A total of 8.47 full-time-equivalent jobs will be put on “hold vacant” status, and a 0.3 FTE position will be eliminated.

The recommended budgets for the following years are $103,977,306 in 2015, $105,052,579 in 2016, and $106,590,681 in 2017. The budgets are based on an estimated 1% annual increase in property tax revenues. [.pdf of draft budget summary]

McDaniel had previously indicated that the county would need to find $3.9 million in structural savings in 2014. On Oct. 2, she reported that $4.13 million in operating cost reductions had been identified. Those include: (1) $2.89 million in proposed departmental reductions; (2) $688,000 in estimated increased revenues from fees and services, (3) $450,000 in reductions to county infrastructure allocations, and (4) $100,000 in cuts to “outside agency” allocations.

Among the recommended departmental reductions, $819,000 is estimated to come from putting eight positions in the sheriff’s office on hold-vacant status. Another $1.1 million is expected to come from health insurance premium-sharing.

The outside agency reductions include decreasing the annual amount for mandated animal control services – paid to the Humane Society of Huron Valley – from $500,000 to $470,000. According to the county’s financial staff, the $30,000 difference will be made up from revenues contributed to HSHV by other local government units in the county.

Another $30,000 in cuts comes from the allocation to the Barrier Busters program – from $120,000 in 2013 to $90,000 in 2014. The budget calls for cutting that allocation to $50,000 in each of the following three years.

This year, the county is supporting the Delonis Center homeless shelter in Ann Arbor with $51,230 from the general fund budget. In 2014, that amount will increase to $160,000, then subsequently increase to $200,000 in each of the following three years. The county is counting the $40,000 difference between the 2014 budget and the 2015-2017 budgets as a “savings” in 2014 because the county, prior to 2012, had supported the center at $200,000 annually.

There are also several proposed changes to the county’s budget policies. Highlights include:

• preparing the budget in four-year cycles, rather than the previous two-year periods.
• increasing the amount of a professional services contract that triggers the need for board notification from $25,000 to $50,000.
• adding a provision to give commissioners a seven-day period in which to review any contract over $150,000.
• increasing the target of the general fund’s fund balance from 8% to 20% of general fund expenditures.

Commissioner asked a wide range of questions before their vote to postpone, and debated the merits of a four-year budget. They’re expected to take up the budget resolution again on Oct. 16. They’ll also be discussing budget-related issues at their Oct. 3 working session.

A public hearing on the budget is set for Oct. 16, with final board approval likely on Nov. 20.

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

The general fund adjustment reflects an increase of $3,476,225 in property tax revenue for 2011, offset by a $1,034,000 shortfall in anticipated expense reductions. The 2011 budget approved by commissioners in late 2010 included the use of $5,289,000 from the county’s fund balance. In light of increased property tax revenues, only $2,921,391 will be used from the fund balance for the current budget year, which ends Dec. 31. The total 2011 general fund budget is $100,696,000.

The CSTS increase reflects an adjustment in the cost allocation plan (CAP) – an amount charged to each department for items like the county attorney and administration. According to a staff memo, the expense will be offset by additional revenue from the Washtenaw County Health Organization, a partnership between the county and the University of Michigan Health System.

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

Park advisory commissioners Tim Berla (left) and Doug Chapman (right). Berla is talking about differences in funding levels for parks as compared with the rest of the city's general fund.

PAC chair Julie Grand lamented the short notice they had received about the proposed changes to the way parks programs will be supported in the fiscal year 2012 budget – which meant that the public had little opportunity to weigh in with PAC.

On May 2, the city council is holding its public hearing on the FY 2012 budget, which the council needs to approve at its May 16 meeting. The 2012 fiscal year begins July 1, 2011.

The city’s administrative policy on parks support dates back to a measure passed by the city council in October 2006, which reads in relevant part: “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.”

The policy was seen as important to assure voters that once the 2006 millage was passed, millage money would not replace general fund support for parks.

But based on city staff calculations, the portion of the city’s general fund in the proposed FY 2012 budget that supports parks would fall short of the 2006 administrative policy standard by $90,000. And some park commissioners objected to the fact that some of the money previously drawn from the general fund to support parks will now be drawn from the METRO and stormwater funds.

The stormwater fund receives revenues paid through fees based on the amount of impervious surface on a property. The METRO fund receives revenues that the state requires telecommunications companies to pay municipalities for use of the right-of-way. For purposes of the administrative policy, the city is counting the METRO funds that are supporting parks as part of the general fund.

The resolution passed by PAC called on the city council to adhere to the prevailing administrative policy. A different resolution passed by PAC expressed the body’s support for the cost-savings measures in the parks and recreation programs included in the FY 2012 budget. Besides parks and recreation programs, park operations are supported by the general fund – in the public services area of the budget. The administrative policy discrepancy lies in the park operations budget.

In other budget-related business, the commission recommended fee increases and new program fees that had been suggested by city staff. Those increases will need final authorization by the city council.

The commission also received a presentation from the Ann Arbor public art commission on a program to create murals. One of the initial sites selected for mural installation is the restroom building at Allmendinger Park.

Parks Budget Background

Understanding the discussion at the park advisory commission meeting last Tuesday depends on an understanding of some history of parks funding, dating back to the park maintenance and capital improvements millage. It was approved in 2006, and allows the city to levy an annual tax of 1.10 mill from 2007 through 2012.

The discussion also depends on understanding how the city of Ann Arbor’s parks system is supported in the general fund budget – it is split between two different areas of the budget.

Budget Background: History

The park maintenance and capital improvements millage approved by voters in 2006 replaced two separate millages, which were previously levied at around 0.5 mill apiece for a total of 0.914 mills. The single millage that replaced the two separate taxes – one for maintenance and one for capital improvements – was approved by voters at a rate of 1.10 mill. That compares with the just over 6 mills that are levied by the city to support the general fund.

Left to right: Mike Anglin (ex-officio member of PAC representing the city council), PAC chair Julie Grand, and Colin Smith, parks and recreation manager.

A mill is equal to $1 for each $1,000 of taxable value for a property. For a hypothetical house worth $200,000, with an state equalized value and a taxable value of $100,000, each mill of tax on that property would generate $100 of revenue. In ballpark numbers, 1.0 mill of property tax in Ann Arbor generates around $4.5 million of revenue annually.

Now, within the combined millage, 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 council’s 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;

The administrative policy expressed by that resolution has since been altered by the city council. The policy as reflected in the 2006 resolution had also stipulated that the city’s natural area preservation (NAP) program would receive a 3% increase in funds from the millage each year – the policy had been based on an assumption that millage revenues would increase.

But during its approval of the FY 2011 budget at its May 17, 2010 meeting, the council eliminated NAP’s automatic 3% increase, and reset NAP funding to levels proportionate with other programs.

Budget Background: Parks Budget Split – Operations, Parks and Recreation

Support for Ann Arbor’s parks system is split between two basic areas of the city’s organization: (1) community services; and (2) public services. The community services area is headed by Sumedh Bahl. The public services area is led by Sue McCormick.

Parks and recreation services falls under community services – think canoe liveries, swimming pools, ice rinks and the like. Park operations falls under public services – for example, the care of trees in parks, mowing of grass and the like.

FY 2012 Parks Budget

Discussion of the FY 2012 parks budget took up most of PAC’s time on Tuesday.

FY 2012 Parks Budget: Stacking Up Against 2006 Administrative Policy

In his presentation to PAC on Tuesday, Colin Smith presented the parks portion of the city administrator’s proposed FY 2012 budget in a way that allowed commissioners to see the effect of the proposed budget on the two different areas, and to evaluate how the proposed budget did or did not adhere to the 2006 administrative policy on proportionate park spending.

The numbers from the summary slide in Smith’s presentation to PAC show that one part of the parks budget did better than the rest of the general fund, but the other part did worse. Specifically, the parks and recreation part of the budget was reduced by 1.51% compared to last year, which is less of a decrease than the rest of the city’s general fund experienced – it dropped by 3.10%.

In this year’s park operations budget, however, general fund support dropped by 17.71% compared to last year. But the city is accounting for part of that drop by pointing to a shift in funding for park operations activity out of the general fund to other funding sources – the METRO fund and the stormwater fund.

Money in the METRO fund comes from telecommunications providers who use the city’s right-of-way; money in the stormwater fund comes from a fee paid by residents. So for purposes of the administrative policy, the city is counting the METRO and stormwater fund support for parks the same as general fund dollars – because the idea behind the 2006 administrative policy was to prevent a shift from the general fund to millage dollars.

Even counting the funding support from METRO and stormwater leaves the city’s proposed FY 2012 budget about $90,000 short of adhering to the administrative policy – a 4.23% reduction in parks support compared to a general fund drop of 3.10%:

               Adptd        Prop
Area            FY11        FY12             Chng
===================================================
Park Ops   $2,732,375  $2,248,537 (GF)      -17.71%
                          212,387 (METRO)
                           36,809 (Storm)
                           19,700 (Rec&Ed)*
                        2,517,433 (TOTAL)    -7.86%
===================================================
Park&Rec    3,641,584   3,586,528            -1.51%
===================================================
Parks Tot   6,373,959   5,835,065 (GF)       -8.45%
                          268,896 (OTHER)
                        6,103,961 (TOTAL)    -4.23%
===================================================
Total GF   81,449,966  78,922,541            -3.10%

-

To get the roughly $90,000 shortfall, take the difference between the relative parks and general fund percentage drops and multiply by the total parks budget support last year, then add in the $19,700 Rec & Ed figure from the table – it should not have been included, according to Smith. Those dollars had already been factored in. [(.0423 – .031) * 6,373,959 + 19,700 = 91,725].

FY 2012 Parks Budget: Public Commentary

The only person to address PAC during public commentary was Karen Sidney, who introduced herself as a Ward 5 resident. She noted the parks maintenance and capital improvements millage would be coming up for renewal [in the fall of 2012]. Back in 2006 when the parks maintenance and capital improvements millage was passed, the public was promised that parks support would go up or down at the same rate as the rest of the general fund, she said. The base year for that was 2007, she said. The first year reflecting the parks millage was 2008.

Sidney told the commission that relative parks general fund spending has gone down since that time. The difference in spending is not being allocated to police and fire protection, so it’s going to other areas – to fund things like the city attorney, general administration and planning.

Secondly, Sidney said, a spreadsheet was sent out on park operations expenses in the general fund, but it doesn’t include forestry expenses. [For the city's overall FY 2012 budget, roughly $475,000 in savings are realized through allocation of some forestry operations to the stormwater fund. Of that $475,000, $36,809 is being claimed by the city for park operations.] Sidney pointed out that there are no forestry expenses in the spreadsheet for FY 2011. You can’t shift zero and somehow have it turn into $36,809, she said.

Sidney also criticized the characterization of a funding shift as savings. She noted that the funding reduction to park operations works out to a 17% cut, but the city is considering it only as a 7% cut because of the shift in funding source. Sidney told commissioners that she’d been following city finances since around 2004, and is sick of getting misinformation: Don’t tell us an orange is an apple, she said. “Just be honest with us.”

FY 2012 Parks Budget: Fee Increases, New Fees

Colin Smith, manager of parks and recreation for the city of Ann Arbor, reviewed for PAC members the set of recommended fee increases and fees proposed for programs that did not previously exist. [.pdf of recommended fee increases]

Examples from the set of fee increases include an increase in daily swimming pool admission fees for adults from $4 to $5, and for youth and seniors from $3.50 to $4. The increase in daily swimming pool admission fees is expected to generate an additional $40,000 in revenue for the city. Smith told commissioners that the last time staff could find history of an increase was 2001. Utility costs and personnel costs have increased a lot since then, he noted.

Alcohol permit fees for residents would be increased from $12 to $25, which is expected to increase revenue by $4,925. Smith said he did not think the increase would scare anyone away. Commissioner Sam Offen asked about the competitiveness of the pricing with Washentaw County parks and metro parks – there’s no fee for an alcohol permit for those two organizations’ parks. Do they change for facility rental? asked Offen.

Smith explained that Washtenaw County and metro parks charge a fee for facility rental and there’s a cost for an alcohol permit calculated into the basic rental. The city of Ann Arbor charges a facility rental fee, then extra for an alcohol permit – so rather than have a fee that subsumes the cost for alcohol, you have an option, Smith explained. Offen confirmed with Smith that the cost of facility rental was competitive. [.pdf of comparative fee data for proposed fees]

Tim Doyle asked if the alcohol permit fee varied based on the size of the party. Jeff Straw, deputy manager of parks and recreation, explained that the price for the alcohol permit is the same, regardless of the group’s size.

Fees are also proposed for FY 2012 for new activities that previously did not exist. Among the new fees would be one for renting inner tubes. The city does not currently rent them out, but expects to be able to do some business with the tubes in connection with construction of the Argo Dam bypass channel – which is projected to be completed at the end of this season. It would cost $10 to rent a tube. The city is projecting 1,000 such rentals for April-June 2012, for an additional $10,000 in revenue for the FY 2012 budget.

There are various options for tube rental, with and without transport. Some tubes are expected to be rented to park users who wish to take the ride down the newly constructed Argo Dam bypass channel, when it’s completed, and then walk the tube back up for another ride.

Raft rental will be another new offering – at a cost of $75. Smith characterized them as comfortable and stable, good for groups and families. Smith also described whitewater boat rental, from a sit-on-top package to a premium boat rental, which would require four hours of instruction. You would need to pass a test, said Smith. You’d learn how to roll the boat, and the boat itself would be equipped with a spray skirt. That type of rental will likely be unique to this area, he said, so the comparables listed in the commission’s packet are all from other areas of the country like Maine, New Hampshire and Tennessee. Offen wanted to know if it was possible to bring your own boat – yes, and there is no charge for that, just like now.

Another fee for a new activity would be for the pilot night market program on Wednesday evenings – the stall charge would be $20, which is expected to generate $10,000 for the city. [Previous Chronicle coverage: "Idea for Night Farmers Market Floated"] Smith told commissioners that the public market commission is fine with the recommended fee level.

Another new fee will be a class to be offered at Huron Hills golf course where a parent and a child will take instruction at the same time – the cost will be $125. Since the golf courses opened up this spring, Smith said, they’ve had a lot of interest in this class.

Outcome: PAC members voted unanimously to recommend the set of fee increases and new program fees for park facilities as part of the city’s fiscal year 2012 budget. The fees require final approval by the Ann Arbor city council. The FY 2012 budget, which begins July 1, 2011, will be considered and approved by the council on May 16. Fee increases would be effective July 1, 2011. [.pdf of recommended fee increases]

FY 2012 Parks Budget: Other Highlights

Colin Smith began his overview of the budget by reviewing the budget process to date, which began with two retreats by the city council and a series of work sessions.

On Monday, May 2, a public hearing will take place. On May 16 the city council will take action on the budget.

The general assumptions for the city and parks system includes a rise in the majority of fixed costs, Smith said, and a decrease in revenue. The city is looking at roughly a 3% reduction each year in a two-year planning process.

As part of the parks funding controversy that arose out of the 2006 millage vote, $287,500 in supplemental parks funding was allocated by the city council for FY 2008. That allocation was initially treated as a non-recurring expense, and the city tapped the general fund for that amount on the assumption that it would be non-recurring. But the expense recurred four times, Smith said. This year it has become part of the ongoing budget for the parks.

Smith also walked PAC members through the anticipated savings from items like lower energy usage resulting from infrastructure energy improvements ($65,083) and eliminating underused computer software ($7,000).

The other part of PAC’s purview in the city budget is a portion of the field operations budget involving park operations. For park operations that are part of field operations, the city is expecting to achieve savings in the use of temporary labor to staff vacant positions ($158,248).

Smith also reviewed with PAC the policy changes with respect to funding of dam maintenance. Based on a city council directive, starting with FY 2012, the city is moving maintenance on recreational dams out of the drinking water utility fund to the general fund. [That direction had come at the council's Nov. 15, 2011 meeting]

Smith also reviewed the breakdown between park operations compared to parks and recreation services, and the use of alternate funding for some park operations to make up some of the gap between the funding levels required by the administrative policy.

FY 2012 Parks Budget: Commission Deliberations

Commission members had a number of questions about some of the basics – what is the METRO fund?

Left to right: Christopher Taylor (ex-officio member of PAC representing the city council), and PAC members Sam Offen, Tim Doyle and Karen Levin.

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. Budget impact sheets from the council’s budget working session on the public services area showed $340,000 in revenues 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 – 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. [The METRO money is not 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.

The talk of using METRO funds for park operations this year comes in concert with a shifting of some expenses out of the METRO fund – to the street repair millage. Currently, 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. If the street repair millage (on the ballot this fall) is revised to include the city’s sidewalk repair program, that will give the city more flexibility to use METRO funds for other programs – but they must still be used in the right-of-way.

Moving to another topic, Mike Anglin, who serves as one of two ex-officio city council members on PAC, drew out the fact that the parks budget supports 30 retirees, with just a handful of current employees.

Several commissioners expressed concern about the clarity of the parks budget. Tim Berla in particular said that if he wanted to ask how much money is spent on parks, the numbers presented to PAC don’t really answer that question. You have to look in different places to come up with the number.

Commissioners were also critical of the reduction in parks spending as compared to the benchmark established by the 2006 administrative policy. Several of them questioned whether it was, in fact, appropriate to count METRO and stormwater funds as “general fund” support in assessing conformance with the policy. Even when those alternative forms of funding are counted, the parks are left $90,000 short of the administrative policy.

The other city council ex-officio representative to PAC, Christopher Taylor, said about the 2006 administrative policy: “A commitment is a commitment and it ought to be abided.” But he went on to say that when services can be provided with lower cost due to greater efficiencies, that is “not a problem.” He was referring in part to the description at the meeting by Matt Warba, field operations supervisor, of the greater efficiencies he’d managed to achieve in mowing operations by revising mowing routes and the use of staging. Taylor compared the current policy of using hard dollars as a guiding principle with an alternative of using service levels as the guiding principle. But in observing that the path the city had chosen was for hard dollars, he concluded: “So be it.”

Matt Warba, field operations supervisor with the city of Ann Arbor, demonstrates the art of balancing budgets ... and a phone on his thigh.

Berla said he did not necessarily want to say that the parks should receive more money just because the city “owes” it to the parks, based on the hard dollar figure. But he pointed out that when savings are realized within the parks budget, it can easily be used on other items within the parks system. He cited the conditioning of ball diamonds specifically as an area where the parks system could spend additional money.

Tim Doyle drew out the fact from Smith that although the parks system has grown over the last decade, that expansion has taken place almost exclusively in the natural areas preservation program (NAP), not in park facilities. The city has not built additional swimming pools, for example. Smith noted that the construction of the Argo Dam bypass scheduled for this summer is an exception to that.

The commission entertained discussion about whether to pass a single resolution on the proposed FY 2012 budget or just one resolution making the two basic points: (1) PAC supported the cost saving measures;and  (2) PAC was unhappy with the failure to meet the 2006 administrative policy standard and with the short notice it had received.

Commissioners eventually settled on two separate resolutions. They briefly entertained the idea of calling on the council to restore the $90,000 or else change the 2006 administrative policy (as the council had done previously for the part of that policy affecting NAP funding). In the end, the one resolved clause in the second resolution read as follows:

RESOLVED, that PAC recommends that City Council honor its commitment to voters by observing sections 4. and 5. of the Policies for Administrative of the 2006 Parks millage and not reducing the Parks Operations Budget at a greater rate than the reduction in the overall General Fund.

[.pdf of PAC's complete memo and support for FY2012 budget measures]

[.pdf of PAC's complete memo and reminder resolution]

Presentation on Murals as Public Art

At its April 26 meeting, PAC received a special presentation from Jeff Meyers, who is one of the newer appointees to the Ann Arbor public art commission (AAPAC). Meyers introduced himself as a Ward 3 resident.

Meyers reviewed for PAC members how the Percent for Art program had been established through a city ordinance in 2007. It’s a program that designates 1% of all capital improvement projects as support for public art, with a $250,000 cap per project. AAPAC is an advisory commission with volunteer commissioners, all appointed by the mayor, Meyers noted.

Last year, AAPAC decided to pilot a mural program, with the goal to generate locally-produced public art by Michigan artists, Meyers said, and to make it an annual way to generate art in all areas of the city. AAPAC had established a task force to lead the mural program.

In addition to Meyers, task force members include Hannah Smotrich, associate professor of the University of Michigan School of Art & Design; Mariah Cherem, a UM graduate student and former community manager for Yelp.com’s metro Detroit region; and Connie Pulcipher of the city’s systems planning staff.

The task force had reviewed two dozen possible sites, and in March, task force members had agreed that the most promising two were: (1) a retaining wall along Huron Parkway – the northernmost wall on the western side; and (2) the Allmendinger Park restroom building. The retaining wall is not inside a park, but runs along the Huron Hills golf course.

Meyers said the task force had picked a retaining wall along Huron Parkway that was not growing a lot of ivy and that offered a sweeping view towards the Huron River. It was a highly visible site to motorized, bike, and walking traffic.

The restroom building features bare concrete pillars around its perimeter, which would provide the mural surface. The rationale for the choice of the concrete pillars as a mural site is the facility’s high use, the fact that it attracts all demographics, and includes a playground as well as sports facilities (tennis courts and ball fields). The neighborhood was invested in the park, Meyers said. The task force liked the fact that it’s not a downtown location, he said, but rather in a neighborhood. Use of pillars would expand the idea of what a mural is – it’s not just a flat space, and there can be many ways to present a mural.

The next step will be to hold two public meetings, one for stakeholders and one for neighbors. They’ll also expand the task force membership from four to six members, drawing an additional two members from the neighborhoods of the selected mural sites.

Commissioners had a range of questions for Meyers. Gwen Nystuen wanted to know what size the murals would be. Meyers replied that the idea was to try to leave it up to the artist. AAPAC doesn’t want to limit or dictate the size. The same principle will apply to the selection of mural materials. Meyers said he’d seen paints, mosaics, keys (in England), but would guess most applicants would be traditional.

David Barrett wanted to know what the budget for the murals would be. Meyers told him that the budget is $10,000 per site for the artist fees and materials. In response to a question about timing, Meyers said that assuming AAPAC gets community buy-in and involvement, he’d like to put out requests for proposals in June and have the murals completed by the end of September.

Sam Offen told Meyers he lives near the proposed site of the Huron Parkway mural. He said there’s a concrete abutment between the path and street and one between the path and the golf course grounds. Offen wanted to know if the lower abutment was also a possibility for a mural. Meyers replied the lower abutment hadn’t been considered, but if someone came back and wanted to include that, maybe it could be included. In response to a question about the possible need to close down a stretch of Huron Parkway for a time during creation of the mural, Meyers replied that if that were needed, he wouldn’t guess it’d be an extended period of time.

Christopher Taylor wanted to know how the $10,000 figure was determined. Meyers explained that the task force had looked at other cities with mural programs, and described $10,000 as a modest price. In Berkeley, Santa Barbara and Santa Fe, that’s about what they were paying for artist and materials, Meyer said.

Taylor then elicited from Meyers that the idea for the mural program is to use it as a pilot program for other similar, relatively lower budget projects that would yield an annual addition to the city’s public art.

Tim Berla wanted to know who would be responsible for maintenance. Would the artist have responsibility for maintaining it? What are the expectations for the life of a mural? Meyers told Berla that AAPAC expects a mural to last five years. He said there would not be specific guidelines – the concrete in different parts of the city might have different substrate, for example. Applicants would have to know what they’re doing, Meyers said. Once created, then as a city asset, a mural would fall under requirements of all city assets.

Berla suggested that AAPAC communicate its expectation of what happens after the five-year period. If the city is supposed to take responsibility, then a provision should be made so that the end is clear, so it’s not an unanticipated burden. Meyers explained that the chosen artists would fill out a maintenance form, so the city knows what the particular requirements for a mural’s maintenance is – and then a mural would be like any other city asset.

Meyers also said that perhaps only .001 percent of murals have been defaced – they’re a deterrent to graffiti, he said, so that makes them an asset. Colin Smith said he’d “received an education” about that fact from Meyers.

In response to a question from David Barrett, Meyers said the process would be driven by a request for proposals (RFP). Because the budget for each mural would be the same, a certain amount of aesthetic judgment would be exercised – by AAPAC. Barrett quipped that he just wanted to make sure Colin Smith wasn’t voting on the aesthetics.

Present: David Barrett, Doug Chapman, Tim Berla, Julie Grand, Karen Levin, Sam Offen, Gwen Nystuen, Tim Doyle, councilmember Christopher Taylor (ex-officio), councilmember Mike Anglin (ex-officio). Also Colin Smith, city parks & rec manager.

Absent: John Lawter.

Next meeting: Tuesday, May 17, 2011 at 4 p.m. in the  second-floor city council chambers of city hall, located at 301 E. Huron St. [confirm date]

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.