During public commentary, Sue Maguire addressed the council on the topic of proposed reductions to the fire department. (Photos by the writer.)

But Monday, at its second meeting in May this year, the city council did not act, choosing instead to recess and continue the meeting the following week, on May 23. The decision to delay was prompted by uncertainty about revenue from the public parking system. The Ann Arbor Downtown Development Authority and the city were poised to ratify a new agreement on parking revenue on May 2, but that agreement was put off when questions were raised about the DDA tax increment finance (TIF) capture. The DDA later called a special meeting on Friday, May 20 to address that issue.

Even though the council did not act on the budget, most of the evening’s discussion was dominated by budget talk, including extensive public commentary on the proposed cuts in the police and fire departments. The council also got a briefing from its chief of police and interim fire chief, Barnett Jones, who responded to an article published in AnnArbor.com about fire department response times, calling the calculations presented in the piece inaccurate.

In addition to putting off action on the FY 2012 budget, the council also tabled decisions on human services funding, funding for a water system study, and fee increases for next year.

However, the council did transact some business. It authorized an increase in taxicab fares in light of rising gas prices. The council also approved neighborhood stabilization funds for demolition of three houses on North Main Street to prepare the site for construction of the Near North affordable housing project. Two large vehicle purchases – a street sweeper and a sewer truck – that had been postponed from the previous meeting were authorized.

The council also revised its administrative policy on how the 2006 parks millage is to be spent. Funds outside the general fund can count as general fund money for the purpose of the policy, as long as those funds are not drawn from the parks millage. The council also gave initial approval to an ordinance on design guidelines for new buildings downtown.

FY 2012 Budget Decisions

Before the council was approval of the 2012 fiscal year budget that had been proposed by then-city administrator Roger Fraser just before he left that position to take a post as a deputy treasurer for the state of Michigan. The city’s fiscal year starts on July 1.

The city’s charter stipulates that the administrator must submit the proposed budget to the council in April and that the council must approve a budget by its second meeting in May, which this year fell on May 16. If the council fails to approve the budget – with any amendments – by its second May meeting, the budget as proposed by the administrator is adopted by default.

The budget as proposed included $77,900,405 in general fund revenues and tapped the reserves for a total of $1,022,136. The city of Ann Arbor’s total budget, including all of its funds (major street fund, parks millage, water fund, sewer fund, etc.) stands at $312,182,605 for FY 2012.

FY 2012 Budget: Announcement of Delay

At the beginning of the council’s May 16 meeting, mayor John Hieftje indicated that when the council reached the budget item on the agenda, they intended to recess the meeting and continue it the following Monday. The budget was the next-to-last agenda item.

As a reason for delaying, Hieftje cited uncertainty about the status of a new parking agreement with the Ann Arbor Downtown Development Authority. Later in the week, the DDA board announced it would hold a special meeting at noon on Friday, May 20 in an attempt to address questions about its TIF capture and to ratify its side of a new parking contract with the city.

Expected amendments to the budget when the council takes it up on May 23 include: (1) use of $90,000 in general fund reserves to add to the parks allocation; (2) use of $85,600 in general fund reserves to add to human services funding; (3) use of a nominal amount of general fund reserves to cover the cost of an additional primary election (as proposed, the FY 2012 budget anticipated primaries in only two of the city’s five wards – there will be primaries in three wards); and (4) elimination of a proposed fee for three-times-weekly trash pickup in the downtown area.

Before the meeting, no budget amendments were anticipated that would change the proposed cuts in public safety positions – 13 in police services and seven in fire protection services. However, at the meeting, Hieftje hinted that some, but not all, of the cuts in police and fire might be avoided.

FY 2012 Budget: Safety Services – Public Commentary

The formal hearing on the FY 2012 budget took place at the council’s May 2 meeting. But several people had signed up for the public commentary reserved time at the beginning of the meeting, including some familiar faces from local government, past and present. [At the council's next gathering on May 23, there will presumably not be public commentary reserved time offered, as it is a continuation of the same meeting.]

Leading off public commentary was Fred Veigel, who serves on the Washtenaw County Road Commission. He introduced himself as president of the Huron Valley Central Labor Council, AFLCIO, which includes 37 local unions with 18,000 members, he said. Terminating police and firefighter positions below national standards would endanger lives and property of Ann Arbor citizens, warned Veigel. Responding to comments by Hieftje at the start of the meeting about the separation of the budget into various funds, he said, “Balderdash!” Money could be borrowed from different funds, he contended, not taken away.

He asked if the last audit of fund balances has been reviewed to see if funds are available for public safety services. The council should cut other services first, he said, like human services. The council should amend the city’s parks policy and let Washtenaw County take over the two city golf courses – that would save several hundred thousand dollars. He said he’d talked with councilmember Tony Derezinski (Ward 2) about enforcing state vehicle codes on unmarked commercial vehicles that don’t pull permits to work in the city – that could generate additional revenue.

Following Veigel to the podium was Wes Prater, who currently serves on the Washtenaw County board of commissioners. He introduced himself as a retired firefighter, and vice president of the Huron Valley Central Labor Council, AFLCIO. He told the city council it was good to be back before them – he hadn’t been there in a while. He asked to council to reflect on some basic points. What services do citizens expect to receive from government? What are the basic quality of life issues? What will ensure sound economic development in the community? What are best practices for re-entry of those who are incarcerated and for dealing with mental health issues? These are all related to the function of the emergency safety system of the city, he said.

For the fire department, eight minutes is too long for a response time – four minutes is recommended by national standards, he said. After four minutes, Prater said, a fire doubles in size every minute. Closing stations and rotating stations gives citizens a false sense of security. The fire department is struggling at this time to provide a basic level of service to the citizens, and the further reductions will make it difficult to answer more than one fire at one time. Multiple fires would require mutual aid from departments in other communities, which would require more than eight minutes, he warned.

Prater noted that according to a recent report from Washtenaw County’s equalization director, Ann Arbor’s property values had dropped less than the values in the rest of the county.

University of Michigan Graduate Employees Organization (GEO) supporters in the audience at the May 16 Ann Arbor city council meeting.

Chelsea Del Rio introduced herself as the vice president of the Graduate Employees Organization (GEO) at the University of Michigan. She told the city council that the GEO stands in solidarity with the firefighers. The GEO is concerned about the rotating closure of fire stations, especially when Station 5 on the university’s north campus is closed. It’s a great concern to the UM community, she said. It’s a concern about physical property, ranging from the safety of historical documents to research facilities, as well as a concern about safety and well-being of students, faculty staff and all Ann Arbor residents.

The unions at UM – from lecturers, to building trades, to nurses – have expressed this view to UM president Mary Sue Coleman as well, Del Rio said. She concluded by saying that the members of the GEO stand with Ann Arbor firefighters, and they urged the council to do the same.

Noting that he was a former member of the city’s park advisory commission and the planning commission, James D’Amour told the council that he was speaking to them as a citizen, not as a member of any group. He said he’d seen declines in terms of services and the promise the city was supposed to keep with respect to the parks, but said he might address that issue later. That evening, he said, he wanted to put a face on the important public safety services offered by the city.

D’Amour then recounted how 12 years ago, his second-floor neighbors – he and his wife lived on the third floor – had started a fire through careless behavior. He said that without help from the fire department, his wife wouldn’t be alive today and likely neither would he. He said he’d seen thousands of dollars paid by the city for consultants, parking structures and public art. He concluded by thanking the firefighters who saved his wife’s life 12 years ago.

Lisa Dusseau told the council she was born and raised in Ann Arbor. She was speaking to them for the first time due to the pending fire department layoffs. She said she admired the skill and fortitude it takes to be a firefighter. She said she’d been following the budget discussions on AnnArbor.com. She wondered why it took so long to get the information out. She had concerns about response times and deaths per calendar year. Increased cuts will turn Ann Arbor’s fire protection service into a surround-and-drown department. If she wanted that level of service, she said, she’d move to a township.

Dusseau contended that once staffing levels fell below 100 firefighters, the number of deaths due to fire had started to increase – even one is too many, she said. Non-essentials need to be eliminated from the budget. She’d read that money to supplement the budget was available but not applied for. She said that people wearing swim goggles at the city council was good theater, but doesn’t serve needs of the city as a whole. [This was an apparent allusion to the May 2009 public hearing on that year's budget, which included advocates for keeping Mack pool open. They had worn swim goggles – among them was James D'Amour. ] She told the council to take another look at the budget and not let staffing levels deteriorate.

Standing is Wendy Woods, former Ward 5 councilmember and current city planning commissioner. She was talking to Sandi Smith (Ward 1) before the meeting.

Former Ward 5 councilmember and current planning commissioner Wendy Woods told the council she wanted to address the issue of police and fire fighters. She said the myth needs to be debunked that fewer fires means we need fewer firefighters. The fire department has served our residents admirably, she said. They are first to respond when you’re at the lowest point in your life. They bring a calm reassurance that someone is there to help you.

Woods said she was concerned about protecting lives of citizens and their property, and also about the safety of firefighters. She urged the council to take the steps necessary to bridge the gap between the fire department and city hall. It’s just a street [Fifth Avenue] that separates them, but it might as well be the Grand Canyon, she said. She concluded with three requests: (1) don’t cut the fire department; (2) don’t cut the police department; and (3) keep residents safe.

University Bank president Stephen Ranzini introduced himself to the council as speaking for himself. He noted that he was a member of the city’s economic development corporation board.

He criticized spending $59 million on the Fifth Avenue underground parking garage at around $90,000 per parking spot – he called the project “the Big Dig.” He continued by criticizing the $43 million expenditure on the “Taj Mahal.” [He was alluding to the new municipal center, or police-courts facility, which the city is officially calling the Justice Center. Some residents have tagged the facility with the name "Raj Mahal" after former city administrator Roger Fraser.]

Ranzini said the city had a $29 million net increase in assets in FY 2010 – which the private sector would call a “profit.” He also said the city had $103 million in unrestricted funds, based on the city’s audited statements. He was referring to the city’s Comprehensive Annual Financial Report (CAFR) [emphasis added]:

$103,726,801 is unrestricted and may be used to meet the government’s ongoing obligations to citizens and creditors, subject to the purpose of the fund in which they are located. This balance is comprised of $43,955,179 in governmental activities and $59,771,622 in business-type activities. [page 10]

“Governmental activities” include general fund activities such as police and fire protection and parks and recreation. “Business-type activities” include funds like water, sewer, and solid waste.

In light of the increase in assets and the amount of unrestricted funds, Ranzini questioned the need to cut police and fire staffing. There’s only one ladder truck owned by the city that is capable of responding to rescue his family from the 10-story building downtown where his family lives, he said. [The 95-foot ladder truck is deployed at Station 1 on Fifth Avenue, across from city hall.] If that ladder truck is responding to a fire in another part of the city that would have otherwise been handled by a station that is closed, he and his wife and children would die, because they can’t jump to safety, he said.

As a downtown resident, Ranzini said he could tell the council that it’s already unsafe at certain times of the day to walk outside. It’s a hostile environment for pedestrians, he said, because a culture of panhandlers is allowed to operate with impunity. The city had allowed 10 Level IV registered sex offenders to take up residence in the homeless shelter, he said, which is one block from the YMCA, and there is no visible police presence.

Ranzini said his wife is correctly afraid to leave their home by herself at night. It’s not just a rainy day, but a “financial hurricane,” he said, so what else is the $103 million rainy-day fund for, if it’s not for times like now, he asked. People say that the money is in buckets, he said, and that the money in one bucket can’t get access to the money in other buckets. So, he said, “Let’s drain the buckets.” Persisting with the fiction of the various buckets enables claims of poverty, he said.

Ranzini noted that there are “leaks in the buckets,” citing as an example the $12 million in revenue to the general fund – used in part for police and fire protection – which the city has received from the city’s public parking revenue via the Downtown Development Authority over the last six years. If the DDA had not decided to build the Fifth Avenue underground parking garage, he said, more money could have been transferred to the city. He contended that one fund can lend money to another fund. He said the city is very talented at charging fees to funds located outside the general fund. If the leaks in the buckets aren’t enough, then he suggested that the city’s charter be amended to access the money the city needs until the storm passes.

Sue Maguire introduced herself as a life-long Ann Arbor resident. She told the council how she’d been driving down Eisenhower Parkway recently, when her daughter yelled at her to call 911. Why? she asked her daughter. She pointed to the sign on the fire station, which read “Fire station closed. Call 911.” [The city is currently closing some fire stations on a rotating basis. The station near Eisenhower has a Briarwood Circle address.] They got a good laugh out of it, she said, but it really is an emergency – it’s an emergency that the city council has the ability to respond to. She told the council they need to say no to public safety cuts. She said she works in the field of crash research and knows the importance of immediate emergency response. As an Ann Arbor resident who has paid taxes her whole life, she wants public safety service to stay the same.

Thomas Partridge introduced himself as a Democratic Party member and leader. He called on the city council, the public attending the meeting and the community at large to look at major issues and the direct issues. He told them to look at the movement to recall Gov. Rick Snyder. He called on the citizens of Ann Arbor to think creatively when it comes to budgeting and to do it for multiple years, not just a single year. [The city of Ann Arbor's charter mandates that budgeting be done year by year, but the city has a two-year planning cycle.] He asked that responsible business owners think about “adopting” fire stations and police stations. He called for joining the fire departments of Ann Arbor with those of neighboring communities.

FY 2012 Budget: Council Commentary – Municipal Center

After public commentary, several council members used their communications time to discuss budget-related issues.

Mike Anglin (Ward 5) said he wanted to address a FY 2011 allocation for non-departmental contingencies – $639,000 in construction overruns for new the municipal center. He said there is money allocated in FY 2012 for asbestos abatement, but he thought the asbestos abatement had already taken place. Funds seem like they’re being shifted, he said. The building is 50,000 square feet over-sized, he said.

Sign on the Huron Street entrance to city hall before the May 16 meeting. As the logistical routines settle into place for use of the new building, staff use practical means to ensure things work as planned.

Anglin suggested that the city should simply complete the work that needs to be done – and not do anything else on the extra 50,000 square feet, until it’s an economically better time. At that point we could put money into it. He noted that this year the city had eliminated the $700,000 economic development fund. [It's been folded into the general fund balance reserve.]

He noted that there was $3 million promised from a developer of the city-owned First and Washington parcel, but the city had not ever seen that money. [The city council extended the purchase option for the developer, Village Green, most recently in August of 2010, through June 1, 2011. The council set in place a series of milestones to be met and amended the development agreement in February 2011.] Anglin said that if he’d been asked in 1990 about building a new building, he’d have been right on board. But now we need to know what we can afford and what we can’t afford.

Responding to Anglin’s remarks about cost overruns with the municipal center, mayor John Hieftje asked interim city administrator Tom Crawford about cost overruns: Were there any? Crawford said that no, he was not aware of any.

Hieftje also clarified with Crawford, who’s the city’s CFO, that it would be possible for the city to amend the budget after it’s adopted if the financial situation changes. Crawford noted that the city council does not do it frequently, but it’s a possibility, and includes bringing back laid-off workers.

FY 2012 Budget: Council Commentary – Funds/Buckets

Mayor John Hieftje asked Ann Arbor’s CFO and interim city administrator Tom Crawford to respond to comments by Stephen Ranzini during public commentary about $103 million being in a rainy day fund. Crawford suggested that Ranzini was referring to the aggregated fund balance. For some of that amount, it’s not appropriate to use it for the general fund, he said, because it comes from ratepayers for utilities.

A lot of that $103 million is reserved for construction of the new wastewater treatment plant, Crawford said. Use of those funds is not a city charter issue – it’s a basic law. Crawford said that he had a lot of concern about the idea of borrowing funds from one fund to another. He allowed that the current situation is painful, but said the city has historically not taken short-term solutions for long-term problems. And that’s the kind of fiscal discipline that has allowed the city to remain financially stable.

Hieftje asked city attorney Stephen Postema to lay out what the legal consequences would be from the state if the city were to take money inappropriately from a utility fund. Postema said he’d have to get back to the council with the specifics on that.

Stephen Kunselman (Ward 3) noted that it was an opportune time to discuss the issue of using restricted funds as they relate to public art. [The city's Percent for Art program allocates 1% of all capital projects for use on public art.] Kunselman said the council had never received a written opinion from the city attorney on that issue, and now was perhaps a good time to get that opinion.

Kunselman asked if it were possible to pass an ordinance to pay for human services in the same way that public art is paid for. Kunselman said that for the public art program, the city is pulling from restrictive funds to build a fountain. [Kunselman has raised this issue previously about obtaining a legal opinion from the city attorney: "Getting Smarter About the City Charter"]

Kunselman wanted to know about possible increases in revenue now being projected by the state. He asked Crawford if the council would receive adjusted revenue projections by their next meeting. Crawford said that would be very unlikely. Of the additional revenue being discussed by the state, Crawford said, it’s not clear how much may roll down to the local level. It will be well past May before that’s clear, he said.

Kunselman asked about the city’s own property tax projection. Crawford told Kunselman that the numbers are pretty solid – he’s not expecting a change.

Marica Higgins (Ward 4) responded to public commentary by saying what she’d heard was not a suggest to take money from one fund and put it into another, but rather to borrow against it. That, she thought, was a fair question. Hieftje said he thought that would not be wise, even if it’s possible.

Kunselman asked about a comment from the city’s public services area administrator, Sue McCormick, to the effect that there is a formula through which the city is paying for police and fire protection from utility funds, not borrowing it. Hieftje commented that the formula-based allocation is made because the city’s public safety area is delivering a service for protection of facilities, given heightened national security concerns. Crawford added that the reason for the safety services fee as applied to utility infrastructure is that the property is government-owned, so there’s no property tax collected. The fee for safety services is a mechanism the city utilities can use to contribute to the city, Crawford said.

FY 2012 Budget: Response Time Reporting by AnnArbor.com

Mayor John Hieftje introduced the topic of an AnnArbor.com article about fire protection in the city that was published over the weekend, noting that for him, it raised more questions than it answered. From the podium at the front of city council chambers, chief of police and interim fire chief Barnett Jones agreed that the article called to mind a lot of questions.

Jones said the information he’d seen in the article was not in the official reports. The article contended that at an April 23, 2010 fire, a father and six-year-old had “jumped” from a roof. Jones said that no indication of that had been made by firefighters in the written report. When he looked at it, it made him wonder, “Where did that come from?”

By way of clarification, an AnnArbor.com article published last year on April 23, 2010 about that fire included the headline: “House fire injures 3 Ann Arbor firefighters; father, child jump from roof to safety.” The first sentence of the article states: “A father and his 6-year-old daughter jumped to safety from the roof of a burning house …” Near the end of the article, the description of the descent from the roof attributed to then-fire chief Dominick Lanza is less dramatic: “Lanza said they had made it off the roof by the time firefighters arrived.”

The AAFD official documentation for that fire includes the reports that people were on the roof, but indicates firefighters were told on arrival that everyone was out of the house:

LADDER FIVE RESPONDED FOR A REPORTED HOUSE FIRE WITH PEOPLE TRAPPED ON THE ROOF. UPON ARRIVAL THE TWO STORY RESIDENCE WAS WELL INVOLVED WITH FLAMES THROUGH THE ROOF AND FIRST AND SECOND FLOOR. A BYSTANDER STATED THEY THOUGHT EVERYONE WAS OUT.

The fire investigation documentation reports an interview with the father of the family as follows:

He went to [the daughter's] bedroom and woke her up to get her out but when he attempted to escape he could not make it down the stairs through the smoke so he exited out the window on to the outside ledge and proceeded to the garage roof and then to the ground.

The Chronicle was not able to identify any descriptions in the report, or attributions to fire department officials in the AnnArbor.com article, that specifically indicate a jump was made from the roof.

Jones said the AnnArbor.com article stated that the response time for that fire was 9 minutes [and 4 seconds], but Jones said that in fact the total complement of firefighters was on the scene in 7 minutes. These are professional firefighters whose reputations could be damaged by what’s in the article, he said. Jones said he wanted to look at the reports and get together with the assistant fire chiefs and reach out to Ryan Stanton, the AnnArbor.com reporter who’d put together the article, and compare it to what’s in the actual reports. The information in the article doesn’t appear to be what the city has in the fire department reports, Jones said.

Hieftje wondered if it would make a difference if six people or four people were staffed – he wondered how they would get to the scene any faster. Jones said that for some of the fires discussed in the AnnArbor.com article, the houses were totally engulfed before the firefighters arrived. They did their best to get there as quickly as they could. So to have information put out in the community that indicated that they didn’t get to the scene fast enough – when the official reports show a different time – that needs to be clarified and corrected, Jones said.

Hieftje asked for a clarification of how “response time” is calculated. Jones said you hear a lot about the National Fire Protection Association’s (NFPA) 1710 Standards. Jones described the standards to the council. The text of the response time standard [emphasis added]:

5.2.4.1 Initial Arriving Company.
5.2.4.1.1 The fire department’s fire suppression resources shall be deployed to provide for the arrival of an engine company within a 240-second travel time to 90 percent of the incidents as established in Chapter 4.
5.2.4.1.2 Personnel assigned to the initial arriving company shall have the capability to implement an initial rapid intervention crew (IRIC).
5.2.4.2 Initial Full Alarm Assignment Capability.
5.2.4.2.1 The fire department shall have the capability to deploy an initial full alarm assignment within a 480-second travel time to 90 percent of the incidents as established in Chapter 4.

Jones told the council that it’s the four-minute “response time” standard they’ve been hearing a lot about. And based on the fire department official reports, Jones said, the fire trucks are covering the distance in the appropriate time from anywhere in the city. He said he believed there are some errors in Stanton’s calculations published in the AnnArbor.com story that need to be cleared up.

FY 2012 Budget: AnnArbor.com Fire Reporting – Background

In terms of the NFPA standards, it’s clear that the “response time” of the fire department is a time interval – with a beginning and an end. The start of the “response time” interval is when the firetruck is on the way (i.e., is en route) to the fire scene. The “response time” interval ends when the truck arrives on the scene of the fire.

This fits with the idea that the “response time” standard is meant in part to address the issue of adequate geographic fire protection coverage, which is related to the number of fire stations, hence to staffing levels. That standard does not address how efficient firefighters are at getting themselves into their gear and onto their trucks after they are notified that they need to roll. And the “response time” also does not include the interval before firefighters are notified – that is, the time it takes the 911 operator and fire dispatcher to deal with a call.

Obviously, the intervals that precede the “response time” interval also matter. And separate standards apply to those intervals. For the interval that starts with the call to 911 and ends with the notification of a fire station that it needs to roll its trucks down the road, the standard is 60 seconds. From the time a fire station receives notification, i.e., is dispatched to the fire scene, to the point when the trucks are actually on the way, the standard is also 60 seconds.

In terms of time points and the intervals between them, this is The Chronicle’s summary of what the NFPA timeline looks like:

Timepoint 1: The time when the emergency alarm is received by the public safety operator.
Interval: 1-2 [Dispatch Time (or Call Processing Time)] 60 seconds
Timepoint 2: The time when sufficient information is known to the dispatcher, and the relevant fire station is notified of the emergency.
Interval: 2-3 [Turnout Time] 60 seconds
Timepoint 3: The time at which a fire truck is en route to the emergency incident.
Interval: 3-4 [Response Time] 240 seconds (4 minutes), 480 seconds for full-alarm assignment of vehicles and personnel.
Timepoint 4: The time when a fire truck arrives at the scene.

Determining the actual intervals for a given fire is a matter of performing the clock arithmetic on the correct timepoints. The reporting in the AnnArbor.com article about the AAFD response times was based on timepoints drawn from AAFD official reports. However, instead of using Timepoint 3 (the actual en route time) for the arithmetic, it appears a different timepoint was used.

The fire reports used in the AnnArbor.com article were uploaded by that publication to a2docs.org:

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Based on The Chronicle’s review of the AAFD reports used in AnnArbor.com’s arithmetic, it seems that AAFD’s practice is not to record Timepoint 3 as a separate datapoint, but instead to copy the timepoint labeled “dispatch time” into the report field labeled “enroute time.” From a Sept. 16, 2010 report:

Ann Arbor Fire Department report for Sept. 16, 2010 fire reporting, illustrating the identical timepoint recordings for "notify time" and "enroute time."

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If the timepoint labeled “enroute time” is used for the clock arithmetic, ignoring the fact that it’s identical to the “notify time” (an equivalence that seems impossible), the result of the clock arithmetic for “response time” is 4 minutes 9 seconds [05:59:44 – 05:55:35 = 00:04:09], or 9 seconds longer than the NFPA standards that should be met for 90% of fires.

In multiple places elsewhere in the same Sept. 16, 2010 report, a “dispatch time” is recorded as 05:55 – it’s only precise to the minute. And an “alarm time” is recorded as 05:55:35 – which is also identical to the “notify time” and the “enroute times.”

The sum of the NFPA standards for the interval between the dispatch timepoint (Timepoint 2) to the on-scene arrival time (Timepoint 4) is 5 minutes. Based on that interval, the Sept. 16, 2010 “response time” + “turnout time” would be classified as meeting the NFPA standard.

One of the reports used in the AnnArbor.com article does include Timepoint 3 as a separate datapoint – in the form of a screen grab from a dispatcher’s screen. For the April 23, 2010 fire, a separate timepoint – between “dispatch” and “on-scene” – is recorded as “respond.” That’s the timepoint when the firefighters alert dispatchers that they are on the way.

Excerpt from a dispatcher screen grab included in the Ann Arbor fire department report for April 23, 2010. The "respond time" corresponds to the "enroute time," or Timepoint 3, when the firefighters let the dispatcher know they're on the way to the scene.

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Using the “respond” timepoint for the clock arithmetic on the April 23, 2010 fire yields a 2 minute 37 second “response time” for the first-arriving vehicle and a 7 minute 6 second response for the fifth vehicle on the scene (including the battalion chief), which is Ann Arbor’s “full alarm assignment.” Both of those “response times” meet the NFPA standard.

In an email to The Chronicle, assistant fire chief Chuck Hubbard noted that sometimes firefighters tell the dispatcher over the radio at the station that they’re responding to a call, then climb aboard the trucks and head to the fire scene, rather than radioing from the truck. That introduces some uncertainty in the response time data.

Assistant fire chief Chuck Hubbard attended the council's May 16 meeting.

While the “response time” standard addresses travel time to a fire scene, and relates to the number of stations maintained in the city and their geographic distribution, the other time intervals relate to call-center efficiency and the ability of firefighters to assemble their gear and start rolling down the road. It’s not clear what accounts for the three-minute interval between “dispatch” and “respond” for the April 23, 2010 fire.

It does seem clear that, without an understanding of actual AAFD operating procedures and how they relate to the data included in official AAFD reports, it’s difficult to draw definitive conclusions from those reports about the actual time intervals that are relevant for evaluating Ann Arbor fire department performance against NFPA standards.

The uncertainty of the data in the reports is supported by a notation in a report made five days after an April 13, 2010 fire [emphasis added]:

04/18/2010 09:51:55 ETAYLOR All individual personnel names were added to each apparatus for complete accountability of who was at the scene. The injury report was updated with the proper age of the firefighter who was injured at the scene. Also wanted to note that some of the times were estimated because of inaccurate times reported by central dispatch.

FY 2012 Budget: AnnArbor.com Community Comparison Reporting

At the council meeting, chief Jones went on to say that a AnnArbor.com article had failed to include in its presentation of data about other Big 10 university communities that some of those fire department have their own ambulances. That requires additional staffing, he said.

Each ambulance would require an additional seven staff, he said. Taking East Lansing as an example [home of Michigan State University], Jones said that if the ambulance personnel were subtracted, it would work out to approximately the same relative staffing level as Ann Arbor.

FY 2012 Budget: Council/Staff Response – Fire Protection

Speaking about the fire protection study that the International City/County Management Association (ICMA) is conducting for the city, chief Jones characterized that organization as the neutral third party that would bring in experts from the fire service profession to do the study. [The contract with ICMA, for not more than $54,000, was authorized at the city council's Feb. 7, 2011 meeting.]

Toward the beginning of the council meeting, mayor John Hieftje had asked interim city administrator Tom Crawford about the status of the fire protection study that the city has commissioned. Crawford said it’s expected to be delivered in July. [In connection with the appointment of the interim administrator from an internal pool of candidates, the fire protection study was one of the major projects identified as important for the appointee to carry forward.]

Chief Jones noted that he’d been working with the two assistant fire chiefs, and he’d be bringing a recommendation to fill the open fire chief position by promoting from within. [Jones is head of public safety services for the city and is serving as interim fire chief in the wake of Dominick Lanza's resignation this spring, after only about a year on the job.]

Ann Arbor is an intelligent community, Jones said, and we need to have the facts in front of us. The ICMA would provide those facts. ICMA would give clear advice so that Ann Arbor is prepared to go in the right direction, he said.

Marcia Higgins (Ward 4) wanted to know who would be doing the fire protection study – city managers? Who are the actual people who have the expertise to evaluate the fire department, she asked. Jones told her it would be experts from the relevant field of city government. For Ann Arbor’s study, it would be Don James, a firefighter from Florida, who would lead the study. He’d be assisted by a data analyst and a third person who is an ex-fire chief, Jones said.

Higgins asked who would write the report. She wanted to know if it would be filtered. Jones told Higgins, “No, ma’am.” He said a personal friend of his – the fire chief in Troy – had tried to influence that report, and they’d “slapped him” a few times. ICMA will not “water down” their results, Jones assured Higgins.

During his communications time, Stephen Rapundalo (Ward 2) said he wanted to clear up some misinformation. He said there’s a perception that the city has refused to meet with firefighters to negotiate a new contract. He said that’s clearly not accurate. The city has met at least 16 times with the firefighters’ negotiating team, most recently a week or so ago. A state mediator has participated in meetings on three occasions. Another another meeting was scheduled later this week. The firefighters had filed an Act 312 petition requesting arbitration in March. Among the issues in dispute are wages, pension, rank differential, and staffing levels. All of those have the potential to affect the budget, depending on how the arbitrator rules, Rapundalo said.

Despite the uncertainty of the situation, the city continues to meet and hope that “cooler heads will prevail,” Rapundalo said. He hoped that the two sides can come to an understanding to mitigate some of the cuts.

FY 2012 Budget: Council Deliberations

The decision to recess the meeting and continue it a week later is driven by a city charter requirement that the council adopt its budget no later than the second meeting in May, which began May 16. When the meeting resumes on May 23, it will be considered to be the same meeting.

Sabra Briere (Ward 1) said she’d looked it up in Robert’s Rules of Order and what should happen is to “adjourn to date and time specific” After clarifying with city attorney Stephen Postema that either the word “recess” or “adjourn” would work, Hieftje noted that the date and time would be 7 p.m. on May 23.

Outcome: The council voted unanimously to recess the meeting until Monday, May 23 at 7 p.m.

Human Services Funding

Before the council was a resolution to allocate $1,159,029 in funding to nonprofits in the city that provide human services.

The $1,159,029 amount to be allocated reflects a 9% reduction from FY 2011 human services funding levels. The council had postponed consideration of the human services allocation at its May 2, 2011 meeting in order to explore ways of “finding another dime.”

The city’s support for human services is allocated in coordination with other entities: the United Way of Washtenaw County ($1,677,000), Washtenaw County ($1,015,000) and the Washtenaw Urban County ($363,154).

On Monday, councilmembers were inclined to delay action on all budget-related issues, given their plan to delay action on the FY 2012 budget, which was achieved through a recess of the meeting until Monday, May 23. When the meeting continues at that time, the resolution on human services funding can be taken off the table for deliberation and a vote.

It’s possible that when the budget resolution is considered on May 23, an amendment will be proposed to draw $85,600 from the city’s general fund reserve to increase the human services allocation. That budget amendment is expected to be proposed by Sabra Briere (Ward 1) and Marcia Higgins (Ward 4).

Outcome: The council voted to lay on the table the resolution on human services funding. It can be taken up off the table when the meeting resumes on Monday, May 23.

Water System Study

Before the council was a $208,984 contract with AECOM for a study of the city’s water distribution system. The money for the study, which dates from a 2007 request for proposals (RFP), was allocated in the fiscal year 2011 budget of the city’s water fund. The level of service (LOS) study to be done by AECOM will recommend a sustainable level of service for the city’s water distribution system, and determine how much investment it would take to achieve that level. The study would also help the city decide, for example, which water mains should be replaced first.

Water System Study: Council Deliberations

Cresson Slotten, unit manager in the systems planning department, fielded questions from the council on the study. He described it as the second part of a two-part study. The first part had addressed the capacity and technical function of the water distribution system. The second phase looks at the level of services and will involve a citizens group, addressing issues like taste and odor, and will provide cost estimates to deliver the desired level of service.

Mayor John Hieftje pointed out that the money for the study derives from fees paid by water consumers.

Stephen Kunselman (Ward 3) asked Slotten if the four water main breaks in his neighborhood in the last year would be included in the scope of the study. Slotten allowed that this kind of issue is part of the study. Other factors include taste – as pipes begin to age, taste might be affected – color and odor.

Kunselman then noted that the city has a very qualified staff. They know where breaks are, so why can’t the city do this internally? Why do they need to hire it out? Slotten said the city has maintained the system well, but hasn’t gone out to citizens and asked them for their views.

Sabra Briere (Ward 1) said if she understood the proposal correctly, what the city is seeking is a consultant to communicate better with people who live in Ann Arbor, to ask the right questions and give the staff the information they have to share. Briere said it seems not to be a one-time thing – it seems to be a recurring theme about why the city hires consultants. Is it that the city doesn’t have the capacity to do the work, she asked, or doesn’t have the capacity to communicate?

One thing a consultant brings, Slotten said, is the ability to compare standards to other communities across the U.S. and Canada. The consultant has evaluated assets in communities across the country, and brings that experience and context. Sandi Smith (Ward 1) said the question has come up from residents about the city possibly privatizing its water distribution system. Smith provided the historical note that Ann Arbor had actually purchased its system originally from a private company in 1908.

Christopher Taylor (Ward 3) asked Slotten to speak to the value of the consultant as it relates to the city’s capital planning. Slotten said that one of the reasons this particular firm was selected is that they use a capital asset prioritization simulator (CAPS) that takes advantage of information that the city is already tracking, like where breaks are occurring.

Marcia Higgins (Ward 4) said she could appreciate that the city wants to have the study done. However, she had a problem taking on a $200,000 study. She said she was not sure she could support it. She was particularly concerned about the $10,550 contingency. She felt like the city did not do a good job making sure that unused contingencies are returned to fund balances.

CFO Tom Crawford noted that contingencies are used only if needed. Contingencies are reviewed quarterly, he said, and when the project is closed, contingencies go back.

Carsten Hohnke (Ward 5) said he was not for the amendment, saying that if there are concerns about accounting and how contingencies are closed out, then that issue should be addressed directly. Hieftje said he would not support the amendment either, saying the contingency could cover critical work that needs to be done.

Outcome on contingency amendment: Amending out the contingency was approved on a 6-5 vote with support from: Smith, Briere, Rapundalo, Higgins, Kunselman and Anglin.

Hieftje then asked if Higgins perhaps would like to delay a final vote until other budget issues were also addressed. So she moved that the issue be laid on the table.

Outcome: The council voted to lay the resolution on the table. They’ll be able to take it up off the table when the meeting resumes on May 23.

Neighborhood Stabilization Program Funds: Near North Demolition

Before the council was a resolution to add to its neighborhood stabilization program (NSP) budget, and a corresponding expenditure to pay for the demolition of three houses as site preparation for the Near North affordable housing project on North Main.

The addition to the NSP budget came from a reimbursement. The owner of a house paid back NSP money to the city, previously expended to demolish the owner’s property. That reimbursement amounted to $24,135. NSP funds come originally from federal grants allocated through the Michigan State Housing Development Authority (MSHDA).

In addition, city staff identified an NSP homeowner acquisition and rehabilitation project that was completed under budget by $11,750. Combined, the additional revenue to the NSP budget and the savings on the rehabilitation project amount to $35,885. Of that amount, $33,292 will be used to pay for the demolition of 718, 722, and 724 N. Main St., with the remaining $2,593 going to administration costs in the office of community development, which oversees the NSP. The money will be allocated to the nonprofit Avalon Housing, which is developing the Near North project with Three Oaks.

The city council originally approved rezoning for the project – a four-story, 39-unit mixed use residential building on a 1.19-acre site – on Sept. 21, 2009.

NSP Near North Demolitions: Council Deliberations

Sabra Briere (Ward 1) asked Mary Jo Callan, head of the city/county office of community development, to explain how the funding worked. Neighborhood stabilization program (NSP) funds received in 2009 were used initially to demolish a residential property. A lien was placed on it for $24,135. When the property was sold, the sale proceeds were used to pay back the city. When the NSP program receives income, the city tries to apply the money to an existing, shovel-ready project, Callan said.

Kunselman noted there are lots of blighted properties in the city that could use these funds. Why were these houses on North Main selected and not others? Why wouldn’t the developer be responsible for tearing down the houses? Callan told Kunselman those were great questions. The funds have a time limit on them, so part of the reason to use them on the Near North demolitions is that it’s a project ready to go, there’s a clear owner, a clear title, and there are no potential delays. In addition, NSP funds can only be used on certain census tracts.

Kunselman wanted to know if a lien would be placed on the property and how the Near North developer would pay it back. Callan said that certain liens are forgiven. But if the property were sold, it would have to get paid back. Kunselman concluded from what Callan said that the money for demolition is a grant. Callan told him, “It’s an investment in permanently affordable housing.” The expectation is that the housing will be permanently affordable. The city’s strategy is not heavily weighted towards “recycling” the money, as Kunselman was suggesting: use money for demolition; place a lien on the property; the property sells; the lien is paid back; and the money becomes available for demolition of another blighted property.

Kunselman asked community services area administrator Sumedh Bahl how many blighted properties the city’s nuisance committee had identified. Bahl said the committee is prioritizing a list and in the next few months, that list would be shared with the council. Kunselman wondered if the city would have any money to undertake demolitions. There was a house torn down in his neighborhood where the money was paid back. Was there any way to make sure the North Main property owner does pay it back?

Sabra Briere (Ward 1) said she was intrigued that it’s a permanent loan that gets paid back only if a property is sold. She said it’s a disincentive to sell, and a reason to give this kind of grant. She asked if there are other similar situations in the offing. Callan said this is the city’s model for investing in affordable housing. She said the need to repay on sale of the property is absolutely a disincentive to sell, but that Avalon Housing doesn’t need the disincentive in the case of the Near North project, because affordable housing is their mission.

Briere wondered if, generally speaking, NSP funds were not for demolition. Callan explained that demolition is, in fact, an allowable activity for NSP funds – it’s about stabilizing neighborhoods. Although the city has not used NSP funds often for that, she said she’d talked with Margie Teall (Ward 4) about setting aside some of the NSP funds for demolition.

Outcome: The council voted to approve the NSP allocations so that the houses on North Main could be demolished in preparation for the Near North housing project.

Large Vehicle Purchases

Before the council were authorizations for the purchase of two large vehicles – an Elgin street sweeper ($273,300) and a combination sewer truck ($398,806).

The staff memo accompanying the request for the sweeper states: “The sweeper being replaced has been in service ten years and has 5,960 hours of use. Over the last two years, this unit has been taken to Fleet Service for maintenance and repairs 87 times of which 33% have been for breakdowns. The total cost of all repairs over the same time frame have exceeded $113,250.”

About the combination sewer truck: “This truck will replace a 2004 unit with 8060 hours of use. Over the last two years, this unit has been taken to Fleet Service for maintenance and repairs 53 times of which 58% have been for breakdowns. These breakdowns have taken the unit out of service from as little as four hours to as long as two weeks.”

The council had postponed the purchases from its May 2, 2011 meeting with a request for additional information about the vehicles.

Large Vehicle Purchases: Council Deliberations

Stephen Kunselman (Ward 3) wanted to know if the trucks had any resale value. Craig Hupy, head of systems planning for the city, said they did. The city is known for keeping its trucks in pretty good shape, he said. But the city kept the trucks in service for a longer time than a dealership would be willing to offer a guaranteed buy-back, so the re-sale value depends on the market, Hupy said.

Kunselman asked if the same sewer truck purchase proposal had been brought before the council last year. No, said Hupy. It was in a previous year’s budget. But Hupy described how the city had a desire to do cooperative bidding with other cities and they’d gone together with three other cities to bid for the truck. Agreeing with the other cities on the specifications for the trucks was like “herding cats,” Hupy said, but in the end the city had gotten about a 10% better deal than if it had gone out to bid by itself.

Mayor John Hieftje drew out the fact that the vehicles to be replaced had frequently been out of service, and in the case of the combination sewer truck could delay cleaning out of sewers, which could result in sewers backing up.

Marcia Higgins (Ward 4) picked up on the idea that the city needs the truck – it’s needed to do sewer clear-outs, which can result in sewer backups for residents if they’re not done. Hearing that, said Higgins, boggled her mind. She said she understood comments by Hupy and Hieftje to mean that if the city doesn’t do sewer clear-outs, it can cause sewer backups in the basement. Hupy allowed that the failure to do sewer clear-outs “can result in” sewer backups – not “cause.” Hupy said it was his understanding that if the city has not performed adequate sewer maintenance and a resident experiences sewer backups, then it can result in a payable claim.

Higgins also wanted to know how the vehicles were being paid for. If a vehicle is not originally paid for out of the fleet fund, does the revenue from resale go back to the fund it was paid out of? Hupy said he’d defer to the financial folks to answer the question – Sue McCormick, public services area administrator. The truck was originally paid out of sewer funds, said McCormick. So money from resale goes back to the sewer fund.

As the city moves ahead, McCormick said, it purchases new vehicles from the fleet fund. So the next time a truck like this is replaced, it’ll be bought out of the fleet fund with money contributed by the sanitary sewer fund. Sabra Briere (Ward 1) wanted McCormick to explain why the city was moving to a strategy of paying for vehicles out of the fleet fund.

McCormick described the history at the city related to pressures on general fund fleet purchases. That had resulted in a very slow vehicle replacement schedule, with older vehicles. And the city wound up with very low reliability on daily production work. So the decision was made years ago to stop purchasing vehicles from the fleet fund and to pay for vehicles through cash flow. The city has now done away with that practice, McCormick said, and is returning to a strategy of paying for new vehicles out of the fleet fund. The reason, she said, is that if you think about paying annual depreciation on a vehicle, as opposed to “cash flowing it,” the cash-flow approach impacts utility rates in the year when the expense is incurred, instead of spreading it over the life of the vehicle. The fleet fund approach is thus more favorable to ratepayers, she said.

Kunselman wrapped up his comments by saying he would be supporting the purchase. He noted there have been four water main breaks within two blocks of his house, and when the city comes with the trucks, they’re right there and they pull everything out of the hole.

Outcome: The council approved both truck purchases on separate votes.

“Parks Fairness” Resolution

Before the council was a proposed revision to the 2006 administrative policy that governs the use of the city’s parks capital improvements and maintenance millage, including how the city’s general fund should support Ann Arbor’s parks.

A key point to the revision includes an additional provision that “for the purpose of this resolution all funds other than the Millage which are used to support Parks and Recreation system activities shall be considered the same as City’s General Fund support.” The proposed budget for fiscal year 2012 calls for using money from the METRO Act fund and the city’s stormwater fund to pay for certain parks operations, which the city would like to count as general fund support.

The new provision in the policy helps the city’s planned budget for FY 2012 conform with another administrative policy requirement – that the amount of general fund parks support not decrease any more than other parts of the general fund.

A further amendment that was before the council on May 16 would have changed the standard of general fund support from one that is based on hard dollars to one that is based on service levels, with FY 2011 as a baseline: “[T]he General Fund budget supporting the Parks and Recreation system for that year may be reduced by a higher percentage than the average percentage reduction of the total City General Fund budget as long as the FY11 level of service within Parks and Recreation system is not materially reduced.”

That second amendment would have helped the city conform with the policy this year, because the proposed FY 2012 budget called for spending $90,000 less on parks than would otherwise be required if the administrative policy were left unamended. The city contends that the $90,000 reduction in expenditures is due to increased efficiency, and would not affect service standards. [Chronicle coverage: "Council to Get Reminder of Parks Promise"]

The city council also revised the 2006 administrative policy during the FY 2010 budget cycle, so that millage funding for the natural area preservation program would not automatically increase by 3% every year.

Parks Fairness Resolution: Council Deliberations

Christopher Taylor (Ward 3) began by introducing the background for the resolution: The 2006 parks maintenance and capital improvements millage was accompanied by a city council resolution outlining how the millage money should be spent. Generally speaking, he said, the resolution was meant to have any reductions/increases in parks funding be on a parallel track with general fund reductions/increases.

Taylor indicated that he’d be suggesting a friendly amendment to a resolution revising the 2006 policy. In the midst of his remarks, which Taylor self-described as a “long and wandering introduction,” Mayor John Hieftje wanted to get the issue of the amendment settled. But Taylor told the mayor that he’d not gotten to the actual amendment yet.

The amendment that Taylor wanted to make to his own resolution was this:  Strike the proposed addition of a clause that would establish service levels as the standard that parks spending would be measured against, instead of a hard dollar figure comparison to the general fund. The reason he wanted to strike the clause was that he felt it might be possible to find a way to make up the additional $90,000 for parks in the FY 2012 budget, which the current administrative policy would require, if it were not amended.

Confusion ensued among councilmembers as they struggled to understand what Taylor intended. In sum, the following language from his amendment was stricken, which left that part of the administrative policy intact.

… [T]he General Fund budget supporting the Parks and Recreation system for that year may be reduced by a higher percentage than the average percentage reduction of the total City General Fund budget as long as the FY11 level of service within Parks and Recreation system is not materially reduced.

Surviving amendment was the part of Taylor’s resolution that allowed non-millage funds outside the general fund to count for purposes of calculating the amount of general fund support for the parks.

Outcome: The council voted unanimously to revise the parks millage administrative policy to allow non-millage funds external to the general fund to count as general fund money for purposes of the policy.

Taxicab Fares

Before the council was an increase in the allowable fare for cabs operating in the city. The rate increase affects only the mileage component of fares, which were last approved on May 19, 2008.

The mileage increase from $2.25/mile to $2.50/mile had been requested by several taxicab companies in light of rising fuel prices, which are currently just over $4/gallon. The city’s taxicab board has indicated that with this increase, it does not anticipate considering another rate change until the gas prices are over $5/gallon for at least two consecutive months. The board had voted to recommend the change at its April 28, 2011 meeting.

Members of the taxicab board include the city’s CFO Tom Crawford, and William Clock, an officer with the Ann Arbor police department, as non-voting members. [The city's ordinance actually requires that the city's CFO and the chief of police serve as non-voting members.] The five voting members are Stephen Kunselman (representative to the board from the city council) as well as Barbara Krick, C. Robert Snyder, Tom Oldakowski and Timothy Hull.

[Hull has filed nominating petitions to contest the city council Democratic primary in Ward 2 against incumbent Stephen Rapundalo. Kunselman will be running for re-election in the Ward 3 Democratic primary.]

Crawford, who is also interim city administrator, had announced the public hearing on the taxicab fare increase at the city council’s May 2, 2011 meeting.

Taxicab Fares: Public Hearing

Michael Benson introduced himself as a Ward 2 resident and president of the University of Michigan graduate student body. He told the council he wanted to speak about the process for the increase. He noted fuel costs are in fact going up and he understands the need for the increase. But he noted that in the past, a temporary surcharge has been used to address increased fuel prices – why not this time? He asked that the increase be amended with some kind of sunset clause that would require the increase to be reviewed after a certain period, and that a recommendation be brought back to the council.

Thomas Partridge called on the council to postpone the increase. Any increase in rates harms the most vulnerable residents first, he said. Executives in limousines pulling up to Google are not concerned about taxicab rates, he said. He called on the council to table the measure and come up with a better proposal.

Taxicab Fares: Council Deliberations

Carsten Hohnke (Ward 5) inquired whether a formula been considered that would tie taxicab rates to some objective third-party measure of fuel prices, so that requests for fare increases would come before the council less frequently. Stephen Kunselman (Ward 3), who sponsored the resolution as the city council’s appointee to the taxicab board, responded to Hohnke by saying that other costs have also increased – it’s not just the gas increase that’s driving this. He told Hohnke that no formula tied to fuel prices has been discussed.

In response to Benson’s suggestion made during public commentary to sunset the increase, Kunselman said he was not going to make that recommendation. Taxicab companies are struggling for other reasons. Kunselman amended one of the “whereas” clauses to make it clear that gas prices have now exceeded $4/gallon – they didn’t jump by $4/gallon.

Outcome: The council voted unanimously to approve the fare increase.

Downtown Design Guidelines

Before the council was initial approval to an amendment of its land use control ordinance that will establish design guidelines for new projects in downtown Ann Arbor, and set up a seven-member design review board (DRB) to provide developers with feedback on their projects’ conformance to the design guidelines.

All city of Ann Arbor ordinances require approval at an initial first reading before the council, a public hearing, and a final approval.

The project review by the DRB will come before a meeting with nearby residents – which is already required as part of the citizen participation ordinance. While the DRB process is required, conformance with the recommendations of that body is voluntary.

The city council had previously approved the design guideline review program at its Feb. 7, 2011 meeting. The city planning commission unanimously recommended the change to the city’s ordinance at its April 5, 2011 meeting. [Previous Chronicle coverage, which includes a detailed timeline of the design guidelines work, dating back to a work group formed in 2006: "Ann Arbor Hotel First to Get Design Review?"]

Council deliberations were brief. Marcia Higgins (Ward 4) noted that the ordinance now before the council is coming back after being presented at the February meeting. The city’s planning commission had been asked to expedite it, she said, and they had done that. That means that new construction will fall under the ordinance. She urged her colleagues to pass it, saying, “It’s exactly what we wanted.”

Outcome: The council voted unanimously to approve the design guidelines, which will need a final approval before the ordinance is enacted.

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: Transformers in Neighborhoods

Stephen Kunselman (Ward 3) informed his council colleagues that in response to an issue raised in Arbor Oaks subdivision by a city engineer – it concerned electrical transformers in the easements of backyards – he and Stephen Rapundalo (Ward 2) had contacted Paul Ganz, DTE’s regional manager, and DTE had sent crews out to investigate. Everything is safe, he reported, and there is no danger of electrocution. DTE is going to address some of the visual issues that had caused concern.

Present: Stephen Rapundalo, Mike Anglin, Margie Teall, Sabra Briere, Sandi Smith, Tony Derezinski, Stephen Kunselman, Marcia Higgins, John Hieftje, Christopher Taylor, Carsten Hohnke.

Council meeting to be continued: May 23, 2011 at 7 p.m. in the second-floor council chambers at 301 E. Huron. [confirm date]

At their May 16 meeting, councilmembers chose to recess the meeting until 7 p.m. on Monday, May 23, 2011 because of uncertainty about the status of a new parking agreement with the Ann Arbor Downtown Development Authority. The decision to recess the meeting and continue it a week later is driven by a city charter requirement that the council adopt its budget no later than the second meeting in May, which began May 16. When the meeting resumes on May 23, it will be considered to be the same meeting.

Expected amendments to the budget when the council takes it up on May 23 include: (1) use of $90,000 in general fund reserves to add to the parks allocation; (2) use of $85,600 in general fund reserves to add to human services funding; (3) use of a nominal amount of general fund reserves to cover the cost of an additional primary election (as proposed, the FY 2012 budget anticipated primaries in only two of the city’s five wards); and (4) elimination of a proposed fee for three-times-weekly trash pickup in the downtown area.

Before the meeting no budget amendments were anticipated that would change the proposed cuts in public safety positions – 13 in police services and seven in fire protection services. However, at the meeting, mayor John Hieftje hinted that some, but not all, of the cuts in police and fire might be avoided.

The city of Ann Arbor’s total budget, including all of its funds (major street fund, parks millage, water fund, sewer fund, etc.) stands at $312,182,605 for FY 2012.

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

Leading up to the city administrator delivering a proposed budget in April – for FY 2012, beginning July 1, 2011 – the city council is also holding a series of work sessions on the budget. Their typical scheduling pattern is for the weeks between council meetings. Previous work sessions have taken place on community services, as well as the 15th District Court and police and fire services. On Feb. 28, the council held its final budget work session of the season – on public services and the city attorney’s office. [.pdf of  combined public services budget impact sheets provided on the city of Ann Arbor's budget impact web page.]

Streets, sidewalks, trash collection, trees in the right-of-way, water and sewers are all included under the general label of “public services” in the city. At Monday’s budget work session on those kinds of activities, public services area administrator Sue McCormick did not present the council with any news more dramatic than Roger Fraser did when he announced at the conclusion of the session that he’d be leaving his job by the end of April.

But McCormick did present the council with options for meeting reduction targets that would, if enacted, have a significant impact on the range of services offered by the city. In at least one case, the range of service would expand – the city (instead of adjoining property owners) could assume responsibility for sidewalk repair and replacement.

In another case – which McCormick stressed was not a recommendation, but rather just an informational ballpark amount for potential annual savings to the city ($2.1 million) – the city would get out of the business of trash collection. In another month, the city expects to give the council a report that provides more detail on possible alternatives to having city workers perform that task, including some kind of franchised trash collection operation.

Many of the specific reduction target tactics presented on Monday evening involved assigning costs to a unit outside the general fund. While the city’s total budget includes around $340 million in expenses, the annual discussion typically spotlights the general fund, which gets revenue from the general operations millage [listed on tax bills as CITY OPER] – and is currently levied at a rate of roughly 6 mills. The widely reported projected deficit of $2.4 million for the city’s budget is for the general fund.

During the work session, the assignment of costs to other funds caused Sandi Smith (Ward 1) to wonder if it was just a matter of “shuffling” money from one bucket to another. The answer she heard was: No – it’s a matter of assigning costs appropriately to whatever fund should properly bear the cost of a particular activity.

One of the largest instances of such a cost reassignment would use the stormwater utility fund, instead of the general fund, to pay for forestry operations for trees in the right-of-way. That move would save the city’s general fund around $660,000 a year.

Another example of that kind of “shuffling,” albeit with a smaller dollar figure ($35,000), was a proposal from the city attorney’s office to charge capital projects part of the cost of a paralegal specializing in easements, instead of burdening the city attorney’s budget with that expense. The city attorney’s reduction strategy, which had originally been scheduled for a prior work session, was also part of Monday evening’s presentation.

Basic Background

As budget planning began in December 2010 with the first of two off-site budget retreats, the city’s chief financial officer, Tom Crawford, had projected a $2.4 million deficit for the general fund. That amount assumed that: (1) the city would continue to receive roughly $2 million in “rent” from the Ann Arbor Downtown Development Authority for use of city facilities to operate the city’s public parking system; (2) that state shared revenues would remain relatively constant; and (3) that union contracts would settle with no wage increases and with greater employee contributions to the benefits plan.

However, based on the state budget recently proposed by Gov. Rick Snyder, city administrator Roger Fraser has estimated the additional negative impact to the city’s budget – including statutory and constitutional state shared revenue and fire protection grants – as ranging from $0.5-1.7 million.

But for the part of the public services budget that is supported from the general fund, public services area administrator Sue McCormick offered some brighter news – she’d identified more reductions than her target for both years of the budget planning exercise: nearly $600,000 in FY 2012 and $500,000 in FY 2013. If those savings can be realized, it could offset a significant part of the reductions proposed by the state.

Current reduction targets for different departments vary from 2.5% to 4.0%, depending on the number of employees who are not on the city’s new benefits plan – departments with higher reductions are those with a greater number of workers whose benefits packages are more expensive to the city. It’s part of the city’s attempt to align its budget strategy with its labor strategy.

Forestry: From Field Ops into Stormwater

McCormick told the council that across the country, more and more governments have recognized the importance of forestry in helping to manage stormwater. This year, she continued, when the city applied for and received a $0.5 million grant from the state’s revolving loan fund for sanitary and stormwater utilities, it was for planting trees. So the state of Michigan is aware that – based on the state of the art in stormwater management – the benefit of an urban forestry program is predominantly for stormwater management, she concluded.

What she’s proposing is to move forestry operations out of the general fund and into the stormwater utility fund for a savings of $659,798 to the general fund. Some forestry expenses would remain in the general fund – expenses associated with past retirees, for example. Moving forestry to the stormwater utility would include the elimination of two vacant full-time positions, and a strategy of contracting out services like tree trimming, planting, and stump removal. Tree planting levels would be maintained, McCormick assured the council. [Previously. the city has paid for some stump grinding activity out of the stormwater fund.]

During council discussion of forestry and stormwater, Mike Anglin (Ward 5) expressed concern about the trees, saying they were the most important thing in Ann Arbor. McCormick told Anglin: “I don’t disagree.” She said that moving the payment from the general fund to an enterprise fund like the stormwater utility would bring with it “an ethic of asset maintenance.” You recognize that you have an asset, she said – it’s a mental shift that would be of value to the city. The city had recently done an asset inventory of all the trees in the city, she pointed out. That includes the age, condition and maintenance activity on the tree. [Chronicle coverage of the inventory as it was underway: "Where Are Ann Arbor's Trees?" The result of the geomapped inventory is available as a .kml file on the city's Data Catalog]

McCormick noted that the city does not trim trees just for aesthetics, but to protect the health of an asset.

Anglin was also concerned about the use of contracted services instead of filling vacant staff positions. By way of reply, McCormick noted that the question is how to do the work most cost effectively. The work load isn’t constant, McCormick replied, saying that contracted services gives the city flexibility to achieve the scale it needs to deal with backlogs – like stump grinding, for example, and planting.

When McCormick discussed the stormwater fund, she noted that the reason the stormwater utility could afford to absorb the cost of forestry operations this year is that a certain amount of loans the city had received through the county had been forgiven through federal stimulus funding. The planned rate increase would be 3.25% in FY 2012 instead of 2.25%, and 3.50% in FY 2013 instead of 2.30%, she said. That extra revenue would have otherwise gone into debt service, instead of supporting forestry operations.

Each 1% increase in the stormwater rate across the whole system is about $60,000, McCormick said. The roughly $2.7 million fund is comparatively small, she said. So if the city were trying to move the forestry operations into the fund at any other time than when it had this extra capacity, it would be difficult.

Streetlighting: LEDs Plus More Conversation – Golf?

McCormick pointed out to the council that an upcoming meeting agenda included an item authorizing an expenditure to buy LED fixtures for those city-owned streetlights that have not already been converted to lower energy fixtures. [The March 7, 2011 agenda item shows 500 LED cobra head fixtures at a cost of $315,968.] Anticipated energy and maintenance savings from installation is expected to be $32,000 in FY 2012 and $47,000 in FY 2013.

The budget impact sheet that McCormick presented for FY 2013 showed a $120,000 savings, which she characterized as a “placeholder” – it’s the same target they’d had when they implemented a program to deactivate lights in some areas of the city last year, as part of the FY 2011 budget. The city council eventually voted to restore the lights in October 2010. [Chronicle coverage: "Streetlights Back On"] McCormick stressed that it was not a proposal to reimplement the de-lighting program, but rather to engage the community in a conversation about how to fund streetlighting. [Options discussed last year during the council's budget work session included streetlighting special assessment districts: "Budget Round 4: Lights, Streets, Grass"]

Also in field operations, McCormick pointed to $158,248 in savings that is expected from using temporary labor in park operations to accomplish work done by workers in now-vacant full-time positions. McCormick reported that the city had discussed with its AFSCME union the idea of keeping positions open in order to provide soft landings in case there are operations in the city that it chose not to keep in the future. So if the city eliminates a position in one area, it could transfer that worker to another job that’s been kept vacant elsewhere.

[One of the potential legacy costs to converting Huron Hills to a non-golf use would be two union workers – one AFSCME and one Teamster – for whom other city positions would need to be found, if golf operations were ended at Huron Hills. At the community services budget working session, the city council had expressed a consensus that for the next two years, which corresponds to the duration of the five-year plan put in place for improving financial performance at the city's two golf courses, Huron Hills would remain a golf facility.]

Sidewalks, METRO, Street Repair Millage

A total of roughly $200,000 in field operations savings is forecast for FY 2012 as a result of reallocating costs from certain field operations – snow removal, graffiti removal, and some mowing operations – to the METRO expansion fund. To do that, future METRO money needs to be freed up. So what does METRO money pay for currently?

[The METRO fund gets its revenue from payments made by the state, based on telecommunications companies that pay to use the city's right-of-way under Act 48 of 2002, which established the Metropolitan Extension Telecommunication Rights-of-Way Oversight (METRO) Authority. Expenses/revenues for the city's METRO fund in the council's authorized FY 2011 budget were $635,000. However, budget impact sheets from the working session showed $340,000 for FY 2011 as well as for FY 2012-13.]

Over the last few years, the city has chosen to spend most of its METRO funds on maintenance in the right-of-way – McCormick explained that a restriction on the use of the METRO funds is that they must be used in the right-of-way. The city has chosen to pay for general fund obligations out of the METRO fund, so that it effectively supplements the general fund, McCormick said. [The METRO money is not a part of the general fund.] For example, the city has used METRO funds for streetlight pole replacements. Early in the program, the city used METRO funds for tree planting.

METRO funds also pay for administrative expenses associated with the city’s sidewalk replacement program – the marking of slabs, notification of property owners and the like, McCormick said. That’s key to understanding a significant impact on the way that the city might fund sidewalk maintenance and replacement in the future.

By way of background, the city’s sidewalk replacement program is a systematic way of ensuring compliance with the city code on sidewalk maintenance and replacement, which places responsibility on adjoining property owners to maintain and replace sidewalks. From Chapter 49 of the city code on sidewalks:

All sidewalks within the City shall be kept and maintained in good repair by the owner of the land, adjacent to and abutting upon the same; and if any owner shall neglect to keep and maintain the sidewalk or any walks and ramps leading to a crosswalk along the front, rear, side of the land, owned by her or him, in good repair and safe for the use of the public, the said owner shall be liable to the City for any damages recovered against the City sustained by any person by reason of said sidewalk being unsafe and out of repair.

The city’s experience with the sidewalk replacement program was uneven, with many property owners complaining about a failure by the city to communicate adequately. From a September 2008 Chronicle report of a city council caucus:

Residents along Second Street reported a variety of problems with adequate notification – including invoices sent from the city after work had been completed, work begun by the city without adequate notification, and lack of adequate marking. Under the rules of the program, property owners are supposed to make arrangements with private contractors to complete the work, with the city only undertaking the work when a property owner does not comply. During a period of low activity for the sidewalk program, council suspended it temporarily between November 2007 and March 2008 so that an ad hoc council committee could implement a clearer set of communication guidelines. Problems along Second Street this year could be remnants of ineffective communication beginning last year.

At the budget working session, Mike Anglin characterized the sidewalk replacement program as “an opportunity to get to know your neighbors under duress.”

In the upcoming months, McCormick told councilmembers, they would be asked to appropriate some additional fund balance from the METRO fund to make sure that the first cycle – the current one – of the city’s sidewalk replacement program is closed out. The closing out of the first cycle of the program would take place over the course of the summer, McCormick said. And that will, for the future, take the METRO fund out of the sidewalk replacement funding picture. What will take the METRO fund’s place in sidewalk replacement?

What the city is now contemplating, as McCormick laid it out, is for the city to start paying for the sidewalk maintenance and replacement – using the street reconstruction millage. Anglin wanted to know: What about property owners who already paid to replace sidewalk slabs under the old program?

McCormick explained that the idea of using METRO funds to close out the first cycle of the program is that all property owners, in the interest of equity, should have experienced one complete iteration of the program. This would entail, in part, performance of work by the city that property owners should have done. Property owners would be billed for the work, but the city would have upfront costs.

Making the city responsible for sidewalk replacement would require changing the city code on sidewalks as well as revising the street reconstruction millage language the next time it’s put on the ballot – on Nov. 8, 2011. Voters last approved the street repair millage in 2006 for a period of five years and a rate of 2 mills. The street reconstruction millage is listed as CITY STREETS on tax bills.

The point that some alternative revenue would be required – like redefining the street reconstruction millage – emerged during councilmember discussion by Marcia Higgins (Ward 4) and Christopher Taylor (Ward 3), who agreed that “it’s not magic.”

McCormick said there’d of course need to be a conversation about whether to roll the sidewalk replacement program into the street reconstruction millage. She said she’d heard some interest in making it a five-year millage, as well as some interest in seeing it be a 10-year millage.

On an ongoing basis, then, METRO funds in the future would not be used for administration of the sidewalk program, McCormick explained. That would free up METRO money to pay for other activities in the right-of-way. Among those activities proposed to be paid for out of METRO funds would be snow removal on sidewalks fronting publicly owned property, graffiti removal, and traffic island mowing and brush clearance. Paying for those activities out of METRO funds would relieve the general fund of around $200,000.

Customer Service – Return to Larcom

McCormick said she felt that a reduction on the $265,206 projected expenses for FY 2012 in customer service would be difficult to achieve in the first year, but doable in the second year. The return to the Larcom building – also known as city hall, which is currently being renovated – would provide some efficiencies due to co-location of some service desks.

Due to some changes in job classifications, she said, the city would have some ability to adjust staffing levels so that by FY 2013, half of one staff position could be eliminated. That move would actually result in exceeding the combined reduction target for both years.

Larcom Building: Five-Day Janitors

The facilities unit – with $1,406,393 in projected expenses in FY 2012 – was actually proposing several increases, reported McCormick. However, it is implementing decreases where it can. Those reductions include small adjustments in the IT fund, the elimination of a managed clothing program and the elimination of half of a facilities maintenance tech position.

The increases include restoration of janitorial services from three days per week to a five-day service. That move from five-day service down to three-day service, McCormick said, proved to be the “worst thing we could have done.” Exacerbating the issue is the age of the building, and there’s ongoing construction adjacent to the building, plus the fact that more people will be returning to work there. So next year’s budget proposes five-day service – an additional expense of $33,500 per year. In the new municipal center, McCormick said, a three-day-a-week janitor service would be a “recipe for decline” in the new building.

By way of brief background, the new municipal center has been constructed directly adjacent to the existing Larcom building (city hall) and is physically connected to it.

Several renovations to the Larcom building amount to roughly $350,000 in additional costs over FY 2012-13. The renovations reflect the reality of the decision to keep city offices in the Larcom building for the foreseeable future, said McCormick. She spoke of holding the building together with “baling wire.” In taking the ceilings apart to do some of the renovations, they’d found “systems” of keeping water off the ceiling tiles. She said that everyone had experienced some of the issues with bathroom drains backing up.

Asbestos mitigation is underway in the east end of the building now, because the plumbing in the bathrooms is failing. Fixtures need replacement – the bathrooms are deplorable, McCormick said. In the course of the next two years, the city wants to put a fresh bathroom on each floor next to the east elevator tower. In the second year, the city wants to do a complete renovation of bathrooms on the west side of the building.

Sabra Briere (Ward 1) wanted to know if the improvements to the Larcom building were in the capital improvement plan (CIP). She also asked for confirmation that the renovations were not expenses that were anticipated when construction started: “It’s add-on, yes?”

McCormick said the answer was actually: yes and no. The city had originally intended the renovations of the Larcom building to focus only on areas intended for repurposing. For example, the planning department formerly on the sixth floor is being moved to the renovated first floor. The reason these activities don’t show up in the CIP, McCormick said, is that generally you don’t put capital improvements from the general fund into the CIP – they’re typically funded from operations.

McCormick clarified further that the Larcom building is a general fund facility. It shows up in the general fund, but to some extent those costs can be allocated – using the municipal service charge – to the departments that actually occupy the space, if they’re not general fund departments.

Bus Passes

The environmental/energy fund, which is part of the systems planning unit, had projected expenses of $113,478 for FY 2012. A savings of $8,800 was proposed to be achieved by reallocating the expense of participation in the getDowntown go!pass program. The go!pass program allows employers like the city to purchase unlimited bus passes for its workers at a cost of $5 apiece for the year. The passes are subsidized by a grant from the Ann Arbor Downtown Development Authority.

McCormick’s proposal was to move the payment for the go!passes to the alternative transportation fund, which is not part of the general fund. Later in the discussion, Stephen Kunselman (Ward 3) got clarification that the alternative transportation fund gets its money from Act 51, which is the state statute under which state gas tax money is allocated.

Dams

In the utilities budget, McCormick said, the city had historically supported maintenance and operation of dams from the drinking water utility. She noted that the staff has had significant discussion with the council about how dams are funded. [At its Nov. 10, 2010 meeting, the council approved a resolution that directed the city administrator to end the payment for repairs, maintenance and insurance of Argo and Geddes dams from the city’s drinking water fund. The shift in dam activity funding is supposed to be effective with the start of FY 2012, which is July 1, 2011].

McCormick said that funding for the city’s four dams – Barton, Argo, Geddes, and Superior – would be shifted around, in order to accommodate the council’s direction.

Barton dam, she said, has a hydroelectric function, but is also source water for drinking water. So the city staff believe it is appropriate to allocate some of the Barton dam administration and maintenance activities to the drinking water fund. Responding to a question from Sandi Smith (Ward 1), McCormick explained that the amount of water drawn from Barton Pond, compared to the city’s well field, depends on the time of year – in the winter, more is drawn from the well field to moderate the water temperature.

In the snapshot presented by McCormick, Geddes and Argo were grouped together as recreational dams, with Barton and Superior grouped as hydroelectric dams. In FY 2011, $88,938 for Geddes and Argo was spent from the drinking water utility, but nothing was spent from the parks millage. In FY 2012, roughly $90,000 is proposed to come from the parks millage for those two dams, but nothing would be spent from the drinking water fund.

In contrast, Barton and Superior were not funded with any drinking water money in FY 2011, but in FY 2012, $19,661 is proposed to be spent on Barton – because of its role in the drinking water supply.

Maintenance, operation and insurance on all four dams will have expenses of around $330,000 per year over the next two years.

Sabra Briere (Ward 1) wanted to know if the picture could change depending on what the VA Hospital wound up proposing – the VA has expressed interest in a collaboration on retrofitting Argo and Geddes with hydropower. McCormick said there would be an impact and that would need to be part of any conversation with the VA.

Utility Fees

McCormick walked the council through the projected rate increases for drinking water. In the last three years, the rate of increase has been somewhat higher than what’s been projected through FY 2017. Starting in FY 2009, the city has had annual increases of 4.62%, 3.61%, and 3.88%. Starting in FY 2012, the chart provided by McCormick to the council indicates increases of 3.36%, 3.25%, 3.50%, 3.38%, 3.38%, and 3.68%.

Mayor John Hieftje mentioned a study showing that Ann Arbor had some of the lowest rates in the state. McCormick said she predicted that Ann Arbor would maintain that distinction.

For the sanitary sewage system, the rate increases were higher, compared to drinking water. For the last three years, starting in FY 2009, the sanitary sewage rates have increased by 3.20%, 3.10%, and 3.00%. Starting in FY 2012, rates are projected to increase by 4.00%, 4.25%, 4.50%, 5.00%, 6.00% and 6.00%. McCormick said she felt that these increases were not outrageous.

Hieftje asked McCormick to give an update on the solids handling project at the waste water treatment plant. The city is just now wrapping up that project and bringing it online, testing the functionality. That was about a $22 million project, she said. The next step is replacing half of the liquids handling part of the plant – design is complete and it’s going out to bid in the next six months, McCormick reported. Much of it had been built in the 1930s, she said.

When the city builds infrastructure but depreciation isn’t built into the system to accumulate funds for its replacement, it’s financially difficult to undertake capital improvements. So the city has adopted a strategy of a “levelized rate increase” – where rates increase incrementally every year, in order to save up money to make a down payment on capital improvements, McCormick said. She later clarified for Hieftje that around $40 million has been accumulated through that strategy. To undertake the $110-120 million investment in that facility, in less than 6-7 years with only moderate rate increases, she characterized as “really quite an accomplishment.”

The city is still looking at applying for the state’s revolving loan fund for the project, which would be a nice benefit, McCormick said. But there would be some administrative burden, she allowed. The real problem is that the state does not typically fund projects that large. So the city may look at ways of staging the project. There’s a balance between bidding out a project in pieces in order to qualify for a state revolving loan, and taking advantage of a contractor’s market, which McCormick characterized as “hungry.”

Trash Collection

The budget impact sheet for solid waste includes a revenue drop of $226,077 from the solid waste millage. [The 2.5 mill levy shows up as CITY REFUSE on tax bills.] Contract increases for operators of the city’s recycling curbside pickup, its materials recovery facility and the commercial franchise recycling are expected to total $320,000.

On the savings side, McCormick showed the council a budget impact sheet that included nearly $600,000 in savings due to efficiency gains at the materials recovery facility, which are due to single-stream processing. Additional savings of $80,000 come from eliminating a full-time supervisor position at the compost facility – the city council authorized the outsourcing of its compost operations last year. Improvement in the market for recycled material is expected to add $250,000 in revenue.

A reduction in one full-time position for trash collection will be made possible through eliminating one trash collection route. In addition to savings on the labor side, McCormick pointed to savings of $84,500 in FY 2013 that the city would gain by not having to replace one of its garbage trucks. McCormick said the single-stream recycling effort – which added automated cart pickup for recyclables – had also allowed Recycle Ann Arbor to reduce a route as well.

In a followup phone interview with The Chronicle, solid waste manager Tom McMurtrie explained that having fewer routes (six instead of seven) would, for the vast majority of residents, not change the day of the week on which their trash and recyclables are picked up from the curb. For some areas, that would change, however – probably sometime this spring. Both trash and recycling carts, he said, would continue to be emptied on the same day of the week. Yard waste collection routes are somewhat variable, he said, and there’s no expected change in those.

“For illustrative purposes only,” at the work session, McCormick gave the council a sheet that included a savings of $2,132,000 if the council and the community decided the city should get out of the business of trash collection. She noted that some households need more trash collection service than others. Some households are now approaching zero waste, with the availability of the larger single-stream recycling carts, she said. Some households might be able to share service, she said.

It’s something that the city would likely want to regulate through some kind of franchising agreement to ensure quality of service – one vendor providing service throughout the city instead of multiple vendors running trucks through the city. That would be one possible model, she said. In about a month, the council would be given a report on various approaches to trash collection, but McCormick stressed that it’s not part of the city’s budget plan.

Hieftje was eager to make clear that before making a decision to move away from city-provided solid waste collection, there would need to be “a ton” of community input and there would need to be a lot of discussion. Stephen Kunselman (Ward 3) expressed his lack of enthusiasm for the idea by venturing that he was not sure he even wanted to have that discussion.

Vehicles: Fleet

In fleet services, McCormick said the city would be taking advantage of eliminating a vacancy due to a retirement, for a savings of $113,000. Another position would also be eliminated, for a savings of $84,309, based on reduced workload as a result of better preventive maintenance. Repair response times, however, could increase. A $45,000 savings was expected from a reduction in on-hand inventory for repair parts. The city will, said McCormick, attempt to reduce the amount of spare part inventory – they will monitor to see if that works.

Fleet rates charged to other departments are expected to be decreased for FY 2012 by 0.53% but increased by 8.26% in FY 2013.

Sabra Briere (Ward 1) wanted some information about why the number of large pieces of snowplow equipment had been reduced from 15 to 14 snowplows on the road, but only 12 of them had been available for service during the most recent storm. [Snow removal was discussed by the council at its last council meeting.]

Craig Hupy, head of systems planning for the city, clarified that the extra piece of equipment that the city previously owned was a front-end loader – not effective for plowing streets, but somewhat useful for clearing cul-de-sacs. As the city had moved to a containerized collection system for leaves, and discontinued the loose leaf program, retaining and replacing a front-end loader was not a priority, Hupy explained.

Hupy said he was not sure of the details about why the two plows were down at the start of the storm. Briere asked if there was adequate staff for all the equipment – Hupy assured her that staffing was not a problem. In the most recent storm, they had staff for all the equipment that was available. He called that group of employees dedicated – “they answer the call,” he said.

Stephen Kunselman (Ward 3) wanted to understand whether the city’s Wheeler Service Center was being used to its fullest capability. That came in the context of mechanics positions that appeared to be slated for elimination. He wanted to know what percent of the maintenance center’s capability was being utilized. McCormick said she would have to defer to Matt Kulhanek, who’s head of fleet services, on that question. He was not at the meeting, but McCormick said she’d pass along the question to him. She allowed that it’s not the case that the city operates the center with three shifts, with all bays full. The city runs two shifts – the second one is smaller.

But the maintenance center was not, she explained, originally programmed for that kind of use – the center is relatively new, dating from 2007. She clarified for Kunselman that although there had been discussion with Washtenaw County about possibly collaborating on the use of the facility, the county had elected not to collaborate. There have been discussions, she said, about collaborating with the University of Michigan and the Ann Arbor Transportation Authority on the use of the facility. The Wheeler Center has bays that are nose-to-nose, which can accommodate longer buses – that’s why those two organizations are interested in the facility, McCormick explained.

Town-Gown Issues

McCormick gave the council some numbers just as an informational sheet to keep in front of them: costs incurred but not directly reimbursed by the University of Michigan in connection with UM home football games. The costs in question are those associated with signs and signal reconfiguration to manage traffic on football game days. Each home football game costs the city $20,000, according to the information McCormick provided the council.

If additional homeland security measures are implemented for home football game days – by closing Main Street – it’s estimated to cost the city an additional $8,900 per game. McCormick said that in conversations with the university about that proposal, the city has made clear that in order to implement the street closure, the city is interested in getting reimbursed for the expense.

The money to pay for this work comes, for the most part, out of the street maintenance fund, said McCormick, so it affects things like pothole repair, snow plowing, crack sealing.

In response to a question about the December 2010 Big Chill hockey game at Michigan Stadium, Craig Hupy, head of systems planning, said an invoice had been sent to the university for the signs and signals work – he had no information about whether it had been paid.

Responding to councilmember questions, McCormick said the city did not send the university invoices for the regular home football games, because the university has made it clear that it will not pay. McCormick said when she’d notified UM of the city’s intention of invoicing for the Big Chill, the response she gotten was, “We really don’t know how we’ll fund that.” There was little recourse for the city to take, she said, and in the end the city would have to write it off.

Stephen Rapundalo (Ward 2) expressed what seemed to be a council consensus that the university be invoiced as a matter of principle, so that it’s on the record. There should be a constant reminder, he said, especially when the university comes and asks for street closures and other things. Sabra Briere (Ward 1) allowed that the university’s rationale for not paying – that the home football games bring commerce into the city – was correct, inasmuch as they did bring commerce into the city. However, Briere pointed out that the additional commerce does not put money back into the street maintenance fund.

Christopher Taylor (Ward 3) expressed some caution about the possible accounting implications – what might the city’s financial auditors have to say about these amounts that get written off? McCormick said that it does create some complications, but it’s doable. Taylor agreed with the principle of billing the university for the costs, but wanted some additional assurance that it would not cause more administrative hassle than it would be worth.

City Attorney’s Office

The 2.5% target reduction on the city attorney’s $1,912,106 budget amounts to roughly $47,000 in reductions.

City attorney Stephen Postema began his work session presentation by asking the council to consider the reductions he was proposing in the context of three retirements last year, which had resulted in the merging of three positions into just two: an office manager position and two paralegal positions had become just an office manager and one paralegal. The reduction in one staff member, he contended, had a large impact on his small office. [In FY 2011, the current budget year, the city attorney's office was budgeted for 13 full-time positions, including eight attorneys.]

The required reduction this year, Postema said, is being achieved partly through a reduction in “materials and supplies” of roughly $12,000. Materials and supplies, he said, includes the library, much of which is available online through sources like Westlaw.

Postema said that in conversation with Homayoon Pirooz, who is head of project management in the public services area, they had concluded that work done by paralegals on easements in most other cities was done in a department different from the legal department. Postema said the reason easement work is done in Ann Arbor through his department is through happenstance. When Marylou Zimmerman – the paralegal who had previously handled easement work – was originally hired, Postema said, her salary was funded by another department. Now, the legal department pays for it.

Although it hasn’t been done as carefully as it should have been, it’s important now, Postema said, to charge out as much time as possible, through whatever grants are supporting various capital projects – like the Stadium bridges project. So the other reduction is actually a revenue source, he said, to charge out half of the easement paralegal’s time to various projects. That $35,000 in additional revenue, combined with the $12,000 in savings, would meet the $47,000 target for FY 2012.

For FY 2013, Postema said, the savings might have to be realized by reducing the easement paralegal to a half-time position, and he remarked that it would be painful, if the department had to do that.

Sandi Smith (Ward 1) wondered: If a project is not grant-based, and the easement paralegal’s time is charged to the project, doesn’t that amount to shuffling it from one bucket to the next? Postema replied by saying that what’s at issue is the amount of time that is properly and legitimately allocated to capital improvement projects.

City administrator Roger Fraser, also responding to Smith, put the easement paralegal work in the context of an ongoing analysis for all of the city’s operations, regarding what the appropriate sources are for funding different activities. It’s easiest and most convenient, he said, to bill something to the general fund, but the city has not been as diligent as it should have been in making sure that the activity is supported by the appropriate departments.

Postema returned to his earlier point that most city attorney offices do not have a position for an easement paralegal – that position is in the engineering department, he said.

Stephen Kunselman asked if annexations of land to the city from the townships were in the same basic category as easements. There’s paperwork that needs to be done for that, Kunselman said. Postema replied that annexations had not been contemplated as part of the additional revenue projection, but if additional revenue could be realized, then that’s all the better. There have been a lot of annexations in the last two or three years, Postema said, but he was not sure if the volume will continue.

Sue McCormick began her part of the evening’s presentation, which immediately followed the 10-minute discussion of the city attorney’s budget, by providing some additional comment on the question of charging easement paralegal costs to capital projects.

She invited councilmembers to think about how the general fund works. Many of the general fund departments – such as finance– provide support to non-general fund departments. Those services are eventually allocated to the non-general fund departments as part of their operating expense budget. That allocation is achieved with the mechanism of the municipal service charge (MSC). But capital expenses, she said, should be capitalized as part of the project.

Leading up to the city administrator’s proposed budget in April – for FY 2012, beginning July 1, 2011 – the city council is also holding a series of work sessions on the budget. Their typical scheduling pattern is for the weeks between council meetings. Previous work sessions have taken place on community services as well as the 15th District Court. On Feb. 14, 2011, the council held its budget work session on safety services – fire and police. Also included were a raft of smaller departments – finance, information technology, mayor and council, administrator’s office, clerk’s office and Community Television Network (CTN). One budget work session remains, for the public services area, on Feb. 28.

At the podium is Barnett Jones, chief of police and head of public safety services for the city of Ann Arbor. Seated at the table, from right to left are: Marcia Higgins (Ward 4), Mike Anglin (Ward 5), Tony Derezinski (Ward 2), Stephen Kunselman (Ward 3) and Stephen Rapundalo (Ward 2). (Photo by the writer.)

On Feb. 14, heads of Ann Arbor’s police and fire departments presented the city council with their strategy for meeting budget reduction targets for the next two fiscal years – FY 2012 and FY 2013. They each presented their strategies for meeting the target on two different scenarios: (1) a 2.5% reduction for each year’s projected expenses; and (2) a 4.0% reduction for each year’s projected expenses.

Police chief Barnett Jones, who’s also head of all safety services for the city, told councilmembers he’d prefer to be “wrassling with a bad guy” instead of talking about the scenarios, but sketched out his reduction strategies anyway: On the 4.0% scenario, two years from now the department would have 14 fewer police officer positions than it does now – the force would decrease from 124 to 110 officers. Of the 14 police officer positions that could be eliminated, 13 of them would come through layoffs. That doesn’t include six additional, non-officer positions that would be eliminated in the department, four of them through layoffs.

Fire chief Dominick Lanza, who announced his resignation the day after the work session was held, sketched out a similar picture for the fire department: On the 4.0% scenario, two years from now, the department would have 13 fewer firefighters, with 11 of those reductions achieved through layoffs.

At the council’s first budget retreat, city administrator Roger Fraser and the city’s CFO Tom Crawford indicated that the 2.5% scenarios depend on unresolved union contracts settling with no salary increases and the adoption of the city’s new benefits plan. But even those scenarios would, in the first year of the two-year plan, result in the elimination of three police officer positions (two through layoffs) and five firefighter positions (three through layoffs).

The 2.5% target is the baseline reduction for all city departments, with higher targets established for a department (up to 4.0%) depending on how many of the department’s workers are on the new city benefits plan. The new plan requires higher contributions from employees for health care and pensions.

Besides fire and police protection, the city council received reduction reports from smaller departments, including a group of units in the finance department, the administrator’s office and the clerk’s office. They also discussed how the information technology department works out of a service fund that is external to the general fund.

Reduction Targets: 2.5% versus 4.0%

During the Feb. 14 work session, part of the back and forth – among councilmembers, city administrator Roger Fraser and chief financial officer Tom Crawford – focused on the definition of budget reduction targets, as well as the different scenarios presented for the police and fire departments.

The work session conversation again drew out the fact that percentage budget reduction targets do not arise from a comparison of last year’s budget with next year’s budget. Instead, the level of activities/services from the previous year is assumed for the next year, so the cost of those same activities/services is projected or forecast into next year. Due to overall inflation, contractually-enforced wage increases, increased energy costs, etc., the costs of the same activities/services, when projected into the next year, is generally greater. Budget reduction targets are thus percentage reductions of the forecasted cost. [For more detail on the calculations of budget reduction targets, see Chronicle coverage of the Jan. 31, 2011 working session: "Ann Arbor 2012 Budget: Parks, Plans, People"]

At the Feb. 14 work session, Crawford reminded the council that all departments had been given the basic task of reducing their forecasted costs by 2.5%. To the extent that employees in departments are not on the new health care and pension plans, they’d been given the additional task of reducing their forecasted costs by up to 4.0%.

Fraser explained how a number of city employees are “enjoying much more expensive health insurance than other employees.” He reminded the council of the city’s alignment between its budget and labor strategy. Asking departments to meet greater reduction targets that are keyed to extra health care costs is part of that alignment strategy. [For more detail on the alignment of labor and budget strategies, see Chronicle coverage of the Jan. 31, 2011 working session: "Ann Arbor 2012 Budget: Parks, Plans, People"]

In the case of the police and fire departments, almost all employees belong to unions that have not adopted the new city benefits plan. So at the Feb. 14 work session, police chief Barnett Jones and fire chief Dominick Lanza presented two different scenarios for their departments: a 2.5% and a 4.0% reduction scenario.

Police Services

Chief of police Barnett Jones walked the council through the strategy he would use to meet 2.5% and 4.0% reduction targets over the next two years. The reduction targets apply to each year. That is, savings identified in FY 2012 are assumed to carry through to FY 2013, and a department’s task for FY 2013 is to identify an additional savings of 2.5% or 4.0%, depending on the scenario. [The city adopts its budget one year at a time, but plans in two-year budget cycles].

Measured in bodies, the 4.0% scenario sketched out by Jones would result in the elimination of  14 police officer positions – 13 of them  through layoffs – in two years. That doesn’t include six additional, non-officer positions that would be eliminated in the department, four of them through layoffs. [.pdf of all budget impact sheets from the Feb. 14, 2011 working session]. That reduction in bodies would reduce the police department’s projected costs of roughly $26.5 million per year by $1 million in the first year, and an additional $1 million in the second year:

Police Services Reduction Strategies
------------------------------------------------------
2.5% SCENARIO

2012            2012           2013            2013
Action          Dollars        Action          Dollars
------------------------------------------------------
LAYOFF                         LAYOFF
2 Dispatchers   162,659        1 Dispatcher     97,810
2 Plc Offcrs    221,332        4 Plc Offcrs    470,272
1 Plc Svc Spcls  90,246
                               REDUCE RANK
ELIMINATE VACANT               1 Lt, 2 Sgt      24,274
1 Telecomm       78,374
1 Plc Offcr     115,521        MAT/SUPP         31,723
1 Plc Prof Asst  79,144
                               Addtl Svngs      22,981

Subtotal Svgs   747,276                        647,060
2.5% Target     666,049                        638,802

------------------------------------------------------
4.0% SCENARIO [in addition to 2.5% savings]

2012            2012           2013            2013
Action          Dollars        Action          Dollars
------------------------------------------------------
LAYOFF                         LAYOFF
3 Plc Offcrs    339,365        4 Plc Offcrs    479,235

                               Addtl Svgs       14,334

Grand Total   1,086,641                      1,140,629
4.0% Target   1,049,330                      1,091,071

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After walking the council through the impact sheet, Jones stressed that eliminating police officer positions would translate to a shift from other areas into the department’s patrol division, which he tries to maintain at a minimum level. Jones has previously described the patrol division as the backbone of the police department. At last year’s budget work session on police services – when the specter eliminating 12 police officer positions was raised – Jones laid out the contrast between the patrol division and other areas of the police force. From The Chronicle’s report of that May 12, 2010 work session, which also gives some insight into how this year’s reductions might be handled from an operational point of view:

Sixty-four of those are in the patrol division, and 22 are on “special assignments.” Special assignments are as follows: five are on traffic; five are in the critical response unit (CRU); three are school liaison officers; two are transport officers; two are in-service detective officers; one is assigned to LAWNET; one is assigned to AATA; one is a property officer; one is a training officer; and one is a court officer.

If 12 officers are laid off, Jones said, then traffic enforcement would be reduced by four officers. One officer would remain in traffic for licensing, taxi cabs, and investigations along those lines. Those traffic officers would shore up the patrol division in order to spread the workload out among the remaining officers on patrol.

The CRU, Jones said, which represents the proactive part of the force, would be eliminated – the department would go from being a proactive to a reactive department. The CRU includes surveillance, uniformed and plainclothes work, and they make warrant arrests, among other duties, Jones said. Those CRU officers would have to be moved into other areas.

Summarizing, the chief said 12 layoffs meant four positions from traffic, five from CRU, with the other three reduced out of the patrol division. That would leave 61 on patrol. The total number in special assignments would be as follows – in some cases due to contractual obligations: traffic (1); school liaison (3); transport officers (2); in-service detective positions (2); LAWNET officer (1); AATA contract (1); property officer (1); training officer (1); and court officer (1). That’s a total of 13 officers in special assignments. The detective bureau would stay at 13, Jones said, reasoning that “core services have to be maintained.”

Stephen Rapundalo (Ward 2) chairs the council’s labor committee and has recently begun using his communications time at regular council meetings to provide updates and information about the status of labor negotiations. At the Feb. 14 work session, he noted that if the police officers union were to adopt the new benefits plan, then they would save the positions they’d otherwise lose under the 4.0% reduction scenario. [Under the 2.5% scenario, seven police officer positions would be lost over the course of two years; under the 4.0% scenario, 14 positions would be lost.]

Rapundalo said it’s within the union’s purview to affect the number of layoffs, “if they so desire.” City administrator Roger Fraser was somewhat more circumspect, saying, “We’re just showing the difference, not advocating one thing or another.”

In response to a question from Sandi Smith (Ward 1), Jones said there were no longer any vacant positions in community standards – they’d been filled. The community standards division has a total of 10 staff with a vacant supervisor position, he said. Just a few years ago, it had 15-16 total staff. Jones reported that Richard Martonchik, who works in the city’s human resources department, is looking at how the community standards department does business, and would, Jones hoped, provide a better business model.

Rapundalo asked Jones to summarize the impact on the department under the 4.0% scenario: 19 positions would be eliminated from the police department, 14 of those from law enforcement, Jones said. That would reduce the number of police officers from 124 to 110.

Marcia Higgins (Ward 4) asked if Jones would be able to maintain his minimum numbers in the patrol division with that number of cuts. Jones told her that with the 2.5% scenario, he could maintain the patrol division, but under the 4.0% scenario, the sheer loss of bodies would mean that patrol would be reduced. Higgins wanted to know what the patrol division would look like on that scenario. Answered Jones, “I haven’t quite figured that out.”

Tony Derezinski (Ward 2) asked if the layoffs from dispatch could be covered by assistance from other jurisdictions. Jones allowed that in the distant future, that might be possible, but not immediately.

Stephen Kunsleman (Ward 3) said that during the council’s budget retreats they’d talked about “party patrol.” [Party patrol is essentially a special detail that is deployed on certain University of Michigan home football games.] Kunseman wondered if overtime would become a necessity in order to cover police activity like party patrol. He wanted to know if additional overtime would be incurred, and if that had been calculated against the projected cost savings.

Jones said he expected overtime would rise as a result of cutting this number of bodies. He also noted that party patrol enjoyed partial grant support, but that yes, overtime would rise.

Higgins wanted to know where it balanced out: What is the number of bodies you can cut without incurring overtime? Jones said he’d need to study the specific question in more detail before arriving at a number he would say in public. Higgins indicated that they’d need to have that conversation later. “Yes, ma’am,” Jones replied.

In response to a question from Derezinski, Jones said that prospects for federal funding are grim and that the department had moved away from seeking federal grants. Most of those grants require that you hire the officers permanently who have been paid for with federal funds, he said.

Derezinski asked if reductions to the state police force could result in more obligations locally. Jones confirmed that there’s speculation about reductions to state police funding. Since the new governor [Rick Snyder] was elected, Jones said, there’s been speculation. The state police took over the crime lab in Detroit, he said, and he does not think they’ll return operation of the crime lab back to Detroit. There’s a backlog of cases from Detroit because of credibility problems, he said. There’s also speculation about the reduction of funding to the corrections system. And there’s talk of turning patrol of the freeways back over to local agencies and the sheriffs. Another strategy would entail removing state police officers from southeast Michigan and putting them in a backup role. Jones concluded by saying he’s waiting to see what direction the state police are going.

Fire Services

The day following his presentation to the council, Dominick Lanza resigned his position as chief of the fire department after slightly less than a year on the job. He was sworn in last year at the March 15, 2010 council meeting, with an official start date of March 22, 2010. His resignation is effective March 25, 2011.

At the work session, Lanza told councilmembers that he wished he could tell them the situation for the fire department was better than in the police department, but it isn’t. There are a number of additional new expenses the fire department had to reduce in their budget task, including $43,573 due to a budget estimate that was too low from last year and $52,000 in lost revenue that will be assigned to the planning department instead – it’s a matter of complying with the state law on how initial inspections are handled. [The city council approved the change at their Jan. 3, 2011 meeting.]

On the 4.0% percent scenario, after two years the number of firefighters in the department would fall by 13, from 88 to 75. On the 2.5% scenario, nine firefighter positions would be cut. [.pdf of all budget impact sheets from the Feb. 14, 2011 working session] By the specific numbers:

Fire Services Reduction Targets
------------------------------------------------------
2.5% SCENARIO

2012            2012           2013            2013
Action          Dollars        Action          Dollars
------------------------------------------------------
ADDITIONAL EXPENSES

Plnng Dpt       (52,000)
Too Low Est     (43,573)       Too Low          (5,406)
Rplc Gen FS1    (62,715)       New Gen FS6     (62,715)
Therm Imagers   (13,500)
Air bottles      (6,900)       Air bottles      (6,900)

REDUCTIONS         

LAYOFF                          LAYOFF
3 FFs           324,000         4 FFs          432,000

ELIMINATE VACANT
2 FF            216,000  

Subtotal Svgs   361,312                        356,979
2.5% Target     349,870                        348,840

------------------------------------------------------
4.0% SCENARIO [in addition to 2.5% savings]

2012            2012           2013            2013
Action          Dollars        Action          Dollars
------------------------------------------------------
LAYOFF                         LAYOFF
2 FF            216,000        2 FF            216,000

Grand Total     577,312                        572,979
4.0% Target     561,126                        584,748

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Lanza told councilmembers that a forthcoming study might change the situation. He was alluding to a study that will be done by the International City/County Management Association (ICMA) Center for Public Safety Management to get an analysis of and recommendations for Ann Arbor’s fire protection needs. The contract, for not more than $54,000, was authorized at the city council’s Feb. 7, 2011 meeting. The interest in a study comes in the context of two recent budget retreats conducted by the council, where the council discussed the possibility of transforming Ann Arbor’s fire department to a staffing arrangement that would combine full-time career firefighters with paid on-call firefighters.

At the budget work session on Feb. 14, Lanza told the council that a lot of the numbers are “guesstimates.” He said that after the study, if the city decides that it wants to go in the direction of a combination full-time/on-call department, then everyone – firefighters and administration – would know. Now, he said, he just does the best he can with the numbers he’s given.

He characterized the current staffing situation – which is budgeted for 88 firefighters – as one where the department has checks, but no money to write them. The previous Sunday he’d implemented the intermittent closing of one of the city’s five fire stations. Regardless of the station that would be closed on any occasion when a closure was necessary, Lanza said it would  have impact on response times, which means potentially more property damage. A station would be closed only on an “as needed” basis, he said.

By way of background, part of what determines when an intermittent closure is required depends on the number of firefighters available on any given day, and the department’s ability to pay overtime.  The department’s firefighting force is divided into three shifts, who work a 24-hour day, followed by 48 hours off. Every 10th day of scheduled work is a “code day,” which works out to a yearly average of time worked by firefighters of 50.4 hours per week.

A fact drawn out by mayor John Hieftje at the Feb. 14 work session is that by union contract, the number of firefighters that can have scheduled time off for any shift is seven. [It's a number calibrated to a firefighting force that previously numbered over 100 firefighters. According to the IAFF Local 693 website, the minimum staffing requirement per shift for the five stations in the city is 18 firefighters. Dividing 88 firefighters by three shifts, subtracting the maximum number for scheduled time off (7), and allowing for coverage of code days leaves little flexibility for staffing, without incurring overtime.]

Tony Derezinski (Ward 2) asked about the possibility of reconfiguring shifts. Lanza said there were a few people who were working a 40-hour week, and one possibility would be to put them back into the fire suppression rotation. Scheduling is a negotiable item for union contracts, Lanza said.

Derezinski asked if the station to be closed on an intermittent basis could be chosen so that it’s near a station in another jurisdiction, so there’d be reciprocal coverage. Lanza indicated that what’s needed in Washtenaw County is a regional approach to fire protection, to ensure that everyone receives the same high level of service.

Non-Safety Services Departments

In addition to police and fire budgets – which together made up 48.9%, of the city’s $81.5 million general fund budget for the current budget year – city council members heard budget reduction strategies from several smaller departments. [.pdf of all budget impact sheets from the Feb. 14, 2011 working session]

Financial Services

The city’s chief financial officer, Tom Crawford, presented the council with the budget impact sheet for the city’s financial services as a group that includes finance, treasury, assessing, risk management, accounting, and procurement.

Savings identified for the first year of the two-year plan include around $60,000 in savings from the new financial system. The group’s impact sheet also includes an additional expenditure of almost $80,000 compared to last year – for a position that has now been reassigned back to accounting. That will be offset by not filling a vacancy in payroll for an employee who’s going to retire.

Another $29,000 of savings is expected from a personnel change next year – an AFSCME union position that is currently held by a Level V employee is expected to retire and the position is expected to be replaced with a Level I employee.

For the second year of the plan, FY 2013, another reduction of a full-time staff position would be required, Crawford said. He’s not yet been able to identify that position, he said, but he would need to do that next year.

Information Technology

Crawford included the IT department as part of the work session presentation. But the 22-person IT department operates with a service fund that’s external to the general fund – it bills other departments in the city directly for the services it provides. Crawford likened the IT department to the fleet services fund – fleet provides vehicles to city departments, and IT provides computers and software.

In discussion with councilmembers, Crawford explained how the brake on IT costs did not come primarily from an attempt to meet reduction targets within that fund – although they did look for direct ways to reduce their costs. Instead, the pushback on IT costs comes from the different departments within the city. As heads of different departments try to meet their budget reduction targets, they might look at reducing people or something else, like IT costs, to remove the next dollar from their budgets.

Crawford told the council he wanted to give councilmembers a flavor of how the IT department works – the budget for the department is over $6 million, which is a lot of money.

One category of IT costs is “multi-year projects,” which are expected to decrease from $552,611 this year to $235,000 in FY 2012 and $160,000 in FY 2013. The $235,000 is primarily for the OnBase document management system, Crawford said, which illustrates the general category of major software implementations included in “multi-year” projects.

OnBase is the last of the major IT software projects, Crawford said, which have in the last few years included systems like the Courts and Law Enforcement Management Information System (CLEMIS) and eTRACKiT. So the line item for multi-year projects is going down. Now, what the IT department will focus on is making sure that the organization is using its software well. That’s an item that shows up as “software maintenance” in the IT department’s budget. In response to a question from Tony Derezinski (Ward 2), Crawford explained that the ongoing software maintenance contracts are struck with the software vendor – it’s not really something that could be bid out separately to a third party. The cost of the ongoing maintenance contract, Crawford explained, is something that’s considered in weighing the merits of the software purchase.

Another category of  expenses for the IT department is “two-year replacement projects.” The typical replacement schedule is every five years for desktop computers and every three years for laptops, but the department is looking at the possibility of extending that schedule to every four years for laptops. The idea is to establish a replacement schedule so that equipment failures don’t wind up costing more money than it would to simply replace the equipment in advance of those failures. In the course of the evening’s conversation, city administrator Roger Fraser explained that the iPad he’d been using recently would be returned to the IT department – he’d been evaluating it as a possibility instead of a laptop. He’d found it useful in some ways, he said, but lacking in others.

Besides software maintenance, the other largest expense is personnel, which works out to roughly $2.5 million year. Crawford stressed that the increase from $2,654,689 in FY 2011 to $2,828,319 in FY 2012 reflected the fact that an employee whose costs were charged out to another department in FY 2011 was coming back to IT.

Mike Anglin (Ward 5) was curious to know what the quantifiable impact is on the city’s operation when the public uses the city’s online tools – there are likely fewer telephone calls and more satisfied customers. Do they have hard data on that? he wanted to know. Crawford said that online tools – like the ability of people to use the city’s online tax payment system – have had a meaningful effect. To the extent that it reduces staffing needs during peak periods, it has had exactly the impact you would expect. Sandi Smith (Ward 1) asked if it would be possible to show over the last five years the savings generated from IT work. Crawford indicated that it’d be easier to do that on a project-by-project basis, and he offered in the near future to pull out some examples to share with the council.

Stephen Kunselman (Ward 3) noticed that the IT department itself was charging itself for IT services. Crawford explained that the IT staff all have computers, and there are also licenses for software use – software licenses are assigned by individual. He also explained that the municipal service charge is assessed to IT, because it’s not part of the general fund.

In summing up the IT presentation, city administrator Roger Fraser described how previously, when someone said, “I need a new computer,” the city gave it to them with no consequence to the department’s budget. Now, there’s instead a conversation – between a “customer” and “a provider.” Sometimes software licenses are removed from a department’s budget, because a unit manager decides they don’t need them.

An example of what Fraser meant was included in the community services area budget work session on Jan. 31, which was reported this way by The Chronicle:

Additional budget savings would result from adjusting water charges to reflect what actual usage is. And they’re eliminating some software licenses. Some of the software, [community services area administrator, Sumedh] Bahl said, isn’t used by the staff that much, “so we’re taking it away from them.”

At the Feb. 14 work session, Fraser credited Dan Rainey, head of IT for the city, for establishing the review team for IT, which includes the district court, the city attorney’s office, and the city’s other key leadership positions. The review team helps establish IT priorities. Crawford said the city’s IT governance model had attracted interest from other organizations as well.

Mayor and Council

The mayor and council have their own section of the budget, which includes mayoral and councilmember salaries. Fraser told them that miscellaneous reductions in FY 2012 of $810 were yet to be determined. It’s assumed that for the following year, in FY 2013, the roughly $8,000 reduction target would not be met, because it would mean a reduction of half a councilmember. [For Chronicle coverage of how council salaries are set – 2011 is a year when they can be changed – see: "Ann Arbor Council Service: What's it Worth"]

Mayor John Hieftje pointed out that there used to be 1.75 FTE staff positions in the mayor’s office and now it’s down to 0.75.

Sandi Smith (Ward 1) suggested not printing out everything in color and dropping it in councilmember mailboxes. She told Fraser she looked at most things online, so she didn’t need paper copies. Fraser noted that while the printing cost did not come out of the council’s budget, it was a good suggestion. He did point out that there’s a balance between providing all the necessary information without flooding the council with too much information. If it’s printed out in color, Fraser said, it’s probably because it’s much easier to understand in color. He assured Smith that he did think this through, but his judgment call would be – if he had to choose – to go with the best quality information.

Administrator

The first item on the administrator’s list was reduced printing costs, with an expected savings of $3,500. Some of the savings were identified simply with the note: “reduced budget to meet required target.” Fraser explained by commenting: ”We’ll have to be frugal.” The line indicating savings in contractual services includes items like membership in the Michigan Municipal League, Fraser said. The reduction strategy includes having those units who actually use the contractual services pay for them. [Membership in the league was not indicated to be cut.]

Community Television Network

Included in the impact sheets was one for CTN, which Fraser indicated was not part of the general fund, but which is also trying to meet reduction targets. The impact sheet indicates an expenditure for a capital investment of $97,431 – to transition to an appropriate digital format. The new format, said Fraser, would allow for live streaming on computers instead of on television.

Clerk

Savings identified in the clerk’s office include the replacement of someone who is retiring with a lower cost employee.

Cost savings were also identified by assuming only two of the city’s five wards would have city council primary elections. [As of last week, the only person who had filed nominating petitions with the city clerk's office was Stephen Kunselman (Ward 3).] Fraser said they’d made a wild guess about the number of wards with primary elections – they figured it might be two, instead of the three wards that were contested last year. The impact sheet for the clerk’s office indicates that a primary election costs about $7,000 per ward to administer. “It’s up to you guys as to how much we spend,” Fraser said. “Get out there and take out your opposition, and we’ll be all set!” he quipped.

Another measure that will continue from last election season is the Friday closure of the clerk’s office for election preparation work. Previously they had done the work on an overtime basis. Fraser said there’d been no complaints about the Friday closure during the last election cycle.

Another way that overtime will be reduced is to eliminate the clerk’s assistant for city council meetings, who comes in at 1 p.m. on Monday council meeting days – she would work just until 10 p.m., instead of staying until the end of the meetings. [Ann Arbor city council meetings rarely end before 10 p.m.] The rest of city council meeting would be covered by city clerk Jackie Beaudry, Fraser said.

Leading up to the city administrator’s proposed budget in April, the city council is also holding a series of work sessions on the budget. Their typical scheduling pattern is for the weeks between council meetings. That was the case on Jan. 31, 2011 when the council held its budget work session on the community services area, which includes human services, parks and planning. Another session was held on Feb. 7, prior to the council’s regular meeting, regarding the 15th District Court. A report on the Feb. 14, 2011 session, which focused on police and fire, will follow.

At the podium is community services area administrator Sumedh Bahl. Partially obscured by the podium is councilmember Marcia Higgins (Ward 4). Leafing through the budget impact sheets that the council had been given just prior to the meeting is Stephen Rapundalo (Ward 2). (Photo by the writer.)

The Ann Arbor city council’s budget work session on Jan. 31, 2011 covered a broad range of topics – from the city’s affordable housing stock, to planning and development, to parks and recreation (including golf courses), to human services funding. All these issues fall under the city’s community services area, which is led by Sumedh Bahl.

In a budget year where maintaining the same level of activity in every department is projected to result in a $2.4 million shortfall, city departments have been given reduction targets between 2.5% and 4%. Targets vary across departments depending on health care costs for employees in those departments.

So at their work session, councilmembers heard from heads of individual departments about the specific ways those targets might be met.

For example, Mary Jo Callan, who’s head of the city/county office of community development, told councilmembers that an unrealized $98,000 federal grant would pose an additional challenge. All other things being equal, Callan would meet the reduction target by reducing the city’s allocation to nonprofit human services agencies by $116,714 – from $1,275,744 to $1,159,030. The budget is planned in two-year cycles, even though it’s adopted just one year at a time, so Callan’s reduction strategy for next year’s FY 2013 budget would be to reduce the nonprofit allocation by an additional $48,700.

The planning department plans to meet its reduction target in part by charging the construction fund for 10% of the historic district coordinator’s time, factoring in projected revenue increases due to increased development activity, and leaving a rental housing inspector position vacant. The rental housing inspection activity would be maintained at appropriate levels by using construction inspectors for rental housing inspections as needed.

The city’s housing commission – which maintains more than 350 units of public housing throughout the city – is not proposing to meet reduction targets, but rather to hire what officials say are two crucially needed positions: a financial analyst and a facilities maintenance manager, which together are expected to cost an additional $154,000 per year.

Parks and recreation would meet their targets in part through savings derived from energy improvements that have been made to various recreational facilities over the past few years.

The council focused some of its session on the city’s golf courses, with a council consensus seeming to emerging that for the next two years, the council will be content to stick with the status quo – operating the Leslie Park and Huron Hills facilities as golf courses, and not changing them to other uses.

But the council was also asked to consider a question on which it could be harder to achieve consensus: Should the city continue to help fund park operations, as it has for the last four years, by tapping the city’s general fund reserve for $287,000 annually? The history of the issue dates back to the parks capital improvements and maintenance millage, which was approved in 2006, and which was followed by the council’s approval of its FY 2008 budget the next spring.

That history is rooted partly in a question that the city’s CFO, Tom Crawford, addressed in a straightforward fashion at the work session: What exactly does it mean for a department to have a budget reduction target of 2.5%? 

In this report, we take a look at: (1) how the city’s financial staff define budget reduction targets; (2) how and why those targets vary across departments; (3) how reduction targets relate to the parks budget controversy of FY 2008 and the current $287,000 question; and (4) the range of work session topics discussed by the council.

What Is a Budget Reduction Target?

The city is currently in the middle of its 2011 fiscal year – which ends on June 30, 2011 – and is developing its FY 2012 budget. If the city’s chief financial officer has established a 2.5% budget reduction target, how does he check to see that the target has been met?

Percents are all about comparing numbers, so a natural inclination would be to compare this year with next year – that is, the FY 2011 budget expenses with the FY 2012 projected revenue. In more detail, you might think to calculate 2.5% of the FY 2011 expenses, subtract that number from the FY 2011 expenses and ask: Is that number equal to my FY 2012 budgeted revenue? Arithmetically:

[FY 2011 expense] — [FY 2011 expense]*.025 ?=? [FY 2012]

If that checks out, then from this year to next year, we’ve cut the budget by 2.5%, right?

But that’s not what a 2.5% budget reduction target means for the city. When the city’s financial staff calculate a reduction target of 2.5%, they’re not comparing this year’s expenses with next year’s projected revenue. They’re comparing next year’s projected expenses, with next year’s projected revenue.

At the Jan. 31, 2011 city council work session, the city’s CFO, Tom Crawford, explained this concept to council members as a stepwise process:

1. Assume the same activities will be maintained next year at the same level they exist this year [staffing levels will remain the same; the same services will be provided; etc.].
2. Project to next year how much it will cost to maintain that same level of activity. [If the cost of electricity is expected to increase by 10%, that's calculated in; if union contracts stipulate that there's a 1.5% salary increase, that's calculated in.]
3. Compare next year’s projected cost with next year’s projected revenue. If cost exceeds revenue, that defines the percentage reduction the organization needs to achieve as a whole.

Arithmetically, the equation looks like this:

[FY 2012 expense] — [FY 2012 expense]*.025 ?=? [FY 2012 revenue]

By way of a made-up example, consider a perfectly balanced FY 2011 budget where expenses and revenues are $100,000. Let’s say that due to contractually obligated salary increases, overall inflation, and a rise in oil prices, it’s possible to project that the same activities/services the city obtained for $100,000 in FY 2011 will instead cost $101,000 in FY 2012. Let’s say that revenues are expected to drop in FY 2012 to $98,475. So the crucial question for the city is how to reduce $101,000 down to $98,475. On this scenario, measured in dollars, the city is looking for some way to trim $2,525. What’s that dollar target in terms of percent?

2,525/101,000 = .025

Let’s say on that scenario, the city does achieve its reduction target of 2.5%. That is, let’s say the city finds a way to cut expenses for FY 2012 down to $98,475. That would mean a reduction target of 2.5% has been met for FY 2012, even though comparing FY 2012 to FY 2011 would indicate only a 1.525% cut.

Different Reduction Targets for Different Departments

Part of the city’s specific labor strategy is to try to convince its unions to adopt a health care and pension plan that would cost the city less – by requiring greater contributions from employees. The public relations component of that strategy was reflected at the Feb. 7, 2011 city council meeting, when Stephen Rapundalo (Ward 2), chair of the city council’s budget committee, addressed his colleagues. He contrasted the level of health care benefits received by city union workers with benefits received by city non-union workers and by employees at institutions like the University of Michigan.

In addition to the public relations piece, the city’s labor strategy has a budgetary component. As early as the first budget retreat in December 2010, city administrator Roger Fraser and CFO Tom Crawford explained to councilmembers that this year they will align the city’s labor and budget strategies. What that means in terms of budget reduction targets is that different departments will be given different reduction targets, depending on how many employees in the department have adopted the city’s new benefits plan.

All departments have a baseline 2.5% target, with additional reductions assigned to departments depending on the extent to which employees in each department are still on the city’s old benefits plan.

In a hypothetical department where all employees were on the new heath and pension plan, the reduction target would be 2.5%. In a department with a large number of union employees who have not yet adopted the new health plan, the reduction target this year can be as high as 4%. The numbers extracted from budget impact sheets submitted by each department for the Jan. 31 work session illustrate how the percentage reduction targets vary across departments. The targets all fall between 2.5% and 4.0%:

                   Community     Plan/Dev     Planning        Parks
Projected FY 012   2,008,008    1,497,874      829,796    3,612,367
Reduction Dollars     55,521       55,182       29,613       92,083
Reduction Percent       2.76         3.68         3.57         2.55

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Reduction Targets and the 2006 Parks Millage: $287,000

The city’s method for computing reduction targets based on next year’s projected expenses and next year’s projected revenues is not new this year – this is simply the way it’s been done. But that method of computing budget targets is inconsistent with the last-year-vs.-this-year comparison that many people are drawn to when they think about percentages. That inconsistency led to considerable controversy in early 2007 when the city council adopted its FY 2008 budget.

The controversy involved the combined parks maintenance and capital improvements millage that was approved by voters in November 2006. Before passage of the combined millage, the city levied two separate millages at 0.5 mill each – one for parks maintenance and the other for capital improvements. Now, within the combined millage, taxes are collected at a rate of 1.0 mill, but money is allocated to maintenance or capital improvements on a more flexible basis than the previous legally enforced 50-50 split that was expressed by the specialized purpose of each millage.

However, there’s not complete flexibility to allocate money to maintenance or capital improvements within the unified millage. Percentage allocation is guided by a city council resolution passed in October 2006. The resolution specifies a range of 60% to 80% for maintenance, with the remainder going to capital improvements.

Another part of that resolution was intended to address a fear expressed by some in the community at the time: Even though more money for parks might be generated through the new millage, the amount of money actually spent on parks could be reduced – if the city reduced funding for parks from its general fund. So the intent of the resolution was to allay that fear. In relevant part, the October 2006 resolution reads:

4. If future reductions are necessary in the City’s general fund budget, during any of the six years of this millage, beginning with Fiscal Year 2007-2008, the general fund budget supporting the parks and recreation system for that year will be reduced by a percentage no greater than the average percentage reduction of the total City general fund budget;

5. If future increases occur in the City’s general fund budget during any of the six years of this millage, beginning with Fiscal Year 2007-2008, the general fund budget supporting the parks and recreation system for that year will be increased at the same rate as the average percentage increase of the total City general fund budget;

By spring the following year – as the council was prepared to adopt the FY 2008 budget – objections were raised when general fund support for parks in the proposed FY 2008 budget was less than in FY 2007. Those who objected, including prominent leaders of two environmental groups, pointed to the increase in the overall general fund budget from the previous year, and contended that parks should enjoy the same increase, not a decrease. From a May 19, 2007 Ann Arbor News account, written by Tom Gantert:

Mike Garfield, director of the Ecology Center, and Doug Cowherd, chairman of the Sierra Club-Huron Valley Group, said the city should do what it said it would do in an October 2006 resolution. That resolution stated that if the city’s general fund budget increased, the parks system budget will be increased at the same rate as the average percentage of the total general fund budget.

According to the city, the general fund budget rose from $78.5 million to $80.3 million, an increase of 2 percent. Yet, the parks system budget dropped from $6.7 million to $6.0 million, a decrease of about 11 percent. To get to that 2 percent increase as the resolution states, the city would have to add about $763,000.

On the night the council adopted the FY 2008 budget, an attempted budget amendment – proposed by then-councilmember Bob Johnson – would have added $638,900 to the parks budget from the general fund reserve. But the amendment failed, receiving support only from councilmembers Johnson, Ron Suarez and Stephen Kunselman.

For that vote, the majority of councilmembers seemed persuaded that the intent and purpose of the October 2006 resolution was served by treating the parks budget targets – as they’ve been laid out in the first section of this article – the same as all other departments. At the time, an Ann Arbor News account from May 16, 2007 had Crawford explaining the apparent discrepancy this way:

But now chief financial officer Tom Crawford says the [October 2006] resolution was too simplistic and just looked at overall budget figures and didn’t follow the city budget methodology in place for several years.

For example, because the parks system doesn’t have as many employees as other departments, its budget doesn’t increase as much for rising expenses such as employee health care.

Because of problems in the ordinance language like that, Crawford said the parks would be getting more money than other larger departments that are paying for such benefits.

Crawford said the parks department was treated the same as the other departments in the city.

But later, in October 2007, Johnson brought the issue back to the council with a smaller number to be added to the parks budget from the general fund reserve – $287,000. And that resolution was passed by the council.

Originally the general fund supplement to the parks budget was supposed to be a non-recurring item from the general fund reserve in FY 2008 and FY 2009. But it recurred in the FY 2010 and FY 2011 budgets, as well.

So at the Jan. 31, 2011 council work session, community services area administrator Sumedh Bahl asked the council for guidance: Should the city simply set the parks budget at $287,000 higher, continue to tap the general fund reserve, or discontinue the supplement? Mayor John Hieftje wanted to know if the city’s park advisory commission had become more versed in how the budget targets work. Crawford told the mayor he thinks PAC understands it.

Stephen Rapundalo said this is not the first time over the years when the council has talked about tapping the reserve fund balance for recurring operational needs – it needs to stop, he said, because the council was just “kicking the can down the road.”

But Crawford was keen to stress that in general the council has been disciplined about not tapping the general fund reserve for operational expenses. The parks supplement was an old decision, he said, and now it’s time to check and see where the council’s consensus is on the question.

Marcia Higgins (Ward 4) indicated that it is a decision the council would make during the budget process. Stephen Kunselman (Ward 3) wondered how that would be achieved: Do they do that by resolution? The answer was unclear.

Christopher Taylor (Ward 3) noted that out of a $7.8 million community services budget, $287,000 is a relatively small order of magnitude. Rapundalo cautioned that the right number to compare the $287,000 against is just the parks portion – around $3.6 million.

Kunselman inquired when the parks maintenance and capital improvements millage is up for renewal, and Colin Smith, the city’s manager of parks and recreation, clarified that it would be on the November 2012 ballot.

Concerning the differing viewpoints on the intent of the October 2006 resolution, city administrator Roger Fraser seemed conciliatory. It was a matter of interpretation, he said, and both groups had made good arguments about whether the budget complied with the intent of voters.

Budget Impact Sheets

The Jan. 31, 2011 budget work session was oriented around budget impact sheets for each department. The city of Ann Arbor is maintaining a separate page in its online budget guide as a repository for the impact sheets. [.pdf of combined budget impact sheets from Jan. 31, 2011] The impact sheets include in detail all the items identified for savings or additional revenue, as well as any items that would increase costs.

Budget Impact Sheets: Planning and Development

Among the ways that the city’s planning and development services departments are meeting their reduction targets, Sumedh Bahl highlighted the following: making sure that staff time is being billed appropriately to other departments; and an additional $3,000 in revenue from already-implemented fee increases in the city’s historic preservation program.

Tony Derezinski (Ward 2) said he liked the additional $10,00o in revenue from increased development activity. He wanted to know if there were more development proposals in the pipeline? Yes, answered Bahl.

In the course of questioning, Bahl went on to explain that part of their plan to meet reduction targets is to leave an inspector position vacant and to use construction inspectors for rental housing inspections. Increased efficiency in rental housing inspections is expected to yield an additional $50,000 in revenue.

In response to councilmember questions, Bahl said that regionalization of inspections – using inspectors from surrounding municipalities – is a future possibility. The city is also looking into the establishment of an administrative hearing bureau (AHB), which would help expedite dealing with nuisance properties, Bahl said. That might take around a year to establish, he said.

[Stephen Kunselman (Ward 3) has, over the last several months, pointed out specific properties in his ward that he says have become nuisances, and are contributing to blight. At the budget retreats, he has also urged that the council and staff  think about ways to address the problem – money for demolition can be clawed back through a lien, for example. Establishment of an AHB is one mechanism that the state's Home Rule Cities Act makes available for dealing with such properties. The city of Ypsilanti established an AHB last year.]

Stephen Rapundalo (Ward 2) noted that he’d made a request at one of the budget retreats for a cost/benefit analysis of doing mandatory home inspections upon sale of a property. It’s something that would generate some amount of additional revenue. Is that on the list? he asked. Bahl confirmed that looking at the issue was at the top of his list.

Budget Impact Sheets: Housing Commission

The Ann Arbor Housing Commission oversees around 350 affordable housing units across the city. The housing commission’s impact sheet did not propose to meet the reduction target. Instead, it called for hiring two new positions: a facility maintenance manager and a financial analyst.

Bahl explained that the facility maintenance position  is vacant. The job includes overseeing the maintenance of buildings, plus the mechanicals like boilers and furnaces. Bahl stressed the need to maintain equipment as a way to extend its life, which delays capital expenses.

Bahl recalled his recent experience as head of the city’s drinking water facilities. [Bahl assumed the leadership of the community services area last year when Jayne Miller left the city for another position. Before that, Bahl was head of the drinking water facilities.] His focus was always on maintenance, he said. By way of example, he described for the council how they had gas engines from 1965 and pumps from 1949 that were still in service. That’s how you prolong the life of equipment – by having a good maintenance program.

[The request for two positions for the housing commission comes in the context of a wholesale replacement of the housing commission's board last year. Additional Chronicle coverage: "Housing Commission Reorganizes," and "Investments: Housing, Bridges, Transit." Last year, the council agreed to a $138,000 allocation to the housing commission to help transition it into an operation that is less dependent on the federal HUD program. The transition included making full-time positions of the executive director and deputy director of the housing commission.]

Mayor John Hieftje asked Tony Derezinski (Ward 2) – the city council’s liaison to the housing commission – if funding would be available to perform the maintenance, if the maintenance manager position were funded.

Derezinski explained that maintenance was part of needs assessment that had been done [by Schumaker & Company]. The commission is currently “backhoeing” a lot of the deferred maintenance, he said. It’s things like changing filters. [There is also currently an open request for proposals (RFP), with a Feb. 25 deadline, to bid on replacing furnaces at many of the housing commission properties.] They need the management position to organize the staff to do it the regular maintenance.

City administrator Roger Fraser said that $330,000 had been spent on furnaces and boilers in the last year. There are two resident managers who work with people in facilities to do some maintenance, he said, but they don’t have time to look at the capital side.

Fraser reminded the council that in last year’s budget, they’d approved additional money for the housing commission – over $130,000 – but this current request is “not a repeat of that money.” For some of the capital investments necessary, Fraser said, the commission had received grants. [To match those grants, the housing commission has recently asked the Ann Arbor Downtown Development Authority for support, but the DDA has not yet acted on the request.]

About the maintenance issues, Derezinski compared it to opening a drawer and finding more snakes. He said the maintenance issues in the housing units are reflected in the complaints you hear at the housing commission’s board meetings. Two years ago, he said, there were a dozen people at every meeting, but that’s decreasing. The staff is now “on top of it.”

Stephen Rapundalo (Ward 2) inquired whether maintenance could be done by third party. If you have a schedule for changing filters, could they call up someone in the phone book and have them perform that task? he wondered. Bahl allowed that some tasks could be outsourced to a third party – they take a combined approach. Some maintenance is done by staff, and some is done by contracted sources – for example, for chillers that require a worker with specialized training. But Bahl said that someone has to monitor and manage everything.

Kunselman noted that as part of the reorganization last year, the commission had eliminated two union positions for maintenance. Kunselman wanted to know how that was consistent with needing a maintenance manager. The part of the maintenance that has been outsourced, instead of using union positions, Bahl said, is done when the units turn over to a new occupant. The commission still needs someone to make sure that all the regular maintenance work is getting done.

Earlier in the work session, Sandi Smith (Ward 1) drew out the fact that there is currently $118,000 in the Ann Arbor housing trust fund. Kunselman wanted to know if that included the Burton Commons project. Mary Jo Callan, head of the combined city/county office of community development, explained that four years ago the commission had committed funds the  Burton Commons housing project. Two years ago, she said, the city told “wanted-to-be developers” it could not continue the commitment. So, where’s the money? Kunselman wanted to know. Fraser explained that it was put in back in the trust fund, and it’s been used. Smith inquired about future payments that are due to the fund by developments – specifically, the one at Plymouth Green. Wendy Rampson, head of planning for the city, explained that based on the Plymouth Green development agreement, two payments of $15,000 had been made and there would be two more, at $15,000 each for next two years.

Smith noted that Avalon Housing is a nonprofit organization in town similar to the housing commission, and Avalon Housing has divested itself of smaller, single-unit housing. Did the needs assessment for the housing commission include consideration of the type of housing stock? She pointed out that it could be a question of replacing 100 furnaces versus one.

Derezinski said that the furnaces that had been replaced were in smaller units. He also said that the question of an appropriate mix of housing stock was receiving attention from the commission. They’d looked at the mix in the Grand Rapids housing commission’s collection of housing, for example.

Fraser wrapped up the discussion of the housing commission by noting that he’d been in public service long enough to see the federal government essentially get out of the business of domestic spending on housing. A lot of the housing we’re dealing with now, he said, dates to the late ’60s and ’70s. The units had 30-year mortgages to guarantee affordability. Fraser noted that the council had previously discussed multi-family units going to market rate. The pressure has rolled downhill to the smallest units of government closest to the people, he said, and the dilemma is only going to get worse.

Fraser pointed to President Obama’s remarks during his state of the union speech, and the new leadership in the U.S. Senate and House, as well as Michigan’s own legislature – all of them have been targeting domestic spending for cuts, he said, and we’ll have to live with it.

Budget Impact Sheets: Community Development

Mary Jo Callan, the director of the combined city/county office of community development, delivered a grim picture for human services allocations to nonprofits. She would meet the budget reduction target in FY 2012 by reducing allocation to nonprofits that provide human services by $116,714 – from $1,275,744 to $1,159,030. Callan’s strategy to meet the target for next year’s FY 2013 budget would be to reduce the nonprofit allocation by an additional $48,700.

Councilmembers appeared slow to grasp the full significance of the numbers on the budget impact sheets. Margie Teall (Ward 4) asked: How did you come up with that number? Where will it hit?

Callan explained that she did not yet know which specific nonprofits would be affected. She said that her department is in the process of gearing up for the new coordinated funding process, beginning July 1, 2011.

Carsten Hohnke (Ward 5) remarked that it was a significant percentage cut, with Teall chiming in that it was greater than 2.5%.

Callan explained that her department had anticipated receiving a $98,000 federal grant from HUD the previous year, to cover administrative costs incurred from city finance and administrative staff. The grant had not materialized – HUD requires documentation that is fairly specific, she said. In a followup email in response to a Chronicle query, Callan described the documentation issue in more detail:

The documentation requires not only the amount of time spent on a specific grant (e.g. CDBG, HOME, CDBG-R, NSP), but also the specific project worked on (e.g. single family demolition, 701 Miller rehab, human services). Community Development has our whole finance and time tracking system set-up to accommodate this documentation threshold, since the vast majority of our funding comes from these sources. City finance and administrative staff however, do not track their time in this detailed way, since the vast majority of their work relates to the general fund.

Stephen Rapundalo (Ward 2) mistakenly concluded from Callan’s remarks that the $116,000 reduction did not mean reduction in nonprofit allocations after all – the reduction would be $116,000 minus the $98,000, he ventured. That would make it more palatable in terms of actual service agency cuts, he concluded.

But Callan clarified that they would not be subtracting $98,000 from anything. Rapundalo sought to clarify why support to nonprofits would be reduced if the $98,000 was originally intended to support administrative staff.

City administrator Roger Fraser sought to bring some clarity to the situation by saying that if administrative staff is reduced, the city loses capacity to administer the program. The office of community development had tried to keep the allocations to nonprofit agencies stable, he said. The city’s recommendation is consider the trade-off: What does it take to run the operation, and how much direct support to nonprofits can be provided? The city is trying to figure out how to pay for staff to run the program at the same level, while continuing to provide direct support to programs.

Rapundalo ventured that the budget impact sheet was not a specific proposal for allocating the cut between administrative staff and direct support to programs. Fraser replied that the city was suggesting a balancing act: “These are the adjustments we think are necessary.” Marcia Higgins (Ward 4) zeroed in on the significance of the numbers the council had been given: “So it really is a direct reduction?” Yes, said Callan. She continued by saying her department is a lean organization: “We don’t bring this to you lightly.”

Hohnke summarized the situation by saying that one way the city had been working to maintain funding was to identify federal funding opportunities – the proposed cut reflects the fact that federal funding didn’t materialize.

Christopher Taylor (Ward 3) characterized the situation as Callan believing the department is as lean as it can go and it has gotten what revenue is gettable – the only way to meet it is to reduce funding to human services agencies.

Fraser stressed that there was no effort yet to balance the choices in human services funding against other choices in the city’s organization. The office of community development was asked to meet the reduction targets just like every other department, and it was presented in “raw form.” In the proposed budget in April, he said, they might propose a different scenario, but the impact sheet simply recognizes that $98,000 is gone.

Budget Impact Sheets: Parks and Recreation – Basics

Among the dollars identified at the work session by Sumedh Bahl for savings in parks and recreation was $65,083 in energy savings due to improvements done at facilities. He also pointed to $10,000 saved in materials and supplies used for upkeep in facilities. Upgrades in facilities means that for a certain time, there’ll be a reduction in maintenance costs, he said. Additional budget savings would result from adjusting water charges to reflect what actual usage is. And they’re eliminating some software licenses. Some of the software, Bahl said, isn’t used by the staff that much, “so we’re taking it away from them.”

Bahl also pointed to an additional $52,000 in anticipated revenue, starting in FY 2013, from new kayaking and tubing, resulting from the planned construction of the Argo Dam bypass, which was recommended by the city’s park advisory commission and approved by the city council last year.

Mayor John Hieftje wondered about a proposed increase in fees at the city’s outdoor pools for FY 2013 – $4 to $5 for adults and $3.50 to $4 for youth and seniors – which the budget impact sheet showed would generate an additional $40,000 in revenue in FY 2013.  He noted that historically, fee increases had caused revenue to drop. Bahl said he felt the prices would still be pretty competitive.

Colin Smith, manager of the city’s parks and recreation program, allowed that fee increases leading to less patronage and lower revenues had happened – but that was a number of years ago, he said. At that time, he said, the increase had been for season passes and it was extraordinary. During the last fee adjustment cycle, the prices on season passes were raised by 10% and the city didn’t get any “hard feedback” on that, he said.

Marcia Higgins (Ward 4) wanted to know: What’s “hard feedback”? Smith explained that this meant negative public input about the increase.

But Higgins noted that this is the first year that the city would see the impact of the 10% fee increase – this spring. She clarified that these are additional fee increases planned for the following year. Smith confirmed that’s the case – he didn’t want to implement two kinds of fee increases at once.

Budget Impact Sheets: Parks and Recreation – Huron Hills

Included in the materials provided to city councilmembers was a memo that outlined various options for Huron Hills golf course. [The city also owns the Leslie Park golf course.]

[Last year the city issued an RFP to privatize of some the operations at the course, but ultimately decided not to accept either of the proposals that were made – one from Miles of Golf and the other from a citizen group that envisioned turning the course operations over to a nonprofit.]

Bahl summarized the result of the implementation of recommendations made by a consultant – Golf Convergence, hired by the city in 2007 – to improve patronage at the city’s two golf courses. All of the recommendations have now been implemented:

Rounds Played
Season  Huron    Leslie
2007    13,913   21,857
2008    15,558   27,078
2009    21,150   30,973
2010    22,500   32,000

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Bahl noted that there’d been a dramatic improvement in the number of rounds played, but there are signs that it’s flattening out.

A memo provided to the council outlines the financial impact of various options for use of the Huron Hills land, including continuing to operate the golf course. In summary strokes, the options for Huron Hills and their costs over the next four years would be:

• Golf course: $162,000-187,000 annually
• Walking trails: $68,000-$309,000 annually
• Naturalization: at least $500,000 annually, falling to around $100,000 after seven years
• Soccer fields: no cost estimate
• Disc golf: no cost estimate
• Farming: no cost estimate

There’s a wide range of cost estimates for the walking trails option. By way of explanation, Bahl noted that for non-golf scenarios at Huron Hills, it’s necessary to include the “legacy costs” for two people currently employed at Huron Hills, both in union positions – one AFSCME and one Teamster. By union contract, he said, those employees cannot be laid off if the city has any temporary, seasonal, or contract worker employed at the city. And the city relies heavily on these types of workers, so laying off the two union workers at Huron Hills is not a realistic option. The net cost to the city of replacing seasonal workers with the Huron Hill’s workers would be around $175,000, Bahl said. Also in the mix is $42,000 in municipal service charges and $24,000 in IT charges that the golf enterprise fund accounting currently pays from the enterprise fund into the general fund.

The lower range of cost reflects a scenario in which the two Huron Hill’s union workers can be placed elsewhere in the city, while the higher cost in the range is a scenario where neither worker can be placed elsewhere.

Colin Smith, manager of the city’s parks and recreation program, stressed that under the walking trails option, the result would not be a natural area, but rather an “unkept golf course.” Converting it to a natural area would require considerably more investment – listed out as a separate option. Stephen Kunselman (Ward 3) confirmed with Smith that under the walking trails option, there was money factored in for mowing of the 8th and 9th hole areas that are used for sledding in the winter. Sabra Briere (Ward 1) drew out the fact that there is not money in that option for mowing areas where people might cross-country ski.

Marcia Higgins (Ward 4) wondered why the parks capital improvements and maintenance millage could not be used for non-golf options. Smith’s answer was that because maintenance would be mowing, which must be paid out of the city’s general fund.

Commenting on the legacy costs, mayor John Hieftje noted that if positions elsewhere in the city opened up, they could be held open for the Huron Hills workers. City administrator Roger Fraser allowed that this would be the city’s strategy, but could not guarantee that positions would open up.

Christopher Taylor (Ward 3) noted that the walking trails options outlined a range of possibility, but he wanted to know what the range of likelihood is. Bahl told Taylor that chances of finding an opening for the AFSCME employee are better, because of the relatively large pool of such workers. On the Teamster side, the pool is smaller. Summarizing the city’s best realistic estimate for the legacy costs for non-golf options, Colin Smith said it’d be $150,000 and above in the first couple of years.

Higgins stated that the city had committed to five years before evaluating the success of the Golf Convergence recommendations – when does that end? she wondered. Colin Smith clarified that the five-year evaluation period ends in 2013 – there are two years left.

City administrator Roger Fraser weighed in, saying the staff was not suggesting the council had to implement changes before two more years is up. It’s a matter of considering what a sustainable approach to city services is. When the city talks about community engagement to solve problems for the city’s future, the different scenarios for Huron Hills should be a part of the discussion, he concluded.

There seemed to be little enthusiasm from councilmembers at the work session for contemplating anything but a golf course at Huron Hills for the next two years.

Leading up to the city administrator’s proposed budget in April, the city council is also holding a series of work sessions on the budget. Their typical scheduling pattern is for the weeks between council meetings. But the work session on the 15th District Court was held just before the council’s Feb. 7, 2011 meeting.

Former city councilmember Chris Easthope was elected in 2008 to serve as a judge on Ann Arbor's 15th District Court. In this photo, Easthope was pointing out other judges, the magistrate and staff of the court, who attended the Feb. 7 work session along with Easthope. (Photo by the writer.)

An hour before the city council’s regular meeting on Feb. 7, 2011, scheduled to start at 7 p.m., councilmembers received a presentation from Chris Easthope on the financial picture for the 15th District Court. The court is funded primarily, but not completely, by the city. Last year, the city’s approved FY 2011 budget for the 15th District Court was $3,776,080, or around 4.5%, of the city’s $81,449,966 general fund budget.

Salaries for the three judges on the court – Easthope, Julie Creal and Elizabeth Hines – are set and paid by the state of Michigan. The judges, along with other key court staff, also attended the work session.

Easthope stressed to councilmembers that he understood the difficult position the council is in, having served on the city council himself. [First elected in 2000 to a Ward 5 seat on the city council, Easthope won a narrow victory in the 2008 race for the 15th District Court judgeship.]

The basic picture Easthope sketched out for the council was of a court that had already reduced its budget – from $4.1 million in FY 2008 to $3.8 million in FY 2011, the current fiscal year. Easthope estimated the needed budget for the court in the next two years at around $3.7 million.

Measures already implemented include optimization of staffing that has allowed a reduction in full-time employees from 40 FTEs four years ago to 32 FTEs today. Easthope also stressed that the court’s probation program, even though it is not mandated by the state, actually saves citizens money, because it offers an alternative to fines (which many defendants aren’t in a financial position to pay anyway) and jail (which may not be the best solution for mentally ill defendants).

Background: What Is the 15th District Court?

Before diving into the budget picture for the court, it’s worth considering: (1) where the 15th District Court fits in the state of Michigan’s court system; (2) what specific kinds of cases the court handles; and (3) the volume of tasks the court handles, including those that are not reflected in its caseload statistics.

Background: State Court System

Michigan uses what it calls a “One Court of Justice” system – there’s one court with various divisions. The main divisions of the One Court:

• Supreme Court [last resort, all decisions final]; number of judges statewide = 7.
• Court of Appeals [handles cases when a party wants a review of a decision that has been made by another court]; the Court of Appeals divides the state into four districts with four sets of seven judges; number of judges statewide = 28.
• Circuit Court [trial court of general jurisdiction, including criminal cases like felonies and certain serious misdemeanors, as well as civil cases involving amounts greater than $25,000];  the individual circuits follow county boundaries, with the number of judges per county set  based on caseload; number of judges statewide = 221.
• Probate Court [handles cases involving wills, trusts, and treatment of mentally ill people]; the geographic parceling out of different individual probate courts mostly follows county boundaries, with some exceptions in northern Michigan, where consolidation has taken place; number of judges statewide = 103.
• District Court [handles all civil claims up to $25,000, including small claims, landlord-tenant disputes, land contract disputes, and civil infractions]; geographically, the number of individual district courts varies by the workload; Washtenaw County, for example has three district courts – 15th District Court for the city of Ann Arbor, 14B District Court for Ypsilanti Township, and the 14A District Court (with four physical venues) for the rest of Washtenaw County; number of judges statewide = 258.

The One Court, across all its divisions, includes more than 600 judges. All three judges from the 15th District Court attended the city council’s budget work session: Chris Easthope, Julie Creal and Elizabeth (Libby) Hines.

Background: Specific Kinds of Cases

The 15th District Court’s docket, which is available online via the Judicial Information System (JIS), gives a more concrete idea of the kind and volume of cases that a district court judge handles. Here’s Easthope’s schedule for three upcoming days, as retrieved from JIS last week and annotated by The Chronicle:

MONDAY 2/14/11
AT 9:00 a.m.
MARIJUANA AA [possession of marijuana; city charter Chapter 16]
UNLICENSED [driving without a license]
DWLS [driving with suspended license]
FLS INFO PO  [giving false information to a police officer]
DWLS [driving with suspended license]
NOISE [noise ordinance violation]
DISORDERLY C [disorderly conduct]
MIP MISD [minor in possession of alcohol]
DISORDERLY C [disorderly conduct]
DWLS [driving with suspended license]
EQUIP VIOL [defective equipment]
NOISE [noise ordinance violation]
DISORDERLY C [disorderly conduct]
EXPIRED LIC [driving with expired license]
MIP MISD [minor in possession of alcohol]
DWLS [driving with suspended license]
NOISE [noise ordinance violation]
NOISE [noise ordinance violation]
OPEN INTOX [opened intoxicants]
NOISE [noise ordinance violation]  

AT 1:30 p.m.
ASSAULT/BATR [assault and battery]

TUESDAY  2/15/11
AT 9:00 a.m.
DISORDERLY, RESISTING [disorderly conduct, resisting arrest]
MIP MISD [minor in possession of alcohol]
OW INTOX [operating while intoxicated]
OPEN INTOX [opened intoxicants]
MIP MISD [minor in possession of alcohol]
DWLS [driving with suspended license]
NOISE [noise ordinance violation]  

AT  10:30 a.m.
OW INTOX [operating while intoxicated]

WEDNESDAY  2/16/11
AT 8:30 a.m.
PARKING VIOL [parking violation]
PARKING VIOL [parking violation]
TRAFFIC DEV [disobeyed traffic device ]
SPEED 1-5 [speeding 1-5 mph over limit]
PROH TURN [making prohibited turn]
FL TO YIELD  [failure to yield]
NO PROOF INS [no proof of insurance]
EXP PLT CI [expired license plate]
SCHOOL BUS [failed to stop for school bus]
IMPR LIGHTS [improper use of lights]
SPEED 1-5 [speeding 1-5 mph over limit]
TRAFFIC SGNL [failure to observe a traffic signal]
SPEED 26-30 [speeding 26-30 mph over the limit]
SPEED 16-20 [speeding 16-20 mph over the limit]
SPEED 1-5 [speeding 1-5 mph over limit]
FL SGNL/OBSV [failure to signal]
PROH TURN [making prohibited turn]
PARKING VIOL [parking violation]
ZONING CI  [zoning civil infraction]
ZONING CI  [zoning civil infraction]
ZONING CI  [zoning civil infraction]
FL STP ASSUR [failure to stop assuring a clear distance]
FL SGNL/OBSV [failure to signal]
FL TO YIELD  [failure to yield]
SPEED 11-15 [speeding 11-15 mph over the limit]
SPEED 11-15 [speeding 11-15 mph over the limit]
TRAFFIC SGNL [failure to observe a traffic signal]
TRAFFIC DEV  [disobeyed traffic device ]
SPEED 6-10 [speeding 6-10 mph over the limit]
SPEED 16-20 [speeding 16-20 mph over the limit]
SPEED 21-25 [speeding 21-25 mph over the limit]
SPEED 1-5 [speeding 1-5 mph over limit]
BASIC SPEED  [violation of basic speed law]
XWY SPD 6-10 [speeding 6-10 mph over limit on expressway]
TRAFFIC SGNL [failure to observe a traffic signal]
PROH TURN [making prohibited turn]
SPEED 1-5 [speeding 1-5 mph over limit] 

AT 9:00 a.m.
TRAFFIC SGNL [failure to observe a traffic signal]

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Background: Volume of Work – Preliminary Exams

In his Feb. 7 presentation to the city council, Easthope stressed that there’s a category of work that’s not counted for the district court’s caseload statistics, but that is nonetheless a significant additional burden on the courts resources: preliminary examinations conducted for the circuit court.

A preliminary examination is one of the steps in criminal prosecution. A defendant accused of a felony, which will be tried in the circuit court, has the right to such a preliminary exam. But it’s not the circuit court that conducts these hearings – it’s done by the district court. They’re sometimes called “probable cause hearings” because it’s an occasion when the prosecutor must convince the judge that there is at least probable cause to believe the defendant actually committed the crime they’re charged with. So the burden of proof is not “beyond a reasonable doubt” as it would be at trial.

The range of possible decisions a district court judge can make at a preliminary exam includes: (1) sending the defendant to the circuit court to be tried on the charges that have been filed against them; (2) reducing the charges and sending the defendant to whatever court is appropriate; or (3) dismissing the charges.

Council discussion after the presentation drew out the fact that the circuit court provides the physical venue for the preliminary exams, so the cost to the district court is measured in terms of their judges’ time.

Where do preliminary exams fit in the work load for the 15th District Court? Easthope told the council it’s hard to give a specific number, because those numbers are not tracked by the circuit court. He said he estimated that the 15th District Court judges conduct around 1,500 preliminary exams per year.

How does that stack up with the volume of other kinds of cases? [.pdf of caseload stats for 15th District Court 2002-2009] Number-wise, the bulk of the work handled by the court involves traffic offenses. But the estimated 1,500 preliminary examinations per year make up around 13% of the non-traffic cases handled by the court:

15th District Court Total Caseloads
            2007    2008    2009
Civil      6,701   6,683   6,624
Criminal   3,818   3,681   3,640
Traffic   29,988  25,416  20,999
Prelim     1,500   1,500   1,500

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In Easthope’s presentation, he highlighted the drop in the number of traffic cases handled by the court over the last few years. Since 2006, that number has declined by about one-third.

Budget Reductions: “The budget is the budget”

The presentation from Easthope began on a cheerful note, with Easthope thanking the council for their support in constructing the new municipal center in which the 15th District Court is now housed. He told the council they’d been in their new quarters for two weeks and that he’d picked his first jury in the new facility that very day. Initial reviews indicate that it’s a great facility, he said.

[As a member of the city council at the time, Easthope was among the councilmembers who cast votes that led to the construction of the new municipal center. He's drawn criticism for that, some of it expressed in a comment written on The Chronicle's website last year. The comment drew a sharp emailed response from Easthope to the comment's author, David Cahill, a local attorney and husband of current city councilmember Sabra Briere (Ward 1). Easthope CC-ed his email to the city council, other judges, as well as the media. Among other issues he raised, Easthope argued that he could not possibly have known he would be elected as judge in a race that included a four-way primary. After he sent the email, Easthope declined a request from The Chronicle for an interview on the subject.

The funding plan for the municipal center's construction came up a bit later in his Feb. 7 presentation, when Easthope described how the court's current revenue stream feeds into that plan. Specifically, revenue from the $10 fee that the district court can impose on all civil infraction citations is pledged to the city's funding plan for the municipal center. The fee generates between $160,000 and $220,000 a year, Easthope said.]

When Easthope introduced the other judges and staff to the council – Judges Creal and Hines, plus the court’s magistrate Colleen Currie and court administrator, Keith Zeisloft – city administrator Roger Fraser kidded Easthope that he’d forgotten to introduce the little guy who also accompanied him – Easthope’s son. Easthope handled the humor by saying that it was his bodyguard, Aidan Easthope, who specializes in security.

After the opening pleasantries, however, Easthope was down to business, saying “the budget is the budget.” He sketched out the overall budget picture for the council by describing how the budget for the court has decreased over the last few years:

2008: $4,158,000
2009: $4,264,000
2010: $4,093,000
2011: $3,860,000
2012: $3,710,000 [estimated]
2013: $3,784,000 [estimated]

-
Easthope described how the court had implemented various measures to achieve those reductions. Not counting the judges and magistrate, the court now has 32 full-time equivalent (FTE) positions, down from 40 FTEs four years ago. Currie, the full-time magistrate, is now also supervisor of the court’s civil division – that move merged what had previously been two full-time jobs and assigned the responsibilities to one person, Easthope said.

The reductions have also been achieved partly through attrition, reassigning tasks and updating technology, Easthope said. The court has reduced court case management staff, who run the court day-to-day, from 14 to 11 positions. The account clerk, senior secretary and court reporters are cross-trained to handle a variety of tasks, he said. He also described how Creal’s court reporter is also the sobriety court’s coordinator – another example of merged jobs.

The last budgeting process, Easthope said, had reduced the pay of court staff. For hourly employees, that had been accomplished by reducing their work hours to 37.5 hours per week. For salaried staff, compensation was reduced by 1.5%, but they continued to work a 40-hour week. Easthope pointed out that judges’ salaries are ultimately not paid by the city – the state reimburses the salaries for judges.

After the work session, Zeisloft followed up with The Chronicle via email with confirmation of much of the data discussed at the work session, plus additional data, including numbers for judges salaries, which are set by state statute. [.pdf of the Revised Judicature Act of 1961]. The formula for setting district judge salaries is based on the salary for Supreme Court justices. Zeisloft calculated the total salary for district judges at around $138,270.

Easthope highlighted how special programs of the 15th District Court – like its street outreach program, its domestic violence program and its sobriety court – were innovative ways to meet the needs of offenders and the larger community. He mentioned that Hines’ street outreach program had recently been featured on the front page of the Detroit Free Press. [The Free Press website currently appears to be in a state of redesign that prevents successful linking to that article, but the program has received play in other media as well, including the American Bar Association Journal: "For Those Teetering on the Edge, Street Outreach Court Offers a Push in the Right Direction"]

Easthope pointed out that one FTE and and three part-time positions at the court are funded by grants. These positions are associated with the domestic violence program, including probation officer David Oblack’s position.

Besides grants and the $10 fee imposed on civil infractions, another revenue source for the court is fines. Easthope described how the implementation of the JIS system had helped with collection  of delinquent fines and fees. Despite the decline in citations over the last decade, improved collections efficiency – including the mailing of monthly statements to offenders – had offset what would have been a more significant decline in revenue. Around $700,000 per year in collections is now attributable to the collections system implemented in 2008, Easthope said. The overall rate of collection is 96-97%, which is better than most collections agencies – not that the court thinks of itself as a collections agency, Easthope added.

Probation Program

The 15th District Court’s probation program offers an alternative for sentencing besides fines or jail – oversight by a probation officer who is assigned to their case. Easthope said that if jail and fines were the only two choices, judges would have few means to deal with defendants who can’t pay (they might be stealing, and got caught, precisely because they have no money), who are mentally ill or who are addicted to drugs.

Easthope acknowledged that the probation program is not mandated by the state. For that reason, he said, it’s often thought of as an easy program to cut. But he described it as “one of the most important things we do.” During questions from the council, Stephen Kunselman (Ward 3) told Easthope he appreciated Easthope’s acknowledgment of the status of the probation program as non-mandated, and wondered if the probation program could be combined with the circuit court’s probation program. Easthope indicated skepticism about that.

Easthope described how the probation program had already reduced its costs by reducing the number of probation support staff. When he first started serving on the 15th District Court’s bench, there were three support staff for probation – now there is just one person, he said. When that person is on break, a clerk or supervisor fills in.

He went on to describe how the probation program’s projected budget for FY 2012 is $532,000. The probation oversight fee of $25/month – charged to those who are on probation – generates between $125,000 and $130,000 per year, which could be subtracted from the $532,000.

At any given time, he said, the three probation officers each have around 150 cases assigned. The annual caseload for the probation program is between 800-900 cases. By way of illustration, the kinds of cases that probation officers monitored in 2010 included: 106 alcohol offenders, 14 suspended license, 96 drunk driving offenders, 105 drug offenders, 255 fraud offenders, 118 property crime offenders, 24 public nuisance offenders, 160 violent crime offenders, and 1 weapons offender.

Among the tasks performed by probation officers are alcohol tests for people who’ve come through the sobriety court – 50 tests a day, said Easthope. [Before winning election to the district court judgeship, Easthope helped conduct volunteer alcohol tests in downtown Ann Arbor on University of Michigan home football games: "Badgers, Breath Tests, Badgers and Buses"]

The bottom line that Easthope suggested for the probation program was this: $7 million of tax money saved – 84,000 jail bed-days at $85 per bed-day.

Courts: Council Comments, Questions – Consolidation?

Tony Derezinski (Ward 2) asked Easthope if the court had yet moved to electronic filing. Derezinski felt that perhaps some cost savings could be realized there. Easthope explained that Judge Donald Shelton – chief judge of the Washtenaw County Trial Court, which includes the Circuit Court – has been working on it. A database implementation issue had slowed that down. [The trial court is funded by the county – Shelton recently briefed county commissioners about restructuring for the court that's aimed at cutting costs and improving services.]

Prompted by a query from Carsten Hohnke (Ward 5), Easthope described how a municipality can request, based on population, that the state establish a district court and the county would then fund it. But the 15th District Court for the city of Ann Arbor and the 14B District Court for Ypsilanti Township are self-funded by their respective municipalities, Easthope explained. Given the seven judges and six courthouses for district courts in Washtenaw County, he said, he felt there is room to consolidate and to make physical changes. The state law would, however, need to be amended, and each municipality with a court – Chelsea, Ypsilanti, Saline and Pittsfield Township– would need to sit down and agree to make a physical change.

Easthope then took a step back from Washtenaw County to look at the picture statewide for judgeships. In the next 10 years, he said, 200 judges will become ineligible to run – the Michigan Constitution prohibits candidates from running who are more than 70 years old. The Judicial Crossroads Task Force of the Michigan State Bar, said Easthope, has just issued a report suggesting that the number of judges statewide could be reduced. So Easthope felt there could be significant changes to the number of judges. It’s ultimately determined by the legislature.

In Washtenaw County, there’s the ability to talk about consolidating physical locations, security and transport, Easthope said. But the state needs to be involved, he said – it can’t be done unilaterally. Hohnke ventured that it might be a daunting effort at regional cooperation, but that it might result in savings down the line. Easthope said he felt like it was, in fact, daunting, but that he told people he thinks consolidation is going to happen. Instead of “hiding under the last rock,” he suggested, we might as well step up now with our ideas.

Easthope and Hohnke agreed that even if it was county taxes that wound up getting saved, city taxpayers would benefit, because they also pay county taxes.

Easthope sketched out a vision where some other district court physical facilities could be closed, and those courts could instead use new city of Ann Arbor space. The two new district court facilities in the county – 15th District Court and 14A-1, on the same campus as the newly expanded county jail – could accommodate all of the county’s district courts, Easthope suggested. That would significantly reduce transport, security and staffing costs, he said.

Bottom Line for Courts

Easthope wrapped up the work session by again expressing the sentiment that he understood the council’s situation in evaluating the budget. He described a recent email he’d sent to the council as perhaps a little “terse” – he’d been reacting to the results of a priority-setting exercise the council had completed in preparation for one of its budget retreats. The court had come in next-to-last on the priority list of 12 service areas, with a 1.8 average score on a three-point scale – a 3 being the highest. Just above the 15th District Court on the ranking was parks and recreation.

Easthope said that on reflecting about that ranking, he thought maybe it was a good result – the court was doing its job well enough that the council didn’t think about the court that much, so maybe it wasn’t all that bad to be ranked below cutting the grass.

Easthope stressed that the court understands the need for budget reduction targets, but said that it would be difficult for the court to meet those targets. [The base-line reduction target for all departments is 2.5%.] Easthope said he could not at this point say what specific areas they would identify in order to meet the target. He said he remembered how as a city councilmember he’d listen every year to people say, “It’s going to be difficult to make our target,” and then confirmed, “It’s going to be difficult to make our target.”

He said that the court is always looking to cut and to be better. With the new facility, there are a lot of changes they might be able to implement. There are a lot of changes countywide they might be able to implement in the long term, but he cautioned that it would require a conversation between the 15th District Court, the other district courts in the county, and the state.

The council has already convened two retreats on the budget – this report is a summary of those retreats.

From the May 19, 1936 edition of the Ann Arbor Daily News. The scan was passed along to The Chronicle by the city's environmental coordinator, Matt Naud. Naud's source was Craig Hupy, head of the city's systems planning unit, who discovered some old papers in an antique store.

Late last year, on Dec. 4, 2010, the Ann Arbor city council held the first of two budget retreats for the next year’s budget adoption process. The current 2011 fiscal year ends on June 30, 2011, and the council will need to finalize its FY 2012 budget in May. The council typically begins contemplating the next fiscal year’s budget at a retreat near the end of the calendar year.

Two days after the first retreat, at the Dec. 6 regular city council meeting, city administrator Roger Fraser and councilmembers recapped the event, with Stephen Rapundalo (Ward 2) describing it as the best retreat discussion on the budget since he’s been on the council. First elected to the council in 2005, Rapundalo has five previous budget seasons to compare against.

The December retreat agenda reflected two main items: (1) general economic conditions; and (2) a sustainable service delivery model. The grim condition of the state’s economy was a point that was also driven home by Kirk Profit – director of Governmental Consultant Services, the city’s lobbyist in Lansing – in a presentation to the council at their Dec. 6 regular meeting.

The second retreat, on Jan. 8, followed up with a focus on services. To prepare for the retreat, councilmembers had ranked various city services by priority.

At both retreats, councilmembers and staff took the opportunity to communicate a message to city labor unions, some of whom Rapundalo characterized as not yet having seen fit to “recognize economic reality.”

And as chair of the council’s labor committee, Rapundalo has said he’ll give updates at the council’s regular meetings on the status of labor negotiations. He started the updates at the council’s Jan. 20 meeting. The implicit message communicated by the first update: Ann Arbor’s labor unions aren’t making the kind of concessions they should reasonably make, given economic conditions.

This report features highlights of the discussion from both retreats – including issues like the city’s approach to fire and police protection, solid waste and composting, as well as possible replacement of the general fund operating millage with a city income tax.

At both retreats, city administrator Roger Fraser and key city staff did their best to frame the council’s conversation not as a question of what services to cut. Instead, they tried to get councilmembers to consider which services might be delivered in a different way. The sustainability of the service delivery model depends on how the city delivers those services to residents – ranging from employment of full-time city workers, outsourcing the work, or by not offering the service at all.

To frame the context of these comparatively brief retreat highlights, we first offer a look back to 1936, when the city delivered a sidewalk snowplowing service to its residents. How? Partly by hiring in teams of horses to do the job.

How Services Are Delivered

The list of services provided to councilmembers for their Dec. 4, 2010 retreat included a blank column headed with “eliminate/modify.” In the course of the morning and early afternoon at the retreat, it became apparent that councilmembers considered all the items on the list as part of the core set of services the city should deliver. That is, there was no consensus that any of the items should be eliminated outright. Councilmembers seemed open, however, to contemplating modifications to the way that some of the city services are delivered.

How: Clearing Snow

In 1936, Ann Arbor city engineer George H. Sandenburgh delivered a report to the common council of Ann Arbor suggesting that the city would in the future need to purchase tractors in order to continue to deliver the sidewalk snowplowing service it provided at that time. [This historical tidbit comes from the May 19, 1936 edition of the Ann Arbor Daily News. A scan from that newspaper, which is the lead art of this article, was passed along to The Chronicle by the city's environmental coordinator, Matt Naud. Naud's source was Craig Hupy, head of the city's systems planning unit, who discovered some old papers in an antique store.]

Six years earlier, a Feb. 3, 1930 report to the common council had included the following in the city’s inventory of equipment:

Snow Removal Equipment

10 Steel Snow Plows for Sidewalks 250.00
2 Standard Snow Plows              40.00
2 Wooden Plows                      5.00
2 High Speed Snow Plows           500.00
5 Doz. Snow Shovels                60.00
1 Doz. Snow Pushers                 8.00  

City Team Equipment and Supplies

1 Team Horses                   $ 300.00
1 Set Double Harness               70.00
2 Halters                           1.00
2 Stable Blankets                   1.00
2 Woolen Blankets                  10.00
3 Tons of Hay                      45.00
80 Bu. Oats                        50.00
1 Troy Dump Wagon                  75.00
1 Wagon with Wood Box              30.00
1 Pair of Bob Sleighs              10.00

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That inventory comes from part of the Ann Arbor District Library’s online set of 40 year’s worth of Ann Arbor city council minutes, from 1891-1930. [Chronicle coverage of the library's presentation of the online archive to the city: "Mayor Walker: 'Print it in the NEWSPAPER!'"] Based on the city’s inventory of a single team of horses, and 10 sidewalk snowplows, it appears that the strategy used for clearing snow from sidewalks involved hiring additional horse teams to do some plowing.

The modification to the sidewalk snow-clearing service that was suggested by city engineer Sandenburgh in 1936 indicated a future where city-owned equipment would be used to do the job. Sometime between 1936 and 2010, a decision was made that sidewalk snow-clearing would not be a service delivered by the city directly – except in the form of ordinance enforcement. Currently, property owners are required by ordinance to clear the snow from sidewalks fronting their property. Chapter 49 of the city code, which deals with sidewalks, dates in relevant part from 1986:

Within 24 hours after the end of each accumulation of snow greater than 1 inch, the owner or occupant of every residentially zoned property shall remove the accumulation from the adjacent public sidewalk and walks and ramps leading to a crosswalk. The accumulation may be from any source including precipitation and drifting. Immediately after the accumulation of ice on such sidewalk, it shall be treated with sand, salt or other substance to prevent it from being slippery and the ice shall be removed within 24 hours after accumulation.

The city service of sidewalk snow-clearing can be used to illustrate a range of different ways city services can be provided, including not providing the service at all:

• No service with respect to clearing snow from sidewalks.
• No clearing of snow by the city except through ordinance enforcement.
• Clearing of snow by the city through employment of temporary workers who use their own equipment (e.g. horses and plows).
• Clearing of snow by the city through employment of temporary workers who use a mix of their own and city-owned equipment (e.g., their own horses, but city plows).
• Clearing of snow by the city through employment of temporary workers who use only city-owned equipment (e.g., tractors).
• Clearing of snow by the city through employment of full-time city workers, who use only city-owned equipment.

If service delivery uses full-time city workers, it’s a fair question to ask: Where do city workers live? At the Dec. 4 budget retreat, Stephen Kunselman (Ward 3) indicated a preference to have city workers live in the city of Ann Arbor – they can be ambassadors for the city in their own community, and they will take greater pride in their work. It’s not possible, however, to enforce residency requirements.

Kunselman pointed to efforts by Detroit’s mayor Dave Bing to provide incentives for city workers to live in the city. City administrator Roger Fraser told Kunselman that he was open to a conversation about that. [It did not seem to be Kunselman's intent to draw out the fact that Fraser himself doesn't live in the city.] But of all the things Fraser wanted to focus on, there were many items on the list ahead of that. It’d be a low priority in terms of his optimism about the positive impact; it’d take time, even if the strategy were effective. Fraser concluded that the potential payoff is fairly remote.

How: Funding a Service

Photo taken Dec. 13, 2010 looking east along the north side of Liberty Street between Ashley and Main. The Main Street BIZ district begins at the alley just beyond the green and blue downtown way-finding sign in the right of the frame.

How a service is paid for – with general fund property taxes, gas taxes collected by the state, a special dedicated millage, a special assessment district, a combination of property and personal income taxes – also counts as the way a service is provided.

With respect to clearing snow from sidewalks, the newly created Main Street BIZ illustrates how property owners can choose to impose an extra property tax assessment on themselves to fund the clearing of sidewalk snow.

After the snow and ice accumulation that occurred in the city on Dec. 11-12, 2010, there was a visible difference in sidewalk snow clearing effectiveness inside the Main Street BIZ boundary compared to outside the boundary.

Sidewalks are one thing, but even on Ann Arbor streets, snow-clearing services are not delivered to all residents in exactly the same way. At the city council’s Dec. 21, 2009 meeting, Christopher Taylor (Ward 3) reported that the city had struck a deal to subcontract out snow removal with the Pittsfield Village Condominium Association. In that area, Taylor said, the city had a hard time doing snow removal well – due to the winding streets and the lack of lawn extensions. The association contracts with a snow-removal provider that uses smaller vehicles to navigate the tighter quarters, and street snow removal is coordinated with sidewalk snow-clearing done by the association.

The Main Street BIZ pursued a fairly lengthy process in winning its eventual approval. At their April 1, 2009 meeting, the Ann Arbor Downtown Development Authority board authorized $83,270 to help fund the administrative and legal costs associated with that process. After that meeting, former DDA board member and downtown property owner Ed Shaffran – who helped lead the effort to create the Main Street BIZ – told The Chronicle how he saw the BIZ fitting into the funding of government services:

Shaffran said that the intent of property owners on Main Street was to provide assurance – by undertaking to assess themselves a higher property tax – that the kind of services they wanted would actually be provided into the future. Shaffran went on to speculate that this could be a pre-cursor of “a la carte government” as revenues to municipalities dwindled. He suggested that the concept of a BIZ could be extended to residential neighborhoods as well. The strategy for providing services, he said, could evolve to be a system where a minimum baseline level would be provided by government, with BIZ-like affiliations electing to augment (or not) that baseline level.

Service When It’s Not a Snow Job

At the Jan. 8, 2011 retreat, councilmembers engaged in some back-and-forth about the quality of snow-removal service in the city of Ann Arbor. Mayor John Hieftje ventured that snow removal is twice as good as it was back in 1999. Stephen Rapundalo (Ward 2) reiterated the view, which he’d expressed at the December 2009 budget retreat, that the quality of snow removal in the city is “abysmal.” At this year’s retreat, he contended that if you go to the city limits, it’s as if someone draws a line where snow removal begins and ends. [It's a point that has been noted by others.]

The city council recently approved an expenditure for a remote vehicle monitoring system that includes, among other features, the ability to track the progress of snowplowing in real time.

Snow removal, of course, is just one service of many that cities might provide.

Not Snow: Solid Waste

Collection of waste material that residents prefer not to store on their property is a basic city service – stuff that ranges from grass clippings, to leaves, empty milk jugs, old newspapers, bags of cat litter, or empty cans of shaving cream. For the city of Ann Arbor, these items correspond to one of three wheeled collection carts – a compost cart, a recycling cart, and a trash cart – which have been distributed to residents and are emptied once a week with a truck equipped with a robot arm controlled by the driver.

At the Jan. 8 retreat, public services area administrator Sue McCormick revealed an underlying assumption by staff in the solid waste program: Residents would not tolerate different days for pickup for different collection carts. Some councilmembers suggested that this might not necessarily be the case. It was left for future thought, along with the possibility that this could simply be a “legend,” along with other assumptions. Why would the flexibility to pick up different carts on different days make a difference? It’s because it might be possible to be efficient enough to collect one kind of cart with few enough routes that only a four-day schedule would be required for that kind of cart.

As for the challenge of keeping track of which days certain carts were to be set out, it was suggested that the city could deploy messaging systems that would push the information to residents.

More significant than the possibility of varying the pickup schedule is the idea of contracting out the trash collection service to a private hauler. At the Dec. 4, 2010 retreat, city administrator Roger Fraser observed that the city had spent a lot of time developing its solid waste plan. The solid waste plan suggests the idea that the city would work its way out of the business of collecting solid waste.

The city has already worked its way out of the business of part of the solid waste collection that it previously ran: At its Dec. 6, 2010 meeting, two days after the first budget retreat, the council approved a contract with WeCare Organics to operate the city’s compost facility. It was a controversial issue for many residents and had led to the postponement of the measure at the city council’s Nov. 15, 2010 meeting.

So the idea of contracting out the collection of trash at the curbside is now also in the works – based on the city’s solid waste plan. From the city of Ann Arbor 2002-2007 solid waste plan:

Three key issues were built into the survey to determine public opinion on possible program directions for reducing waste – rolling back taxes with a for-fee trash collection system, anti-litter campaigns, and food waste composting pilots. … Under a PAYT system, the financing for trash collection would be directly paid by the consumer, with a partial roll-back in taxes, while recycling, composting and other waste services would continue to be covered at no extra charge. …The majority of those interviewed (61% residential; 79% business) felt that the existing system of “tax-paid full service” was preferable to a PAYT mechanism.

Some councilmembers appeared taken slightly unaware by Fraser’s update. But Fraser reminded the council that they’d heard the idea at the previous year’s budget retreat. From The Chronicle’s report of the December 2009 budget retreat:

Reduce solid waste millage

On this proposal, the city would get out of the business of garbage collection, but stay in the business of recycling. The city would contract with a waste hauler, which would then be paid directly by residents under some kind of franchising arrangement that would allow them to “pay as they go.” That would allow a reduction in the solid waste millage, which could be passed along to residents. Or voters could be asked to continue to pay the same percentage, but direct to other areas the part not needed to fund garbage collection.

When considering whether residents would choose to continue paying the same amount even though their service had been reduced, and then pay again separately for waste hauling, Stephen Rapundalo asked, “Why would they do that?”

Stephen Kunselman (Ward 3) cautioned that this kind of “pay as you go” system could have the unintended consequence of encouraging the dumping of trash wherever people could find a place – something he said he’d seen as administrator of  Sumpter Township in the early 2000s.

Now, Fraser said at the Jan. 8, 2011 retreat, the city is taking a full look at that to see if there’s a benefit to exploring implementation in the next fiscal year. He told councilmembers that an alternative study on trash collection would be presented to them in March.

Not Snow: Public Safety – Police, Fire

The idea of outsourcing police services – by contracting with the Washtenaw County sheriff’s office – was briefly touched on at the Dec. 4, 2010 retreat. Barnett Jones, head of the city’s safety services, reiterated the same sentiments he’d expressed at the 2009 retreat. He brought the perspective of having previously worn a brown shirt, working for the Oakland County sheriff’s department, selling townships on the idea of contracting for police services. The difference, he said, is that Ann Arbor already has the best police force in the county. Further, he explained, the county would have to add considerably to its force in order to provide service to Ann Arbor.

In any case, councilmembers did not appear to have great interest in altering the basic way Ann Arbor provides police services – which is by hiring full-time city employees to do the job.

Fire protection was a different story. Councilmembers expressed keen interest in exploring alternatives to providing fire protection by some other means than staffing fire stations around the clock with full-time career firefighters. Jones explained that there are three basic approaches to providing fire protection: (1) volunteer firefighters, (2) paid on-call firefighters, and (3) full-time career firefighters. Jones described how departments are starting to spring up that are a blend of (2) and (3) – a combination of full-time employees, who are career firefighters, and others who are paid to be on call to perform fire suppression duties. He cited Troy as perhaps the largest city that used such a combination department for fire suppression. He suggested that Troy would not use that strategy if they didn’t think they were getting effective fire protection.

Councilmembers were keen to get an understanding about what the implications for emergency medical response would be – many fire department calls are in response to medical calls. Fire dispatch is now handled by Huron Valley Ambulance, with the goal of reducing unnecessary medical runs by the fire department. But this goal has not been entirely met. Fraser explained that there’s a need to clarify existing protocols and to clarify the exact definition of a Category 2 call. The category had been defined two decades ago by responders in the eastern part of the county, he said, and hasn’t been reconsidered in two decades. He characterized the wasted runs as translating to a multimillion-dollar impact on the system.

Stephen Kunselman (Ward 3) expressed concern that when a combination paid/on-call department was introduced in the townships, it became a way for politicians to get elected – giving jobs to their neighbors, so that they could go hang out at the fire station with the big trucks. He urged caution about implementing a combination paid/on-call fire department.

Mayor John Hieftje pointed to a decrease in the number of fires since 1970, which he attributed to good building codes, suggesting that the need for fire suppression resources is not as great now as it was historically.

Unknowns

The budget planning process in any year includes a number of factors that cannot be completely known. These were also discussed at the two retreats.

Unknowns: Labor Contracts – Aligning Labor, Budget Strategies

Among the city’s assumptions in planning for the FY 2012 budget is that currently unresolved labor contracts will settle in a way that results in no increases to their wage structure, plus additional reductions equivalent to the cost savings the city would see if all employees were on the new health care plan. It is, of course, not possible to know if those contracts will settle in the way the city is assuming for budget planning purposes.

What’s the city’s plan for getting the contracts to settle? At the Dec. 4, 2010 retreat, city administrator Roger Fraser and the city’s CFO, Tom Crawford, described a strategy of aligning the budget and the labor strategy. Stephen Rapundalo (Ward 2) called it the “number one issue.”

What’s meant by aligning the two strategies? It essentially means including health care costs in the equation that determines the budget reduction target for each department.

By way of background, the city has a new health plan it would like all workers to use – it includes monthly employee contributions, higher deductibles, and out-of-pocket maximums. Non-union staff have transferred to the new plan, as have a few of the city’s unions – though not those with the greatest number of employees: AFSCME, police officers, and fire fighters. The city’s net cost per employee for the new plan is $10,686, compared with $12,310 for the AFSCME workers’ plan, $13,121 for the police officers’ plan, and $12,871 for the fire fighters.

At the Dec. 4 retreat, Sandi Smith (Ward 1) expressed surprise at the cost of even the city’s plan. She said it’s twice what she pays with a self-funded plan. Fraser noted that to truly compare the plans, you’d have to compare details, and there are different assumptions about risks. He also noted that in the public sector, you can’t go in and say, “Here’s your new plan!” Implementation has to be incremental, he said. Crawford also observed that with police and fire fighters “who are out there every day, it’ll be different than …”  and Fraser completed his sentence by quipping, “… people who work in real estate.” It was a playful allusion to Smith’s line of work.

Fraser explained the budget and labor strategy alignment this way: Suppose every department has a base reduction target of at least 2.5%. For departments with employees who have not adopted the new city health care plan, the inclusion of health care in the equation could result, for example, in an extra 1.5% added to the target. That department’s total reduction target would become 4%.

Councilmembers and staff alike were frank during both retreats about what this implies: Unions need to accept the new city health plan, or accept the fact that there will be fewer of their members employed by the city.

Rapundalo expressed some frustration that the major unions have not yet adopted the city health plan. He characterized it as a lack of understanding and appreciation or an unwillingness to understand impacts on the entire organization. “The consequences are not going to be pleasant,” he warned.

Fraser was somewhat more accommodating of the union perspective, telling councilmembers that as elected officials they are representing citizens. But people who are selected to lead labor unions, said Fraser, while they work at the city to provide services, their task is to “optimize their circumstances as employees.”

Unknowns: DDA Parking

The city has a contract with the Ann Arbor Downtown Development Authority under which the DDA manages the city’s public parking system. The contract currently runs through 2015. The 10-year contract stipulates that the DDA will pay the city $1 million in “rent” annually, with the provision that the city could request up to $2 million in a given, year as long as the amount for the entire 10-year period does not exceed $10 million. Through the first five years of the contract, the city requested the maximum $2 million payment – reaching that $10 million mark.

Last year, in the sixth year of the contract, the DDA decided to authorize an additional $2 million not required under the agreement – a vote that was controversial on the DDA board.  It was a move that allowed the city council to revise the city administrator’s proposed budget, which averted some planned layoffs of police officers and fire fighters. The city had not assumed the additional payment as part of its budget planning. As city administrator Roger Fraser explained at the Dec. 4 retreat, the $2 million was “not a part of our optimism,” because there were no ongoing conversations between the city and the DDA at the time.

This year, the city is assuming $2 million from the DDA for its budget planning. That’s because since June 2010, the city and the DDA have engaged in a regular extended conversation via their respective “mutually beneficial” committees about renegotiating the parking contract. The strategy the committees are currently exploring is switching from a fixed fee “rental” style agreement – based on the idea that the DDA is using city-owned assets to run the public parking system – to a percentage-of-gross style arrangement, which aligns the two parties’ interests. [Most recent Chronicle coverage: "Parking Money for City Budget Still Unclear"]

Based on the most recent percentage-of-gross figures the DDA has discussed, in the next year or two, the payment could amount to slightly less than $2 million. As parking revenues increase in later years of the contract, the return to the city is projected to reach and exceed $2 million, even on the lower percentage-of-gross figures the DDA is currently discussing. The city’s CFO, Tom Crawford, wrote in response to an emailed query from The Chronicle that if the amount received by the city is slightly less than $2 million in the first year, he would probably recommend making up the difference from the general fund reserve, based on the idea that the shortfall would not persist beyond the first year or two.

Unknowns: State Shared Revenue

The concept behind the state shared revenue system is that local municipalities in Michigan have a restricted ability to levy taxes, so the state reapportions to local municipalities some revenues out of the 6% sales tax that it collects. The reapportionment comes in two flavors: the constitutional portion (15% of the 4% gross collections of the state sales tax) and the statutory portion (up to 21.3% of the 4% gross collections of the state sales tax). The legislature controls the statutory portion, but not the constitutional portion.

Historically, the amount of statutory state shared revenue received by the city of Ann Arbor has fallen from $6.5 million in FY 2001 to just under $2 million in FY 2011.

The city’s budget planning right now assumes that state shared revenue will remain stable, despite some indications from the state legislature that the state might significantly reduce it. At the Dec. 4 retreat, Fraser indicated that the budget planning decision reflects less conservatism than the city has displayed in previous years of budget planning. Conservatism means that if anything, you understate revenues and overstate expenses, so that there is maximum flexibility to adjust mid-year.

This year, the city is minimizing the conservatism on both sides, to be as lean as it can possibly be, which means there’ll be less flexibility during the year, Fraser said. The risk associated with this strategy, said Fraser, is that a budget amendment might be needed in the middle of the year, if something unforeseen occurs.

Revenue: Operating Millage or City Income Tax

Local municipalities have four sources of possible revenue: (1) property taxes; (2) fees for services; (3) state shared revenue – apportioned from the state sales tax; and (4) city income tax.

The city of Ann Arbor does not levy just one kind of property tax. Ann Arbor tax bills include separate taxes to support: general operations, employee benefits, solid waste system, debt, street repair, city parks, open space acquisition and mass transit.

An example of fees for service is the drinking water utility – residents pay for the amount of water they use.

It’s not an option for a city to levy any kind of sales tax in addition to the state sales tax. For example, the city of Ann Arbor is not legally empowered to apply an entertainment tax that could be added to University of Michigan football tickets. Part of the rationale behind the state shared revenue system is for local municipalities to have their inability to levy extra taxes balanced out by revenue that is shared with them by the state.

A feature of the Ann Arbor city charter that distinguishes Ann Arbor from other Michigan cities is the relationship between the general operations property tax and a city income tax. Per the city charter, Ann Arbor can enact one, but not both kinds of tax:

City Tax Limit SECTION 8.7. (a) … In any calendar year in which the Uniform City Income Tax Ordinance is in effect on the day when the budget is adopted, the City may not levy any part of the three-fourths of one percent property tax previously mentioned …

But if the city of Ann Arbor were to enact a city income tax, it’s only the general operations property tax that would disappear – the other city property taxes would remain.

Cities can enact a city income tax under the state statute Uniform City Income Tax, which allows an income tax of up to 1% to be levied on residents of a city, and on non-residents up to 1/2 of the percentage levied on residents. For example, if a city enacted a .5% income tax on residents, then non-residents would pay no more than .25%.

Supporters of a city income tax for Ann Arbor typically defend against tax burden arguments by pointing to the fact that the city charter stipulates that a city income tax replaces, rather than supplements, the roughly 6 mill general operations property tax for residents. [For readers who wonder how much property tax they would save, the line item, on summer tax bills, is labeled CITY OPER].

Supporters also typically point out that 40% of the real estate in Ann Arbor is not subject to property tax – due to the large city park system and the presence of the University of Michigan, whose land is not subject to property tax. So funding operations from property taxes is more challenging than in cities where a greater percentage of the property is subject to a tax.

Supporters also typically point to the large number of workers who have jobs in the city of Ann Arbor – many of them at UM – who live outside the city. That translates into larger potential revenue from an income tax than in cities that have a smaller number of commuters.

Detractors of a city income tax typically point to the potential barrier such a tax might represent to businesses choosing to locate in Ann Arbor, or to the inequity of the income tax with respect to resident renters – who may not see the reduction in their landlord’s property tax passed along to them in lower rents. Some oppose the idea on philosophical grounds, arguing that applying the tax to non-resident workers amounts to taxation without representation. Income taxes as a source of revenue are also somewhat less stable than property taxes.

City Income Tax: Previous Discussions

Two years ago, at the Jan. 2009 budget retreat, then-councilmember Leigh Greden advocated for an exploration of replacing the general operating millage with an 1% city income tax. The budget retreat discussion resulted in the dissemination of a previous, 2004 city income tax study. The 2004 study had been preceded by a 1997 city income tax study.

In July 2009, the city released a more current study. But in August of that year, it became clear at a city council work session that there was no enthusiasm on the part of the council to place the issue on the ballot in the fall.

Yet at that year’s budget retreat on Dec. 5, 2009, Christopher Taylor (Ward 3) again raised the issue of exploring a city income tax. And at a Feb. 16, 2010 meeting of the city council’s budget committee, which included [and still includes] Taylor, members gave city administrator Roger Fraser the green light to conduct a survey of voter attitudes on the city income tax.

City Income Tax: Current Discussions

Through the city council and mayoral election season in 2010, the idea of a city income tax received some discussion as an issue. During his campaign, Tony Derezinski (Ward 2) in particular expressed support for the idea. He’s now part of a working group on the council, which also includes Taylor and Marcia Higgins (Ward 4), that is taking a closer look at revenue questions. At the Dec. 4, 2010 retreat, city administrator Roger Fraser expressed the same sentiment he’d conveyed to members of the budget committee back in February 2010: That he thought he had an obligation to ask the citizens to consider the income tax question before cutting services.

Fraser stressed the need to engage the public on the question, saying that the first thing people will ask is, What have you done already to address expenses? He said that they’d need to be clear about what the city had accomplished – that includes reducing the work force from a peak of 1,005 ten years ago to fewer than 750 today.

At the Jan. 8, 2011 retreat, there was some back-and-forth about whether the work group looking at the income tax question – as well as the possibility of a Headlee override – should be called a “committee” or a “work group.” Implicit context for the distinction is that council committees are supposed to do their best to conduct their meetings openly in accordance with the Michigan Open Meetings Act – based on a two-decades-old city council resolution. Work groups are not considered to have the same obligation.

Discussion at the Jan. 8 retreat included the possibility that the revenue work group would also take a look at the street repair millage. Stephen Kunselman (Ward 3) expressed some interest in wrapping sidewalk replacement into the activities the millage revenue could cover. Currently, property owners are responsible for maintaining the sidewalks adjoining their property.

Collaboration: UM, AAPS, County, Townships

At the Dec. 4, 2010 retreat, the council discussed collaboration by the city with a range of other entities – University of Michigan, Ann Arbor Public Schools, the county surrounding municipalities – as a way to maximize use of resources.

At some points, the conversation grew very specific. For example, public services area administrator Sue McCormick revealed the city would be presenting an invoice to UM in connection with traffic control and police staffing for the Big Chill hockey game, which was held on Dec. 11. Some councilmembers seemed to suggest that concessions from the university could be won by withholding city consent when the university wanted something from the city. The university’s desire to include Monroe Street as part of the UM Law School campus was cited as a specific example. Fraser, though, counseled that each situation should be evaluated unto itself. He pointed to the planned Fuller Road Station as an example of the importance of that principle.

McCormick indicated the possibility of future collaboration with UM on maintenance of longer buses. Background on this issue includes the inter-campus transportation challenge that UM faces, which could potentially be alleviated by purchasing longer, articulated coaches. UM currently has no maintenance facilities that can accommodate longer buses. But the city’s maintenance yard at the Wheeler Service Center could conceivably be used to work on such vehicles, because the maintenance bays are configured so they’re face-to-face. Nothing has come to fruition yet with UM on that possibility, McCormick reported.

Fraser stressed that any collaboration was a slow process, even when partners are willing. He pointed to the new integrated funding model for human services, which involved a collaboration between the city, Washtenaw County, the Urban County, Washtenaw United Way, and the Ann Arbor Area Community Foundation. Fraser said that effort required just short of 24 months – and the only thing that was done was to change a process. No organization gave up any of their authority. It wasn’t that it was uncomfortable, he said, but each one of the groups had boards and they each had their own process for approval.

Regarding the city’s relationship with other municipalities, Fraser described how he and the mayor had begun in 2003 working to change the nature of the relationship of the city of Ann Arbor and its neighbors. He said if he were to describe the nature of the relationship that he saw when he arrived in 2002 between the townships and the city of Ann Arbor, he felt Ann Arbor would have been described as “self-absorbed and selfish and not willing to play fair with others.” There was a lot of healing that needed to be done before the city could even begin to have a conversation about collaboration on service delivery, said Fraser.

But that had not been true with Washtenaw County, Fraser said:  ”[Bob] Guenzel and I hit it off right away.” [Guenzel was until last year Washtenaw County administrator – he retired in May 2010.] Fraser said that he and Guenzel had even talked about combining the city and the county together, but as a practical matter it’s not authorized under state law. But Fraser concluded that Guenzel’s and his vision were very similar in terms of looking for opportunities to seek collaboration.

Public Engagement

At both retreats, city councilmembers and city staff acknowledged the challenge of engaging the public effectively. Fraser noted that most citizens don’t pay attention to a fine level of detail. The city can put the information out there, he said, but the question becomes: “What information can be provided and what can we expect them to retain?”

At the Dec. 4, 2010 retreat, Mike Anglin (Ward 5) suggested that then was the time to engage the public on the question of re-thinking how fire protection would be provided. Stephen Rapundalo (Ward 2) objected, saying that at that point they had nothing to propose. So councilmembers grappled with the question: When should public engagement start? Regarding the community task forces that were eventually formed two years ago to study Mack Pool and Ann Arbor Senior Center – resulting in plans to help keep the facilities open – Sue McCormick noted that those processes didn’t begin with engagement, but rather with a proposal to to eliminate those facilities. Christopher Taylor (Ward 3) suggested that public engagement would most effectively begin with a proposal to do something different.

Fraser’s remarks made mid-retreat can serve as a summary of the message the city hopes to communicate to the public. The city can’t continue to pare down the number of people it employs and continue to provide the same services. “Our future has to be different. Your expectations have to be different. The community’s expectations have to be different about what it is that they can expect from us as an organization. … There’s nothing on the horizon to suggest that denial will work.”

Coda: Retreating to Luxury?

In recapping the first retreat at the Dec. 6 city council meeting, Fraser pointed out that the council’s budget retreat was not held in a luxurious location, but rather one of the crew work rooms at the city’s Wheeler Service Center on Stone School Road. [While not austere, the crew work rooms are in no way comparable to the Book Cadillac hotel, where Washtenaw Community College trustees held a retreat in March 2010.]