would add to that. “And I feel secure in that we have a fail-safe in the [budget] reaffirmation each year,” he noted. “To me, if that wasn’t there, this wouldn’t be in any way, shape or form a prudent or responsible thing to do.”

In some ways, LaBarre added, a four-year approach moves the county away from a crisis-to-crisis mentality and more toward a strategic and tactical approach.

Yousef Rabhi (D-District 8) emphasized that the board’s responsibility is to pass an annual budget, and the four-year budget cycle won’t change that. In two years after the next board is seated, commissioners could decide that they didn’t want to do a four-year budget cycle, he said. So he didn’t feel that he was forcing anything on future boards.

There’s value in having a budget process and in allowing commissioners to delve into the details, Rabhi said. So there should be some sort of budget process every two years, with the understanding that the budget extends beyond a two-year time period.

In terms of the budget process so far, Rabhi reminded commissioners that they’ve had one budget retreat so far. Also, there was a working session in February specifically about the four-year budget proposal. “It wasn’t as well-attended as it could have been,” he added, but materials from that working session were provided to all commissioners, weighing the advantages and disadvantages. [.pdf of McDaniel's Feb. 21 presentation]

Rabhi said he’s scheduled a second retreat for the board on May 16 at the county’s Learning Resource Center. [The LCR is located near the county jail, at 4135 Washtenaw Ave.] The meeting is open to the public, and will be held at the same time as the board’s working sessions, which begin at 6 p.m.

If approved, Washtenaw County will be one of the only counties in Michigan if not the country to do a four-year budget, Rabhi said. “It’s a wonderful way to lead the nation in fiscal stability and fiscal responsibility.”

Conan Smith (D-District 9) also shared concerns that had been raised about process considerations. From the standpoint of staff and administration, he said, a four-year budget makes a lot of sense because of the long-term planning process. But from the board’s perspective, he still was concerned about the two-year election cycle.

The resolution in front of the board simply gave direction to the staff, C. Smith said. It’s a good model, because it leads to longer-term decisions with more predictability. But it doesn’t obviate any of the concerns that had been raised by other commissioners, he said, so the board needs to develop a budget policy for this four-year approach. If they were operating on a two-year cycle, commissioners would approve the two-year budget for 2014-2015 at the end of 2013, but in 2014 they’d likely just rubber stamp it, he said. Commissioners know that they’ll be around for two years, so that second year budget is one they’ve already worked on.

It would be different on a four-year cycle, C. Smith said. There’s no guarantee that a commissioner would be around for four years. So it’s important to differentiate what happens in each of the four years. In the third year, perhaps there should be a substantive review of the budget – have the priorities changed, or are the original objectives being met? Then in the fourth year, commissioners would begin the budget process again with a “fulsome” assessment of the previous four years, he said.

In concept, the four-year process is a good approach, C. Smith said. But the board hasn’t yet articulated clearly the role that commissioners should be playing inside that process. He supported the resolution, saying that it simply gave direction to plan for four years. In September, if commissioners decide they want to adopt only a two-year budget, “we still have that right.” He said he’d be happy to be a leader in thinking through how the board can engage in the next four-year budget process.

From left: Pete Simms of the county clerk’s office and Yousef Rabhi (D-District 8), chair of the county board of commissioners.

Peterson spoke again at length, saying it was amazing to him that the board had only held two short retreats, but had already made decisions about budget priorities. [In fact, there has been just one budget retreat so far – on March 7, 2013 – although budget issues have come up during discussions at several regular meetings.]

The budget isn’t the responsibility of administration, Peterson said, and he hoped the board assumed responsibility for it soon. He praised the county’s employees and talked about their sacrifices over the past few years. He urged the board to assess the county’s programs and services, to make sure the county never gets into this same kind of position again. He questioned how anyone could see the needs of the county four years from now, when things have changed so dramatically just over the past nine months. National healthcare reform is one example of changes that could impact the budget in the future, he said.

Rabhi responded, thanking Peterson for raising these concerns. Rabhi said he wanted to have a robust budget process, whether it’s a two-year or four-year budget. He expressed willingness to address Peterson’s concerns over the current budget process, and noted that another retreat is scheduled for mid-May. There will also be more budget-related working sessions, he said. “I don’t know of any private discussions that have been had around the budget,” Rabhi added.

A budget task force has been working under the direction of the administration, Rabhi said, noting that Felicia Brabec – chair of the board’s ways & means committee – has been very active in those. In addition to retreats, working sessions and regular meetings, Rabhi said he was open to other suggestions from commissioners in the budget process.

Brabec agreed that the board needs to be thinking more strategically, and said the next retreat will focus on that approach, looking at things like community impact. Rabhi added that the budget can’t just be about dollars and cents – it’s also about community impact, and developing a framework for assessing impact.

Dan Smith stressed that the board would be voting on something very specific that night, and he read from the resolution’s only resolved clause: “… that the Washtenaw County Board of Commissioners approve the development of a Quadrennial County Budget.” It doesn’t say that the board will adopt a quadrennial budget, he noted – it’s just the beginning of the process. At any point, commissioners could change this approach. The actual voting on the budget itself is a long way off, he said, and this is just the first step in the process. He said he’d continue evaluating it over the next few months.

Conan Smith reported that he had communicated to Brabec and LaBarre – but not to Rabhi, the board chair – his concerns that the board hasn’t allocated sufficient time so far for a robust budget conversation. Waiting until late May for the next board retreat means that administration will already be deep into the budget process, he said, and it gets harder to change direction if you want to keep the process on schedule. He expressed concerns that presentations at the working sessions had been on topics with lower priority than the budget.

C. Smith said he knew there’s keen interest in bonding for pension and healthcare liabilities, but going down that path before the board has a conversation about budget priorities is not the right sequence. He thought there should also be more conversations on the budget at the board’s ways & means committee meetings.

In the last budget cycle in 2011, C. Smith said, the board had held three retreats “all before March.” [He had been board chair at the time. Retreats – including sessions on Jan. 29, 2011 and Feb. 9, 2011 – culminated in the board adopting a set of budget priorities and principles at its March 16, 2011 meeting.]

The board had “a more engaged conversation by this point in the last budget process,” C. Smith said, “so I think that might be part of what the tension is – it feels like we’re getting late, in all honesty.” He urged the board leadership – Rabhi, Brabec and LaBarre – to examine their budget schedule and possibly call additional meetings to focus on the budget.

Outcome: Commissioners voted 7-1 to approve the resolution directing the administration to develop a four-year budget. Dissenting was Ronnie Peterson (D-District 5). Rolland Sizemore Jr. (D-District 6) was not in the room when the vote was taken. A final vote is expected on May 1.

Weatherization Grant

Commissioners were asked to give initial approval to accept $185,654 in funds for the county’s weatherization assistance program.

The funding roughly equals the amount of federal weatherization dollars that the county received in 2012, which was a decrease of about 65% compared to 2011 federal funding levels. The current funding is allocated through the 2013 Low Income Home Energy Assistance Program (LIHEAP). The county last received LIHEAP funding in 2010, but has received weatherization grants from other federal funding sources in the intervening years.

For the period from April 1, 2013 to June 30, 2014, the program is expected to weatherize 27 homes. According to a staff memo, the work includes an energy audit inspection and follow-up inspection of the completed weatherization work, which might include attic and wall insulation, caulking, window repairs, furnace tune-ups, furnace replacements, and refrigerator installations. To qualify for the program, residents must have an income at or below 150% of federal poverty, which is about $35,325 for a family of four.

Weatherization Grant: Board Discussion

Dan Smith (R-District 2) asked whether the county would use outside subcontractors for this work, or if staff would do it. Mary Jo Callan – director of the county’s office of community & economic development (OCED) – replied that licensed contractors are hired to do the weatherization work, while staff members act as project managers and oversee the work.

Washtenaw County commissioners Alicia Ping (R-District 3) and Andy LaBarre (D-District 7).

D. Smith also noted that it’s been a few years since the county has received this type of grant. As he had read through the contract, there seemed to be some rather onerous requirements – such as making sure contractors meet the federal requirements needed to do the work. He wondered whether the county had sufficient resources to make sure all of those contract requirements are met. [.pdf of LIHEAP agreement]

Callan noted that although the county hasn’t received LIHEAP funding since 2010, there were large amounts of federal recovery (stimulus) dollars available in the interim. The requirements for all of this funding are similar, she said. Getting federal funds isn’t simply being given a blank check, she noted. It’s sometimes onerous, she acknowledged, but the county has a robust structure in place to manage dozens of federal grants.

Andy LaBarre (D-District 7) asked for Callan’s opinion on the proposed 30% reduction in LIHEAP funding that’s part of President Barack Obama’s budget. Callan replied that this is part of the analysis that her staff is doing related to the impact of federal sequestration. “A cut to this program is actually not new,” she said. It’s been a recurring recommendation in the federal budget for at least three years – either LIHEAP specifically, or weatherization in general.

Callan noted that the president’s budget also proposes a 50% cut in the Community Development Block Grant, which would have a tremendous impact on local programs. County staff is following this closely, she said. If the cut materializes, it would absolutely mean a decrease in the number of weatherization projects done each year. “And at some point, if you receive such a low allocation, you can’t have a program,” she said.

Ronnie Peterson (D-District 5) wondered how the county establishes criteria for delivering services. He said he’s very concerned about the elderly getting the services they need. In the past, he said, the program has served a lot of rental properties, while there are elderly homeowners who haven’t received the weatherization services. He wanted to see if senior citizens could get some kind of preference.

Brett Lenart, OCED’s housing and infrastructure manager, replied that the elderly are given a priority. The scoring system goes beyond a first-come-first-served approach, he said, and includes criteria like whether there are senior citizens or young children in the home, among other things. In response to additional queries from Peterson, Lenart noted that more information is available on the county’s weatherization website.

Conan Smith (D-District 9) reported that the Better Buildings for Michigan program has an version that’s available for non-low income families. A lot of people don’t qualify for weatherization program based on their income level, he noted, but could still use some support. He said he could help OCED connect with that program. [The Better Buildings for Michigan program is run by the Michigan Suburbs Alliance, where Smith serves as executive director.]

Outcome: Commissioners unanimously gave initial approval to accept the weatherization grant. A final vote is expected on May 1.

Employees, Residents Honored

At its April 17 meeting, the board presented resolutions of appreciation honoring Rabbi Robert Dobrusin and several residents from the city of Saline, as well as to Leila Bauer, the county’s chief deputy treasurer who is retiring after 41 years of service.

In addition, the board declared the week of April 14-20 2013 as National Public Safety Telecommunicator Week in Washtenaw County. Several members of the county’s dispatch operations were on hand and received recognition from the board. [.pdf of telecommunicator resolution] Marc Breckenridge, Washtenaw County director of emergency services, said dispatch operators have gone through a lot over the last couple of years, citing new technology and changes related to combining county dispatch operations with the city of Ann Arbor. “They’ve really come through for us, and we’re really proud of them,” he said.

Marc Breckenridge, Washtenaw County director of emergency services, was among those on hand to accept a resolution regarding national telecommunicator week.

Dobrusin was recognized for 25 years of “providing spiritual and pastoral support” for the Beth Israel congregation in Ann Arbor, the city’s “oldest Jewish Institution.” [.pdf of Dobrusin resolution] Also cited was his work as a founding member of the Interfaith Round Table of Washtenaw County and with the Interfaith Council for Peace and Justice. The resolution noted his human rights efforts, including his current position as national co-chair with T’Ruah: The Rabbinic Call for Human Rights.

Former county commissioner Barbara Bergman attended the meeting to accept the resolution on behalf of Dobrusin. She highlighted his work in supporting the rights of indentured workers, then indicated that this would be a surprise for him. “If you know Rabbi Dobrusin, don’t talk!”

The board also passed a resolution of appreciation for Leila Bauer, the county’s chief deputy treasurer. Her work over the years has included serving on the Washtenaw County Health Organization, Washtenaw County Community Mental Health board, Washtenaw County Human Services board, and the Washtenaw County Health Authority. She received a standing ovation from the board. [.pdf of Bauer resolution]

Several Saline residents were also recognized by the county board. Helen Martin was honored for her work with the Saline Downtown Merchants Association and Saline Main Street. Jeff Dowling was recognized for receiving the “Saline Salutes” 2013 Citizen of the Year Award, as well as for work with the American Cancer Society and various Saline community events. Joy Ely, owner of The Pineapple House, was recognized for receiving the “Saline Salutes” 2013 Lifetime Achievement Award, and for her support of downtown Saline. Also honored by the board was Sarah Chu, who received the city of Saline’s 2013 Youth of the Year Award. [.pdf of Martin resolution] [.pdf of Dowling resolution] [.pdf of Ely resolution] [.pdf of Chu resolution]

Outcome: Commissioners unanimously passed all resolutions of appreciation.

Washtenaw Ride Dissolved

On the agenda for a final vote was a resolution to officially dissolve a countywide public transit authority known as the Washtenaw Ride. Initial approval had been given on April 3, 2013.

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.

Washtenaw County commissioner Conan Smith (District 9).

The county board’s April 17 resolution rescinds a board resolution 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."]

There was no discussion on this item.

Outcome: On a 7-1 vote, commissioners passed a resolution dissolving The Washtenaw Ride. Voting against the resolution was Conan Smith (D-District 9), but he did not comment on his vote during the meeting. Rolland Sizemore Jr. (D-District 5) was absent.

CSTS Job Creation

On the April 17 agenda for a final vote was a resolution authorizing the creation of 39 new jobs and the reclassification of 76 others for Washtenaw County’s community support and treatment service (CSTS) department. Initial approval had been given on April 3, 2013.

CSTS is a county department employing about 300 people, but receives most of its funding from the Washtenaw Community Health Organization, a partnership between the county and the University of Michigan Health System. The WCHO is an entity that receives state and federal funding to provide services for people with serious mental illness, developmental disabilities and substance abuse disorders. WCHO contracts for services through CSTS. Although staffing has remained fairly constant in the last five years, demand for services has increased by about 40%. These jobs are being created to provide the capacity to meet that demand.

The new jobs include client service managers, support coordinators, mental health professionals, mental health nurses, management analysts, administrators and a staff psychiatrist. All of the reclassified positions are client service managers. Of the 39 new positions, 30 of them are union jobs, represented by AFSCME.

According to a staff memo, the changes will add $14,255,535 to the CSTS 2012-2013 budget, bringing the budget total to $41,822,489. Of that, WCHO is providing $38,692,815, including revenues from grant pass-throughs. Other revenues include $165,190 from the Haarer bequest and $246,846 from a contract with the Washtenaw County sheriff’s office.

CSTS Job Creation: Board Discussion

Ronnie Peterson (D-District 5) clarified with CSTS staff that they would be returning later in the year to secure approval for their annual budget. The CSTS budget runs from Oct. 1 through Sept. 30. At that time, there would be a broader picture of the services that CSTS offers, he noted. The organization is shifting to more of a fee-based approach, Peterson said, and someone will need to assume responsibility for paying for these services. It would be helpful to show exactly what services are delivered by CSTS. It’s a very complex department, he said, and most people don’t know what services it provides. “You are the resources of last resort for many of our citizens,” he said. It’s important that the county provide the support that CSTS needs to deliver its services, he noted, especially as funding changes at the state and federal levels.

Yousef Rabhi (D-District 8) thanked the CSTS staff for their work, and said he echoed Peterson’s sentiments.

Outcome: On a final vote, commissioners unanimously approved the creation and reclassification of CSTS jobs.

Public Hearing for Urban County Plan

A public hearing to get input on the Washtenaw Urban County‘s five-year strategic plan through 2018 and its 2013-14 annual plan was held during the board’s April 17 meeting. [.pdf of draft strategic and annual plans]

The Urban County is a consortium of Washtenaw County and 18 local municipalities that receive federal funding for low-income neighborhoods. Members include the cities of Ann Arbor, Ypsilanti and Saline, and 15 townships. “Urban County” is a designation of the U.S. Dept. of Housing and Urban Development (HUD), identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, entitling them to an allotment of funding through a variety of HUD programs. The Urban County is supported by the staff of Washtenaw County’s office of community & economic development (OCED).

Two HUD programs – the Community Development Block Grant and HOME Investment Partnership – are the primary funding sources for Urban County projects.

The plans indicate that the Urban County area is expected to receive about $2.7 million annually in federal funding, which will be used for these broad goals:

1. Increasing quality, affordable homeownership opportunities

2. Increasing quality, affordable rental housing

3. Improving public facilities and infrastructure

4. Supporting homeless prevention and rapid re‐housing services

5. Promoting access to public services and resources

6. Enhancing economic development activities

Only one person spoke during the April 17 public hearing. Thomas Partridge criticized the lack of affordable housing in the county, and said there was insufficient funding for adding adequate housing. He urged commissioners to hold their retreat and do their strategic planning in the boardroom, where the proceedings can be televised and accessible to residents.

Communications & Commentary

During the evening there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. In addition to issues reported earlier in this article, here are some other highlights.

Communications & Commentary: Thomas Partridge

Thomas Partridge spoke during the evening’s two opportunities for public commentary – each time speaking for the full three minutes that speakers are given. He described himself as an advocate for the most vulnerable residents, and called for ending housing discrimination in every city and township in Washtenaw County. He advocated for zoning and planning policies that ensure non-discrimination in housing. Partridge also demanded the recall of all elected officials who ran for office on the platform of advancing Michigan, but who subsequently neglected their promises and have taken the opposite attitude.

He also noted the much lower turnout during public commentary at the county board meeting compared to an Ann Arbor city council meeting earlier in the week. [The council's April 15, 2013 meeting had included two public hearings on controversial topics: 45 speakers participated in the public hearing on proposed changes to the Ann Arbor Downtown Development Authority ordinance, and 51 people spoke on the 413 E. Huron site plan.]

Responding to Partridge’s comments about the need for more public participation, county board chair Yousef Rabhi said the board wanted to ensure that there aren’t any barriers to citizens participating in its meetings. Any time he speaks with constituents, Rabhi said, he stresses the importance of the county’s work and encourages input. But he conceded that the county board doesn’t draw the same kind of crowd that the Ann Arbor city council does. On the other hand, he noted, the county board’s meetings don’t last until 3 a.m. [The council's April 15 meeting had adjourned after 3 a.m., before the council finished its business. Most council agenda items were postponed until May 6.]

Present: Alicia Ping, Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith.

Next regular board meeting: Wednesday, May 1, 2013 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to confirm date.] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public commentary is held at the beginning of each meeting, and no advance sign-up is required.

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• Late March & Early April: Community dialogue meetings sponsored by BOE
• April 10, 2013: Administration presents projected revenues for FY 2014
• April 24, 2013: Administration presents recommended expenditure budget for FY 2014
• Early May: Community forums led by the administration on the proposed budget
• May 8, 2013: First briefing of the Budget Resolution for FY 2014
• May 22, 2013: Second briefing and action on the Budget Resolution for FY 2014

The schedule for public engagement on the budget was put forward at the board’s March 13, 2013 meeting.

This brief was filed from the board room of the Ann Arbor District Library in downtown Ann Arbor at Fifth and William. A more detailed report of the meeting will follow.

Current zoning of properties surrounding the parcel at 2081 E. Ellsworth Road – denoted with a “?” Owners are requesting the parcel to be zoned as R3 (townhouse dwelling district). (Map labeled by The Chronicle.)

Dependent on the R3 zoning is Summit Townhomes – a proposed project for the 2081 E. Ellsworth Road site, located in the southern part of the city just east of Stone School Road. The townhouse project’s site plan is expected to come before the council for approval later this month. The planning commission has already recommended that the Summit Townhomes project be approved, and previously recommended the R3 zoning. The council itself had already given the zoning its initial approval at a previous meeting.

But during the public hearing about the zoning on Feb. 4, the council heard from several people who spoke against the zoning and the project, reprising many of the same objections that had been raised more than seven months ago at the June 19, 2012 meeting of the planning commission. Concerns included overcrowding and congestion in the area, and a lack of adequate city services. Also weighing in with general support for zoning that fits with the desires of residents was Washtenaw County commissioner Andy LaBarre, who represents the county district where the site is located.

Another item related to future land use was council action to authorize the distribution of the draft South State Street corridor plan to neighboring jurisdictions and other stakeholders, such as the University of Michigan, the Ann Arbor Public Schools, and the Ann Arbor Transportation Authority. After a mandated comment period, the city planning commission will have the opportunity to make revisions to the plan, before the commission and the city council make a decision to adopt it.

A major infrastructure study, with a roughly $1 million budget, was also authorized by the council – to give the city a clearer understanding of how flows behave in the sanitary sewer system, especially during rainy periods. The study is prompted by a desire to measure the impact of a footing drain disconnection program that the city has implemented for over a decade. In the last year, the program has generated strong protest from the Glen Leven neighborhood. The footing drain disconnection program was created in part to remedy the backup of raw sewage in basements during heavy rains.

The city council also authorized revisions to two existing technology agreements. One was an agreement between the city of Ann Arbor, Washtenaw County and the Ann Arbor Transportation Authority to act as a purchasing consortium. The modification to the agreement will allow other participants to be added to the consortium in a streamlined way. The second agreement was the extension of a contract with the city of Chelsea to provide various IT services.

The council put off a decision on issuing bonds to support energy improvements for its property assessed clean energy (PACE) program. The item had been added late to the agenda, and several councilmembers had questions they wanted answered before voting on it.

Although the agenda itself was light, several significant communications were included, either as written attachments or conveyed verbally. The written reports attached to the agenda included a revised auditor’s letter and a report on how the street resurfacing millage money was spent during the 2012 season.

Conveyed verbally was a report from the council’s budget committee chair, Marcia Higgins (Ward 4), who alerted councilmembers that on Feb. 11 and Feb. 25 the council would hold budget work sessions starting at 6 p.m., with each meeting consisting of two 2-hour sessions with a break.

Stephen Kunselman (Ward 3), chair of the city’s taxicab board, called for enforcement of the city ordinance that is meant to prevent the operation of “rogue limousines” – in the context of a reported sexual assault of a University of Michigan student by the driver of either a taxicab or limousine.

Kunselman also called for a number of revisions to the city ordinance that establishes the Ann Arbor Downtown Development Authority, including stricter regulations on membership of the board, but more significantly a limitation on the way the DDA’s tax increment finance (TIF) capture is calculated.

Townhouse Zoning

The council considered a second and final approval of zoning for a recently-annexed city parcel as R3 (townhouse dwelling district). It’s a roughly 3-acre site, just east of Stone School Road, that was previously part of Pittsfield Township.

The city’s planning commission had voted to recommend the zoning at its Nov. 20, 2012 meeting and the city council gave initial approval at its Jan. 7, 2013 meeting.

Parcel (shaded yellow) is requested to be zoned as R3 (townhouse dwelling district). The blue line is the boundary between the Malletts Creek and the Swift Run watersheds.

When the council gave its initial approval, Christopher Taylor had indicated that while he was voting for the zoning on that occasion, he wanted to alert his council colleagues to the fact that he’d heard some concerns about the type of progress and development that the zoning represents. Taylor represents Ward 3, where the proposed project is located. So Taylor said the issue might be a point of discussion when the council was asked to give the zoning its final approval. That reflected concerns also expressed at the planning commission’s June 19, 2012 meeting from residents of the nearby Forest Hills Cooperative.

R3 zoning is consistent with the intended development of the site – to be called Summit Townhomes – for which the city’s planning commission recommended approval at its Jan. 3, 2013 meeting. The developer wants to build 24 attached residential units in four separate buildings, with each building between 80 to 160 feet in length. Each of the 24 units would have a floor area of about 1,300 square feet, and an attached one-car garage. The site plan includes two surface parking areas on the east and west sides of the site, each with 12 spaces.

Townhouse Zoning: Public Hearing

Andy LaBarre told councilmembers he was addressing them as a city resident and also as a Washtenaw County commissioner. The parcel is in the district he represents on the county board of commissioners – District 7. [LaBarre is serving his first term as a Washtenaw County commissioner, having been elected in November 2012.] In the course of the campaign and since then, LaBarre said, he’d had a chance to meet Claudia Myszke [managing agent of the Forest Hills Cooperative] and other leaders of neighborhood and homeowners associations in the area.

Left to right: Christopher Taylor (Ward 3) and Washtenaw County commissioner Andy LaBarre.

LaBarre believed that residents hoped to have as little dense development as possible. He allowed that city councilmembers have hard jobs with the number of constituents that they have to respond to, and they have different ideas amongst themselves on the council and “frankly, within your own heads at times.” So he wanted to offer any and all assistance that he could provide – in his capacity as a resident or as a single commissioner on the county board – to work to make sure there’s some level of future use of that land that fits with the desire of current residents there. LaBarre said he’d follow up later with Ward 3 councilmembers Christopher Taylor and Stephen Kunselman.

Aiji Pipho introduced herself as a resident and committee member of Forest Hills Cooperative. The project planned for the 3-acre parcel will be the fifth to be “shoe-horned” into a quarter mile, she said. The city’s goal is that everybody is supposed to be able to walk to a park that’s within a quarter mile of their home. The park that is walkable from her house, she said, is one where people get attacked. Her son got his jaw and nose broken in the park closest to their house. The city should be thinking about providing services to a poor community, she said – something that would create a separation from “gang members” who hang out in the parks and the “latch-key children” who come home from school and have to manage without their mom and dad being there. What’s shown itself to be a positive influence in other areas, she said, are good community services. So she wanted part of the land to be reserved for a community center – in this part of the city, where many poor people are concentrated.

Flo Hepola told the council she had concerns about the population density. She described the traffic on Ellsworth as horrible – saying it was bad to begin with, even without the new development. She asked for more infrastructure support for the growing and expanded population. She said it was difficult to find a decent park to take her granddaughter, so she’d wound up driving to a county park. There’s only one drinking fountain in the closest park – Southeast Area Park. The kids in the neighborhood liked to hang out at that park, she said, but there’d been incidents of kids having heat stroke while playing basketball. She wanted to see the land developed for use by the community. She thanked Christopher Taylor, Chuck Warpehoski and Andy LaBarre, who she said have been very helpful.

Claudia Myszke, managing agent of the Forest Hills Cooperative, told the council she was there representing her board of directors and the 306 limited-income families who live in Forest Hills. She was also there on behalf of the “sister cooperatives” – Colonial Square Cooperative and University Townhouse Cooperative – which have 427 and 630 limited-income families, respectively. She thanked Christopher Taylor, Chuck Warpehoski and Andy LaBarre for working with members of the Forest Hills community as they’ve tried to educate themselves. She also thanked Leonard Michaels, who represents the Summit Townhomes development.

Myszke told the council she was there to oppose zoning of the land as R3. She told the council that within a five-mile radius, there are over 2,400 units of multi-family housing. All of it is limited-income, affordable housing. She calculated that this translated to about 6,000 people. She had major concerns about the potential zoning to accommodate more people in an area that is already saturated.

Thomas Partridge told councilmembers he wanted them to take the zoning proposal back and make sure that it provided for some prospect of integrated affordable housing with retail or community services and affordable, accessible transportation for the most vulnerable residents.

Townhouse Zoning: Council Deliberations

Sabra Briere (Ward 1), who is the city council appointee to the city planning commission, briefed the council from her perspective serving on the planning commission since December 2012. When the planning commission had deliberated on the Summit Townhomes site plan in early January, planning commissioners had not heard from residents with the kind of objections that they’d expressed that evening to the city council, Briere said. [Later in deliberations, city planning manager Wendy Rampson pointed out that these issues had been raised at a meeting earlier in 2012, in the summer before Briere had been appointed to the planning commission.]

Planning commissioners had discussed transportation and congestion issues and whether there was a way for children to walk to school without having to walk along Ellsworth or Stone School roads, Briere reported. The planning commission had not discussed whether property should be acquired for a city park, she said.

Briere allowed that it’s a very congested area and the zoning is intentionally for multi-family use. Since she lived in the area 40 years ago, it’s been an “entry level” of housing for people with low incomes, she said. She noted that the Community Action Network (CAN) provides services in this neighborhood. [CAN runs the nearby Bryant Community Center, under contract with the city.] The requests from residents for more services and more thoughtful planning were reasonable, she said. But Briere also noted that the proposed project absolutely fits the zone and the master plan. She noted, however, that the council had options – including saying that it was the council’s desire to step back and think about it.

Councilmembers Margie Teall (Ward 4) and Christopher Taylor (Ward 3).

Christopher Taylor (Ward 3) allowed that the proposed zoning is probably consistent with the master plan because that’s generally what is in the area now. But it’s important to acknowledge the feelings of the residents who live there who’d expressed concerns about the livability of the area. He ventured that perhaps the implementation of the city’s master plan had “outstripped” the master plan itself.

Taylor asked city planning manager Wendy Rampson to address the rationale for the parcel’s R3 zoning. Rampson indicated that the project had been reviewed by the planning commission and staff several times before it had come before the city council. When the parcel was under Pittsfield Township’s jurisdiction, it had a single-family home. Upon annexation, the city must assign appropriate zoning, she explained. The city’s South Area Plan, which she allowed was somewhat dated, identified 20 acres at the corner of Ellsworth and Stone School as being appropriate for single-family attached and detached use. The R3 zoning designation, which was being requested, is single-family attached housing – which translates to a maximum density of about 10 units per acre, she said. The Summit Townhomes project is actually about 8 units per acre. The other alternatives would be single-family or duplex. At the planning commission, there hadn’t been a suggestion that either of those should be applied.

The report from the city traffic engineers, Rampson said, indicated that the impact from a single-family attached development is minor compared to a Tim Hortons at the corner of Ellsworth and South State. The Summit Townhomes development would add a small amount of traffic to what’s already there.

Taylor got clarification from Rampson that application of single-family or duplex zoning to the parcel, instead of townhouse zoning, would reduce the number of allowable units by half to a quarter. She note that there’s a slope on the land that makes it a challenging site to develop, so she ventured that a certain minimum number of units would be required in order to make it financially feasible.

Two-foot contour map for the area on Ellsworth Road that’s requested to be zoned R3 (townhouse dwelling district).

Responding to a question from Taylor about drainage, Rampson indicated that the parcel drains to the south and west side, so the drainage doesn’t affect Arbor Oaks to the north – because water from the parcel flows toward Ellsworth. Later in deliberations, Stephen Kunselman (Ward 3) questioned whether the parcel had a different drainage area from Arbor Oaks, saying that he believed that both were a part of the Mallets Creek watershed. Rampson agreed that both pieces of land were part of the Mallets Creek watershed, and that the drainage from the Summit Townhomes parcel went to Mallets Creek, but not through Arbor Oaks.

Public services area administrator Craig Hupy was not able to recall what the topographic maps for the area looked like to settle the question for Kunselman.

Kunselman also pointed to the parcel zoned R1C to the east, which would become isolated as an R1C area if the council approved the R3 zoning for the Summit Townhomes parcel. He asked Rampson if assigning R1C zoning to the parcel would stop the Summit Townhomes development. Yes, Rampson confirmed. Kunselman asked if there’d be any legal issues associated with a council decision to do that. Rampson declined to speculate, saying that the zoning decision is discretionary on the council’s part. She ventured that if the council was not inclined to support the R3 zoning, the item could be rescheduled or postponed. The zoning and the site plan could be considered together at the council’s Feb. 19 meeting.

Kunselman and Taylor both indicated a willingness to postpone the zoning question.

There was no opposition to postponement expressed by other councilmembers. The ensuing discussion centered around the nature of the direction to be given to the planning commission. The consensus coalesced around the idea that the planning commission should consider lower density zoning – without specific direction from the council to consider specific zoning options.

Leonard Michaels of CIW Engineering was present at the meeting on behalf of the developer and asked to comment.

Michaels described how the project began more than a year ago, noting that Taylor had been present for the required citizens participation meeting. The location of that meeting had been changed to accommodate as many people as possible. He noted that the report from Claudia Myszke, managing agent of the Forest Hills Cooperative, had been included in the developer’s report about the citizens participation meeting, without any omissions. He noted that the Summit Townhomes proposal adds less density than is allowed by R3. The drainage is still being designed, he said, but it will not increase the runoff into the Ellsworth ditch.

Michaels reported that he’s still “playing phone tag” with the Ann Arbor Public Schools, trying to understand where to put a pedestrian connection to the school.

Chuck Warpehoski (Ward 5) said he was comfortable with having the planning commission take another look at the zoning. He summarized the concerns as involving three issues: driving, drainage, and public services. He noted that the area is not in the ward he represents, but he knows people who live there.

Outcome: The council voted unanimously to refer the issue back to the planning commission. The commission’s next regular meeting is on Thursday, Feb. 21.

Distribution of South State Street Plan

The council considered a resolution to distribute a draft of Ann Arbor’s South State Street corridor plan to neighboring jurisdictions and other stakeholders, such as the University of Michigan, the Ann Arbor Public Schools, and the Ann Arbor Transportation Authority. The planning commission had voted to recommend the corridor plan’s distribution at its Jan. 3, 2013 meeting. [.pdf of draft South State corridor plan]

The plan includes more than 40 overall recommendations for the corridor, which stretches about 2 miles between Stimson Street at the north end down to Ellsworth in the south. Recommendations are organized into categories of the city’s sustainability framework: Land use and access, community, climate and energy, and resource management.

Among the recommendations are: (1) Evaluate use of vacant parcels for alternative energy generation; (2) Evaluate integration of public art along the corridor; (3) Evaluate use of open land for community gardens; (4) Assess and improve high crash areas along the corridor; (5) create boulevard on State Street between Eisenhower and I‐94 to enable safer automobile, bicycle, and pedestrian movement; (6) consider utilizing vacant parcels for athletic fields and recreation facilities; (7) develop a pedestrian and bicycle path along the Ann Arbor railroad that will connect the planned Allen Creek bikeway to Pittsfield Township through the corridor; and (8) resurface roads in the corridor.

Each recommendation includes several related action items. The plan also provides a section that organizes the recommendations into each of three distinct sections of the corridor: (1) from Stimson on the north to Eisenhower Parkway; (2) from Eisenhower south to the I-94 interchange; and (3) from I-94 to Ellsworth. In addition, there are nine site-specific recommendations for areas including Briarwood Mall, the complex of hotels near Victors Way and Broadway, and the research park development near the corridor’s south end.

The city planning commission and staff have been discussing this project for several years, but have accelerated work on it within the past 12-18 months. See Chronicle coverage: “South State Corridor Gets Closer Look,” “Sustainability Goals Shape Corridor Study,” and “Ideas Floated for South State Corridor.”

South State Street Plan: Council Deliberations

Marcia Higgins (Ward 4) clarified with planning manager Wendy Rampson that the plan to be distributed is a draft plan, and asked that the word “draft” be inserted in one instance where the plan was described in the resolution. Higgins also confirmed with Rampson that a comment period would follow the draft plan distribution, which would include possible comments from the public. Revisions to the draft could be undertaken, but the planning commission and the city council would then need to adopt the plan to make it final, following a public hearing.

Rampson noted that the planning commission and the city council would need to adopt the same plan. She noted that in the past, the city council hadn’t agreed with the planning commission’s version of a plan and had returned the plan to the commission. [She was referring to the downtown plan, which was most recently adopted in 2009.] Rampson said she’d prefer for that not to happen again, and for differences between the council and the commission to be sorted out before voting.

Outcome: The council voted unanimously to authorize distribution of the draft South State Street corridor plan.

Sanitary Sewer Flow Study

The council was asked to consider authorizing a study of Ann Arbor’s sanitary sewer flows – meant to assess the impact of a decade-long footing drain disconnection program. The study is to be conducted by Orchard, Hiltz & McCliment Inc. over the next year-and-a-half to two years.

The $968,348 contract with OHM is part of a project budget that includes a $192,000 contingency and $85,000 to account for city staff time. The money will come from the city’s sanitary sewer capital fund.

The city of Ann Arbor’s footing drain disconnect (FDD) program was implemented in 2001, prompted by repeated incidents of raw sewage backing up in residents’ basements and the discharge of only partially treated sewage into the Huron River.

The city of Ann Arbor has separate sanitary and stormwater conveyance systems. However, during construction of new developments before 1980, footing drains – permeable pipes buried around the perimeter of a foundation, roughly at the depth of a basement floor – were frequently connected directly to the sanitary sewer pipes. Those connections were convenient to make, because the footing drains and the sanitary sewers are buried at roughly the same depth.

However, during very heavy rains, that configuration leads to a volume of stormwater flow into the sanitary sewer system that it’s not designed to handle. That can cause two problems. First, near the point where the extra water is entering the sanitary system, it can cause raw sewage to back up through the floor drains of basements. Second, farther downstream at the wastewater treatment plant, the amount of water flowing into the plant can exceed the plant’s capacity. That can result in only partially-treated wastewater being discharged into the Huron River.

It was wastewater discharges into the river that led the city to agree to an administrative consent order with the Michigan Dept. of Environmental Quality (MDEQ) to establish a way to offset the impact of new connections to the sanitary system required by new developments. That program essentially requires developers who are building projects that place additional burdens on the sanitary sewer system to pay for a number of footing drain disconnections elsewhere in the city, according to a formula.

The footing drain disconnect program was targeted initially in five neighborhoods that accounted for about half of all reported basement sewage backups. Since implementation, 2,538 footing drains have been disconnected, including nearly all of the houses in three of the five areas. In the two other areas, between 55% and 60% of footing drains have been disconnected.

Cresson Slotten, engineer and unit manager in systems planning for the city of Ann Arbor.

In one of the remaining areas – the Glen Leven neighborhood – overland flooding during heavy rains in the spring of 2012 resulted in basement flooding in some houses that had been included in the disconnection program. The procedure includes the installation of a sump to collect water from the footing drains – which previously fed into the sanitary system – and a pump to move the water from the sump to the stormwater system.

Emphatic protest came from residents of that neighborhood, which has in recent weeks included rumblings of possible litigation. The litigation would be based on the legal theory that the city’s footing drain disconnection program has proceeded without valid contracts with homeowners, and that the installation of the wells and pumps constitutes an illegal “taking.” The city council decided on Sept. 17, 2012 to suspend temporarily the footing drain disconnection program.

It’s in that context that the city is now undertaking the study to be done by OHM – to determine if the footing drain disconnect program needs to continue and if so, where the efforts should be focused.

The scope of OHM’s work includes: (1) perform flow monitoring on the sanitary sewer in the five priority areas; (2) update, calibrate, and validate the existing sanitary sewer model; (3) evaluate the effectiveness of the current FDD program; (4) provide recommendations for reducing or eliminating wet weather flow impacts; and (5) do public engagement throughout the entire project, including a citizen advisory committee, a technical oversight committee, focus groups, and the general public.

Sanitary Sewer Flow Study: Council Deliberations

Cresson Slotten, an engineer and manager in the city’s systems planning unit, responded to questions about what the study would entail. The first part of the study, he explained, would include monitoring the sanitary system during heavy rains.

Margie Teall (Ward 4) drew out the fact that the city has also undertaken a study of the stormwater system – which is separate and distinct from the study of the sanitary sewer system. Teall encouraged members of the public to attend the public outreach meetings for the stormwater project.

Left to right: Ward 5 councilmembers Chuck Warpehoski and Mike Anglin.

Responding to a question from Marcia Higgins (Ward 4) city administrator Steve Powers indicated that the sanitary sewer project could be part of the council’s discussion of the capital improvements plan (CIP) at a working session on Feb. 11.

Mike Anglin (Ward 5) observed that when people live in a neighborhood, they expect that it’s not going to flood. He felt like the measurement study should have taken place earlier.

The Landsdowne neighborhood had paid for the fact that this study was only now taking place, he contended. Anglin asked Slotten why the city staff couldn’t undertake the study: Why did an outside contractor need to be hired? Slotten explained that the project is very intensive with respect to the equipment and staff resources.

A lot of human resources are required to gather all the data – to analyze and check for errors ,and to maintain the devices that are deployed out in the sanitary sewer system, Slotten said. The devices require a high level of expertise to operate, and a lot of expertise to take the data and analyze it with a computer model.

Slotten allowed that the city did have a computer modeler on staff – but his role is to maintain and utilize the existing model. The study is an effort to “advance” the city’s model of the system, to see how the system has evolved in the last 10 years – over the period when the footing drain disconnections have taken place. If the city’s one modeler were tasked with the study, it’d take a longer time and he wouldn’t be able to perform his usual duties.

Jane Lumm (Ward 2) concurred with Anglin, saying that for the homeowners who’d been impacted by it, this situation has been a nightmare. She allowed that $1 million is a lot of money, but said the city needs to do what it can to remedy the situation.

Outcome: The council unanimously approved the contract with OHM to conduct the study of flows in the sanitary sewer system.

Tech Agreements

Two technology agreements were before the Ann Arbor city council for consideration – a three-way agreement with the Ann Arbor Transportation Authority and Washtenaw County, and another two-party contract with the city of Chelsea. Both agreements existed previously.

The three-way accord had been approved by the council on May 2, 2011. This interagency agreement for collaborative technology and services (IACTS) is meant to provide a way to procure and maintain common technology platforms and services centrally.

The modification to the agreement, approved by the city council on Feb. 4, allows for adding other entities into the agreement in a more streamlined way, by “giving each founding member the ability to approve a process to enable an administrative individual to sign on behalf of that founding member for purposes of this adding new participants.” Other members could thus be added without modifying the agreement itself. With the amendment, Ann Arbor’s process for adding a new participant would include simply the approval of the city administrator on recommendation of the IT director and chief financial officer.

According to city of Ann Arbor IT director Dan Rainey, responding to an emailed query, one of the entities interested in participating in the IACTS is the Washtenaw Intermediate School District (WISD).

In May 2011 – when the Ann Arbor city council approved the IACTS with AATA and Washtenaw County – the council was also asked to consider the approval of an agreement with Washtenaw County for data storage services and for backup services. At the May 2011 council meeting, Rainey explained the nature of the shared storage and shared backup – there will be one machine at city hall and one at the city’s Wheeler Center.

The topic of backup and disaster data recovery issues was identified as one area of minor concern in the city’s most recent audit in late 2012. In chief financial officer Tom Crawford’s response to the auditor’s note on that topic, he outlines how the city uses a “separation of risks” approach and has always been able to backup and recover data in individual computing environments. Crawford’s written response also describes the city’s current work to improve its disaster recovery plan in terms of the IACTS: “Because of the nature of our interdependences, the information technology departments of the city of Ann Arbor, Washtenaw County and the AATA are collaborating on developing a common disaster recovery plan. The current state of the plan is that all parties know what is being backed up, where it is stored and that there is the ability to recover backed up data on a small number of servers.” [.pdf of revised auditor's letter] [.pdf of Crawford's Jan. 24, 2013 response]

Responding to an emailed query, Washtenaw County IT manager Andy Brush explained that certain IT services are already provided by Washtenaw County to various entities – like the city of Ypsilanti, Dexter’s fire department, and the 14B District Court – although they aren’t yet parties to the IACTS agreement.

The agreement between Ann Arbor and the city of Chelsea, which the council also considered on Feb. 4, dates back to 2011. Under the agreement, the city of Chelsea will pay the city of Ann Arbor up to $55,614 for the following services: helpdesk, management of the city’s website, server hosting, data backup and recovery, overseeing IT contractors, project management, and representing the city of Chelsea in regional technology efforts and meetings.

Tech Agreements: Council Deliberations

Jane Lumm (Ward 2) said she supported the concept of intergovernmental cooperation, and was supportive of this specific resolution. It’s nice to see other agencies joining in partnership with the city of Ann Arbor, so she ventured that the city’s approach to IT must be working.

But she noted that one of the aspects of the arrangement is that it’s a procurement cooperative. She wanted to know what other procurement cooperatives the city was part of, how the city decided to use them and when. She asked Dan Rainey, head of IT for the city, how can adding new members benefit the city?

Rainey explained that in the past there were occasionally opportunities to collaborate between the city and the county. The two entities would generate contracts and they’d done that one, two, three times. They’d then decided to come up with a platform to handle things in a more streamlined way. The benefit to the city is that the city’s expenses have been offset by investments the county has already made. In the other direction, other entitles have benefited from the investment the city has made in its data center. The council was being asked to consider a revision to the agreement that evening, because the existing partners are trying to get other entities to participate in the mindset of sharing. The idea is to not make other organizations feel like they’re being bullied into joining. They can join of their own accord, Rainey said.

Outcome: The agreement with Chelsea was on the consent agenda, which was approved unanimously. Separately, the council also unanimously approved the revision to the IACTS agreement.

Bonds for Clean Energy (PACE)

The Ann Arbor city council was asked to approve a step that would help owners of commercial property make improvements designed to help save energy under the city’s property assessed clean energy (PACE) program.

That step was to authorize the issuance and sale of up to $1 million in bonds in support of energy improvements to be undertaken by five property owners. In broad strokes, the PACE program is enabled by state legislation – the Property Assessed Clean Energy Act 270 of 2010. Property owners take out loans to make energy improvements to be repaid through regular installments as part of their taxes. Municipalities like the city of Ann Arbor administer the program. More than a year ago, on Jan. 9, 2012, the city council set the fees for participation in the program. Prior to that, on March 7, 2011, the city set up a loan loss fund with about $430,000 granted by the U.S. Department of Energy.

Properties for which owners have applied for improvements under Ann Arbor’s PACE program include: (1) Arrowwood (2566 Arrowwood Trail) for new HVAC equipment, insulation, occupancy sensors and lighting upgrade for the clubhouse; exterior lighting upgrade to LED; and solar shingles on one apartment building; (2) Big Boy (3611 Plymouth Road) for HVAC upgrade, lighting upgrade, cooking equipment replacement with energy efficient equipment, and controls; (3) Bivouac (330-336 S. State) for interior lighting upgrade; (4) Goodyear Building (118-124 S. Main) for HVAC replacement (boilers and A/C units), and lighting upgrade; and (5) Kerrytown Market & Shoppes (403 N. Fifth Ave.) for lighting upgrades in tenant areas and common areas.

Bonds for Clean Energy (PACE): Council Deliberations

The item was not added to the agenda until the day of the council meeting. Marcia Higgins (Ward 4) said she wanted to postpone the item, in light of the many questions she’d heard about the program. She reported that the city’s chief financial officer, Tom Crawford, had indicated that a two-week postponement wouldn’t present a problem.

Mayor John Hieftje, who’d co-sponsored the addition of the agenda item, said he didn’t know why it had been added late to the agenda. He said he thought it was to be added to the agenda that’s publicized on the Wednesday before the following Monday’s council meeting.

Hieftje said he had been working on the PACE program for years and would be “joyful” when it finally was implemented.

Outcome: The council voted unanimously to postpone the issuance of the PACE bonds.

Reports, Written Communications

Every council agenda includes a raft of written reports and communications. Here are two highlights from the Feb. 4 agenda.

Reports: Revised Auditor’s Note

A revised auditor’s letter to the city of Ann Arbor was attached to the city council’s Feb. 4, 2013 agenda, and has been formally received by the council as a written communication from the city administrator.

The original version of the letter had indicated three instances of an employee with a vehicle allowance also being reimbursed for mileage, and characterized those reimbursements as a “violation of city policy.” It was subsequently revealed that it was the mileage reimbursements of city attorney Stephen Postema that had caused the auditor to flag the issue.

But after further review – pushed by Postema and chief financial officer Tom Crawford – auditor Mark Kettner agreed that there was no written policy per se that disallowed the dual claims. Kettner is a principal at Rehmann, the city’s auditor, which is in the first year of a five-year contract.

But Kettner also noted that his original conclusion of inappropriateness was based on his view that the dual claims would be “illogical,” whether a policy existed or not. Kettner also indicated in reaching his conclusion of inappropriateness that he had not reviewed Postema’s employment contract, which Postema and Crawford contend would have permitted Postema to claim mileage reimbursements in addition to the vehicle allowance.

Postema’s contract was altered last year, chronologically after the contested mileage reimbursements, so that his vehicle allowance was eliminated.

The new wording of Kettner’s letter omits the characterization of the mileage claims as a “violation” but still calls attention to the issue, and adds language to highlight the problematic character of the reimbursements – that “… in each instance the expense report was not subject to independent review and approval.”

Postema’s contract stipulates that his reimbursements for travel are to be made according to standard city procedures. And one new procedure recommended by Crawford in his written response to the auditor’s report would address the lack of independent review. The recommendation is to require that reimbursements claimed by the city attorney or the city administrator – who are the city council’s two direct reports – be approved by the chair of the council’s administration committee.

[.pdf of original letter] [.pdf of revised letter] [.pdf of Crawford's Jan. 24, 2013 response]

Reports: 2012 Street Millage

The city of Ann Arbor’s street millage expenditure report for the 2012 construction season indicates that approximately 25 lane miles on 36 different streets were resurfaced or reconstructed this past season. Total construction cost was about $8.2 million, allocated between major streets (one-third) and local streets (two-thirds).

The street repair millage, renewed by voters in 2011, is levied at a rate of 2 mills, which generates about $9 million annually. The street millage expenditure report was attached to the city council’s Feb. 4, 2013 meeting agenda as a communication.

According to city project manager Nick Hutchinson, responding to an emailed query, the miles of streets resurfaced as reported in the city’s comprehensive annual financial report (CAFR) is a different measure – in two ways – from the lane miles reported in the 2012 millage report. First, the CAFR statistic (which has typically ranged between 4 and 7 miles over the last six years) reflects simply the length of the roadway. Second, the CAFR statistic is based on fiscal years (starting on July 1), whereas the millage report is a based on the activity in a calendar year.

Also approved by voters in 2011 was a new 1/8 mill sidewalk repair millage, which generated roughly $500,000 in revenues. According to the city’s report, about $561,000 worth of work was done under the sidewalk repair program, which included replacement of 1,475 slabs of sidewalk and the trimming of an additional 6,380 slabs.

Work also completed that was funded by the street millage program – not the sidewalk millage – were sidewalk ramps on 395 street corners, which are on a list to be replaced under a consent decree. The consent decree requires curb ramps to be installed on all street corners where the city resurfaced or reconstructed streets between 1992 and 2004. The Americans with Disabilities Act was enacted in 1990. [.pdf of street millage report] [.pdf of map showing streets resurfaced in 2012]

Communications and Comment

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

Comm/Comm: Downtown Parcels – Library Lot, Y Lot

During public commentary, Alan Haber ventured that the council had heard from the “fringe” pressing on issues with thoughts that the council didn’t particularly want to hear – concerns about the homeless and about Palestine and about an energy farm.

Haber referred to a written statement he’d circulated to councilmembers about the interim use of the top of the Library Lane underground parking garage. [.pdf of Haber's message to the council.] Haber’s remarks came in the context of a presentation by the Ann Arbor Downtown Development Authority to the city council on Jan. 14 about the Connecting William Street project. The presentation had included the DDA’s recommendations for the future use of five city-owned downtown parcels, which includes the top of the new Library Lane underground parking garage.

Haber called for allowing people to begin to have activities on top of the structure. If it were allowed to be open, he told councilmembers they’d be surprised by the creativity that Ann Arbor shows. He told them that Ann Arbor really needs a place for the community to come together, and asked councilmembers to take a look at his ideas – including a temporary skating rink with artificial ice.

Two days later, at the Feb. 6, 2013 meeting of the DDA board, Haber reprised his comments.

By way of additional background, at its Dec. 19, 2012 meeting, the DDA’s operations committee was provided with a draft of ideas for a policy on special events at the Library Lane mid-block cut-through and the top of the Library Lane parking garage.

The preamble to the draft includes the expectation that the site would eventually include a building with public open space, but indicates support in the interim for the kind of activity that Haber called for:

The structural component of the underground Library Lane structure was designed to anticipate the construction of a future building and a future public open space area. In the meanwhile, until such time as these elements are designed and constructed, the DDA is supportive of community groups using the Library Lane surface parking lot and the adjoining Library Lane for events, public gatherings and meetings.

In the draft, the main bureaucratic requirement is approval by the city of Ann Arbor for a special events permit, which currently costs $34.

During his communications time at the Feb. 4 council meeting, Stephen Kunselman (Ward 3) addressed a second parcel that’s part of the Connecting William Street project – the former Y lot at Fifth and William streets. Kunselman contended that it was pretty clear that “the DDA missed the boat on what to do with the Y lot.” Kunselman said the city needed to get that parcel listed for sale, so he’d be bringing forward a resolution directing the city administrator to solicit a real estate broker so that the Y lot can be offered for sale before the balloon mortgage payment on the property comes due at the end of this year. [The site is known as the Y lot because it was the former location of the YMCA. The property was sold to the city when the Y moved to its current location at 400 W. Washington.]

Comm/Comm: Budget Sessions

During communications time, Marcia Higgins (Ward 4) reported that the council’s budget committee had met and has mapped out the next few council work sessions.

City administrator Steve Powers and Marcia Higgins (Ward 4).

The Feb. 11 session will consist of two 2-hour sessions, starting at 6 p.m. The first session will cover affordable housing and the 15th District Court. The second session will cover the city’s capital improvements plan (CIP).

By way of additional background on pending proposed changes to the Ann Arbor housing commission’s housing stock, see: “Housing Commission Selects Co-Developer.”

For additional background on the 15th District Court, including an explanation of its responsibilities and funding sources, see coverage from the budget planning session two years ago: “Ann Arbor 2012 Budget: 15th District Court.”

For additional background on the status of the CIP as a planning document and the recent history of inclusion in the CIP of a proposed runway extension at the city’s municipal airport, see “Ann Arbor Budget Process Starts Up.” According to Craig Hupy, public services area administrator with the city, the fact that the runway extension is listed in the CIP for 2014 – with $2.135 million of funding – means that all other things being equal, $2.135 million will be spent on the runway extension in 2014 (i.e., it will be done in 2014), provided that funding is available. One factor that could change that would be for the city council to exercise its budgetary control and not to fund the project.

On Feb. 25, the work session will cover the specific budget impacts to individual service units and the council’s five key priority areas. The top three priority areas are: (1) city budget and fiscal discipline; (2) public safety; and (3) infrastructure. Two additional areas are: (4) economic development; and (5) affordable housing.

On March 11, Higgins continued, the council would talk about conflicting issues and would have a much larger discussion. That will give the city administrator time to finalize the budget. [Under the city charter, the city administrator must submit the budget for the next fiscal year, which begins on July 1, at the second regular council meeting in April. The council then must amend and adopt any changes by its second meeting in May.]

Higgins noted that the night of March 25 would be reserved for a possible additional working session, but she recognized that it’s the first night of Passover. She observed that no votes would be taken.

Comm/Comm: Ann Arbor Downtown Development Authority

During communications time, Stephen Kunselman (Ward 3) noted that for the previous meeting’s agenda, the council had received the Ann Arbor Downtown Development Authority’s annual report. [.pdf of FY 2012 DDA annual report]

That had reminded him that in August of 2011, he’d indicated to his colleagues that he’d wanted to make some amendments to the city ordinance establishing the DDA.

[That was on Aug. 4, 2011, two days after Kunselman won the Democratic primary election, on a campaign that was partly based on criticism of the DDA. That primary was a three-way race that included Marwan Issa and Ingrid Ault. Ault was subsequently appointed to the city's park advisory commission. The current chair of the city's park advisory commission, Julie Grand, could provide some competition for Kunselman in his re-election bid for 2013 – as she is now mulling a possible candidacy. Kunselman took out petitions on Nov. 3 to run for re-election to council for Ward 3.]

On Feb. 4, Kunselman highlighted the $2.1 million in the 2012 annual report from the DDA that was labeled “administration.” To have $2.1 million going toward administration seemed “a little outlandish,” Kunselman maintained.

By way of background, the line item labeled “administration” in the DDA’s annual report does not correspond just to those items typically associated with administrative overhead, like staff salaries and benefits. The amount includes, for example, about $0.5 million as a grant to the city for the police/courts building, as well as the subsidy of bus rides taken with the getDowntown’s go!pass. Responding to a request from The Chronicle, DDA executive director Susan Pollay provided the following breakdown of that amount:

Staff, office, professional services    $1,018,259
Grant to the city for the Municipal Ctr   $508,608
Other TIF grants and projects             $110,267
Grant for go!passes, other alt programs   $467,392
Total                                   $2,104,526

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Among the revisions to the DDA ordinance Kunselman described were changes to DDA governance, which would include term limits on board members, a prohibition against elected officials serving on the board, a requirement that any TIF (tax increment finance) expenditures outside the DDA district boundaries need the council’s approval, and a stipulation that TIF “rebates” for projects require city council approval.

Councilmembers Sumi Kailasapathy (Ward 1) and Stephen Kunselman (Ward 3).

But more significantly, Kunselman is proposing to change the way that the tax increment finance (TIF) capture by the DDA is calculated. The change to the way that TIF is calculated would be based on a different interpretation of the existing language in the ordinance, but would result in roughly $600,000 a year less in TIF capture by the DDA. It’s the same proposal Kunselman made on May 21, 2012 – as a proposed amendment to the city budget last year. On that occasion, his proposal received just three votes on the 11-member council; however, the current composition of the council includes three new councilmembers. For additional Chronicle reporting of the TIF calculations, see: “Column: TIF Capture Is a Varsity Sport.”

Kunselman’s view on the correct interpretation of the TIF calculation is one that was shared at least at one time by the Ann Arbor city attorney’s office. An apparently overlooked clause of the city’s ordinance on DDA TIF capture led the DDA board nearly two years ago, on May 2, 2011, to delay a vote on the new contract between the city and the DDA, under which the DDA administers the city’s public parking system. The Ann Arbor District Library, whose taxes in the district are subject to the DDA’s TIF, has also questioned the correct interpretation of the ordinance.

Kunselman concluded his Feb. 4 remarks on the DDA by saying that the ordinance needs some teeth to “rein in” the DDA board and the amount of TIF that is captured.

Comm/Comm: Taxicab Sexual Assault, “Rogue Limos”

During communications time, Stephen Kunselman (Ward 3) noted that he was chair of the city’s taxicab board and also the parent of two teenage daughters. He’d recently received a crime alert through the University of Michigan, reporting a sexual assault of a young woman, in either a limo or a taxi. Kunselman said the incident raises the issue that the taxicab board has been grappling with – the issue of “rogue limos.” He was describing limos that “impersonate taxis” with their marking and top lights, and pick up passengers as taxicabs do, but are not licensed as taxicabs under the city’s ordinance.

The city council had amended the taxicab ordinance [on Nov. 10, 2011] so that tickets could be written for limos that “impersonate” taxicabs by using top lights. If they’re not licensed, Kunselman said, the city doesn’t know who those drivers are. Kunselman thought it’s time the city do something about it. As chair of the taxicab board, he would ask for a monthly report of enforcement activities – how many limos are pulled over and how many have been ticketed. Kunselman identified two companies as having “rogue limos” – Yellow Car and Green Cab.

Responding to a question from mayor John Hieftje, Kunselman said there’s a state law that the city is trying to get strengthened and that he’d forwarded the crime alert to the city’s lobbyist, Kirk Profit. But Kunselman said he wasn’t sure it’s not possible to take action under existing laws and ordinances. At the most recent meeting of the city’s taxicab board, which took place before the reported sexual assault, the issue of limos impersonating taxis also arose.

Comm/Comm: Coleman Jewett, Public Art

During his communications time, mayor John Hieftje mentioned the memorial service for Coleman Jewett held the previous Saturday. Hieftje noted that Jewett had been a member of the Pioneer High School championship basketball team in the early 1950s. Hieftje passed along a suggestion that a bronze Adirondack chair be placed at the city farmers market as a remembrance to Jewett, who had sold Adirondack chairs and other furniture there for many years. Hieftje indicated that he hoped the public art commission would follow up on the idea.

Comm/Comm: Ending Homelessness, Cold Weather

Thomas Partridge introduced himself as a resident of Ann Arbor and a recent candidate for the state senate and house. He was there on a frigid night to urge the mayor and the city council to show immediate concern for the homeless in Washtenaw County. He expressed concern for people who show up on local news programs as causalities, hospitalized with frostbite or in the morgue frozen to death. He called on the council to empower the disenfranchised, and to give voice to continued union representation in contracts. He called on the city council immediately to end homelessness in Ann Arbor, Washtenaw County and Michigan. The Ann Arbor police department, fire department, Washtenaw County sheriff’s office and other organizations should be out looking for people who need shelter. He called for affordable transportation. Partridge observed that Feb. 4, 2013 was the 100th anniversary of the birthday of the most famous public transit rider in history – Rosa Parks.

During his communications time, mayor John Hieftje cited a report he’d received from Ellen Schulmeister, executive director of the Shelter Association of Washtenaw County, saying that no one has been turned away from the shelter system this winter. There’s outreach going on, done by a group that goes out and looks for people who might need shelter. But Hieftje said that some people won’t come in.

Comm/Comm: Energy Farm

Kermit Schlansker described again his concept of an energy farm as a showplace where many people could come together to work out ideas that would support a comfortable, sustainable society that could last 1,000 years. Beyond a multipurpose building, one of the first projects would be to construct a bunk house where people could stay while they are working on projects. The ultimate goal of the farm would be the construction of an energy efficient apartment building that could last 1,000 years, he said.

Comm/Comm: Israel, Palestine

Three people spoke on the issue of Israel and Palestine during public commentary at the council’s Feb. 4 meeting.

Henry Herskovitz told the council that Jewish Witnesses for Peace and Friends, a group he’s a part of, has been holding peaceful vigils for over nine years outside the Beth Israel congregation. The group is known for raising the issue of Palestinian sovereignty and what he described as Israeli war crimes. When a member of the city council lashes out with false accusations, he continued, he felt the need to “play a little defense.” He alluded to an Ann Arbor Chronicle article that reported comments from Chuck Warpehoski (Ward 5). From that report of the city council’s Jan. 7, 2013 meeting:

In Ann Arbor, Warpehoski said, we like to assume we’ve got everything all worked out, but when a Muslim woman driving home from her job at the university hospital had a gun pulled on her and was told to “go home,” that indicates that there’s work yet to be done. Another example he gave was the idea of putting a swastika over the Star of David, or circulating literature saying that Jewish religious observances turn boys and girls into “monsters.”

Herskovitz said that a website dedicated to ending his group’s demonstrations did not show any photographs of a swastika over a Star of David, and that if such a photograph existed, he was sure that it would be posted on that website.

Herskovitz then characterized the claim about religious observances turning boys and girls into monsters was out of context. Herskovitz indicated that the context should include Ovadia Yosef’s remarks as quoted in the Jerusalem Post: “Goyim were born only to serve us. Without that, they have no place in the world – only to serve the People of Israel.” Herskovitz noted that Yosef is former Sephardi Chief Rabbi of Israel and spiritual leader of the Shas political party in Israel.

Herskovitz pointed to another work by an Israeli rabbi, Yitzhak Shapira, who wrote “The Complete Guide to Killing Non-Jews.” Herskovitz quoted another former chief rabbi, Mordechai Eliyahu: “It is important to make one thing clear – the life of one yeshiva boy is worth more than the lives of 1,000 Arabs.”

Herskovitz concluded that those quotations were “monstrous” and ventured that those who’d said those words were probably indoctrinated into an ideology that makes such statements possible – likely at an early age. Herskovitz contended that Beth Israel rabbi Robert Dobrusin takes Jewish children on tours of Israel and poses them with armed soldiers. Dobrusin indoctrinates children into a Zionist ideology, Herskovitz contended.

[Based on the Anti-Defamation League's frequent condemnation of various remarks by Yosef (including those cited by Herskovitz), Shapira's book and remarks by Eliyahu, the views expressed by the men could fairly be considered to be inconsistent with the mainstream.]

Blaine Coleman began his remarks by saying that Warpehoski had made a promise not to vote for any resolution that criticized Israel – at a time when Israel is, Coleman contended, massacring Palestinians. Coleman described that as a “monstrous” promise to make, and hoped that Warpehoski would retract that promise. Coleman hoped that Warpehoski would support a resolution to boycott Israel, to divest from Israel or at least divest from companies that supply arms to the Israeli military. Coleman pointed out that Warpehoski’s own organization, the Interfaith Council for Peace and Justice, had approved a resolution to divest from Israel’s military, and he said that it’s Warpehoski’s responsibility to support that resolution as a city councilmember. Coleman described Israel as a “monstrously racist state” that could be compared to the racist ideology of Nazism.

Coleman showed the council a map of Palestine, which existed before Israel was established. One day, Coleman said, the Palestinian people would be free again to walk “in every inch of their land as free people.” That could only happen if “the racist state of Israel” were abolished, he said, in the same way that racist South Africa was abolished.

Coleman called on Warpehoski to lead the way by retracting his promise not to support a resolution critical of Israel. He closed by asking to whom Warpehoski had made the promise, and if someone had asked him to make such a promise.

Mozhgan Savabieasfahani called Israel a “racist state” and contended it could be compared to a Nazi state. What Israel is doing to the people of Palestine, she said, is nothing less than what Nazis did to Jews. She contended that people were being kicked out of their homes in East Jerusalem by the Israeli military, with the full support of the U.S. She said the U.S. contributes $5 billion a year to Israel so that Israel can kick “regular people” out of their homes. Addressing the several high school students who were attending the city council meeting as part of a class assignment, Savabieasfahani told them that thousands of Palestinians their age were in jail without any charges being pressed against them.

Among the councilmembers, one had said he’d be in favor of cutting funding to the “racist, Nazi state of Israel,” Savabieasfahani continued – Chuck Warpehoski. That’s to his credit, she said. Now she wanted to see him push forward and act on that, given that he now has a position where he can do that. Nothing has changed, since Warpehoski made that statement. She concluded with a call for a boycott of Israel.

During council communications time, Sabra Briere (Ward 1) responded to the commentary about Warpehoski. She said that in the five years she’s served on the council, one councilmember or another has been singled out for “less than positive feedback” during public commentary – something that always makes her “squirm.”

Left to right: Ward 1 councilmembers Sumi Kailasapathy and Sabra Briere.

She was told when she ran for the city council that no matter how liberal she might be as a person, to please try hard not to bring resolutions to the council that have nothing to do with local government. When she brought a resolution to the council about immigration reform, she heard from a lot of people who felt that was really none of the council’s business. She has brought other items like that in the last five years, because she thinks that they’re important when they have a “local connection.” But at the same time, she allowed that there were a lot of people in the community who think the council should be “focused on the business of doing business in Ann Arbor.”

Briere thanked Warpehoski for recognizing that there’s no city investment in Israel, and that there’s no money the city is sending to Israel. She thanked him for recognizing that without some kind of local connection – unlike the boycott of South Africa over apartheid – there is no “local hook.” The city’s ability to influence federal spending decisions is very limited, Briere contended. She said she had wanted to say something, because she’d been on the receiving end of occasional “interesting communication” with members of the public. [.pdf of city council resolution rescinding South Africa boycott]

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

Next council meeting: Tuesday, Feb. 19, 2013 at 7 p.m. in the second-floor council chambers at city hall, 301 E. Huron. The meeting date is pushed back a day to accommodate the Presidents Day holiday on Feb. 18. [Check Chronicle event listings to confirm date]

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The Ann Arbor city council is beginning a budget planning process that should culminate in a council vote to adopt a fiscal year 2014 budget at its second meeting in May, which falls this year on May 20, 2013.

City administrator Steve Powers and chief financial officer Tom Crawford sketched out three kinds of topics they could explore with the full council at work sessions through the spring: (1) funding for items in the capital improvements plan (CIP); (2) budget impact analysis, broken down by service unit; and (3) additional resources required to support the city council’s five priority areas, which were  identified in a planning session late last year.

The top three priority areas are: (1) city budget and fiscal discipline; (2) public safety; and (3) infrastructure. Two additional areas were drawn from a raft of other possible issues as those to which the council wanted to devote time and energy over the next two years: (4) economic development; and (5) affordable housing.

Possible city council work session dates are the second and fourth Mondays of the month. Regular meetings fall on the first and third Mondays.

The city council will be adopting a final budget for fiscal year 2014 by its second meeting in May. FY 2014 starts on July 1, 2013. Although the council approves an annual budget for the next fiscal year, the city uses a two-year planning cycle. This year starts a new two-year cycle, the first complete one for city administrator Steve Powers, who started the job about a year and a half ago, in September of 2011.

During some back-and-forth with the budget committee about the staff’s ability to provide all the information to the council that the committee had been describing – within the timeframe of the budget season – Powers joked: “Tom and I aren’t rookies!” Powers was previously Marquette County administrator for 16 years. Crawford has served as Ann Arbor’s CFO for more than eight years.

The council’s five-member budget committee consists of: Sabra Briere (Ward 1), Jane Lumm (Ward 2), Christopher Taylor (Ward 3), Marcia Higgins (Ward 4) and Mike Anglin (Ward 5).

An interesting wrinkle that emerged during the budget committee’s discussion was the role to be played by the city council in shaping the capital improvements plan (CIP). In response to some interest expressed by committee members to amend the CIP, Powers encouraged them to think in terms of allocating funds (or not) for elements of the plan. That’s because the content of the CIP is the statutory responsibility of the planning commission, not of the city council. The city council’s role is to determine which projects should be funded, Powers explained. But it’s for the city planning commission to finalize the content of the CIP itself.

This report includes more on the Michigan Planning Enabling Act (Act 33 of 2008) and the city council’s recent history of amending the CIP.

Capital Improvements Plan: 2014-2019

The city’s planning commission has already voted, on Dec. 18, 2012, to approve the CIP for 2104-15. [.pdf of CIP for FY 2014-2019] The CIP is developed and updated each year, looking ahead at a six-year period, to help with financial planning for major projects – permanent infrastructure like buildings, utilities, transportation and parks. It’s intended to reflect the city’s priorities and needs, and serves as a guide to discern what projects are on the horizon.

This year, 377 projects are listed in 13 different asset categories. In the report, new projects are indicated with gray shading. They include renovating and/or remodeling five fire stations, 415 W. Washington site re-use, a park at 721 N. Main, urban park/plaza improvements, several street construction projects, a bike share program, and the design, study and construction of a new rail station.

Capital Improvements Plan: Amending the Plan?

Three years ago, on Feb. 16, 2010, the city council voted to amend the CIP after receiving it from the planning commission. On that occasion, the project that the council removed from the plan was one labeled the “Runway Safety Extension” for the city’s municipal airport.

The possible runway extension has been controversial for a few decades, but re-emerged again as a point of friction more recently in the context of an environmental assessment connected with the runway extension. [The runway extension is included again in this year's CIP.] The city council has voted periodically to fund the project, which taps non-local sources in addition to the smaller amounts needed from the city. The most recent vote by the council on that study came on Aug. 20, 2012.

Again on Feb. 7, 2011 city council amended the CIP to exclude the runway extension. Roger Fraser, who was city administrator at the time, hinted during the council’s meeting that the council was not actually expected to alter the plan itself [emphasis added]:

City administrator Roger Fraser noted that the planning commission is required to propose the CIP, but that not every item in the plan needs to have funding identified. Development of the plan, he said, complies with state law, and technically, the city council should simply be voting to receive the plan – implying that it was not really expected that the council would alter the plan.

Last year, on May 21, 2012, the council received the FY 2013-18 CIP attached to its agenda as a communication, and did not vote on it except to receive it along with several other communications. By that time, Powers had been serving as city administrator for about 9 months. The memo attached to the item on the agenda recited the past practice of amending the CIP, but noted that the city council did not need to act on the CIP [emphasis added]:

Similar to the City’s two-year budget process in which this year’s budget review by City Council consists of adjustments to the second year of the two-year budget presented to Council in the spring of 2011, the CIP approved by the Planning Commission consists of adjustments to the second year of the FY12-17 CIP approved by the Planning Commission on January 4, 2011. On February 7, 2011 City Council approved the FY12-17 CIP as the basis for the City’s capital budget, with the exception of the Airport Runway Safety Extension Project which was removed from the FY12 Capital Budget. As the adjustments to the CIP and to the capital budget under review by the Council were performed jointly, and with approval of the adjusted capital budget to be performed by Council following its review of the adjustments, no action regarding the CIP is required by City Council.

When Powers sketched out the overall concept for budget planning at the Jan. 22 meeting of the city council’s budget committee, Jane Lumm (Ward 2) expressed an interest in amending the CIP. She noted that when she’d served on the council in the mid-1990s, she recalled undertaking amendments to the CIP. And Sabra Briere (Ward 1) recalled the more recent amendments of the CIP with respect to the airport runway.

Powers responded by pointing out that the CIP was not the purview of the governing body – in this case, the city council – but rather of the planning commission. What the council was responsible for, Powers explained, was allocating funds (or not) for the projects in the CIP. Powers alluded to the relatively recent change in the statute that lays out the responsibilities of the city planning commission. He confirmed later for The Chronicle that he was referring to the Michigan Planning Enabling Act 33 of 2008, which reads in relevant part:

125.3865 Capital improvements program of public structures and improvements; preparation; basis.
Sec. 65. (1) To further the desirable future development of the local unit of government under the master plan, a planning commission, after adoption of a master plan, shall annually prepare a capital improvements program of public structures and improvements, unless the planning commission is exempted from this requirement by charter or otherwise. If the planning commission is exempted, the legislative body either shall prepare and adopt a capital improvements program, separate from or as a part of the annual budget, or shall delegate the preparation of the capital improvements program to the chief elected official or a nonelected administrative official, subject to final approval by the legislative body. The capital improvements program shall show those public structures and improvements, in the general order of their priority, that in the commission’s judgment will be needed or desirable and can be undertaken within the ensuing 6-year period. The capital improvements program shall be based upon the requirements of the local unit of government for all types of public structures and improvements. Consequently, each agency or department of the local unit of government with authority for public structures or improvements shall upon request furnish the planning commission with lists, plans, and estimates of time and cost of those public structures and improvements.

In the case of Ann Arbor, there’s no exemption of the planning commission from having responsibility for the CIP.

At the committee meeting, Briere observed that – from her perspective as the recently appointed city council member to the planning commission – she perceived that planning commissioners viewed the CIP as a document that could be altered by the city council, and thus commissioners viewed it in some sense as merely a recommendation by the commission. She ventured that Powers’ explanation of the respective roles of the planning commission (which is responsible for the content of the plan) and the council (which is responsible for the budgeting of specific projects in the plan) would need to be incorporated into the planning commission’s culture.

Water Mains in the CIP

At the budget committee meeting, Lumm indicated that her interest in amending the CIP stemmed from a desire to see a water main replacement project in her ward be funded for 2014 instead of 2015. And in the course of deliberations during the city council session that followed the budget committee meeting, Lumm’s Ward 2 council colleague Sally Petersen mentioned a water main replacement project she wanted the city to undertake. The two councilmembers confirmed for The Chronicle that the specific water main project they meant was on Yellowstone, which is in the eastern area of the city, bounded by the east-west portion of Green Road on the north, and Bluett Road on the south.

The CIP for FY 2014-19 includes the Yellowstone water main replacement for 2015, and indicates a cost of $650,000. The CIP includes more than 30 different water main projects citywide. Projects are ranked on a priority scale with a number of factor weights. Lumm wants to see the Yellowstone moved a year earlier – to 2014. She responded to a query from The Chronicle by indicating that the Yellowstone water main has had six breaks in a five-month period.

Based on data compiled by The Chronicle from the city’s comprehensive annual financial reports (CAFRs), total water main breaks citywide in the last four years are less frequent per year than in the previous three. In 2012 there were 72 water main breaks citywide.

City of Ann Arbor water main breaks: 2006-2012. Data from city of Ann Arbor comprehensive annual financial reports.

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AAPS trustee Simone Lightfoot at the March 7 meeting. She was not alone in expressing her dissatisfaction with the transportation services being provided by Washtenaw Intermediate School District. (Photo by the writer.)

Under Michigan’s schools-of-choice legislation, local school districts can enroll these nonresident students without having to obtain approval from the district in which students reside.

So schools-of-choice students bring their state per-pupil allocation with them to AAPS. If all 170 seats are filled, the district will gain approximately $1.19 million in additional revenue.

The March 7 board meeting included discussions of the district’s transportation options, staffing process, and fund balance as trustees brace for budget recommendations to be brought to them by AAPS administration by the end of March.

Trustees expressed dissatisfaction with its transportation services, which it receives from the Washtenaw Intermediate School District as part of a consortium of other districts.

Schools of Choice

AAPS director of student accounting Jane Landefeld briefly reviewed the policy and procedures the district uses to administer the Schools of Choice program, which the district has offered for the past two years. She reviewed how the district will again offer a limited number of seats – 170 in total, split primarily among kindergarten (40 seats), first grade (40 seats), and sixth grade (50 seats). Ten seats will be also be offered at each grade level between second and fifth grades – mostly to accommodate the older siblings of incoming kindergarten or first-grade students.

Landefeld reported that AAPS gained 72 students through SOC in 2010-11, and another 95 this school year (2011-12). When students are admitted to AAPS, they can stay in the system through graduation.

Landefeld noted that AAPS is required by the state to open a 30-day window, give parents a 15-day notice before opening the window, and announce the number of slots available per grade level, but not per school. If the district receives more than 170 applicants, it is required to admit at least 170 of them, because that is the number of seats AAPS is declaring are open. Siblings of admitted students are given priority, after which a random draw is done by grade level.

Finally, Landefeld explained, AAPS is required to accept all students who apply, unless they have had a suspension in the past two years. Special education status or academic history cannot be a factor in admission. Trustee Susan Baskett asked if AAPS could choose to admit a student who had been suspended, if the district believed the reason for suspension was not serious. Landefeld said the district could do that.

Schools of Choice: Feeder Patterns

Baskett asked if parents who enroll their children in AAPS via the schools of choice program have the opportunity to ensure their children’s admittance to a desired high school by choosing to enroll them in an elementary or middle school that feeds to that high school.

Landefeld explained that while every SOC student is guaranteed a space in the district through graduation, it is not guaranteed that SOC students will follow the same feeder pattern as their elementary or middle school peers.

Basket asked, “Would we really make someone switch feeder patterns?” She asked whether in-district transfer students are guaranteed to follow the feeder pattern of the schools to which they transfer, and Landefeld said no. Neither SOC nor in-district transfer students are guaranteed to follow feeder patterns, but are assured that they will have a space through graduation.

Trustee Simone Lightfoot suggested that the district needs to overhaul the in-district transfer policy, noting that it has “had some challenges.” She questioned whether the policy covers every instance of a parent requesting a new school for his or her student.

Schools of Choice: High School Level

Trustee Andy Thomas suggested that AAPS open up SOC at the high school level as well, and asked if this has been considered. He noted that prior practice was not sufficient reason to restrict SOC to middle and elementary levels when SOC can significantly enhance revenue. Thomas ventured that the district’s decision on this issue had been made during a time of overcrowding at Pioneer and Huron high schools. Now, with a full complement of students now transitioned to the newly-constructed Skyline High School, the district should take another look at this, Thomas said.

AAPS deputy superintendent of instruction Alesia Flye said that superintendent Patricia Green has asked administration to look in to offering high school SOC slots, but that there are myriad challenges. Landefeld noted that one issue is that the high schools have not historically been open for in-district transfers, and said that if high schools were opened to students outside the district, the district should first consider opening them to in-district transfers. She added that the intent of the SOC program is not to add staff. So she pointed out that staffing levels of additional students need to be considered, in addition to physical space in buildings.

Trustee Glenn Nelson argued that the district should rethink the premise that admitting SOC students should not require the hiring of additional staff. He pointed out that a classroom of 30 SOC students would generate approximately $210,000 in revenue, with the average foundation allowance of the other Washtenaw County districts being $7,000. Because the cost of adding an additional staff member is less than $210,000, Nelson argued, the district needs to take another look at this premise.

Landefeld pointed out that the math is not as straightforward as Nelson had characterized it – because a high school student could take up to seven classes, each taught by a different teacher.

Lightfoot noted that she was concerned about SOC causing class sizes to increase, but Nelson argued that it happens both ways. Last year, he pointed out, there was a school that lost a teacher for a grade – but if an additional four or five students from SOC were attending, the school would have had three sections of that grade instead of two, with smaller class sizes in each.

Board president Deb Mexicotte suggested that if trustees felt that due diligence had been done, the opening of these SOC slots could be moved from first briefing to a special briefing, allowing for a vote at the March 7 meeting. Seeing general assent around the board table, Mexicotte directed board secretary Amy Osinski to add SOC to the consent agenda.

The Schools of Choice proposal was approved unanimously as part of the consent agenda, along with minutes, gift offers, and a resolution to thank school social workers in recognition of school social worker week.

Budget Update

AAPS deputy superintendent of operations Robert Allen gave an update on development of the fiscal year 2012-13 budget. The bulk of trustees’ discussion on the budget update focused on transportation, discussed in detail below.

The only other topic Allen covered was the special education reimbursement rate, or the percentage of total special education costs that AAPS is reimbursed by the Washtenaw Intermediate School District (WISD). Allen noted that the rate is projected to decrease from its current level of 73%, but not by as much as initially anticipated. Nelson thanked the community for approving the recent special education millage, which he said would have caused a much larger drop in the reimbursement rate, had it not passed.

Budget Update: Timing of Budget Recommendations

Trustee Christine Stead expressed concern that looking at any one issue, such as transportation, in isolation does not put the district in a good position in terms of “activating the community” around the budgetary tradeoffs the board ultimately needs to make. Trustee Irene Patalan agreed, saying that she was “anxiously awaiting the hard decisions we have to make,” and that she was looking forward to seeing the “whole picture.”

Allen said that the administration is planning to bring a set of budget recommendations to the board by the end of the month, and to the community via forums in the first few weeks of April.

Budget Update: Transportation Review

By way of background, two years ago the AAPS joined with Ypsilanti and Willow Run school districts to form a transportation consortium, administered by the WISD. At the board’s committee of the whole meeting on Jan. 25, 2012, the board discussed their collective surprise that Ypsilanti and Willow Run had just decided to issue a request for proposals (RFP) for transportation services, effectively signaling they were considering leaving the consortium. The AAPS board directed Allen to see if Ypsilanti and Willow Run would let AAPS join the RFP, which the district did. At the March 7 meeting, Allen reported on the RFP process.

Allen reported that Ypsilanti and Willow Run had decided in the end not to issue an RFP for transportation services, based on a consultant’s analysis that the potential savings “would not be worth it.” Therefore, Allen clarified, Ypsilanti and Willow Run are “leaning toward just staying in the [WISD] consortium.” He said the district’s options now were to remain in the WISD consortium or to issue an RFP on its own.

Multiple trustees expressed concern that the district’s transportation would continue to be managed by the WISD without ever having had a thorough review of the first two years of service. “I don’t want the WISD to be able to exhale … Service has been terrible,” said Baskett. She said AAPS should consider looking at another vendor for transportation services, but noted that it’s not likely anything new could be implemented “in a timely and respectful manner” for fall 2012. Thomas agreed, saying “this has been a rocky time for students and drivers … It would be a bad idea to upset the apple cart once again [by leaving the consortium].”

Mexicotte noted that the WISD would be making a presentation to the AAPS board in May. Lightfoot said she was concerned about waiting until May to decide whether to stay in the WISD transportation consortium. “I want us to be able to renegotiate this contract,” she said. “I’m looking forward to getting this update so we can move forward.”

Trustees asked Allen about the savings AAPS has gleaned by being part of the consortium. Allen said that while AAPS did not reach its savings target, “We have spent significantly less in transportation under the consortium.” The first year’s savings came from significantly lowering transportation staff salaries, and the second year’s savings came from operational changes, he said. Allen also noted that projected transportation costs have been adjusted in the budget, as reflected in the second quarter financial report.

Budget Update: Transportation Suggestions from the Board

Lightfoot asked if the other six Washtenaw county districts that had not initially joined the consortium would be willing to join now. Allen responded by saying he has not had any conversations regarding expanding the consortium at this time. Lightfoot also suggested forming a board-level transportation committee, and said she was willing to lead it or be a part of it. “This transportation piece is a real passion of mine because of the students who need it,” she said.

Stead suggested that AAPS should lead a more overt effort to get more districts on board, at least in terms of consolidating special education transportation services, which are mandated by law. She asked if there was a way AAPS could help the WISD coordinate with more districts.

Mexicotte’s suggestion was the most strongly worded. She began by saying she found the WISD’s leadership surrounding transportation “troubling,” and noted that the savings gleaned from routing efficiencies came from work by AAPS, not WISD. “I am not certain any more that we can rely on the best thinking of this consortium … I wonder if we shouldn’t look at taking back the leadership around our transportation.”

Second Quarter Financial Report

Allen and AAPS director of finance Nancy Hoover reviewed the district’s financial report for the second quarter of the fiscal year, which runs from July 1 to June 30. The budget amendments proposed by the Allen and Hoover noted revenue increases of $1.2 million, but expenditure increases of $2.2 million.

Hoover explained that the revenue increases were due primarily to Medicaid funding previously held by the WISD being returned to AAPS, the district’s receipt of one-time best practices funding from the state, and WISD’s reimbursement of special education transportation costs. Expenditures, she said, increased primarily due to an adjustment of $800,000 in the transportation budget, and a $1.2 million increase in instructional salaries due to an inability to meet the targeted staff reductions.

In terms of the disbursements being presented for approval, Hoover noted that the district is now writing very few payroll checks, as substitute teachers and coaches now are both also paid via electronic transfer.

Trustees had a few clarifying questions. However, the discussion on budget amendments centered mostly on staffing issues and the district’s fund balance, as the board approaches the task of setting the FY 2012-13 budget.

Second Quarter Financial Report: Staffing

Nelson opened up a discussion on staffing by sharing his concern about the district’s failure to meet its targeted staff reductions. The 2011-12 budget had planned for a reduction of 66 FTEs (full-time equivalent positions) in instructional services. Allen explained that the qualifications and certifications of the teachers who retired still overlapped with the district’s continuing instructional needs. So the district had not been able to achieve the full number of staff reductions that had been targeted. Allen also noted that the district had a “no layoffs” agreement with the teachers’ union as part of the current contract.

Nelson pointed out that recent e-mails he had seen made it look like staffing decisions were being made in the schools before the budget is set. He said he would like to understand the district’s hiring policy and procedures better. He noted that in addition to the budgetary aspect of the district’s hiring process, he had concerns about its timing. “We in Ann Arbor wait, wait, wait in deciding how many people we can hire, but … we are not hiring when the whole pool is available.” Nelson noted that he and Baskett had attended a meeting of the minority affairs committee of the teachers’ union. Based on that meeting, he reported that there is the perception among members of that committee that AAPS is not getting the best teachers from underrepresented groups, because it is not hiring at the right time.

Stead and Baskett each supported Nelson’s request for a review of the district’s hiring process. Baskett also wondered whether the board needed to have a conversation about approaching the teachers’ union to lift the “no-layoffs” constraint. AAPS superintendent Patricia Green said the district has not gone to the unions to reopen contract issues, but acknowledged that “staffing is done very differently here than in other places,” and said internal discussions about the district’s hiring process have been ongoing.

Second Quarter Financial Report: Fund Balance

Stead asked Allen what the district is expecting fund equity to look like in the third quarter. She pointed out that there was a big change in the fund balance between the second and third quarters last year. Allen said he was not expecting any major changes to fund equity, and that there may be a slight savings in health care costs.

Stead requested that Allen provide the board with a history of what the third and fourth quarters have done to fund equity the past few years – in order to increase the board’s confidence as it sets the fiscal year 2012-13 budget. She asserted that the more Allen can help the board understand the kinds of swings expected in fund equity, the better the board can decide how to weather the next round of budget reductions.

Nelson noted that the $2.2 million in increased expenditures means that the fund balance for this year will be lower than anticipated. Thomas added that the majority of the negative expenditures variance is due to retaining 14 more FTEs than anticipated, and asked whether the district will attempt to reduce these FTEs next year.

Allen answered that those 14 FTEs become part of the new base expenditures. He noted that depending on the district retirements this year, the positions could be absorbed. But he also pointed out that the district will need to add roughly 24 teachers in order to offer all-day kindergarten.

Outcome: The second quarter financial report will return to the board for a second briefing and vote at the next regular meeting.

Public Commentary

Three people addressed the board at the March 7 meeting.

Public Comment: Disciplinary Action

Ruth Zweifler of the Student Advocacy Center spoke on the issue of disproportionality in suspensions and expulsions, and requested that the board declare a moratorium on all disciplinary exclusions. She argued that school exclusions are meant to be a last resort and that the message of exclusion for already marginalized children affirms their sense they are not welcome and they don’t belong. “Racial disproportionality is shameful and hurts everyone,” Zweifler asserted. Noting her length of service to students in this area, Zweifler noted that the data do not look any different than they did years ago.

Public Comment: Student School Board

Ray Batra, a University of Michigan student and AAPS alumnus addressed the board as a member of rEDesign, an education reform group formed by UM undergraduates. He said rEDesign had studied AAPS, and noted a lack of student perspective at the board level. He urged the board to consider creating a “student school board,” which would be general representative of AAPS and enjoy students’ respect in a way the Youth Senate has not. The student school board, Batra said, would have two goals: (1) to address some of the smaller problems at certain schools—such as the use of security cameras and lunch concerns; and (2) to be a student voice for some of the bigger issues, such as budget cuts, or curriculum revisions.

With an advisor, Batra suggested, this student school board could be led to develop and present resolutions to the board. Finally, he noted that in addition to providing students with a respected, legitimate voice, having a student school board would provide a civic education opportunity, with board members actively developing student leadership.

During clarification on public commentary, Mexicotte said that members of rEDesign had met with her as well as Stead and Green, and presented a comprehensive proposal, which she would be sending on to the full board for review. Green added that her executive cabinet would be discussing the proposal as well, and that she saw the student school board as an opportunity to develop student leadership and voice, and prevent students from being excluded.

Mexicotte said this was an opportune time for rEDesign to approach the board, because the board has been discussing student voice. She expressed interest in her fellow trustees’ review of the rEDesign proposal, as well as administrative recommendations about how to increase student voice, and said she was interested in finding ways for board members to mentor students.

Public Comment: Huron versus Skyline

Finally, Kaveh Esmael addressed the board on behalf of his daughter, who will be attending high school next year. He described an issue he has been having regarding getting his daughter assigned to Huron instead of Skyline. Esmael owns a home in each attendance area. He expressed concern with how he had been treated by AAPS administration regarding his daughter’s school assignment, as well as how boundary lines have been drawn for the high schools in general. Finally, Esmael asserted that the education at Skyline is not “on par” with the other two comprehensive high schools, and that the environment there is not safe for girls, especially Muslim girls. “I don’t want my daughter to be part of this experience,” he said. “We should not kid ourselves.”

During clarification on public commentary, Lightfoot asked how follow up would be done with parents who brought concerns to public commentary, and Green said administration would follow up personally. [During the meeting break, The Chronicle observed two members of AAPS administration meeting with Esmael at a table in the hallway.]

At the end of the meeting, during “items from the board,” Mexicotte responded to Esmael’s assertions. She said she was confident that the three AAPS comprehensive high schools are all equally excellent in terms of rigor and student opportunities. She asked if the board would be amenable to having Green look into the perception or reality expressed by Esmael that there are diversity and tolerance issues relating to Muslim students at Skyline. “I don’t really think this is the case, but I am concerned that there is this perception,” Mexicotte said. The board agreed to having Green look into Esmael’s claims.

All-Day Kindergarten

Mexicotte noted that all-day kindergarten was on the March 7 board agenda not because there was any more work to be done on the issue, but to affirm the presentation the board had been given at the Feb. 15 committee of the whole, to acknowledge that the board had been well-briefed on the issue before its vote at a special meeting on Feb. 18, and to give board members an opportunity to speak to the issue.

Green said she has received a lot of positive feedback on the board’s decision to approve all-day kindergarten in all schools. She noted that she had been approached in downtown Ann Arbor and asked to thank the board, and called the move “a step in a new direction as a district.” Nelson agreed, saying he was “happy and proud of this step.”

Stead pointed out that while moving to all-day kindergarten will be best for students from an instructional perspective, and will cost less than maintaining half-day kindergarten, it will still cost the district $1.5 million. She said it is important to be aware of the tradeoffs the district has to continue to make due to state funding changes.

Lightfoot assured the public that the board did have a conversation about keeping half-day kindergarten, but ultimately decided it was more feasible to make the kindergarten program uniform across the board.

Two trustees had questions regarding all-day kindergarten. Patalan asked Green if she could give some reassurance that all day kindergarten would support young children’s capacity for imagination and play and not always focus on academics and testing. Green acknowledged that there is a balance, and that all-day kindergarten will allow teachers better to develop students’ creativity and unleash their imagination and sense of play. “This is a tremendous opportunity,” she said. “When it’s done right, the potential is exponential … to develop well-rounded youngsters.”

Baskett asked what the district’s practice was regarding “redshirting,” or “holding a child back until age six for kindergarten.” Calling the practice a “growing trend,” AAPS director of student accounting Jane Landefeld acknowledged, “We do have parents who choose to redshirt … It tends to be more males. Parents want them to be older and stronger to participate in high school sports.”

Mexicotte said moving to all-day kindergarten will be better for the district educationally and financially. Green thanked deputy superintendent of instruction Alesia Flye for spearheading this effort and deputy superintendent of operations Robert Allen and his staff for being sure the district could move this forward as quickly as possible.

Student Reinstatement Action

Mexicotte noted that trustees had received a copy of a motion regarding a student reinstatement. She moved that the board deny reinstatement of Student A based on the reinstatement panel recommendation.

Outcome: The motion to deny reinstatement to Student A passed unanimously.

Student Engagement

The board invites student voices to the board table in two direct ways – for one of the two regular meetings per month, the Youth Senate is invited to make a presentation, and for the other meeting that month, a slot is reserved to hear from representatives of one of the six AAPS high schools on a rotating basis. At the Feb. 8 meeting, representatives of Community High School addressed the board.

Student Engagement: Community High School

Hind Omar and Emma Share reported for Community high school. They expressed enthusiasm for their school, and noted opportunities for students to be involved there. They noted their involvement with the School Improvement Team, and credited SIT with increasing the diversity in the admissions lottery for Community, starting program between upperclassmen to mentor and lowerclassmen, and increasing the membership of a variety of student groups.

Omar and Share also mentioned they were two of the chairs on the forum council. Community’s students are organized into 20 forums, which include students from each grade. They explained that the forums are used to help coordinate “not school as usual” days, such as going to see Sweet Honey in the Rock, or pulling garlic mustard weeds throughout the city. Forum council is also planning a fundraiser this spring to address local hunger issues, they reported, and visits middle schools to help recruit students.

Patalan asked the Community students about the strategies they used to increase diversity in their admissions lottery.

Hind explained that there is a mandatory information meeting for parents and students to attend before they can apply for a spot, and those meetings have historically been held on weekdays. Last year, she said, Community began offering an information session on Sunday to allow for parents to attend who could not make it during the week. Share added that she was part of the team of students who did outreach at the district’s middle schools. The goal of that outreach was to show middle school students that Community is for all types of people. She noted that next year’s incoming class is more diverse, and credited the outreach strategies with increasing the diversity in the lottery pool.

Patalan said that she had heard this was the largest group of applicants, and suggested that the outreach that had been done increased interest in Community in general as well as among students of color.

Association Reports

Five associations are invited to make regular reports to the school board: the Black Parents Student Support Group (BPSSG), the Ann Arbor Parent Advisory Committee for Special Education (AAPAC), the Parent Teacher Organization Council (PTOC), the Ann Arbor Administrators Association (AAAA), and the Ann Arbor Education Association (AAEA). The BPSSG, AAPAC, and AAAA addressed the board at the March 7 meeting.

Association Reports: BPSSG

Bryan Johnson reported for the BPSSG. He noted that the BPSSG is working with the University of Michigan school of education on student achievement, and is planning for a roll-out of their efforts in 2012-13. He also noted that the BPSSG had attended “National African-American Parent Involvement Day (NAAPID) at Night”, and that he looks forward to AAPS hosting the county-wide event next year. Johnson said that the BPSSG had discussed the racial disparities in the newly released discipline data, as well as Green’s plan for addressing these disparities.

Association Reports: AAPAC

Maria Huffman reported for the AAPAC. She thanked AAPS special education staff members for their recent updates, and expressed appreciation for the developments they shared regarding the Kurzweil assistive technology system, peer-to-peer mentoring, and a transition guide for students with IEPs transitioning from high school to beyond. Huffman reported that adaptive physical education classes at some of the middle schools are being offered at a time that conflicts with academic classes, and argued that this was an unacceptable arrangement. Finally, Huffman invited trustees to attend upcoming Disability Awareness Workshops in the district, and encouraged parents to participate as well.

Association Reports: AAAA

Dicken elementary principal Michael Madison reported for the AAAA, beginning by congratulating the UM men’s basketball team on their first conference title in 26 years. He pointed out two fellow principals in attendance at the meeting – Jennifer Hein from Community High, and Kit Flynn from Ann Arbor Open, and said that several administrators would be attending all future board meetings so that the board can put faces to names.

Madison thanked the board for its recognition of principals’ week, and Green for the plaques that she had made up for each principal. He also thanked the trustees for their leadership, and invited them to visit school buildings during the day and for evening events as well. Finally, he reported that the AAAA is “150% behind the tech bond initiative,” and has even given a very small donation to the citizen’s millage committee as a sign of support. Madison said the principals will work with the community to help them know why they need to support the tech bond.

Superintendent’s Report

Green began by recognizing school social workers, national merit scholars, Skyline High School’s theater troupe, and AAPS students who recently won competitions in art, chess, business, and journalism. She also thanked students for recent service projects they have completed in the community.

Green noted that trustee Susan Baskett had been awarded a “master board member” award from the Michigan Association of School Boards (MASB), and congratulated her on the accomplishment. Among other accolades of individual students, Green noted the tremendous commitment and dedication of band and orchestra members throughout the district, along with vocal and instrumental solo and ensemble winners. She invited everyone to notice the AAPS student artwork on display downtown in honor of youth art month, and, finally, noted that she was recently inducted into the Ann Arbor Rotary Club, and was excited to “dig [her] roots deeper into the Ann Arbor community.”

Thomas added that the music programs in AAPS are “phenomenal,” and singled out Skyline in particular for the program growth they have shown. “It’s incredibly difficult to start an orchestra from scratch … I really think that Andrea Cowper and her staff and all the student musicians deserve a lot of recognition for the dedication they have shown.”

Agenda Planning

Baskett requested a review of the district’s alternative programs, including enrollment numbers and accomplishments of the WAY program, the International Baccalaureate, Clemente, and A2 Tech. She also requested a set of action steps for the discipline plan Green revealed in December, 2011. Green responded that the discipline plan is part of her overarching student achievement plan, and will be discussed as part of the overall plan being presented at the board’s next committee-of-the-whole meeting on March 14.

Items from the Board

Stead reported that the Forsythe Middle School science fair was a great event, and complimented all the students who participated. She also complimented Pioneer High School athletic director Lorin Cartwright for bringing students and teachers together for Pioneer basketball team’s teacher appreciation night, saying it was a great opportunity for students to honor their teachers.

Lightfoot also appreciated the Pioneer event she said, noting that the “young men were very articulate in their writing … Their penmanship was amazing.” [Each student athlete selected one teacher to honor.] Lightfoot also reported that she had visited a Rising Scholars event at Huron High School, and expressed support for the program. She said she had been honored to be selected as a “living leader” during Black History Month.

Nelson congratulated Baskett for a presentation on privatization during a recent forum during a recent forum sponsored by the local League of Women Voters. He agreed that orchestra night was a tremendous testimony to students, staff, and parents. And, he thanked the citizens helping out with the upcoming tech bond, saying that the kickoff was wonderful and inspiring.

Baskett emphasized the wonderful work of AAPS students, and asserted that “orchestra night was a great recruiting tool.” She reported that she was impressed with the commitment of teachers she saw during National African-American Parent Involvement Day at Carpenter Elementary, Bryant Elementary, and Slauson. Middle School. And, Baskett said she met with parents from southeastern Ann Arbor’s PTOs who were analyzing the potential impact of the district’s budget cuts to their buildings.

Present: President Deb Mexicotte, vice president Christine Stead, secretary Andy Thomas, treasurer Irene Patalan, and trustees Susan Baskett, Simone Lightfoot, and Glenn Nelson.

Next regular meeting: Wednesday March 21, 2012, at 7 p.m. at the downtown branch of the Ann Arbor District Library, 343 S. Fifth Ave.

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City of Ann Arbor chief financial officer Tom Crawford before the Feb. 13, 2012 working session. (Photos by the writer.)

With the exception of one significant change – adding one police officer instead of cutting nine – the blueprint for this year’s budget will, with some slight revisions, follow the plan put in place last year. That includes a plan to eliminate five firefighter positions, pending labor negotiations with the firefighters union.

At the December budget committee meeting, city administrator Steve Powers described this year as taking a “breather” – while stressing that the review of the organization is an ongoing process.

The relative luxury of essentially following the second year of a two-year plan is made possible this year by positive news and outcomes on several fronts.

But at Monday’s working session, the city’s chief financial officer, Tom Crawford, urged a cautious approach, given pending uncertainties about the basic structure of funding local governments in Michigan. Among those uncertainties is the future of the personal property tax, which could drop the city’s general fund revenue by $1.76 million, if that tax were to disappear completely. He advised the council not to use one-time positive outcomes to increase expenditures. Instead, he recommended that the city should strive to increase its fund balance reserve to 15-20% of expenditures – it currently stands around 13%, or $10.5 million. The general fund budget for the city this year calls for $78,321,015 in expenditures.

One of those positive outcomes is the retiree health care funding level for FY 2013, recommended by the city’s actuary – $12.4 million. The city’s planned cost for FY 2013 was $15.3 million. But Crawford is recommending that all but $400,000 of that $2.9 million savings should continue to be paid into the city’s voluntary employees beneficiary association (VEBA), to reduce unfunded liabilities and to guard against future liabilities. The potential $2.9 million savings is a citywide figure.

But as a result of another VEBA-related policy choice that Crawford is recommending, the city’s general fund – out of which basic services like police, fire, planning, and the like are paid – would see a roughly $1 million boost. That policy change would start treating retiree health care as a true pre-funded system, instead of the current pay-as-you-go hybrid. The current hybrid pay-as-you-go approach places a higher burden on those funds that have a relatively large number of associated retirees – workers who were paid out of that fund while they worked for the city. [As of December 2011, the city's general fund had 366 active employees and 532 retirees.] Crawford’s recommended approach focuses on the gaps in pre-funding, which puts the financial burden where most of the liability is currently accruing – active employees. And that would translate to a $1 million general fund savings, compared to the current approach.

Crawford put specific pieces of positive budget news in the context of general positive news, suggesting that the city has now seen the worst of the 2008 economic downturn. Unemployment numbers are dropping – in the Ann Arbor area, unemployment stood at 5.5% in December. And state sales tax receipts are coming off depressed levels – that’s important, because the “revenue” in state shared revenue (the amount the state distributes to local units of government) comes from state sales tax receipts.

Among the specific pieces of positive news Crawford presented to the council was the expectation that the city would break even on the current budget year (FY 2012), which ends June 30, 2012. The city had expected to tap the general fund reserve for $1.1 million this year. In the previous year (FY 2011), the city also essentially broke even, when it had anticipated needing to spend $1.5 million from its fund balance reserve.

Compared to what was anticipated in the two-year plan for FY 2013, on the revenue side several categories are expected to increase. Additional expenses, compared to the two-year plan, include adding a police officer instead of eliminating nine positions.

The net effect of all the changes from the two-year plan is a $1.6 million surplus of recurring revenues against recurring expenses for FY 2013. Of that surplus, Crawford is recommending that the council allocate $150,000 for a pilot program for recruiting police officers. But the rest he’s advising the council to add to the fund balance reserve to guard against leaner years projected in FY 2015-16.

The police recruitment program would allow potential hires to work under the direction of an Ann Arbor police officer before being hired on as a sworn officer. The program’s rationale was described by police chief Barnett Jones at the Feb. 13 working session as stemming from the hiring process to fill nine officer positions that came open at the end of 2011, due to retirements.

Jones gave a presentation of year-end crime reports showing that crime in major categories is trending down for Ann Arbor. Despite the net gain of 10 officers now anticipated for FY 2013, compared to the AAPD staffing levels in the two-year plan, the department’s 118 sworn officers leave Jones 32 short of the 150 that he described at the working session as the “perfect” number of officers for Ann Arbor.

After the jump, this article includes charts and graphs of crime reports, more detail on the impact of retiree health care on the budget, the budget outlook for FY 2013, and the city council’s work schedule for ratifying the FY 2013 in late May.

Work Schedule

Some elements of budget timing leave very little room for flexibility. The city administrator is required by the Ann Arbor city charter to present a budget to the city council each April. And the administrator’s proposed budget must be adopted by the city council, with any amendments the council wishes to make, no later than the council’s second meeting in May.

This year, those constraints have translated into the following schedule.

• Feb. 13: Working session (budget overview, strategy, and police impacts)
• Feb. 27: Working session, if necessary
• March 12: Working session (fire department and other organizational impacts)
• March 26: Working session, if necessary
• April 16: City administrator presents recommended budget
• May 7: Public hearings on budget and fee changes
• May 21: Council consideration of the budget – amendments, adoption

The schedule indicates an apparently late start compared to the last three years, when the council has held off-site retreats to identify priorities and goals, starting in December or early January. Of those three years, the second was actually an exception to the strategy the council has tried to use since CFO Tom Crawford came on board six years ago: Plan in two-year cycles, even though the council adopts budgets one year at a time. On that strategy, every other year should work out to be a fairly straightforward exercise of making minor adjustments to the plan already in place.

So in late 2009, when the city was preparing its FY 2011 budget, that would have ordinarily been a light year for budget work. However, given the dramatic economic downturn a few months before, it wasn’t possible to pursue a strategy of making minor adjustments. Counting that middle year, the council’s pattern over each of the last three years has been to start in December or early January. So this year’s “late” start, though apparently an exception, is essentially a return to the two-year planning approach.

Retirement System Background

At the Feb. 13 work session, Nancy Walker, executive director of Ann Arbor’s employee retirement system, sketched out some background on the system, including its board membership: Jeremy Flack (fire trustee, chairman);
Alexa Nerdrum (citizen trustee, vice chairman);
Dave Monroe (police trustee, secretary);
Terry Clark (general member trustee);
Tom Crawford (city CFO);
Brock Hastie (citizen trustee);
Mark Heusel (citizen trustee);
Steve Powers (city administrator);
and Brian Rogers (general member trustee).

Walker noted that the board still has the same composition as it did before the charter amendment on board composition was approved by voters in the Nov. 8 election, because the change has not yet been collectively bargained. The pre-election charter language set forth the board composition as follows:

(1) The City Administrator and the Controller to serve by virtue of their respective offices; (2) Three Trustees appointed by the Council and to serve at the pleasure of the Council; (3) Two Trustees elected by the general city members from their own number (general city members being members other than Policemen and Firemen members); and (4) Two Trustees elected by the Policemen and Firemen members from their own number.

The revised charter language, which was approved by voters with a margin of 68% to 32% (with a majority in every precinct of at least 61%) retains nine members but distributes them differently, most notably by eliminating from the board the city administrator and one of the trustees elected from the general city membership. The revised board composition is: (1) the city controller; (2) five citizens; (3) one from the general city employees; and (4) one each from police and fire.

The Aug. 15, 2011 city council resolution that placed the charter amendment on the ballot noted that the change would also need to be collectively bargained:

RESOLVED, That if the amendment is adopted, the City Administrator and City Attorney shall immediate commence negotiation with the City’s collective bargaining units to implement the amendment and present to Council the necessary ordinance and contract documents for adoption to make the amendment effective.

Although the new city administrator, Steve Powers, is serving on the retirement board until the new board composition is collectively bargained, the terms of his contract state that he is not a beneficiary of the city’s retirement plan, but will instead have a 401(a) plan. The rationale for the change in the board’s composition was to reduce the number of board members who are also beneficiaries of the plan.

That recommendation had come from a 2005 “blue ribbon” commission – tasked to make recommendations about the city’s retirement board and the city’s pension plan. In 2008, a member of the retirement system’s board of trustees, Robert N. Pollack, Jr., resigned from the board in part due to the city’s failure to enact recommendations of the blue ribbon panel. [.pdf of blue ribbon panel report] [.pdf of Pollack's resignation letter]

At the Feb. 13 work session, Walker reported to the council that most of the blue-ribbon panel’s recommendations had now been implemented.

By way of additional background, the city’s retirement program is supported in part by the levy of a retirement benefits millage [labeled CITY BENEFITS on tax bills], currently at a rate of 2.056 mills, which is the same rate as the city’s transit millage. A mill is equal to $1 for every $1,000 of taxable value of a property.

Walker noted that the retirement system had undergone many changes in its administration, but described the transition as smooth. Among those changes include a new investment manager, a new medical director, a new pension analyst and a new executive director. Walker had joined the Ann Arbor retirement system in January 2011 after Willie Powell had retired in June 2011. Powell served as executive director for the retirement system for 11 years.

Walker also noted that the actuary used by the system as a consultant is also new. Previously the city’s retirement system had used Gabriel Roeder Smith & Company. Starting in 2011, the city began using Buck Consultants as its actuary. The Buck Consultants representative who handles the city of Ann Arbor, Larry Langer, was employed for 10 years by Gabriel Roeder Smith.

Retirement/VEBA Allocation

Larry Langer of Buck Consultants gave the council an overview of the pension fund and the VEBA systems. [.pdf of slide presentation]

Retirement/VEBA Allocation: Overview

City of Ann Arbor retirement system funded ratio graph.

Key takeaway points given by Langer to the council included the fact that the pension fund, for FY 2011 (ended June 30, 2011) had greater investment returns and lower salaries than expected and more retirements than expected. All those changes generated better-than-expected results compared to the June 30, 2010 projections. For FY 2013 the expected employer contribution is now $9,748,510. Based on projections from the prior year’s June 30, 2010 valuation, it had been expected that the city would need to contribute a total of $10,784,00 to the pension fund in FY 2013.

The funded ratio for the pension fund at the end of FY 2011 was 88%, which is a drop from the end of FY 2010 (June 30, 2010) when the funded ratio was 90.3%. But that’s less of a drop than was expected, Langer said. Based on projections from FY 2010 valuation, he had expected a funded ratio of 86.3%.

For FY 2012-14, the dip in the valuation, and the corresponding spike in required employer contributions, drew some questions from councilmembers. Langer explained that the dip corresponded to the economic downturn in 2008-2009. The valuation is keyed to a rolling five-year average, in order to damp the volatility of the measure, so those years continue to have an impact on the valuation until at least five years have passed. Langer cautioned that the funded status will continue to slip in the next few years as the last of the returns from the down years in 2008 and 2009 are reflected in the valuation.

On the VEBA side, which funds retiree health care, key presentational takeaways for the council were greater investment returns than expected, lower salaries than expected, and fewer claims. For the coming fiscal year 2013, the expected employer contribution for employees citywide is $12,379,000, not including some adjustments and interest.

Retirement/VEBA Allocation: VEBA Allocation Policy – How Much?

When the city’s chief financial officer, Tom Crawford, took the podium, he contrasted the expected employer contribution with the number that had originally been planned for FY 2013: $15.3 million. That reflects a citywide savings of roughly $2.9 million.

A number of factors contributed to the reduced cost, including a higher return on investments – 28% last year compared with the standard assumption of a 7% return. Crawford also pointed to ordinance changes reflected in recent collective bargaining agreements, which reduce the health care costs to the city for active employees. And employees hired after July 1, 2011 have an access-only retiree health care plan.

City of Ann Arbor retiree health care contributions. Red line: Historical and projected claims expenses. Green line: Actuarial calculation of contribution. City CFO Tom Crawford is recommending the city continue to make contributions based on the FY 2012 level (dashed blue line), in order to guard against rising claims expenses. (Image links to higher resolution file)

But Crawford noted that the investment returns and the claims amounts – which had contributed substantially to the savings – are relatively volatile and could reverse in the future.

So, of the citywide $2.9 million savings, Crawford recommended that the city continue to contribute $2.5 million of it to the VEBA to pay down unfunded liability and reduce future expenditures. In his presentation, Langer had noted that the VEBA is only 34% funded. On that figure, Langer said that the council might wail and gnash their teeth over the low amount, but it’s still 34% more than a lot other communities.

Crawford also noted that putting $2.5 million of the $2.9 million savings toward the VEBA would help pay down the city’s other post-employment benefit obligations (OPEB) – the city has a $12 million OPEB obligation arising from a settlement with the IRS. Crawford hopes to have that obligation paid off in 5 years.

Crawford noted that the city’s contribution to the VEBA has typically been more than the retiree health benefit costs. And the excess in the contribution, beyond the cost of claims, contributes to pre-funding future benefits. However, because of the increased number of retirees and the rising cost of medical care, the cost of claims is expected to exceed recommended employer contribution in the future. And that will mean that the city will have to rely more heavily in each year on the accuracy of the assumptions underlying the contribution (like at least a 7% return on investments).

In that context, Crawford recommended a VEBA funding policy that makes future city contributions to the VEBA based on the FY 2012 level – but adjusted up or down as a function of the total general fund revenues. That would provide better stability in financial planning and investing, and reduce radical changes in city expenditures, Crawford concluded.

Retirement/VEBA Allocation: VEBA Allocation Policy – Targeting Liability

Crawford’s recommended strategy for the overall citywide retiree health care funding level does not call for the kind of reduction in the city’s contribution that could be achieved if the actuarial OPEB cost were used to determine the city’s contribution.

City of Ann Arbor retirees by fund (department). The majority of city retirees – 65.8% – worked in positions paid for out of the city's general fund (red wedge).

However, a different policy change – one that would assign contributions to those city departments (funds) based on where the future liability is being accrued – would have the effect of saving the city’s general fund roughly $1 million a year.

Under the current system of allocating the city’s retiree health care costs, roughly 73% goes to pay retiree health care claims and the remaining 23% goes to pre-funding – through payments into the VEBA. It’s a hybrid between a pay-as-you go approach (in which each year’s retiree claims are paid out of the current year’s budget) and a pre-funding approach.

The current method essentially treats all retiree health care claims in any given year as unfunded liabilities. That approach means that a city fund (department) with a relatively high number of retirees compared to currently active employees has a relatively higher retiree health care contribution compared to other city funds.

City of Ann Arbor active employees by fund. While the majority of city workers are paid out of the general fund (53.3%), it's a lower proportion than the number of retirees paid out of the general fund (65.8%).

The new approach Crawford is recommending is a true pre-funding approach, and takes into account where the new liability is accruing. The city has already made contributions to the health care of retirees, so not all of the retiree health care claims in a given year are unfunded liabilities – part of those claims have, in a sense, been pre-funded.

So the accruing liability is with currently active employees as they work each additional year. And eventually, as new hires who came on board after July 1, 2011 are vested in the system, the city will see just a $2,500 per year liability in connection with those employees’ access-only plans. So instead of a 73%/27% split, the new allocation methodology would work out to 40%/60% – with 40% going toward the unfunded liability due to existing retirees’ health care and 60% going toward the accruing liability of active employees.

The effect of that shift has a variable impact on different city funds (departments), based on the proportion of retirees and active employees associated with each fund. In late 2011, for example, the general fund had 366.3 active employees, compared to 532.5 retirees. By way of contrast, the parks maintenance fund had 22.59 active employees, compared to just 10 retirees. So for the general fund, under the new methodology recommended by Crawford, the total retirement health care allocation would drop from $9,600,241 to $8,584,649, for a savings of roughly $1 million. But for the parks maintenance fund, the retirement health care allocation would increase from $258,909 to $322,960.

FY 2013 Budget Outlook

The $1 million savings to the general fund – which would result from the retiree health care funding methodology recommended by city CFO Tom Crawford – figures into the overall budget outlook for FY 2013 presented to the council by Crawford.

He began by putting the current year’s budget discussion in the context of the general economic and political climate. Unemployment is improving, he said. In the Ann Arbor area, the unemployment rate stood at 5.5% in December 2011, compared to a rate of 9.3% across the state of Michigan. State sales tax receipts are coming up from their depressed levels. Short-term interest rates are still near 0%. Property tax revenues are fluctuating slightly. Revenue from the federal stimulus package is disappearing. He noted that the state legislature is still considering the elimination of personal property taxes, but has focused little discussion on addressing the structural funding issue for local governments.

Crawford noted that for the previous fiscal year, the city had broken even, when it had planned to spend down the fund balance by roughly $1.5 million.

FY 2011
Revenues                $ 81,065,793
Expenditures              80,938,127

Net Excess/(Deficit)       $ 127,666
Unassigned Fund Balance $ 10,525,445 (13% of expenditures)

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Crawford told the council that again this year, for FY 2012, the city is working realistically to break even, despite having budgeted to tap the fund balance for over $1 million. If the city does break even, that will result in maintaining its $10,525,445 in unassigned reserves, which is 13% of annual expenditures.

Compared to the two-year plan associated with the previous year’s budget, there’s been a net increase in expected recurring revenues [figures in millions]:

FY 2013
Recurring Revenues

$77.8 planned
----------
  0.6 increased tax revenues
  0.7 state shared revenues
  0.2 increased fire inspection revenues
 -0.6 remove police dispatch (loss of PSAP revenue)
 -0.2 bond user fees
  0.2 other
----------
$ 0.9 total change
----------
$78.7 revised

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On the expenditure side, Crawford presented the council with a net reduction of $0.7 million compared to the two-year plan. The bulk of those reductions were related either to health care or the contracting out of the city’s police dispatching operation to the Washtenaw County sheriff’s office:

FY 2013
Recurring Revenues

$77.8 Planned
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 -1.2 remove dispatch (19 positions)
  0.8 add back 1 police officer, not cutting 9
 -1.0 change retiree health allocation method
 -0.3 police union employees health care
 -0.1 AFSCME union employees health care
  0.1 increased pension contribution
  0.3 higher energy costs
  0.2 higher tax refunds
  0.1 AATA
  0.1 AFSCME president
  0.1 increased severance
  0.2 Other
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 -0.7 total change

$77.1 revised

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The increase in revenues and reduction in expenditures resulted in a net surplus of $1.6 million for FY 2013. Crawford cautioned against spending that surplus, even on one-time items, and advised instead that it be added to the city’s fund balance. The reason for his caution is based on a continued projected increase in expenses in FY 2014-16 of around 2% per year – which he characterized as about what you’d expect in a organization where the primary expense is employee compensation. Personnel costs outpace inflation, he explained.

Against that 2% increase in expenses, the city is projecting only a 1% increase in revenues. On that basis, Crawford is currently projecting that the city would need to spend $792,973 of its fund balance in FY 2015 and $2,112,030 in FY 2016.

In order to guard against any future economic downtown, Crawford said he’s advising that the city increase its fund balance reserve target to the range of 15-20% of annual expenditures. It currently stands at 13%. Still, Crawford said that compared to previous years, it was a nice forecast, with basically a $1 million challenge to meet in coming years – compared to the $2.5 million in savings the council had needed to find in previous years.

Policing, Crime Statistics

Out of the $1.6 million surplus anticipated for FY 2013, one new program that Crawford is recommending the city fund is a pilot program for recruiting police officers. It would cost $150,000. At the Feb. 13 working session, chief of police Barnett Jones explained that the rationale for the program stemmed from difficulties with the hiring process to replace nine officers who retired at the end of 2011. The city received a few hundred applications, but Jones told the council that seven of the nine candidates it had initially identified didn’t turn out to have the kind of backgrounds that rose to the level of professional standard that AAPD wants.

The pilot program would give the department a chance to work with officers on the beat before being hired on as full-time sworn officers. They’d work under the supervision of an AAPD officer and would spend a portion of their time downtown addressing nuisance issues. Despite the net gain of 10 officers now anticipated for FY 2013, compared to the AAPD staffing levels in the two-year plan, the department’s 118 sworn officers leave Jones short of the number he’d like. At the working session, he described the “perfect” number of officers for Ann Arbor as 150.

At the working session, Jones also presented year-end crime totals for the city – in the context of trends since 2002. In all categories of major crimes, the city is trending downward, except for one, criminal sexual conduct:

Ann Arbor Crime Trends: 2002-2011 (UDAA is automobile theft) (Image links to Google Spreadsheet and other charts.)

As a possible theory on why that category of crime has increased, Jones ventured that it’s the kind of crime that carries with it a stigma that acts as a barrier to reporting it. As women are increasingly comfortable reporting such crimes, the numbers have risen, he theorized.

At the working session, Jones rejected the idea that for other crimes the decrease in frequency could be attributed to a decreased number of officers – the idea being that are simply fewer officers to take the reports, leaving more crimes unreported. Jones said that for these types of crimes, he thinks it’s unlikely that anyone would fail to report them – in many cases they’re tied to payouts of insurance claims.

Data for categories of serious crimes was not presented at the working session. The most recent six months of all crime reports for Ann Arbor and some other jurisdictions are available through the website crimmapping.com

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