The extension – which would still need approval from the Michigan Economic Development Corporation – depends on establishing a relationship between the Ann Arbor-Ypsilanti SmartZone and some other “satellite” LDFA. So the Sept. 2 resolution designates Adrian/Tecumseh as that satellite and approves an agreement with Adrian/Tecumseh.

The council’s vote was 7-4 over dissent from Sumi Kailasapathy (Ward 1), Stephen Kunselman (Ward 3), Jack Eaton (Ward 4) and Mike Anglin (Ward 5). It followed a discussion that lasted over an hour, with questions from councilmembers fielded by city CFO Tom Crawford and LDFA board members Eric Jacobsen and Stephen Rapundalo, a former city councilmember.

The Ann Arbor-Ypsilanti LDFA – branded as one of about a dozen LDFA SmartZones statewide – is funded through capture of public school operating millages within the geographic areas of the Ann Arbor and Ypsilanti downtown development authority districts. However, no capture is made of the Ypsilanti school taxes.

The LDFA contracts with Ann Arbor SPARK to operate a business accelerator, which is meant to move start-up companies in the tech and biosciences sectors more quickly to a stage in their development when they are generating revenue from paying customers and adding jobs.

The city contracts separately with Ann Arbor SPARK for general business attraction and retention services. Also at its Sept. 2 meeting, the council voted to take SPARK’s $75,000 annual contract up off the table and consider it again, having tabled it three months ago. That contract won approval from the council.

The council’s Sept. 2 resolution on the LDFA extension specified the following as findings:

1. That the selection of the Adrian/Tecumseh LDFA as a satellite provides unique characteristics and specialties through its public and private resources including the location of Adrian College, Siena Heights University and Jackson College within its TIF District and the opportunities for research partnerships and student/young entrepreneur involvement. In addition partnership with another multi-jurisdictional LDFA provides opportunities for shared experiences.
2. That the selection of the Adrian/Tecumseh LDFA as a satellite provides regional cooperation and collaboration benefits to the LDFA and the Cities of Ann Arbor and Ypsilanti with joint focuses on technology (including expanding green technologies and agricultural technology) and entrepreneurial services.
3. That the selection of the Adrian/Tecumseh LDFA as a satellite provides value and support to the LDFA by strengthening existing collaboratives, making available a new/expanded technical assistance and support through its Innovation Center at Adrian College, and agricultural and manufacturing resources.

In connection with the extension, revisions to the Ann Arbor-Ypsilanti SmartZone TIF (tax increment financing) plan and development plan are being undertaken. Drafts of revisions are attached to the council’s Sept. 2 agenda item. Revisions appear to address concerns that have been raised about the current arrangement – to some extent by Ann Arbor city councilmembers.

Those concerns include the fact that TIF is not currently allowed to be spent outside the TIF district in the city of Ann Arbor; further, no TIF funds can currently be expended in Ypsilanti – inside or outside its TIF district – because no actual tax capture revenue is generated for the LDFA in that area. The revisions would allow TIF revenue to be expended anywhere in the entire cities of Ann Arbor or Ypsilanti.

In addition, the revisions specify in greater detail that TIF revenue can be used to pay for high-speed communications infrastructure. Specifically mentioned as eligible expenditures is the “installation of technology related infrastructure assets, i.e. fiber lines, nodes, or work spaces.”

The LDFA extension comes in the context of lingering questions about the impact on school funding of the LDFA tax capture. In FY 2013, the total amount captured by the Ann Arbor SmartZone LDFA was $1,546,577, and the current fiscal year forecast is for $2,017,835. About the same amount is forecast for FY 2015. The majority of councilmembers were convinced that the mechanism by which the state of Michigan funds public education means that the LDFA tax capture has no negative impact on  local schools funding.

Separate from the LDFA business acceleration contract with Ann Arbor SPARK, the city of Ann Arbor has historically engaged SPARK for business attraction and retention services. However, this year the $75,000 annual contract with SPARK was tabled by the council – in a vote taken at the council’s June 16, 2014 meeting.

It was taken back up off the table for consideration at the Sept. 2, 2014 meeting and approved on a 9-2 vote over dissent from Sumi Kailasapathy (Ward 1), Jack Eaton (Ward 4) and Mike Anglin (Ward 5)

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron.

Update: The board failed to reach a quorum, but received reports. The update on the jobs audit is that the audit firm Abraham & Gaffney will be planning to audit jobs figures in the Ann Arbor SPARK Salesforce database. The board also received an update on the formation of LDFA satellites in Adrian and Brighton. One of those satellites will be selected as a partner for the Ann Arbor/Ypsilanti SmartZone as it seeks a 15-year extension past its current 2018 end date. A city council work session on the topic of the LDFA expansion is currently planned for Sept. 8. A vote is is planned by the council in October. 

On the agenda is a year-end report from Ann Arbor SPARK, the LDFA’s vendor for entrepreneurial support services. The fiscal year ended June 30, 2014. Also on the agenda is an update on the effort to extend the term of the LDFA past its current end date in 2018.

The LDFA’s last meeting, on June 17, 2014, included discussion of the LDFA’s capture of the local school operating millage and whether those captured taxes are reimbursed to the state’s School Aid Fund. After that meeting, The Chronicle reported that communications staff at the state treasury and the Michigan Economic Development Corporation had confirmed that under the LDFA statute, that reimbursement is not required for the Ann Arbor/Ypsilanti SmartZone.

Listen live to the audio broadcast using the embedded live stream player below. The two text boxes are identical in content. They are used to provide notes to the listener during the live broadcast. The first box forces the view to the bottom of the file. The second one can be manually scrolled.

[.mp3 of July 15, 2014 LDFA board meeting]

Carrie Leahy is chair of the LDFA board.

The council’s meeting was of more than just passing interest to the LDFA board members – because the council voted at that meeting to table a $75,000 contract for business development services with Ann Arbor SPARK, a local nonprofit economic development agency. Ann Arbor SPARK is also the LDFA’s contractor – but not for the same kind of services that SPARK delivers under its contract with the city. The council will likely take up its contract with SPARK again at a future meeting, possibly as soon as July 7.

The city’s annual contract with SPARK, which is paid for with general fund money, is meant to cover the attraction and retention of mature companies to the Ann Arbor area. In contrast, the LDFA contracts with SPARK for entrepreneurial support services – for companies that are in some phase of starting up.

On the LDFA board’s June 17 agenda was the annual contract with Ann Arbor SPARK for entrepreneurial support services – which the board voted to approve. This year that contract is worth nearly $2 million – $1,891,000 to be exact.

An unsuccessful bid by councilmembers made during the city’s FY 2015 budget deliberations would have reduced the total LDFA expenditures by $165,379. The goal of that expenditure reduction would have been to increase the fund balance that was available for infrastructure improvements in the LDFA district – specifically, for high-speed telecommunications. At the LDFA’s June 17 meeting, city CFO Tom Crawford indicated that sometime in the FY 2015 fiscal year, the city would be making a proposal to install fiber throughout Ann Arbor.

The contract between the LDFA and SPARK covers a range of items, with the top two line items consisting of staffing for the business incubator ($420,000) and provision of services to start-up companies in Phase III of their development ($550,000). SPARK classifies its engagement with companies in terms of phases: preliminary screenings (Phase I); due diligence (Phase II); intensive advising (Phase III); and accelerating opportunities (Phase IV). [.pdf of FY 2015 budget line items] [.pdf of LDFA-SPARK FY 2015 contract]

At its June 17 meeting, the LDFA board also approved a routine annual $42,600 contract with the city of Ann Arbor – for administrative support services. Those include items like the preparation of meeting minutes, stewardship of public documents, and preparation of budgetary analyses. [.pdf of FY 2015 LDFA contract with city of Ann Arbor]

The final voting item for the board was approval of its meeting schedule for the next fiscal year. The LDFA board meets in eight out of 12 months, with the next meeting taking place on July 15, 2014, starting at 8:15 a.m. in the city council chambers. [.pdf of 2014-2015 meeting schedule]

These voting items did not, however, generate the majority of the board’s discussion at its June 17 meeting.

The board focused most of its discussion on issues surrounding its application for an extension of the LDFA past its current 15-year lifespan, which ends in 2018. Legislation passed in 2012 allowed for either a 5-year or a 15-year extension – with different criteria for those time periods. The 15-year extension requires an agreement with a satellite LDFA, with two communities currently under consideration to partner with Ann Arbor’s LDFA: Brighton and Adrian. Flint had also been a possibility, but is no longer on the table.

With an extension, the LDFA would continue to capture school operating millage money, which would otherwise go to the state’s School Aid Fund. At least some of the school taxes subject to capture by LDFAs statewide are required to be reimbursed to the School Aid Fund by the state. Questions about how that applies to Ann Arbor’s LDFA have been raised – and a review of the state statute appears to support the conclusion that the key clause requiring reimbursement is inapplicable to the Ann Arbor SmartZone LDFA. That understanding was confirmed to The Chronicle by the Michigan Dept. of Treasury communications staff in a telephone interview on June 23.

The exact nature of that tax capture arrangement and possible reimbursement was also the subject of LDFA board discussion on June 17 – because the LDFA board is being pressed by city councilmembers to account for how the LDFA tax capture impacts the state’s School Aid Fund. Board member Stephen Rapundalo expressed some frustration about that – based on his perception that this material had been well explained in the past: “What’s it take – for them to understand unambiguously how that works? I mean, we have told them. Why is the onus on the LDFA to have to show them that?”

Besides the tax capture mechanism, two other issues raised by city councilmembers are factoring into the LDFA board’s approach to seeking an extension of its term. Board chair Carrie Leahy told her colleagues that she took away two main messages from recent appearances in front of the Ann Arbor city council. Some councilmembers, she said, would like to see: (1) an independent audit of job creation numbers; and (2) a provision for infrastructure investments as part of an LDFA extension.

On the infrastructure side, the LDFA board’s discussion focused on the existing TIF (tax increment finance)/development plan, which provides for investments in high-speed telecommunications (fiber) networks, but not for projects like street construction, sewer construction and streetlight installation. The question was raised as to whether the LDFA could use its school tax capture to pay for a fiber network in the whole geographic district of the LDFA – or if school taxes could only be used to fund a fiber network to an business incubator.

The Ann Arbor LDFA’s district covers the geographic areas of the Ann Arbor and Ypsilanti downtown development authorities – although Ypsilanti’s DDA area does not generate any LDFA tax capture. As a consequence, money captured by the LDFA is not spent in the Ypsilanti portion of the district. But that could change under an extension of the LDFA – based on board discussion at the June 17 meeting.

On the job creation numbers audit, the June 17 board discussion indicated that the LDFA will now be looking possibly to incorporate a job numbers audit as part of an upcoming financial audit. The financial auditing firm will be asked to provide some explanation of how it might be able to incorporate a jobs audit as part of its scope of work for the upcoming financial audit. The board appears to understand that some type of jobs audit would be important for winning ultimate city council support for a 15-year extension of the LDFA.

The city council’s representative to the LDFA board, Sally Petersen, made that explicit more than once during the June 17 meeting, saying that “taking the lead on establishing an independent audit would go a long way towards getting city council support for an extension.”

The LDFA’s deliberations and other agenda items are reported in more detail below.

Ann Arbor SPARK’s Two Roles

Some of the political chaffing surrounding Ann Arbor SPARK involves a lack of clarity about roles played by SPARK – which are, from SPARK’s perspective, clearly separate and distinct: (1) a somewhat conventional economic and business development agency that attempts to retain mature companies in the Ann Arbor area, and also to attract mature companies to locate in this area; and (2) an organization that provides entrepreneurial services to start-up companies and nurtures them toward commercialization. It’s this second role for which the LDFA contracts with SPARK.

At one point during the June 17 LDFA board meeting, Luke Bonner – SPARK’s vice president of business development – sought to clarify these two distinct roles. Bonner heads up SPARK’s efforts to retain and attract new fully-formed companies. Bonner got clarification that Ann Arbor city council’s discussion the previous evening had centered on the $75,000 business services contract between the city of Ann Arbor and SPARK.

The business development team at Ann Arbor SPARK – of which Bonner is a part – is not under contract with the LDFA, he pointed out. Instead, SPARK’s business development team is under contract with Washtenaw County, the city of Ann Arbor, various other municipalities in Washtenaw County, and Livingston County – in addition to all of the private funding received by Ann Arbor SPARK.

Bonner stressed that the business development and the entrepreneurial services teams operate in two different worlds. Bill Mayer, SPARK’s vice president for entrepreneurial services, followed up Bonner’s observation by pointing out that the kind of companies that Bonner deals with are too big for him to be able to help under the SmartZone (LDFA) guidelines. Mayer described the situation at Ann Arbor SPARK as two separate paths, but under one banner.

Mayer stressed that reports required by the Michigan Economic Development Corp. (MEDC) entail reporting different kinds of numbers. The issue of these different numbers from different reports has been raised as a concern by some members of the public, as well as by some councilmembers.

For outside observers, including some councilmembers, SPARK’s two distinct roles are not as self-evidently separate – because they both fly under the same banner of Ann Arbor SPARK.

The $75,000 contract to which Bonner referred was between the city of Ann Arbor and SPARK for its role as an agency that attracts and retains mature companies.  At the council’s June 16 meeting, the parliamentary motion used to deal with the contract was to “table” the question, which is not debatable under Robert’s Rule of order – so the council voted on the tabling motion, without additional deliberations. That vote came out 6-5 in favor of tabling. With that the council moved along on its agenda.

But at the end of the June 16 council meeting, Ward 1 councilmember Sabra Briere brought up the issue during the council communications time, saying that Ann Arbor SPARK CEO Paul Krutko had expected to be asked questions and respond to councilmembers’ concerns – but that had not happened. Briere alluded to the fact that the issue might come back before the council “sooner rather than later,”  but she wanted Krutko to be able answer some questions at that time – as he had remained in the council chambers until that point.

In the course of the back and forth, Ward 2 councilmember Jane Lumm told Krutko that she would have preferred to postpone it. But in talking to her colleagues during the break, Lumm said, there was greater interest in tabling the resolution.

The back-and-forth between the council and Krutko ultimately did not result in a motion by any councilmember to take up the resolution off the table for a vote. It appears likely that the council will consider the question at its July 7 meeting.

Some of the disparity of jobs numbers in SPARK’s reporting, as claimed by SPARK’s critics, appears to be due to reports that cover different activities: SPARK’s overall business development impact, as opposed to reports made to the state legislature and related to various state grants. [Ann Arbor SPARK 2013 annual report] and [21st Century Jobs Trust Fund 2013 Annual Report]

Contributing to the lack of definiteness on the numbers reported by SPARK is the fact that SPARK uses self-reported company figures for projected jobs – as opposed to independently verifying the creation of actual jobs. That independent verification is not necessarily straightforward, because SPARK may not be able to compel a company to disclose records that would allow such independent verification of a company’s self-reported jobs claims.

SPARK as LDFA Contractor

The LDFA board deals with Ann Arbor SPARK as its contractor for entrepreneurial services – not as an attractor and retainer of companies in the area. And the June 17 LDFA board meeting reflected that. On the agenda were three items related to that specific function of SPARK – the treasurer’s report, the report from SPARK, and the annual contract between the LDFA and SPARK.

SPARK as LDFA Contractor: Treasurer’s Report

Eric Jacobson gave the treasurer’s report. As of the end of May, he could report that spending by the LDFA’s contractor, Ann Arbor SPARK, was well below the amount budgeted for the year. There was an overall positive variance of about $76,000.

Eric Jacobson is the LDFA board treasurer.

He noted that Ann Arbor SPARK had exceeded its budget in two categories – but in both categories the amount by which it had exceeded budget is well below the threshold constrained by the contract.

That meant that SPARK could spend up to a certain amount over budget in any line item – he thought it was a 5% variance. First, SPARK had overspent in the internship and entrepreneur-in-residence program. SPARK had also overspent the budget in the line items to cover expenses for administrative costs for the incubator facility at SPARK Central.

He reiterated that both of those variances were very minor, so he could report that – as SPARK has done historically – the agency is spending within its budget overall, as the last month of the fiscal year approached. The fiscal year ends on June 30.

SPARK as LDFA Contractor: Report from SPARK – Interns, Incubator

The report from the LDFA’s contractor was given by Skip Simms, Ann Arbor SPARK’s senior vice president for entrepreneurial services. Simms sits on the LDFA board in an ex officio, non-voting capacity.

Simms told the board that he did not have much report, beyond what the LDFA treasurer, Eric Jacobson, had just covered. Referring to the overspending on incubator expenses, Simms said that if they were going to overspend, that’s where they would want to be overspending. He explained that the CEO-in-residence program was a way to help retain executive talent – keeping CEOs in the community who might otherwise be inclined to leave the community and work someplace else. The CEO-in-residence program allowed someone to be retained and at the same time provide their experience and expertise to start-up companies in the community. The CEO-in-residence program, not the interns, had caused SPARK to exceed that line item.

The definition of interns was an issue that still needed to be resolved for next year, Simms said. The next cycle of interns would actually be employees of Ann Arbor SPARK, he explained. Simms pointed out that on a couple of other different line items, Ann Arbor SPARK was under budget. Money could be moved around so that it would be “a wash” when the board reviewed SPARK’s quarterly report next month.

Board chair Carrie Leahy asked about the occupancy of the SPARK Central business incubator [in the Michigan Square building adjacent to Liberty Plaza, at the corner of Division and Liberty]. Simms responded by saying that SPARK Central on the lower level had more than 90% occupancy. There was an opening for perhaps one additional company, and there were some companies in line for that space. The third floor of the incubator is filling up, he said. On the third floor, there is perhaps room for one additional company, he said.

The third floor space, Simms continued, is finally breaking even on rent compared to expenses, so he expressed some optimism about that. More importantly, Simms said, companies on the third floor are growing and expanding. As an example, he gave Seelio, which has been acquired. The company is staying in Ann Arbor, Simms reported, and they are probably going to add five more people by the end of the year. The company is going to be squeezed for space, he said, so he was not sure if they were planning to move. If they moved, there would be quite a few seats that would need to be filled in the third floor space, he said. There were some companies in line for that space, however.

Simms then described the incubator environment in the community as a whole as growing. There are a couple of new incubators in town, he said, and the space they’re offering seems to be getting absorbed quickly: As soon as space becomes available, start-ups and early-stage companies are moving in. That was a good indicator for the future, he concluded. It reinforced the need for the LDFA to continue to have the kind of facility that Ann Arbor SPARK has created at 330 E. Liberty, Simms concluded.

Leahy ventured that the newest incubator was associated with University of Michigan. Skip Simms indicated that the incubator to which Leahy was referring was still in the works. Ann Arbor SPARK is in dialogue with the university on that. One of the reasons that Ann Arbor SPARK in dialogue with the university about that incubator, he explained, is that SPARK wants to have a clear understanding of what the goals and objectives are of that new incubator, and what kind capacity they are planning for. Because it would be operated by the University of Michigan, access would be limited, Simms said: Some kind of university relationship will be required to use the incubator, which would eliminate about 60% of the market.

Still, Simms ventured that there could be a partnership opportunity there. One possibility is that companies that started in the university’s incubator could be handed off to SPARK as they got closer to commercialization. He was not sure how far the university was planning to take companies in their evolution toward commercialization.

Responding to a question from Leahy, Simms indicated that university’s incubator concept was for relatively early-stage companies. Leahy said she heard the university was planning to take a percentage of ownership of the companies. Simms thought that was still under discussion. They are looking at a model that does take equity, he said. The university is freer to take that approach than the LDFA is, Simms said.

SPARK as LDFA Contractor: FY 2015 Contract

Board chair Carrie Leahy explained that the LDFA board’s contract committee had reviewed the contract – after Ann Arbor SPARK had reviewed it and proposed updates. A revised draft had then been proposed by the contract committee. That draft was now in front of the LDFA board for its approval, she explained. [.pdf of LDFA-SPARK FY 2015 contract]

Leahy called everyone’s attention to a section that was enclosed in brackets and bolded:

[The reports shall include, as applicable, and only at such times as required, information required to be reported in connection with an extension of the LDFA's term.]

She felt that the bracketed sentence was intended to be included as part of the contract – so it was not meant to actually be in brackets and bold. She checked with Simms to see if it was okay to simply include it. She wasn’t sure if Ann Arbor SPARK had had a chance to comment on the added language. The point of the added language, she explained, was that if the LDFA was awarded an extended term, the required reporting would already be expressed in the contract. She felt that the reporting that was described in the added language was already being done, in any case.

The new contract, Leahy explained, includes updates to the specified years and budget numbers. Another update the contract covers is how the internship program will work, she said. Leahy explained the changes to the internship program. Interns that are being deployed to people now will actually be Ann Arbor SPARK employees, she said. The contract between the LDFA and SPARK is been updated to reflect that arrangement, which has been approved by the MEDC, she said.

Outcome: The LDFA board voted to approve the updated contract with Ann Arbor SPARK.

City of Ann Arbor as LDFA Contractor: Administrative Services

The LDFA does not employ a staff – so it contracts with the city of Ann Arbor for administrative support services. Those include items like the preparation of meeting minutes, stewardship of public documents, and preparation of budgetary analyses. [.pdf of FY 2015 LDFA contract with city of Ann Arbor]

When the board reached the item on its agenda, board chair Carrie Leahy ventured that under the first bullet point, under “services,” the intended word was likely not “secretariat” but rather “secretarial.” There was some lighthearted commentary to the effect that the language had been like that for about 10 years and no one had noticed. [The intended word was, in fact, likely "secretariat" – in the sense of an administrative office or department, especially a governmental one.]

Leahy checked with board treasurer Eric Jacobson that he was OK with the numbers that were included at the end of the contract, and he was. She characterized the contract as the same as in years past, covering administrative support by the city of Ann Arbor for the board of the LDFA.

Outcome: The board approved the administrative services contract with the city of Ann Arbor for support of the LDFA board.

LDFA Extension

At its June 2, 2014 meeting, the Ann Arbor city council had approved a resolution expressing city council support of the local development finance authority’s application to the Michigan Economic Development Corp. to extend the life of the tax capture arrangement for up to 15 years. The MEDC is described on its website as the “state’s marketing arm and lead advocate for business development, talent and jobs, tourism, film, and digital media incentives, arts and cultural grants, and overall economic growth.”

Without an extension, Ann Arbor’s LDFA would end in 2018.

Under a 2012 amendment to the state’s LDFA statute [Act 281 of 1986], the MEDC is empowered to approve extensions of LDFAs for 5 or 15 years. Both extension options would require a greater explicit commitment to greater regional collaboration. But the 15-year option requires the creation of an additional “satellite” geographic area for tax capture:

In addition, upon approval of the state treasurer and the president of the Michigan economic development corporation, if a municipality that has created a certified technology park that has entered into an agreement with another authority that does not contain a certified technology park to designate a distinct geographic area under section 12b, that authority that has created the certified technology park and the associated distinct geographic area may both capture under this sub-subparagraph for an additional period of 15 years as determined by the state treasurer and the president of the Michigan economic development corporation.

The council’s resolution approved on June 2 stated that if the MEDC approves the extension, the city of Ann Arbor will work with the LDFA and the city of Ypsilanti to identify another LDFA – called the “Satellite SmartZone LDFA.” The arrangement will allow the satellite SmartZone LDFA to capture local taxes in its own distinct geographic area for the maximum 15 years allowed by statute.

What is it that would be extended? Ann Arbor’s local development finance authority is funded through a tax increment finance (TIF) district, as a “certified technology park” described under Act 281 of 1986. The MEDC solicited proposals for that designation back in 2000. The Ann Arbor/Ypsilanti “technology park” is one of about a dozen across the state of Michigan, which are branded by the MEDC as “SmartZones.”

The geography of the LDFA’s TIF district – in which taxes are captured from another taxing jurisdiction – is the union of the TIF districts for the Ann Arbor and the Ypsilanti downtown development authorities (DDAs). It’s worth noting that the Ypsilanti portion of the LDFA’s TIF district does not generate any actual tax capture.

In FY 2013, the total amount captured by the Ann Arbor SmartZone LDFA was $1,546,577, and the current fiscal year forecast is for $2,017,835. About the same amount is forecast for FY 2015.

The LDFA captures Ann Arbor Public Schools (AAPS) operating millage, but those captured taxes don’t directly diminish the local school’s budget. That’s because in Michigan, local schools levy a millage, but the proceeds are not used directly by local districts. Rather, proceeds are first forwarded to the state of Michigan’s School Aid Fund, for redistribution among school districts statewide. That redistribution is based on a per-pupil formula as determined on a specified “count day.” And the state reimburses the School Aid Fund for the taxes captured by some SmartZones in the state.

However, the school taxes captured by the Ann Arbor SmartZone are not required to be reimbursed to the state School Aid Fund – which diminishes the amount of funding for public schools statewide. That’s a conclusion based on a reading of the LDFA statute and confirmed to The Chronicle by communications staff in the Dept. of Treasury and the MEDC.

According to the Dept. of Treasury, the Ann Arbor SmartZone LDFA was designated under subsection (8). From the LDFA statute [emphasis added]:

(13) Not including certified technology parks designated under subsection (8), but for certified technology parks designated under subsections (9) and (10) only, this state shall do all of the following: (a) Reimburse intermediate school districts each year for all tax revenue lost that was captured by an authority for a certified technology park designated by the Michigan economic development corporation after October 3, 2002.
(b) Reimburse local school districts each year for all tax revenue lost that was captured by an authority for a certified technology park designated by the Michigan economic development corporation after October 3, 2002.
(c) Reimburse the school aid fund from funds other than those appropriated in section 11 of the state school aid act of 1979, 1979 PA 94, MCL 388.1611, for an amount equal to the reimbursement calculations under subdivisions (a) and (b) and for all revenue lost that was captured by an authority for a certified technology park designated by the Michigan economic development corporation after October 3, 2002. Foundation allowances calculated under section 20 of the state school aid act of 1979, 1979 PA 94, MCL 388.1620, shall not be reduced as a result of tax revenue lost that was captured by an authority for a certified technology park designated by the Michigan economic development corporation under subsection (9) or (10) after October 3, 2002.

A 15-year extension is possible, according to the staff memo accompanying the June 2 city council resolution, “if, in addition to the above requirements, Ann Arbor and Ypsilanti, as the municipalities that created the SmartZone, enter into an agreement with another LDFA [a "Satellite SmartZone"] that did not contain a certified technology park to designate a distinct geographic area, as allowed under Section 12b of the Act…”

A key requirement for an LDFA SmartZone is “significant support from an institution of higher education, a private research-based institute, or a large, private corporate research and development center.” So the possibilities for an LDFA satellite for Ann Arbor’s SmartZone include not just a governmental unit, but also an institution of higher learning.

Currently under consideration for the satellite LDFA are Adrian (Adrian College) or Brighton and Livingston County (with Cleary University). The June 17 LDFA meeting included an update on where Adrian and Brighton are in the process – as they are competing to be the partner designated by the Ann Arbor LDFA.

Only one of the two communities would partner with the Ann Arbor LDFA SmartZone.

LDFA Extension: Board Discussion

Skip Simms of Ann Arbor SPARK gave an update on the status of other communities that are candidates for the satellite LDFA that would be required for the Ann Arbor/Ypsilanti SmartZone to receive an extension. Right now SPARK is talking to both Brighton and Adrian. Brighton would be a Brighton-Howell satellite. Adrian could turn out to be an Adrian-Tecumseh satellite, he said.

Both communities are rapidly moving forward to complete required tasks as communities and LDFAs to comply as satellites. Flint is off the table – because Flint took themselves off the table, he said, and made it clear that they were not interested. Both Adrian and Brighton are on a fast-track to try to beat each other to meet all the compliance for a satellite. Simms invited Ann Arbor SPARK’s Luke Bonner to walk the board through the details of what those communities need to do.

Bonner told the board that the city of Adrian had gone through the first step of the process to create an LDFA – which was that the city council approved a resolution expressing the intent to create an LDFA and set out the district boundaries. They are moving toward the first public hearing. Adrian should have its final approvals done, he believed, by the first week in September. So this would be a new LDFA, where the city of Adrian would be the lead governmental unit. Tecumseh is going to come in as a partner to Adrian after the LDFA is created, Bonner explained.

In the case of Brighton and Howell, Brighton already has an LDFA, so their approvals are pretty simple. They don’t have to go through the time-consuming process of creating the authority itself. Howell has an LDFA that was never actually kicked off – they don’t have board members or a district. It was just approved and left in limbo, he said. So Howell is going to wait until the process is completed in Brighton and then Howell will put its LDFA together for the sole purpose of being a partner to Brighton and of overseeing the school funds to run the incubator and accelerator program.

In both cases, Bonner said, the communities have an educational institution as a partner. Adrian is working with Adrian College, which has established a business incubator program. They have built a facility and dedicated funds, and personnel are working on that program. In Livingston County, in Brighton, Cleary University is the educational institutional partner. Cleary University has an existing business incubator program that they are continuing to scale up, Bonner explained. So there are university partners in both communities.

Board chair Carrie Leahy asked how the process that Brighton and Adrian are undergoing would integrate into the timing of the Ann Arbor/Ypsilanti SmartZone LDFA extension application. In the case of Adrian, Bonner explained, they will make sure that the very first LDFA board meeting happens immediately following the establishment of the authority. The satellite LDFA has to approve the contract with the host LDFA. So the first order of business for the LDFA in Adrian will be to approve its bylaws and then move right into the approval of the agreement. That should be done by the first week in September, he said.

In the case of Brighton, they are looking at doing some informational sessions with the LDFA and the city council in July. And they look to be taking action sometime at the end of August. So the two candidate satellite LDFAs will be completing their work in roughly the same two-week timeframe.

Bonner explained that Brighton has a couple of other issues with its LDFA because it is “underwater” – as its tax capture is not at the point where it can cover debt service. It falls short by about $5,000-$6,000 annually, he said. That issue will have to be addressed, he said. They’re waiting to see what happens with the personal property tax law in the August election. That will also affect how Brighton does business with its LDFA. Leahy ventured that there could be a situation where both communities form an LDFA. Yes, Bonner confirmed.

Leahy invited attorney Jerry Lax to walk the board through the Ann Arbor/Ypsilanti SmartZone LDFA’s next steps. She knew there was a two-page summary that needed to be submitted to the MEDC. She asked Lax what else needed to be submitted.

Lax told Leahy that the only thing that needed to be submitted to the MEDC promptly by June 30 was the two-page summary. The MEDC guidelines provide that the two-page summary be emailed by June 30. That two-page summary has already been drafted, he said. Leahy told Lax she was not sure if board resolutions needed to be attached to the state summary. The guidelines don’t say so, Lax replied.

Lax continued by noting that the two city councils (Ann Arbor and Ypsilanti) have already passed resolutions supporting a 5-year extension and supporting the contemplation of creating satellites in anticipation of a potential 15-year extension. But with regard to the 5-year extension, the next thing that has to be done is for the cities to amend the existing TIF plan to accommodate a higher degree of regional cooperation. And both city councils have passed resolutions committing to engage in those discussions, he said.

The requirement is that by March of 2015, the amended TIF plan be available for submission to the MEDC, Lax explained. So the first step is just submitting a two-page summary – and everything is all set to do that, he said. And hopefully, once the LDFA is notified that the MEDC has approved the proposed 5-year extension, the next step for the 5-year extension would be the amendment of the TIF plan, he said.

Lax reported that he has communicated with Mary Fales of the Ann Arbor city attorney’s office and also John Barr, who is the city of Ypsilanti attorney – and both of them are on board with jumping into the process and meeting promptly and dealing with potential amendments to the TIF plan. Both of the city councils will have to attend to those details.

Leahy asked Lax what he meant by “attending to the details.” She asked, “What are we proposing to amend in the TIF plan?”

Lax called that a policy question for the city councils. He did not know how much attention the councils had given to the details of what exactly would need to be amended. Tom Crawford, the city of Ann Arbor’s CFO, ventured that procedurally it would be appropriate for the LDFA board to make a recommendation to the city council and then for the council to consider it. Based on his conversations with Fales and with Lax, Crawford felt that the next step would be for the LDFA to articulate changes, by providing a document with tracked changes that the councils would vote on.

Lax agreed with Crawford that it was entirely appropriate for the initial proposal to come from the LDFA board. But then it would need to be discussed by both councils – because it would involve amendments that the councils need to approve. Leahy got clarification from Lax that the TIF plan and the development plan were combined as one document.

Some back-and-forth unfolded about whether an MS Word copy of the TIF plan still existed. Leahy ventured that it could be scanned in and then cleaned up, prompting Skip Simms to observe that Adobe had improved. Steve Rapundalo said he thought he might have some old documents. Leahy ventured that probably the first order of business was to just get their hands on a copy of the old MS Word document.

A question was raised by an LDFA board member about whether the board needed to wait until the MEDC approved the two-page summary before working on amendments to the TIF plan. Lax ventured that if the MEDC did not approve the two-page summary, then any effort the LDFA board put into revising the TIF plan would be wasted.

But on the other hand, even though it looks like March 2015 is a long way off, he thought it made a lot of sense to give prompt attention to amending the TIF plan. He did not know how soon they could expect the MEDC to approve the two-page summary. Leahy wanted to know if Lax knew of any guidelines the MEDC had provided for the kind of amendments to the TIF plan that they would be looking for.

Lax said he was not aware of any additional guidelines beyond the guidelines in the statute that talk about a higher degree of regional collaboration. Even for just a 5-year extension, this higher degree of regional collaboration is something the MEDC is looking for, he said. Leahy asked Skip Simms if there was anything he recalled from his discussions with the MEDC by way of guidelines. Simms said the key point that the MEDC is looking for had been described by Lax – broader regional collaboration.

The other thing the MEDC has said, Simms added, is that this is an opportunity for the LDFA to make changes to elements of the TIF plan that might have been too restrictive. It would be an opportunity to look at the TIF plan and the development plan with a clean slate and change anything and everything that they would like to see changed, he said. You can start with the core document if you’re happy with most of it, he allowed, but this is the opportunity to make changes.

Once the TIF plan has been changed, it’s unlikely that it would be changed again for another 15 years, Simms ventured. So now would be a good time to take the opportunity to insert everything that they wanted to put into a new TIF plan that might have been missed 15 years ago, he concluded.

Rapundalo suggested that the LDFA board, or a subgroup of the board, go through the TIF plan line-by-line from a conceptual viewpoint and ask about everything that’s included: Is this still valid today? If it is, then leave it in – if not, then take it out and perhaps replace it with something else.

A consensus that seemed to evolve from the board discussion was that the LDFA board’s contract committee would be a suitable group to take up the task of reviewing the TIF plan. Leahy said the issue of infrastructure would be a good topic to review in the TIF plan – because the Ann Arbor city council is suggesting it would like to see infrastructure projects undertaken, but there are certain kinds of infrastructure projects that the LDFA cannot undertake, because they are not in the plan.

Rapundalo suggested it would be useful to collect some best practices from other SmartZones in the state as well as other communities with high-tech concentrations, and try to incorporate some of that into the new plan. Leahy asked Lax if he could inquire with Roslyn Zator at the MEDC to get some direction about what the MEDC would like to see in the TIF plan amendments. Leahy also asked Skip Simms which other SmartZones he thought would be good to look at, as far as best practices – Traverse City, Houghton, Grand Rapids?

Simms said that what he heard from everyone else is that they are modeling everything after Ann Arbor SPARK. Nobody is saying they are doing it better than Ann Arbor SPARK is doing it, he said. Nonetheless, Simms allowed, it would still be important to reach out.

Simms said that Grand Rapids was undergoing a revision, so it would be good to contact Grand Rapids. Rapundalo agreed with Simms’ point about Grand Rapids, saying that Grand Rapids is making changes to their SmartZone that would set them apart structurally from other SmartZones. He thought it would be important to take a look at that and see why Grand Rapids is making those changes.

Simms pointed out that Grand Rapids is also considering applying for a 15-year extension of its LDFA. In terms of out-of-state organizations, Simms suggested taking a look at TechColumbus. Leahy asked Simms to see if he could get a copy of the TechColumbus development plan.

Lax circled back to the idea that the LDFA board should make the first proposal to the city councils about the needed changes to the TIF plan. But he also pointed out that the Ann Arbor city council had expressed interest in seeing greater attention paid to issues like infrastructure. He suggested that the LDFA take into account anything the councils might be interested in seeing at the outset. That way, whatever is ultimately proposed would stand a greater likelihood of being approved by the city councils.

At that point, Lax noted that March 2015 seems like a long way off, but given the potential complexity, it creeps up rather quickly. So the discussion should take place sooner rather than later. He suggested getting some clarity about what people may think they want to know, and what topics they have not known enough about up until now. That would help focus the discussion on what information is available, he said.

Although there are different timelines for requirements to apply for a 5-year extension of the LDFA compared to a 15-year extension, the consensus that evolved at the June 17 LDFA board discussion was that they should be handled pretty much simultaneously. Lax pointed out that the 15-year plan would involve a satellite and there would be some coordination among the various municipalities involved, but some room could be left in the 5-year plan extension to accommodate the addition of a satellite LDFA. Jacobson ventured the right approach would be to redline an amended TIF plan for both a 5-year plan and the 15-year plan.

Bonner suggested that everything be done, based on the idea of a 15-year agreement, with language incorporated into the documents to include satellite LDFAs. Then, if it turns out that only the 5-year extension is approved, the additional language due to the 15-year plan can simply be eliminated through an administrative amendment. The idea would be that it would be convertible to a 5-year plan in relatively short order. Lax agreed that much of the content would be the same in either case – 5-year plan compared to 15-year plan. Lax reiterated that he felt it made sense to think of it all as a unified project.

Crawford pointed out that after an amendment is prepared, you have to go through a process of notifications and public hearings – and it was undesirable to have the document change significantly during that process. Lax suggested that the 15-year component of the plan could be separated out as an “add on.”

Jacobson ventured that they need to think it through so that they have two different versions in their back pocket – that can be pulled out, based on what the MEDC approves. Lax also suggested having prompt discussions with the MEDC about other plans that could be used a model. The MEDC might have some guidance about how complex the amendments to the TIF plan might be, related to a 5-year extension, if a community is also contemplating a 15-year extension.

Simms pointed out that the MEDC review would happen after the council action. Lax allowed that was true, but ventured that the MEDC might have something useful to say in advance of that.

The question was raised about whether Houghton had pursued both types of extension simultaneously – but Simms thought that Houghton had pursued a 15-year extension from the get-go. Simms was not sure if everything had been completed in Houghton, but things have been completed in Marquette, which is supposed to be the satellite. He thought that the current status of that 15-year extension was: Discussions are taking place about the agreement between the satellite LDFA, the host LDFA and the MEDC. He pointed out that that was a whole additional agreement that would need to be amended and addressed.

About the timing, Simms said here’s what “your contractor [Ann Arbor SPARK] is prepared to do: We are prepared to have this dialogue with the LDFA relative to the amendments and changes to the TIF/development plan through the summer.” In September 2014, it will be known whether Brighton or Adrian or both are “real.” And they will know by Sept. 30 whether there’s a legitimate 15-year proposal to submit to the MEDC.

At that point, everything could already be in place for either the 5-year extension or the 15-year extension. Then in early October, “Bang, we go forward with either the 5-year plan or 15-year plan, because it will be clear which one it is,” Simms said. By the end of October, there could be a proposal to give to the two city councils for approval.

Jacobson ventured that it would also be clear from the state at that point which option could move forward – the 5-year or the 15-year option. Lax asked Simms if he knew when the MEDC was likely to give a reaction to the two-page executive summary, as related to a 5-year extension. No, Simms told Lax. But as a point of reference, Simms said the MEDC had responded to Houghton’s application very quickly.

Given the relationship between Ann Arbor and the MEDC historically, Simms had no doubt that MEDC would respond quickly. [The MEDC's current CEO, Michael Finney, is the former CEO of Ann Arbor SPARK.] The MEDC recognizes the importance to all parties – including the MEDC – to making this happen as quickly as possible for everybody, he said. So he was confident that the MEDC would respond rapidly. Leahy said she could get the two-page executive summary submitted that very day when she returned to her office.

Jacobson asked if Simms was suggesting that the contract committee wait until September or October to start reviewing the TIF plan amendments. Not at all, Simms replied. Simms thought the LDFA board’s contract committee ought to meet within the next three weeks and begin this process – because the majority of it is relevant, whether it is a 5- or 15-year extension.

Jacobson asked a question on the 15-year extension, which related to some feedback he thought the MEDC had given to the Ann Arbor/Ypsilanti SmartZone LDFA. At one point the MEDC had given the Ann Arbor/Ypsilanti SmartZone feedback, he thought, that in order to include a satellite that is subsidized by a third-party like a university, the MEDC would expect Ann Arbor to funnel 10% of the expenditures to Ypsilanti. He thought that had been presented as an idea by the MEDC, he said. Is that a requirement that should be considered when the LDFA prepares the 15-year application? Jacobson asked.

Simms said it was something that needed to be looked at and discussed, adding that the LDFA probably needed to go back to the MEDC to get some definitive language.

The idea of funneling money to Ypsilanti had come up in a discussion between the two CEOs – Ann Arbor SPARK CEO Paul Krutko and MEDC CEO Michael Finney, Simms said. Whether that would be a firm position or not has not been clarified. Jacobson wondered if that would be clarified before a 15-year proposal would be submitted. Yes, Simms said, that will be clear. The other thing that MEDC is pushing is the idea of collaboration.

Ypsilanti has been in the Ann Arbor/Ypsilanti SmartZone all along, Simms said, but “Ypsilanti has gotten squat.” Collaboration would mean that it’s a way to get something, he said. What the LDFA has been providing needs to extend outside the city limits, Simms said. So that needs to be considered in thinking about the modified development plan, he said.

The overwhelming benefit at the end of the day, Simms continued, is a significant sum of money that is coming to benefit the city of Ann Arbor that would not be coming at all – not a dime of it – if the LDFA did not get the 15-year extension. The benefit to the city is still enormous, Simms said. So to extend a little bit of that to Ypsilanti seems like a reasonable action, he concluded.

Leahy came back to the point that the next step is to submit the two-page executive summary to the MEDC. She told her board colleagues that she would submit that to Roslyn Zator. The next steps would be for city of Ann Arbor financial services staffer Ken Bogan and Ann Arbor SPARK – as well as Stephen Rapundalo – to look for the MS Word version of the TIF/development plan.

In the next three weeks, the contract committee would schedule a meeting to start going over the changes to the TIF/development plan that they think are appropriate to take to the city councils. Bonner ventured that the satellite LDFA communities might need some support as they go through their process – and he thought it might be appropriate for the LDFA to provide that support in the form of legal counsel from Jerry Lax. That way they could make sure that the resolutions and the agreements are in line with what the Ann Arbor city council would want to see.

The contract committee set a meeting for Tuesday, July 8 to start going over the TIF plan.

Politics of an Extension

The LDFA board’s June 17 discussion included acknowledgment that an extension of the LDFA’s term would likely need to satisfy recent concerns expressed by the Ann Arbor city council:  (1) investments in high-speed fiber telecommunications; (2) audit of jobs creation figures; and (3) clarification of school tax capture by the LDFA.

Politics of an Extension: Jobs Audit

Based on LDFA board chair Carrie Leahy’s conversations with Paula Sorrell, the MEDC ex-officio representative on the LDFA board, and some email exchanges with Rosalyn Zator, it does not look like any other SmartZones are doing audits of job creation numbers. Sorrell said the MEDC would be looking specifically at its grant to SPARK– and not all of Ann Arbor SPARK – just those things that are associated specifically with the grant.

Sorrell explained that there are process audits and financial audits – and they take place every 2 to 3 years. Those are audited by the state, she said. As far as job creation numbers go, those are collected monthly, she said, and those are specific to grants. Spot-checking is done on those numbers as well.

Stephen Rapundalo asked Sorrell to describe how the spot-checking was undertaken. He ventured that all of the numbers are essentially self-reported by the companies. So are you randomly calling companies and saying, “Hey, you said this,” and verifying the numbers? Is that how it works? he asked.

Sorrell told Rapundalo that in a start-up tech company, it would be typical to see a few jobs added at a time. Eventually the only thing that can be done is to just work down the list of all the companies that had been served and to verify whether the numbers that had been quoted were in fact accurate or not. Sorrell said the MEDC also gets reporting from multiple areas, and most of the companies use three or four other grantees at a time, so they can check to see if anybody is reporting different numbers.

Petersen also noted that the previous evening’s council meeting had included quite a bit of discussion about the appropriate metrics – in terms of return on investment. The question had arisen with respect to projected job creation as opposed to actual job creation, she noted.

Tom Crawford, Ann Arbor’s CFO, said he’d heard some the comments about projected versus actual jobs created and he was not sure exactly how that applies. When a company comes in, they are not necessarily incentivized to give you a number that they would overshoot. The system is designed so that they give you a higher number. That’s not a detriment to the entity that is providing the incentive, Crawford said, because the incentive is based on the actual jobs that are provided. He wasn’t sure that everyone understood that point. Historically the state has paid grants based on actual jobs. Companies were only paid tax credits for actual jobs, he said.

For SPARK’s business development team, Luke Bonner said, its metrics for counting jobs are based on what the company says it will do in a public announcement – based on a tax abatement application, or a state grant they are receiving. And those numbers are what are included in Ann Arbor SPARK’s successes annually, Bonner explained.

For example, the company says that they are investing $2 million and creating 75 jobs in Ann Arbor, and that goes into SPARK’s annual report for successes, he said. SPARK continues to meet with that company over time. However, SPARK does not have to track what that company does over time, because they are not committed to SPARK to report anything. If it is a tax abatement, it’s part of the letter of agreement that you can go back and ask them how many jobs they have created. Or if it’s a state grant, the company has to report the actual jobs that they create to the state.

What SPARK’s business development team has been doing that is a little different now, however, is starting to look at the number of jobs a company has created this year as opposed to last year, Bonner said. That allows the business development team to start to measure the health of the local economy. So if a company adds 100 jobs last year and 200 this year, SPARK want to be able to show that difference.

But the LDFA uses really different metrics, Bonner said. LDFA metrics are those from the SPARK entrepreneurial services team. Those are two different areas, he stressed.

Sally Petersen, the city council’s representative on the LDFA, ventured that the council would like to see metrics that show projected versus actual jobs created. Bonner told Petersen that the LDFA should work with Skip Simms and Bill Mayer to look at the programs they’re running, and to figure out the best metrics to report that would satisfy the MEDC, the LDFA board and the city council.

Crawford added that projected jobs numbers are typically associated with incentive-based financial support – which is not what the LDFA board deals with. Stephen Rapundalo pointed out that the LDFA board’s own metrics committee had reviewed the kind of metrics that SPARK reports – and SPARK is already required to report a great deal of information to the MEDC.

Bonner went on to explain that internal to SPARK, they use a different nomenclature to talk about “retained jobs.” The entrepreneurial services team will say that “retained jobs” mean one thing, whereas for the business development team, “retained jobs” mean something else. For the business development team, Bonner continued, if a company says they’re going to move out of this state with their 100 employees and add another 200 employees elsewhere, and through the efforts of SPARK the company were to actually stay, the business development team would characterize that as 100 jobs retained – if not for the effort of the community and the state.

But for the entrepreneurial services team, when a company comes to SPARK, with, say, two employees, then that is their baseline – two retained jobs for when SPARK entrepreneurial services started to work with the company. Mayer added that he refers to the “retained jobs” in entrepreneurial services as a “snapshot” of the growth curve of a start-up. At a moment in time when SPARK “touches” the company, they say the retained number of jobs was three. And then six months later the retained number of jobs is four. That equates to one job created, Mayer concluded.

Board chair Carrie Leahy noted that the  issue of an independent jobs audit had been brought up in multiple city council meetings. Petersen said that a lot of the “noise that is out there” has to do with accountability. Putting aside accusations about whether SPARK is or is not inflating job creation statistics, it’s important to focus on the interest in accountability, she said.

If Ann Arbor were to be the first SmartZone in Michigan to do an independent audit, that would reflect positively on Ann Arbor, Petersen said. That would show that the Ann Arbor/Ypsilanti SmartZone is not afraid of being accountable, she added. The components of such an audit are still unknown, because no one else has done it before, she said. So she felt it was important for the LDFA board to pursue that direction with an intention to do such an audit.

Eric Jacobson asked if Petersen was talking about an audit of metrics or a financial audit of the dollars. Petersen explained that the interest was an audit of the job creation numbers. Stephen Rapundalo ventured that such an audit would have financial implications. How much would it cost? In addition, was the LDFA also planning to do a financial audit?

Jacobson explained that the financial audit is to be done about every two years and usually in the fall. He then explained that a financial audit of the LDFA is done every year in conjunction with the city of Ann Arbor’s audit. Another kind of audit is an audit of the LDFA’s contract with SPARK – which is an audit on contract compliance.

Jacobson said that the firm that had done the financial audit last time had done a great job from his perspective, so he would like to use the same firm again – Abraham & Gaffney. It would be an audit by the LDFA of Ann Arbor SPARK, using a third-party, to go through and check all the LDFA dollars that are going to SPARK, to check to make sure none of the funds had been misappropriated according to the terms of the contract, he explained.

Rapundalo suggested that the scope of the financial audit could be expanded to include the jobs numbers. Leahy asked if an inquiry could be made with Abraham & Gaffney to see how they would propose to check those numbers. Petersen asked if Abraham & Gaffney could be used just because they had done the audit previously – and wondered if they needed to use a bid process and accept the lowest responsible bid.

Jacobson told Petersen that Tom Crawford, the city of Ann Arbor’s CFO, was checking into that issue. Some back-and-forth between Petersen, Leahy and Jacobson led to a tentative consensus that the auditor would be asked to develop a proposal.

But SPARK’s Simms expressed some skepticism: “Wait, wait, wait!” Earlier in the meeting, Bonner had done a nice job of explaining that the job numbers that are projected come from SPARK’s business development team, Simms said. Entrepreneurial services has never provided the LDFA or anybody else “projected” jobs, Simms added. [The LDFA-SPARK contract approved by the LDFA board at the June 17 meeting includes a requirement for reporting to the LDFA "projected new employees" for Phase IV companies: "These reports shall include but not be limited to the following ... 4) the companies that receive Phase IV assistance, description of assistance, number of full time equivalent employees and projected new employees."]

Rapundalo told Simms that they were talking about the metrics that SPARK’s entrepreneurial services team does currently report, which includes jobs created and jobs retained. Petersen explained that this audit was not focused on the city’s contract with SPARK for the business development services. Leahy said that what they were hearing from the city council is that the LDFA is just accepting what SPARK says with no verification.

Sally Petersen is the city council’s representative to the LDFA board.

Simms replied that there has in fact been an audit: “We somehow allowed the thought to occur that there has never been one.” Leahy told Simms that they reported to the city council that there had been a contract audit. But Simms told Leahy he was not sure the council had actually heard that.

So this won’t be the first audit, Simms concluded. Rapundalo felt the council had heard clearly that there had previously been a financial audit. Leahy said they had reported to the council that SPARK has undergone a financial audit, and they were clean and that the results of that audit have been posted.

Petersen wrapped up by reiterating the importance of doing an independent audit of the metrics. The LDFA needs to provide documentation, she said. She wanted an independent audit, even if that meant the Ann Arbor/Ypsilanti SmartZone was the first in Michigan to do it. Ann Arbor would be putting its best foot forward and saying: Here’s what an independent audit of job creation numbers actually looks like. The Ann Arbor/Ypsilanti SmartZone needs to focus on the accountability outcomes first, Petersen concluded.

Politics of an Extension: Infrastructure, City Fiber Initiative

With respect to infrastructure, Stephen Rapundalo asked if the MEDC could provide information about what other SmartZones and LDFAs had done in the way of investing in infrastructure. Paula Sorrell said she had put Carrie Leahy in touch with MEDC contacts. And by-and-large, there are not a lot of SmartZones that have undertaken infrastructure projects.

Leahy reported that so far she’d found the use of TIF for infrastructure on road improvements and sewer connections in Grand Rapids. In Grand Rapids, TIF had also been used for marketing in the SmartZone and for equipment and furniture – updates to their business incubator – which the Ann Arbor/Ypsilanti SmartZone already uses money for. Leahy ventured that furniture in incubators is not what the Ann Arbor city councilmembers mean when they talk about infrastructure. She also described a bridge project in Grand Rapids where there was a question about whether TIF funds were used – and it turned out that TIF funds were not used.

The Ann Arbor/Ypsilanti SmartZone development plan, Leahy continued, states that infrastructure such as roads and sewers and certain other infrastructure are already complete in the SmartZone. So if there were some kind of project like that, she ventured that the development plan would need to be changed.

The one kind of infrastructure project that keeps coming up, Leahy said, is high-speed fiber telecommunications. That seems to be the only type of infrastructure project that has been floated that is specifically addressed in the current development plan for the Ann Arbor/Ypsilanti SmartZone, she said. If that were something the LDFA wants to pursue, then it would not require altering the development plan, she said.

Leahy wondered who would initiate that kind of project. Is it the LDFA that says, We should put money toward fiber? Or does the Ann Arbor city council tell the LDFA to pursue it? “That’s a good question,” allowed Sally Petersen, who is the Ann Arbor city council’s representative to the LDFA board. Like Leahy, she wondered what the next step might be toward high-speed fiber. If it would be helpful for the city council to pass a resolution on the topic, Petersen said she would be willing to try to move that forward.

Tom Crawford is the city’s chief financial officer, and serves on the LDFA board in an ex officio capacity.

City of Ann Arbor CFO Tom Crawford told Petersen that the city staff was working on a proposal for high-speed fiber that would be brought forward. Asked what the timeframe for that project would be, Crawford said it would be some time during FY 2015. [That means before June 30, 2015.]

As for details about projected costs, Crawford told the board that it was a proposal that would be “worthy of this group.” Rapundalo recalled Ann Arbor’s ultimately unsuccessful Google Fiber initiative, toward which the LDFA board at the time had pledged $250,000.

Rapundalo wondered how the LDFA could reach out to the high-tech community to get input on what that community feels is lacking in terms of high-speed infrastructure. Crawford responded to Rapundalo by saying that he would look to Skip Simms specifically, or Ann Arbor SPARK generally to facilitate that inquiry. He ventured that Ann Arbor SPARK conducts that kind of inquiry as a matter of course.

But Simms told Crawford that Ann Arbor SPARK does not do that in a formal way – characterizing it more as an ad hoc approach. The main mechanism for that is through the business development team, Simms continued, through their conversations with the more mature technology companies about their needs. “So far, quite honestly, we’re not hearing any outcry that we need a bigger pipe,” Simms said.

What SPARK is hearing, Simms continued, is “I need job training. I need people with skill sets. I need office space downtown. Those are the things we’re hearing from those companies. They’re not saying … fiber.”

But Simms allowed that could change in five years. Video technology is requiring more capacity – more storage space. So maybe what is needed is more online technology facilities, as opposed to fiber – but who knows? Simms said. He added that it’s important to be careful going forward that the LDFA doesn’t lock itself in and limit itself. Whether the proposal comes from the city council or from Ann Arbor SPARK or from city staff, Simms urged that the approach be kept fairly broad that whatever unfolds 10 years from now – and no one knows what that might be – it can be accommodated.

Crawford agreed with Simms’ remarks. The existing tech companies, Crawford said, are currently very well served – because if you want very good high-speed service, you can just pay for it. What the city has been considering is a broader look that would not necessarily address the issues of technology companies, but that would be a real asset and attraction for new companies to come in and other kinds of companies to start up. So the city’s fiber initiative would not necessarily address the need that existing companies have.

Crawford characterized it not as “incremental” but rather as “supplemental.” It would not take away from anything that Ann Arbor SPARK is already doing, Crawford said. Petersen ventured that there would be some “positive externalities” that would come from the installation of high-speed fiber, which would benefit residents as well. So if this project were viewed as affecting “community prosperity,” it would also help start-ups. Petersen thought there were also a lot of existing, mature businesses and residents who would be helped as well.

Crawford responded to Petersen by saying that it’s somewhat of a chicken-and-egg problem. Without high-speed fiber, innovations are not occurring and we are falling behind worldwide on innovation in this kind of thing, Crawford said.

Responding to a question about whether the city’s high-speed telecommunications fiber project would extend to the neighborhoods or just to the downtown area, Crawford explained that the concept is to include the entire city. Eric Jacobson said that his “gut feeling” was that demand for high-speed fiber capacity from residents would be possibly more than the demand from businesses – just because at home, people are pulling down massive amounts of bandwidth for video programming and things like that.

For a business, there’s some of that, Jacobson added, but perhaps not as much as for residents. He works for a software company [Amplifinity] and all of his company’s bandwidth to the outside world is provided by its hosting facility. But for his company’s office space, the bandwidth requirements are more than met by commercial providers, he said.

Crawford responded by adding that the price point that Americans are paying for the service they get is high compared to international standards, and speeds are uneven for uploading compared to downloading. Improving bandwidth in both directions has the potential to change the way that people do business, Crawford said. It’s not just about adding bandwidth to the business that you have – it’s potentially changing the way you use bandwidth.

Leahy brought the conversation back to the concerns of the Ann Arbor city council.

Leahy told Jerry Lax that she understood the current TIF/development plan limited how TIF funds could be expended on infrastructure. She asked him to provide some additional background. Lax told her he wanted first to look at the TIF/development plan a little more closely, because he has not investigated it in detail. Whatever conclusions might be drawn about its current limitations, he said, the real question is: What would the LDFA board like it to see? The next question is whether there are concerns either in the enabling legislation or elsewhere that would make it difficult to have the TIF/development plan say what the LDFA board has concluded that it wants the plan to say.

Lax wanted some additional time to take a look at what the constraints are in the current TIF/development plan, and also the question of whether in general there might be some limitations on altering the TIF/development plan. Right now, Leahy said, the TIF/development plan says that the roads and sewers and lighting are complete and basically done in the Ann Arbor/Ypsilanti SmartZone district. The only real item that is addressed is high-speed telecommunications fiber.

Lax cautioned that even if that was an accurate statement at one point in time, it might no longer be accurate. Leahy thought that the enabling legislation does in fact permit infrastructure investments, pointing out the Grand Rapids had done it. Lax allowed that his recollection of that portion of the enabling legislation was that there is not a constraint, but he would like to take another look at that.

Luke Bonner then interjected, asking if he could be a “wet blanket” based on his experience. If you look at the local development finance authority legislation that was put together in the 1980s, it’s important to note that’s when things were terrible in Michigan, he said. An LDFA was a tax increment financing mechanism that allowed for reimbursements of infrastructure costs to spur certain kinds of investments – basically for manufacturing in high tech, engineering, and alternative energy, he said. And that is the only type of project that those TIF dollars could be used for – it was very specific.

Then came along the amendment to the LDFA legislation in 2000 that created SmartZones, Bonner said. What the state did was create a new kind of TIF that was a “certified technology park.” That basically meant that if you had an existing LDFA, or if you wanted to create one, you could apply to the state to have a certified technology park designation – and that certified technology park designation basically allows an LDFA to capture school taxes to support business incubation and acceleration services.

The deal that has been put together on almost all of the certified technology parks, Bonner continued, is that if the state is going to contribute funding, there has to be some kind of local contribution – a local match. So if an LDFA already existed, and the LDFA had debt obligations – because it had built roads and bridges and sewer pipes – then the state treasury considered that to be the local commitment: Your local taxes are being used to create local economic development, and so you are allowed to capture school taxes, Bonner said.

In the case of Ann Arbor, there was a downtown development authority (DDA) district that was already established and that was already investing money. The infrastructure in which the Ann Arbor LDFA could invest could serve an incubator or an accelerator program. For example, an incubator could be built and you could run high-speed telecommunications fiber to that incubator. You could, under the enabling legislation [even if not under the Ann Arbor LDFA TIF/development plan] build a road or a sewer connecting to the incubator.

Where the challenge comes is trying to use school millage capture to build out general infrastructure that is not tied to an incubator. Bonner reported that the city of Rochester Hills was actually refused by the Michigan Dept. of Treasury, when the city wanted to use school taxes to help build out local infrastructure. The treasury had said: No way, you have to use the DDA, or a [non-SmartZone] LDFA to do that. The school millage can be used by a SmartZone LDFA to do infrastructure improvements – just as long as it is for an incubator, Bonner contended.

Leahy ventured that the restriction was not that specific and that it could be for infrastructure improvements anywhere in the SmartZone district. That’s what Grand Rapids had done, she thought. Bonner questioned whether what had happened to Grand Rapids was infrastructure improvements through a SmartZone LDFA or through an already-established LDFA.

Stephen Rapundalo said he knew some of the background of the situation in Grand Rapids and characterized the interpretation of the statutory language in that case as “rather liberal.” Grand Rapids had somehow got away with something, Rapundalo said. He told Bonner that he was on the right track in describing how things were supposed to function according to the statute. How Grand Rapids had done what they did, Rapundalo had no idea. Bonner pointed out that Ann Arbor’s LDFA is set up only to manage the use of the school taxes.

The LDFA in Ann Arbor is not set up in the original sense of the LDFA Act passed by the state legislature in the 1980s – which was to set up a mechanism to fund infrastructure improvements to attract manufacturing high-tech and engineering companies. But what Ann Arbor does have is a DDA that can make those improvements as well, Bonner pointed out. He had never looked at the Ann Arbor DDA plan before, but he knew that the DDA built parking decks and made road improvements.

The DDA has a lot of flexibility to make infrastructure improvements within the district, he said – whether it’s high-speed fiber or parking decks or roads or sewers. He noted that the geographic area of the LDFA and the DDA in Ann Arbor are the same district. He suggested again that it would be a good idea to develop an LDFA 101 presentation for the city council to explain how all these entities are very separate and distinct from one another.

Lax pointed out that one question is how the existing enabling legislation is interpreted. He also pointed out that legislation can be changed – although he would not want to suggest that as anyone’s first line of attack – because that is a “forever project.” Leahy ventured that right now the plan does not allow for the funding of the kind of infrastructure projects that the city council is interested in. Bonner thought that the state treasury would challenge an attempt to use LDFA school millage capture to run fiber to the premises in Ann Arbor citywide.

Politics of an Extension: School Tax Capture

Earlier in the meeting, Skip Simms had argued for a 15-year extension. He said if the LDFA did not get the extension, a significant sum of money would not be coming to benefit the city of Ann Arbor.

Stephen Rapundalo is a former city councilmember who serves on the LDFA board.

Sally Petersen picked up on Simms’ observation about the source of funds and the reimbursement from the state. One of the issues that the city council is concerned about, Petersen said, is whether the TIF capture from the Ann Arbor/Ypsilanti SmartZone is coming from the state school aid fund. “That’s still out there,” she said.

Stephen Rapundalo responded to Petersen by asking: “What’s it take – for them to understand unambiguously how that works? I mean we have told them. Why is the onus on the LDFA to have to show them that?” The LDFA has nothing to do with that aspect of funding, Rapundalo continued, saying that all the LDFA knows and understands is how the calculation is made, and therefore how much money is allocated to the LDFA board for the purposes stated in all of the various agreements. [See above for statutory interpretation indicating that the school aid fund is not reimbursed for the Ann Arbor/Ypsilanti LDFA SmartZone tax capture.]

Luke Bonner of Ann Arbor SPARK suggested that it is a lot to ask of current Ann Arbor city councilmembers, who were not around when the LDFA was created, to have a clear understanding. He suggested that the material needed to be broken down into a kind of LDFA 101 presentation.

Rapundalo expressed frustration – because such presentations have been given over the years, which he thought were really dumbed-down. Jerry Lax quipped that maybe they needed better diagrams. Rapundalo ventured that with respect to the school aid fund reimbursement, the council needed to hear from someone at the state level. He did not know who that person might be, but it could be somebody at the highest level of the MEDC, or the Dept. of Education – but it should not be from the LDFA.

Bonner suggested that it might be someone at the Dept. of Treasury – because the treasury department, more so than the MEDC, has to put their stamp of approval on the TIF plan. The state treasury is responsible for taking the money and reimbursing the school aid fund.

Rapundalo said he would ask Ann Arbor SPARK to identify the person who could explain that. “That needs to be cleared up, as much as we can, once and for all,” Rapundalo said. Lax added that many of the issues that city councilmembers might have concerns about are based on the actions of the state legislature in creating the statutory scheme in the first place. So if people have questions about it, they might very well be legitimate questions that need to be addressed – but the fundamental point is that for better or for worse, this is what the state legislature determined would be the mechanism.

If people have questions or doubts or criticism about how reimbursements are made, and where it comes from, and what bucket the money is taken out of, that’s not something that the city council determined or that the LDFA determined, Lax said. That’s something that the state legislature determined in adopting the state legislation in the first place.

Petersen said there are two things that concerned her about how the city council received this kind of information. The council might decide that they don’t like the mechanism at the state level, and to prove that point, the council might not want to support a 15-year extension of the LDFA. There are also remaining questions about whether the city of Ann Arbor public schools are actually getting reimbursed. She understood that representative Jeff Irwin had done some analysis of that, but she was not sure what it was, as she had just heard about it.

Lax ventured that maybe councilmembers feel that the schools ought to be getting more money – but the question of whether the schools are getting more money is a separate question from whether the way the schools are being reimbursed is fair. If the schools in general are getting a dollar-for-dollar equivalent for the captured taxes, then “so far so good,” Lax said.

Petersen stated that city CFO Tom Crawford has stood up and stated that the schools are getting reimbursed. Rapundalo observed that Crawford’s statement does not satisfy some councilmembers, and that’s why they need to hear from somebody who can walk them through the calculations and the whole process at the state level.

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Action came at the council’s June 2, 2014 meeting after about 20 minutes of deliberation that concluded just before 11 p.m. Carrie Leahy, chair of the LDFA board, and Ann Arbor SPARK CEO Paul Krutko were on hand to answer councilmember questions. The voice vote by the council passed over dissent from Sumi Kailasapathy (Ward 1).

Ann Arbor’s local development finance authority is funded through a tax increment finance (TIF) district, as a “certified technology park” described under Act 281 of 1986. The Michigan Economic Development Corp. (MEDC) solicited proposals for that designation back in 2000. The Ann Arbor/Ypsilanti “technology park” is one of 11 across the state of Michigan, which are branded by the MEDC as “SmartZones.”

The geography of the LDFA’s TIF district – in which taxes are captured from another taxing jurisdiction – is the union of the TIF districts for the Ann Arbor and the Ypsilanti downtown development authorities (DDAs). It’s worth noting that the Ypsilanti portion of the LDFA’s TIF district does not generate any actual tax capture.

The LDFA captures Ann Arbor Public Schools (AAPS) operating millage, but those captured taxes don’t diminish the school’s budget. That’s because in Michigan, local schools levy a millage, but the proceeds are not used directly by local districts. Rather, proceeds are first forwarded to the state of Michigan’s School Aid Fund, for redistribution among school districts statewide. That redistribution is based on a per-pupil formula as determined on a specified “count day.” And the state reimburses the School Aid Fund for the taxes captured by SmartZones throughout the state.

In FY 2013, the total amount captured by the LDFA was $1,546,577, and the current fiscal year forecast is for $2,017,835. About the same amount is forecast for FY 2015.

The extension of the LDFA is made possible by Public Act 290 of 2012, which amended the Local Development Financing Act to allow a SmartZone to capture school taxes for an additional five years or an additional 15 years. The staff memo accompanying the council resolution describes the five-year extension as possible “upon approval of the MEDC President and the State Treasurer, if the Ann Arbor/Ypsilanti SmartZone LDFA agrees to additional reporting requirements and the LDFA requests, and the city councils of Ann Arbor and Ypsilanti approve, the amendment of the LDFA tax increment financing (TIF) plan to include regional collaboration.” The current MEDC president is Michael Finney, former CEO of Ann Arbor SPARK.

A 15-year extension is possible, according to the memo, “if, in addition to the above requirements, Ann Arbor and Ypsilanti, as the municipalities that created the SmartZone, enter into an agreement with another LDFA [a "Satellite SmartZone"] that did not contain a certified technology park to designate a distinct geographic area, as allowed under Section 12b of the Act…”

The council’s resolution states that if the MEDC approves the extension, the city of Ann Arbor will work with the LDFA and the city of Ypsilanti to identify another LDFA – called the “Satellite SmartZone LDFA.” The arrangement will allow the Satellite SmartZone LDFA to capture local taxes in its own distinct geographic area for the maximum 15 years allowed by statute.

Responding to an emailed query from The Chronicle, Sally Petersen (Ward 2) – who sponsored the resolution on the agenda and serves as the council appointee to the LDFA board – wrote that possibilities for an LDFA satellite for Ann Arbor’s SmartZone include Adrian (Adrian College) or Brighton and Livingston County (with Cleary University).

Details on the council’s deliberations are provided in The Chronicle’s live updates filed during the meeting.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron.

Ann Arbor city administrator Steve Powers at the council’s May 12, 2014 working session. He presented his recommended FY 2015 budget to the council in April. The council can amend that budget on May 19.

Under the city charter, the council needs to adopt the budget, with any amendments, on a seven-vote majority. If the council is not able to achieve a seven-vote majority on an amended budget, then under the city charter, the city administrator’s proposed FY 2015 budget will be adopted by default.

At the conclusion of a May 12 city council work session, Tom Crawford, the city’s chief financial officer, reminded councilmembers of the constraints they were working under when considering budget amendments. The forecast for fiscal year 2014, he told the council, is that about $1.5 million in the fund balance reserve will be used – which compares to the budgeted use of about $2.8 million of fund balance.

But Crawford cautioned that the unspent budgeted amount likely reflected a delay in that spending, not an actual savings. Crawford expected that the fund balance reserve at the end of FY 2014 would be about 10% of operating expenses.

The proposed FY 2015 budget would use $2.8 million in fund balance, Crawford told the council, which would take the fund balance down to the 7-9% range. That’s the bottom of the minimum 8-12% range that has been the council’s policy. “I say all that because I want to remind you that you’re entering a budget deliberation with pretty tight constraints,” Crawford said. So Crawford encouraged the council to find offsets to any additional expenses they wanted to incur – whether those were recurring or non-recurring expenses.

Councilmembers were asked to submit drafts of their proposed amendments to staff by the close of business on Thursday so that staff could assist in crafting the amendments. This report includes some additional background on what’s in the budget, as well as a description of 17 possible budget amendments that might be proposed.

Detail is provided on amendments in three areas: police staffing, leaf/compost collection and the local development finance authority (LDFA).

Outline of Possible Amendments

Here’s a bulleted list of possible amendments, not necessarily exhaustive, with potential councilmember sponsors in parens:

• Police staffing. One proposal would increase the number of sworn police officers by five officers instead of an increase of three proposed by the city administrator. Funding would come in part from a reduction in the 15th District Court budget. (Jane Lumm, Jack Eaton, Sumi Kailasapathy) An alternative proposal would increase the number of sworn officers by two officers instead of three, with the savings allocated to human services for the purpose of drug treatment and prevention. (Chuck Warpehoski)
• Forestry staffing.  The proposal would add a city forester position. The funding for the initial year would come from eliminating a proposed corridor study planned for Ellsworth Road. (Eaton)
• Compost/leaf program. One proposal would restore loose leaf collection in the fall and holiday tree pickup in the winter. This would require roughly $406,000 in capital investment and $319,500 in recurring expenses from the millage-supported solid waste fund. (Lumm, Eaton, Kailasapathy) A different proposal would extend the curbside compostables pickup from seasonal to year-round so that food waste could be kept out of the garbage stream year-round, at an increased annual cost of $300,000. (Sabra Briere)
• LDFA, Ann Arbor SPARK. One proposal would eliminate some increases in the budget of the local development finance authority (LDFA) – of $30,000 in incubator operating expense, $20,000 in direct staffing expense, and a $75,000 increase to Ann Arbor SPARK’s marketing plan. Those funds would instead be reserved for “future infrastructure improvements.” (Kailasapathy, Eaton) A separate proposal would eliminate the city general fund allocation of $75,000 to Ann Arbor SPARK and put that money toward human services instead. (Kailasapathy, Eaton)
• Animal control. The proposal would eliminate funding for an inventory of commercial signs in favor of animal control for the Human Society of Huron Valley and for deer herd management costs. (Sally Petersen, Kailasapathy, Eaton)
• Art administration, traffic calming efforts. The proposal is to reduce the amount allocated in the recommended budget for transitional costs associated with the public art program from $80,000 to $40,000. The $40,000 in savings would be used for traffic calming projects in neighborhoods, including but not limited to speed bumps. (Eaton, Kailasapathy)
• 415 W. Washington demolition. One proposal would use about half of the $300,000 in the general fund budget that’s designated for demolition of the city-owned 415 W. Washington property to fund the pedestrian safety and access task force. (Briere, Warpehoski) A separate proposal would simply eliminate general fund support for demolition of the city-owned buildings at 415 W. Washington. (Kailasapathy, Lumm, Eaton)
• Community-facing climate action programs. Money for “community-facing” climate action programs would come in part from $50,000 allocated for the Ellsworth Road corridor study. (Christopher Taylor, Margie Teall, John Hieftje, Warpehoski)
• Warming center. This proposal would allocate $100,000 from the affordable housing trust fund to provide assistance for a warming center. (Lumm, Briere)
• Streets. A proposal about alternative transportation would, for this year, bump the Act 51 allocation for alternative transportation from 2.5% to 5% – which translates to $180,000. The amendment would ask the city administrator to provide information that would help the council determine the appropriate percentage to allocate to alternative transportation. (Briere) A separate resolution would not alter the budget but would ask the city administrator to “study alternatives to increase street funding and present to Council by Sept. 30, 2014 a report outlining options, their financial impact, and the pros and cons of each.” (Lumm, Eaton, Kailasapathy)

In addition to these budget amendments, it’s possible that a resolution will be put forward by Jane Lumm (Ward 2) directing the city administrator to develop a revised retirement plan design for new hires that “includes a defined contribution element and results in lower costs to the city.” The new plan design would be presented to the council by Dec. 31, 2014, with the intent that the revised plan would be applied to all employees hired after Dec. 31, 2015.

FY 2015 Budget Background

Ann Arbor city administrator Steve Powers’ proposed general fund budget for fiscal year 2015, which starts on July 1, 2014, approaches $100 million. [.pdf of FY 2015 budget detailed breakdown] Powers presented the budget to the council at the council’s second meeting in April, as required under the city charter.

Left: Stumps (black) and vacant sites (gray). Right: Maples (purple), Crabapples (red) and oaks (blue). Maps by The Chronicle from the city’s 2009 tree inventory.

Funded as part of the proposed FY 2015 budget are five new full-time employees, four of them in public safety: one additional firefighter; three additional police officers; and an additional rental housing inspection position. The additional police positions will bring the total number of sworn officers in the city of Ann Arbor to 122.

The proposed budget also includes a one-time expense of $1 million to address a backlog in critical pruning and removal of trees that are in the public right of way. The allocation comes in the context of the development of an urban forestry management plan.

The $1 million one-time expense for street trees brings the total of non-recurring expenses in the FY 2015 general fund budget to about $2.8 million. Other one-time expenses budgeted for FY 2015 are: $80,000 to cover transitional costs for public art administration; $606,000 for repairs and maintenance of the city’s hydroelectric dams; $100,000 for consultants to assist with completing the downtown zoning amendments and sign inventory; $300,000 for demolition of city-owned buildings at 415 W. Washington; $200,000 for corridor studies; and $209,000 in operational support for the Ann Arbor Housing Commission’s (AAHC) transition to a rental assistance demonstration program.

The housing commission also accounts for the bulk of a $13.8 million (17%) increase in general fund recurring expenditures compared to last year. That’s due to an accounting change that recognizes 22 AAHC employees as city employees. By recognizing revenue and expenses for AAHC employee compensation through the general fund, the AAHC can avoid the negative impact of a new accounting rule. The GASB 68 rule requires unfunded pension fund liabilities to be recorded in the financial statements for proprietary funds (like the AAHC) but not for governmental funds like the general fund.

Also included in the FY 2015 budget proposal is about $3,000 for a pilot program for closed captioning of public meeting broadcasts on the Community Television Network. According to city of Ann Arbor communications manager Lisa Wondrash, the cable commission recommended approval of the money at its Feb. 25 meeting, and she notified the commission on disability issues about the pilot on April 16. The pilot will begin with meetings of the city’s commission on disability issues, with a goal of testing out a closed captioning system this July.

The $98.1 million of general fund expenditures in FY 2015 will include $95.3 million in recurring expenditures and $2.8 million in one-time expenses.

When the general fund is added in with the rest of the city’s budget – the street fund, water fund, sewer fund, parking fund, and the like – the total expenses proposed for FY 2015 come to $334,434,101.

Loose Leaf Collection, Holiday Trees

Until 2011, the city of Ann Arbor offered an option to residents for the pickup of leaves that allowed residents to sweep their leaves into the street for collection.

The city collected the leaves using street sweepers as pushers, front-end loaders and rented large-volume trucks. The city offered two such pickup days for all parts of the city. As part of the general strategy for moving to wheeled carts for all types of curbside pickups (including garbage and recycling) – which can be serviced by a mechanical arm controlled from a truck cab – the city made compost carts available to residents. The city also still picks up leaves that are “containerized” in paper bags.

The proposed FY 2015 budget does not provide for the loose leaf collection service. Jane Lumm (Ward 2) will likely bring forward an amendment to restore the leaf collection service, as well as holiday tree pickup. According to a staff memo responding to questions about the financial impact, restoration of the program would require $406,000 in one-time capital costs for the additional equipment, and a total of $319,500 in additional recurring annual costs. That’s been roughly the same financial picture the council has been provided in the two previous years.

A truck rented from Premier Truck Sales & Rental for fall containerized (paper bagged) leaf pickup – action back in 2011 on the Old West Side in Ann Arbor.

Last year on budget night, at its May 20, 2013 meeting, the council deliberated over an hour on the restoration of loose leaf collection in the fall. That was the second-longest amount of time spent on any topic. [The longest amount of time was spent by the council on the Ann Arbor Downtown Development Authority budget – about an hour and a half.] It did not result in the restoration of the mass leaf collection service. The proposal failed on a 4-7 vote, with support from Jane Lumm (Ward 2), Sally Petersen (Ward 2), Mike Anglin (Ward 5), and Sumi Kailasapathy (Ward 1).

That was two more votes than the proposal to restore loose leaf collection got the previous year, during the council’s May 21, 2012 FY 2013 budget deliberations. Joining Lumm and Anglin in support that year was only Tony Derezinski (Ward 2).

Compared to last year, the proposal will likely pick up at least one vote – from Jack Eaton (Ward 4), who prevailed over Marcia Higgins in last year’s Democratic primary. But that would leave it one vote shy of the six votes needed to amend the budget.

Loose Leaf Collection: Possible Points of Debate

Context for this item includes the fact that funding for curbside collection of leaves – whatever the method – comes from the solid waste fund, which is supported by a tax at a rate of 2.467 mills. That generates roughly $12 million a year. The proposal from Sabra Briere (Ward 1) to extend compost collection – using curbside carts as well as paper bags – from seasonal to year-round collection would cost about the same as Jane Lumm’s proposal to add loose leaf collection and holiday tree pickup. Either proposal would cost roughly $300,000.

The two proposals intersect on one relatively small point – the pickup of holiday trees, which has a standalone cost of roughly $26,000. Extending compost collection to year-round service could have the practical effect of providing pickup of holiday trees – because many such trees would fit inside the compost carts or could be chopped to fit inside them. Briere’s interest in extending compost pickup to year-round service is motivated by a desire to allow the city’s food scrap composting program – implemented for the first time this spring – to operate year-round.

Briere’s proposed amendment would expect the $300,000 in annual costs to be recovered in part through reduced landfill tipping fees for garbage – as the weight from food scraps would be diverted from the garbage stream. Based on a city sampling of the contents of garbage trucks, about half of the weight is attributable to food waste. So if all of the food waste were eliminated from the garbage stream, the city could expect to cut its tipping fees for residential garbage by half.

Data from the city indicates about 14,500 tons of residential curbside trash picked up in FY 2012. Reducing that figure by half would result in a savings of just $195,000 – based on a tipping fee of $26 a ton paid by the city. Those fees could increase, however, as the city’s contract with the landfill expires in 2017.

Lumm is likely to argue that loose leaf collection is a basic service that residents can reasonably expect to be paid for from their taxes. Further, she’ll likely argue that the sheer volume of leaves that some residents contend with makes bagging the leaves or mulching them impractical, so that paying a private hauler is the only alternative for such residents. She’ll likely point to the current fund balance in the solid waste fund of $11.7 million as adequate to fund the acquisition of the necessary equipment to provide the service.

On the financial side, opponents of restoring the service will likely point to challenges faced by the solid waste fund: increases to tipping fees – as much as 50% – when the city’s landfill contract expires in 2017, construction of a new drop-off center, expansion of commercial food waste recycling, and expansion of multi-family recycling. Other considerations likely to be cited by opponents of restoring loose leaf collection could include localized flooding caused by leaves clogging storm drains, the road hazards to bicyclists and motorcyclists, and the increase in suspended solids that flow into the Huron River. One staff memo on the topic indicates that there’s been a 28% drop in service requests about plugged storm drains since the containerized approach was adopted.

On May 17, Janis Bobrin – former Washtenaw County water resources commissioner – sent an email to all councilmembers on the topic of localized flooding and particulate pollution caused by leaves in the street. Bobrin’s email received a quick reply from Lumm, who attached a photo of a leaf-clogged storm drain from April of this year. Lumm contends that storm drains get clogged with leaves with the containerized approach, because the streets are not systematically cleared of leaves as they would be if the mass loose leaf collection service were implemented.

Police Officer Staffing

The FY 2015 proposed budget would add three police officers – two in community engagement and one for traffic enforcement – bringing the count of sworn officers from 119 to 122. An amendment to be put forward by Jane Lumm (Ward 2), Jack Eaton (Ward 4) and Sumi Kailasapathy (Ward 1) would increase the number of sworn police officers by five officers instead of three. Funding would come in part from a reduction in the 15th District Court budget.

An alternative proposal from Chuck Warpehoski (Ward 5) would increase the number of sworn officers by two instead of three, with the savings allocated to human services for the purpose of drug treatment and prevention.

Last year on budget night, at its May 20, 2013 meeting, the council deliberated a bit under an hour on a proposal to reduce the 15th District Court’s budget by $270,000 and to use the recurring savings to hire three additional police officers. That proposal failed on a 5-6 vote – with support only from Lumm, Kailasapathy, Mike Anglin (Ward 5), Stephen Kunselman (Ward 3) and Marcia Higgins (Ward 4). A proposal to fund a single police position – by eliminating an FTE in the city attorney’s office through a retirement – received shorter debate and less support, with yes votes coming only from Lumm and Kailasapathy.

The previous year, Lumm put forward an unsuccessful amendment to add five police officers – in addition to five that would have been added if a Community Oriented Policing Services (COPS) grant was received. The five non-grant-funded positions would have been paid for with non-specific cuts to other city general fund departments: mayor and council ($8,957); 15th District Court ($94,617); public services ($192,265); and human resources ($35,939). The amendment also called for higher cost recovery for officers for which the Ann Arbor Area Transportation Authority (AAATA) contracts. And the amendment called for use of money designated for a high speed rail grant match. That 2012 budget amendment to add five police officers got support only from Lumm and Kunselman.

Police Officer Staffing: Historical Levels

At a May 12, 2014 work session, police chief John Seto gave the council an update on safety services. Among the data sets he presented were tables that showed the decrease in sworn officer staffing levels for the AAPD over the last 10 years, broken down by category of officer. He allowed that the staffing levels prior to 2005 were even higher.

Ann Arbor Police Department sworn officer staffing levels by category: 2004-2014. The significant decrease from FY 2009 to FY 2010 was the result of several officers taking advantage of an incentivized early retirement offered by the city. Those positions were not filled. (Data from the city of Ann Arbor, chart by The Chronicle.)

Ann Arbor Police Department sworn officer staffing levels by category: 2004-2014 with proposed levels for FY 2015. (Data from the city of Ann Arbor, chart by The Chronicle.)

In his work session presentation to the council, Seto pointed out that the category of lieutenants and sergeants had decreased more than sworn officers overall, which he indicated was a result of flattening the organization so that it was administratively lighter. Computing the ratio of officers in the lieutenant and sergeant category to the other officers illustrates the drop Seto described:

Ratio of lieutenants and sergeants to other officers in the Ann Arbor Police Department. (Data from the city of Ann Arbor, chart by The Chronicle.)

Police Officer Staffing: Crime Trends

At the May 12 work session, Seto also updated the council on major crime trends through the end of last year. He was reprising a presentation he’d given two months earlier at the council’s March 3, 2014 meeting. [.pdf Ann Arbor 2013 crime stats]

Part I crime totals for 2013 were 2,827, down from 3,059 in 2012. Part II crime totals for 2013 were 3,625, down from 3,883 in 2012. Total crimes for 2013 were 6,452, down from 6,942. That’s a 7% drop.

As he had in March, Seto stressed at the working session that the numbers being reported were not the official FBI numbers but they are the internal Ann Arbor police department numbers that are reported to the FBI. For 2013, he said, the year-end reported number of Part I crimes was 2,827. [Part I crimes include: criminal homicide, forcible rape, robbery, aggravated assault, burglary (breaking or entering), larceny, motor vehicle theft and arson.] That represented about an 8% reduction compared to the previous year, Seto said. These statistics don’t include those from the University of Michigan, which reports its crimes separately.

At the work session, Seto cautioned that crime statistics only tell part of the story. He said it’s important also to consider what the community wants and what makes them feel safe, which can include consideration of nuisance-type crimes that might not make it into Part I crime stats.

Ann Arbor crime statistics from 2002 through 2013 for larceny (red) and burglary (blue). (Data from the AAPD. Chart by The Chronicle.)

Ann Arbor crime statistics from 2002 through 2013 for Part I crimes except for larceny and burglary. (Data from the AAPD. Chart by The Chronicle.) The downward trend is consistent in every category except for sexual assault crimes (red).

At the work session, the increasing trend for sexual assault was highlighted by Sally Petersen (Ward 2), who wanted to know if Seto thought it could be in any way related to the increase in prosecuted heroin cases – from 5 in each of 2011 and 2012 to 15 cases in 2013. Seto did not think there was a connection, but noted that the majority of sexual assault cases the department sees involve an assailant who is known to the victim.

The yearly departmental figures presented by Seto are consistent with the monthly breakdown charted out by The Chronicle using data from crimemapping.com over the last three years:

Ann Arbor Monthly Crime Stats: Sexual Assault (Data from crimemapping.com, chart by The Chronicle)

Ann Arbor Monthly Crime Stats: Drug Offenses (Data from crimemapping.com, chart by The Chronicle)

Ann Arbor Monthly Crime Stats: Burglary (Data from crimemapping.com, chart by The Chronicle)

Ann Arbor Monthly Crime Stats: Robbery (Data from crimemapping.com, chart by The Chronicle)

Ann Arbor Monthly Crime Stats: Aggravated Assault (Data from crimemapping.com, chart by The Chronicle)

Police Officer Staffing: Possible Points of Debate – Adequacy

At the city council work session, Seto was cautious in the way he characterized current staffing levels. He described patrol and detective staffing as “adequate,” saying he chose that word because he really felt that AAPD is doing a good job – an adequate job – of reacting, and doing follow-up and solving crimes. But that leaves little time for other things he also feels are important – which are community engagement and proactive policing, Seto said.

Seto’s statements will likely be used at the May 19 meeting for and against adding two additional officers beyond the three already in the recommended FY 2015 budget. His remarks will be used to support the idea that three additional police officers are not enough to accomplish what Seto would like to see. And councilmembers who are not inclined to add two more officers for a total of five will point to his choice of the word “adequate.”

At the May 12 work session, Jack Eaton (Ward 4) pressed Seto to describe his attitude toward the three additional officers: Was the addition of three officers “sufficient” to accomplish what Seto had described in terms of community engagement? Seto came back with his preferred vocabulary, saying: “It is an adequate start.” Seto said it’s difficult to predict the needs of the community.

Sometimes he’s heard that more police are needed downtown. Sometimes Seto has heard that more officers should be available to work with youth. Seto reiterated that the two community engagement officers are “an adequate start.” He continued saying that as police chief, he felt very comfortable with the excellent and professional officers that AAPD has to respond to crimes and to solve them. As far as community engagement and outreach, “I will always think that we can do more, if that’s the answer you are looking for,” Seto concluded.

Police Officer Staffing: Possible Points of Debate – Traffic Enforcement

One of the proposed new positions would be dedicated to traffic enforcement. This could also be part of the May 19 debate – as the council voted at its Dec. 16, 2013 meeting to allocate $125,000 in overtime for additional traffic enforcement for the last six months of the current fiscal year. Those six months run from Jan. 1 through June 30, 2014.

At the May 12 work session, Eaton made the point that this was the staffing equivalent of two FTEs for that six-month period. So it’s possible that he’ll make the argument that to maintain that level of enforcement activity, the city would need to add two officers dedicated to traffic enforcement – not just the one that’s recommended in the FY 2015 budget.

At the May 12 working session, Seto gave the council a breakdown of the activity that’s been funded by the $125,000 to date.

26 Weeks to Safer Streets: Breakdown of 937 Traffic Stops (Data from the city of Ann Arbor, Chart by The Chronicle)

26 Weeks to Safer Streets: Targets of Enforcement by Time (Data from the city of Ann Arbor, Chart by The Chronicle)

Police Officer Staffing: Possible Points of Debate – Human Services

A possible proposal to be brought forward by Chuck Warpehoski (Ward 5) would re-allocate the funding for one police officer to instead pay for human services to treat addiction and promote recovery. Seto’s remarks at the work session could be used to argue for that amendment. During discussion of the increased incidence of drug offenses – in particular, heroin – Seto delivered the following quote: “I would say very cautiously we’re not going to arrest our way out of this.”

Seto noted that the increase in heroin use is a trend that is not unique to Ann Arbor – but rather is noticeable throughout the county and the country. Addressing the issue would require a multi-disciplined approach that includes education and treatment for addiction. Solving the problem would require collaboration across multiple jurisdictions, Seto said. And he’s already spoken to the county sheriff and other police chiefs to talk about how they can manage the situation from a law-enforcement perspective.

Local Development Finance Authority: Infrastructure (Fiber?)

By way of background, the local development finance authority (LDFA) is funded through tax-increment financing (TIF) in a manner similar to the way the Ann Arbor Downtown Development Authority is supported. A TIF district allows authorities like the LDFA and the DDA to “capture” some of the property taxes that are levied by other municipal entities in the district. The district that yields TIF revenue for the LDFA has the same geography as the Ann Arbor DDA. The taxes that are captured are generated by the Ann Arbor Public Schools general operating millage.

If the LDFA did not exist, then the taxes collected on behalf of the AAPS for its general operating millage would not be used directly by AAPS, but rather would go to the state’s School Aid Fund, for redistribution among school districts statewide based on a per-pupil formula as determined on a specified “count day.” The state reimburses the School Aid Fund for the taxes captured by the LDFA.

The main contractor for the LDFA is Ann Arbor SPARK, which operates a business accelerator with LDFA funding. To the extent that the property valuation in the LDFA district (which is the same as the Ann Arbor DDA district) increases, the LDFA revenue budget also increases.

The possible amendment to the LDFA budget, which might be brought forward on May 19, would among other things eliminate $30,000 in increased incubator operating expenses, $20,000 in direct staffing expense, and a $75,000 increase to Ann Arbor SPARK’s marketing plan in order to reserve a total of $165,379 for “future infrastructure improvements.”

The nature of the infrastructure improvements is not specified in the budget amendment, which might be brought forward by Sumi Kailasapathy (Ward 1) and Jack Eaton (Ward 4). But if it’s approved by the council, it could give some direction to the LDFA board as that group contemplates its future spending in the coming years. The LDFA was established for a period of 15 years, which ends in 2018. But state legislation passed in 2012 could allow an extension for an additional 5 or 15 years.

The idea of using LDFA funds as infrastructure investments – specifically the kind of high-speed telecommunications infrastructure represented by fiber-optic networks – is made explicit in the LDFA’s formative documents. From the TIF plan [emphasis added]:

The LDFA District is fully developed with roads, sidewalks, lighting and subsurface utilities. The infrastructure is publicly financed and maintained. The Development Plan does not anticipate large-scale improvements to or expansions of this infrastructure. In the event sufficient revenues become available through this plan, investment may be made to facilitate the expansion of high-speed telecommunications infrastructure throughout the District. Alternatively, the LDFA may become a grant recipient for financing designed to encourage this investment.

The development of a high-speed fiber network is also highlighted in the final report of the economic collaborative task force, established by the council last year at its May 20, 2013 meeting. [.pdf of March 28, 2014 economic collaborative task force report]

Specifically, that report included a recommendation that the city consider technology infrastructure that is “essential for companies to compete globally and for communities to attract the necessary talent.” In that category of infrastructure, the report indicates that the city and Ann Arbor SPARK should “continue their work to develop a proposal for high-speed fiber that would accelerate both commercial and residential Internet speeds.”

Back in 2010, the LDFA had offered $250,000 in support of Ann Arbor’s response to the Google Fiber initiative. Around that time, Stephen Rapundalo, who represented the city council on the LDFA board, indicated that the LDFA would consider making an investment in a fiber-optic network, even if Google did not choose Ann Arbor as a test community. Google did not choose Ann Arbor.

At the March 15, 2010, public hearing on the Google Fiber initiative, former Congressman Wes Vivian urged the city council to think about how they would achieve a fiber-optic network, if Google did not choose Ann Arbor. [From Chronicle coverage: "Mixed Bag: Phones, Fiber, Fire"]:

Wes Vivian introduced himself as a decades-long telecommunications consultant, and told the council that for the last 15-20 years it’s been clear that either the telephone companies will migrate to fiber-optic networks or face domination by cable television companies. That process has begun, he said – AT&T has installed fiber in many communities.

If Google “coughs up the money” that’s great, Vivian said, but we need to find a way to implement this anyway – even if Google decides not select Ann Arbor as a test site. Fiber, he said, was part of the necessary infrastructure of a city – like a street. It wasn’t necessary to provide a system, he said, but just a hole in the ground or a hole in the air.

The idea of working on a “fiber-to-the-premises” project in the city was on the FY 2014 work plan for the city’s IT department, and was described by city administrator Steve Powers in an interview with The Chronicle as follows: “That is very important, and I think it’s part of place-making, part of having an environment that’s conducive to businesses and residents choosing to locate in Ann Arbor and stay in Ann Arbor. ”

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This apple on a councilmember’s desk could reflect the fact that part of the meeting was devoted to core priorities. (Photo by the writer.)

Councilmembers established a concern about the possible financial risks associated with the project, and a desire that public input be solicited on the ultimate decision for a site. But the vote was unanimous to accept the grant, which includes an obligation to provide roughly $480,000 in matching funds. That match is expected to be provided by Wind Products Inc., a company located in Brooklyn, New York.

At a meeting of the city’s energy commission held the following night, commissioners expressed their dissatisfaction that the proposal had not been brought to that body for review.

Some of the council’s deliberations on the wind turbines included the question of whether the effort was consistent with the council’s priorities for the next two years – ones that were formally adopted at the Jan. 7 meeting. The priorities, which had been identified in a Dec. 10 planning session, included the basic areas of: fiscal responsibility, public safety, infrastructure, economic development and affordable housing.

The council had three parks-related voting items on its agenda, neither of which prompted extended deliberations. One was approval of a design for the new skatepark in the northwest corner of Veterans Memorial Park, which is expected to start construction in the spring and be completed in the fall. A second voting item was the approval of another contract with the Conservation Fund, which helps manage operations for the city’s greenbelt and parkland acquisition programs.

A third parks-related voting item was authorization of a contract to replace roofs on two buildings at Cobblestone Farm.

Another agenda item – related to parks, but not requiring a vote – was a presentation from the council-appointed task force that’s been asked to make recommendations for a future vision of the North Main Street corridor, extending to the Huron River, including the MichCon property. They focused their presentation on the 721 N. Main property, for which the council had authorized two grant applications at its Dec. 17, 2012 meeting. The group has a summer 2013 deadline to make recommendations for the whole area.

Also on the topic of parks, the council heard from representatives of New Hope Baptist Church during public commentary, regarding a planned new dog park. Members of the congregation oppose the location of the dog park inside West Park, because it’s immediately adjacent to the church on Chapin Street. Also during public commentary, the council again heard calls for the top of the Library Lane parking garage to be designated as a park.

Some other items on the agenda could be grouped under land use and planning. The council gave approval to changes to the site plan for Packard Square, a proposed redevelopment of the former Georgetown Mall. The council had postponed the item from its Dec. 3, 2012 agenda.

And the council gave initial approval to a zoning request in connection with the proposed Summit Townhomes project site, just east of Stone School Road. The land was recently annexed into the city from Pittsfield Township.

Also as a result of council action, Ann Arbor residents could have some additional flexibility for parking cars on their front lawns – beyond just the occasions of University of Michigan football games.

In other business, the council approved the appointment of Carrie Leahy to the board of the local development finance authority (LDFA). The LDFA is a tax-increment finance (TIF)-funded entity that comprises the geographic area of the city of Ann Arbor’s downtown development authority, as well as the city of Ypsilanti’s DDA.

Other public commentary heard at the meeting included remarks opposing continued investment in companies that provide military hardware to Israel.

One hour immediately preceding the regular meeting was a special session of the council. Its agenda consisted only of a closed session, to discuss labor negotiations – which is an allowable topic for a closed session under the Michigan Open Meetings Act.

Wind Turbine Grant

The council was asked to consider acceptance of a nearly $1 million grant from the U.S. Department of Energy that will fund part of the construction of two wind turbines. The turbines are intended to generate electricity for the Ann Arbor Public Schools. The project requires construction in or near the city of Ann Arbor sometime in the next year and a half.

The city is obligated to provide an additional $484,390 in matching funds on the $951,500 grant – which it expects to achieve through partnership with a third-party developer, who was not named in the council’s resolution. However, city staff responded to councilmember questions before the meeting by indicating it was Wind Products Inc., out of Brooklyn, N.Y. that is expected to make the investment.

The city’s plan is to make a $18,590 contribution of in-kind staff time, not paying any cash.

The plan is to locate the wind turbines on AAPS property, and that the third-party developer will construct the turbines. The developer would then provide AAPS with a 20-year power purchase agreement (PPA) – which would give the AAPS some guaranteed minimum of power at less than the current market rate. The recipient of any renewable energy credits (RECs) from the installation would be the city of Ann Arbor.

AAPS director of communications Liz Margolis responded to an emailed query from The Chronicle describing the possibility that the site of the installation could be Pioneer High School, with the height of the turbines approximating that of two cell towers already located on the property. Margolis indicated that before any decision is made to locate wind turbines on the school’s property, the school district would solicit comments from residents who live near the site. The city council deliberations indicated little enthusiasm for locating the turbines near residential neighborhoods or very near a school building.

In the state of Michigan, Ann Arbor has poor to marginal potential for wind energy generation, compared with areas in the rest of the state – according to data maintained by the U.S. Department of Energy. However, the goal of the Ann Arbor project is focused on the educational benefit – as the schools integrate the project into their curricula and the public would have its awareness raised regarding renewable energy.

Wind Turbine Grant: Public Comment

During public commentary at the conclusion of the meeting, Kai Petainen told the council that he was speaking only on his own behalf. He thanked them for their vote on the skatepark. But he told councilmembers that the wind turbine grant didn’t make sense to him, saying it doesn’t take much to see we don’t have much wind in this area. He ventured that the money would be better spent hiring him to teach children about geography, and where wind resources are distributed. He told the council that the VA hospital has a windmill on its roof that he has occasion to observe with some frequency, and he contended that it never moves.

During public commentary at the start of the meeting, Kermit Schlansker told the council he was unaware that windmills were on the agenda. He told the council they should take money if they can get it, but added that they should divert it for something else. Windmills are not new, he said, and there’s nothing spectacular about them, and there isn’t that much wind in this area, he said.

A better way to spend the money, he said, would be to invest it in an “energy farm” – which relates to food, energy, jobs for unskilled labor, factory jobs, a place to house the homeless and for recreation. He advocated for putting up an apartment building that was supported by using geothermal heat, solar, wind and biomass energy.

Wind Turbine Grant: Council Deliberations

Brian Steglitz, a utilities engineer with the city, was asked to the podium to answer questions.

Jane Lumm (Ward 2) indicated that 18 months didn’t seem like a lot of time to complete the project, and the amount of staff time – with an estimated in-kind value of about $18,000 – didn’t seem like sufficient resources to complete the job.

Jane Lumm (Ward 2) as she arrived at the Jan. 7 meeting.

Steglitz explained that half the staff time is reimbursed by the grant, so the amount of staff time would actually be $36,000. He also noted that a fair amount of effort would come from non-city staff. He allowed that the timeline is aggressive but said it’s “doable.” In the scheduling of the activities that have to be completed, there are many items contingent on some previous thing occurring. For example, the environmental assessment could have an outcome that could delay the process. Preliminary conversations have been held about a possible location, he said, adding that he could not yet share details.

Lumm asked Steglitz to describe the risks to the city: What happens if costs exceed projections? He explained that under the U.S. Department of Energy process, spending isn’t authorized until certain milestones are met. As an example, he said, it’s not possible to do design work on the turbines right now. If the project doesn’t meet a milestone, then the project stops, he explained. Steglitz did not see any risk except the staff time – that is, the city could put forth $18,000 worth of staff time and not have finished wind turbines. If the project is unsuccessful, then the city would have to summarize its experience in a report, he said.

Sumi Kailasapathy (Ward 1) wanted to know how big the turbines would be. Steglitz explained that they hadn’t been designed or studied yet, but estimated that they’d be about 100-150 feet tall – the height of a typical cell tower. Responding to Kailasapathy, he indicated that a turbine could be located on AAPS property.

Sally Petersen (Ward 2) expressed some confusion – about whether there’d been an RFP (request for proposals) process and how Wind Products was selected. Steglitz indicated that the city had gone out initially a year ago and had made a partnership with the University of Michigan. Originally, the university was going to provide matching funds because they were interested in doing research – but that had not worked out. So the city had looked at other financing partners. The proposal from Wind Products calls for the company to construct the turbines on the city’s behalf, and then the company would own the turbines. The city would lease the turbines for a certain period of time and pay the company for the power during that period. Wind Products was the only company that had come to the table to meet the grant requirements and the financial commitment to build the turbines.

Petersen asked Steglitz if he didn’t consider that a risk – that Wind Products would not match the DOE grant matching requirement on the city’s behalf. Steglitz explained that the city had a letter of intent with Wind Products – but it’s not a contract. It states that if the city accepts the grant, then the city and Wind Products will work together to develop the power purchase agreement – the contract. The council would eventually need to authorize that contract, he said. Petersen indicated that she thought the power purchase agreement was supposed to be between AAPS and Wind Products. Steglitz responded that the parties to that agreement had yet to been determined.

Sabra Briere (Ward 1) asked what the advantage to AAPS and to the city was: Why is the city working hard to accept this grant? Steglitz said that AAPS has been trying to do some kind of wind project for a long time. A planned project at Skyline High School never came to fruition, he said. There is some financial benefit, he said, because AAPS would pay less than current market rates for the electricity that’s generated. The school district is interested in being the “face of renewable energy,” he said, and wants to incorporate the turbines into the educational program. One of the benefits to the city is that it helps meet its goals for renewable energy.

Briere noted that Ann Arbor is not a really good location to locate wind turbines, because the steady 13-14 mph winds you need don’t blow here. Why are we doing this here? she asked. Steglitz observed that the project goes back many years, and he was not involved with the grant application. He ventured that the application was likely submitted by former city energy coordinator Dave Konkle. Steglitz said the project didn’t indicate that the city thinks it has a great wind resource. It’s more about education. It’ll be a monument to renewable energy, he said.

Mayor John Hieftje drew a comparison to a previous grant the city had received from the DOE for solar energy – which had been awarded even though DOE was aware that Ann Arbor is not the sunniest spot.

Stephen Kunselman (Ward 3) indicated that he felt Skyline High School would be a great location. He was concerned about the siting of the facility without much community engagement. He ventured that there would not be a direct feed from the wind turbine to a school building, but Steglitz indicated that might be possible – but he would not speak on DTE’s behalf.

Steglitz described challenges associated with various sites, including zoning and municipal airport flight lines. Kunselman got additional confirmation that any contracts associated with the project would come back before the council for approval.

Marcia Higgins (Ward 4).

Marcia Higgins (Ward 4) asked about the size of the turbine blades. Steglitz indicated that they’d be on the order of a 30-foot radius – so 60-feet long. She expressed concern about noise. She also wondered what would happen if a blade flew off. She indicated she had some mixed feelings about it.

Lumm echoed Higgins’ sentiments about the importance of working with the community on site selection – that should be Job 1, she said. She noted that the solar array installation undertaken by UM recently involved zero community input. And the university had made zero effort to reach out to city staff, she contended, so many people were surprised when the panels appear. She said she gets angry any time she drives past it. She expressed a desire to “test the waters” on the issue of siting before going down the path of accepting the grant.

Hieftje described vibration and danger issues associated with wind turbines as minimal. He allowed that one particular wind turbine installation – at California’s Altamont Pass – was a danger to birds.

On the topic of siting, Chuck Warpehoski (Ward 5) joked that if the idea was to consider a site where a lot of air gets pushed around, he wondered if Steglitz had considered city council chambers?

Higgins questioned whether there was clear support from the AAPS board for the project, and drew out from Steglitz that he’d been working with AAPS executive director of physical properties Randy Trent. Higgins ventured that to complete the project in 18 months, they’d need to move with “lightning speed.” Steglitz indicated he was optimistic.

Lumm said this sounded to her like a familiar path. [She was alluding to a grant the city had received from the Federal Rail Administration that required local matching funds that the city thought it had already provided – which turned out not to be the case.] She questioned whether the city should try to do everything, or instead try to prioritize. In the year she’s served on council since being elected most recently, Lumm said, it seemed like the council had spent a lot of time on transportation and the environment, not the priorities the council had discussed at a recent planning session. She looked forward to shifting her focus to those priorities.

Petersen stated, “I’m a fan of wind.” [It's unclear if the pun was intended.] She also said the city needs to focus on alternative energy in the future. As Lumm had pointed out, environmental concerns were not in the council’s top five priorities, Petersen said. She liked the educational components, but was not sure if the AAPS board was supportive. She was also worried about the short time frame.

Margie Teall (Ward 4) did not share Petersen’s concerns and said she was pretty excited about the project. The short time frame means we don’t need to wait, she said, adding: “The time is now; the time is yesterday.”

Responding to remarks by Lumm and Petersen on priorities, Briere noted that infrastructure was one of the identified priorities – which include transportation. Briere’s comment responded specifically to Lumm’s contention that the council’s focus on transportation wasn’t consistent with the five priority areas. Briere pointed out that the council had made a big effort to define infrastructure so that it included transportation. In any case, the priorities are aspirational goals for the next two years, not for the current budget cycle. She said it would be a shame to decide they don’t want to do it.

Left to right: Christopher Taylor (Ward 3) and Stephen Kunselman (Ward 3).

Kunselman said he would support the project, reasoning that it’s important that they move forward on something that had been started years ago. He felt like the city would hand off the siting question to the AAPS board.

Warpehoski agreed with Kunselman, saying that he was excited when he saw it on the agenda – because it meets several goals of the city. Among those goals were financial and educational goals. The best way to assure we waste staff time is to back out now, he said, adding that the finish line is in sight. Higgins said she’d support the project but wanted AAPS to have a community-involvement element to its site-selection process.

Christopher Taylor (Ward 3) said the project struck him as typical of the large, forward-thinking projects that the city staff brought forward – where the city’s risk is minimized. Taylor said the fact that he didn’t understand where the turbines will be or what the community conversation will be didn’t strike him as important. The time to evaluate that is for the future, he said. If the school district’s process is lacking, the council would hear about it. And the council would have the chance to “pull the plug” at a later time.

Outcome: The council voted unanimously to approve acceptance of the DOE grant for wind turbines.

Wind Turbine Grant: Postlude

On the following evening, on Jan 8, 2013, the city’s energy commission met and was briefed about the wind turbine project. Based on CTN coverage, which is available through Community Television Network (CTN) Video on Demand, commissioners had a negative reaction to not being included in the review process for the project. [CTN coverage begins at roughly the 0:57 minute mark]

Wayne Appleyard, who chairs the commission, stated: “Some of us wonder what we’re here for if we’re not consulted on these things.” He also pointed to the stated purpose of the commission in support of his contention that the city should have taken advantage of the technical expertise of commission members: “To oversee City policies and regulations in areas of energy efficiency concerns and make periodic public reports and recommendations to the City Council.”

By way of explanation for the omission, environmental coordinator Matt Naud, who gave the briefing, explained that the project had languished for a time, and that there’d been a staff transition – as former program manager for the Ann Arbor energy office, Andrew Brix, had left the city. But Naud allowed: “We did not keep you up to date as much as we should have.”

Mayor John Hieftje, who sits on the energy commission, seemed to discount the significance of the council’s action, expressing some skepticism that the project would even be built: “I’ll believe it when I see it.” The item’s appearance on the council’s Jan. 7 agenda was facilitated by Hieftje’s sponsorship of it. It had missed the deadline by which staff could add an item to the agenda – but a member of the council can add an item at any time.

Commissioner Cliff Williams asked some pointed questions about the RFP process that had eventually led to an exclusive letter of intent with Wind Products Inc. He was aware of some companies that had submitted bids, but that were not aware of the change in scope of the project that resulted in the selection of Wind Products, which had not bid in response to the initial RFP.

Council Priorities

On the council’s agenda was an item that called for the adoption of a consultant’s report on a Dec. 10, 2012 council planning session. Part of the report outlines priorities for the next two years identified by the council at that session, including: fiscal responsibility, public safety, infrastructure, economic development and affordable housing. [.pdf of Julia Novak's report on the Dec. 10 session]

For more detailed coverage of the problem and success statements that the council associates with each of the priority areas, see Chronicle coverage: “Council Focus: Budget, Safety, Infrastructure.” And for coverage of statements of councilmember sentiments in response to one of the planning session assignments – a 3-5 minute statement on “What I believe” – see “What They Believe: Ann Arbor City Council.”

Council deliberations consisted of remarks from Jane Lumm (Ward 2), who called the session productive. She thanked the city staff for their efforts. The time was well spent in team-building and identifying key areas of focus for the next two fiscal years, Lumm said. She reviewed the five priority areas. She supported those five areas, which she felt were aligned with the community’s priorities as well, and looked forward to acting on them in the next few months. [The council will be adopting the fiscal year 2014 city budget in May, for the 12-month period beginning on July 1, 2013.]

Outcome: The council voted unanimously to adopt the planning session report.

Ann Arbor Skatepark Design

The council was asked to consider the final design of a new Ann Arbor skatepark, to be located in the northwest corner of Veterans Memorial Park. The city’s park advisory commission had unanimously recommended approval of the proposed design at its Dec. 18, 2012 meeting.

The conceptual design by Wally Hollyday for the Ann Arbor skatepark at the northwest corner of Veterans Memorial Park.

Construction is expected to begin in the spring of 2013, with a goal of completing the project by the fall.

The park was designed by Wally Hollyday. In July of 2012, the Ann Arbor city council had authorized a $89,560 contract with his firm, Wally Hollyday Skateparks, for the design and construction oversight of the skatepark. City council action on the skatepark at that location dates back to a Dec. 1, 2008 approval of a memorandum of intent. [.pdf of memorandum of intent]

The roughly $1 million project – including an anticipated $100,000 endowment for ongoing maintenance – will be financed through a combination of funds. Those include private donations – primarily solicited through the Friends of the Ann Arbor Skatepark – as well as a $300,000 state grant, and up to $400,000 in matching funds from the Washtenaw County parks and recreation commission. The Ann Arbor Area Community Foundation is acting as fiduciary.

The design includes a wide variety of skateboarding features – including bowls and pools; banked, Hubba and cantilevered ledges; and slappy curbs. Landscaped areas and rain gardens are located throughout the park, which will also serve as stormwater management elements. The design includes a small stage, which could be used for skateboarding demonstrations as well as other community performances. Organizers also hope to incorporate concrete “skateable artwork” on the site.

Two residents who live near Veterans Memorial Park spoke against the location during public commentary at PAC’s Dec. 12 meeting, saying they hadn’t been informed before the site was selected. They also referred to a petition of about 20 other residents who opposed the location, including the owners of Knight’s Restaurant, which is located across from the proposed skatepark. They were concerned about noise, maintenance, safety and other issues that they felt hadn’t been adequately addressed.

Later in that PAC meeting Colin Smith, the city’s parks and recreation manager, reviewed the history of the project starting in 2007, including a listing of forums with neighbors, which he described as well-attended, and public hearings at PAC and city council. He later showed The Chronicle a receipt for a mailing sent to neighbors in 2008, notifying them about the proposal in its very early stages.

Trevor Staples, chair of the nonprofit Friends of the Ann Arbor Skatepark, also spoke to PAC and noted that the group would be holding a retreat later this winter to discuss their future mission, indicating that they’d be involved in ongoing support for the skatepark. Part of the MOI with the city stipulates that 10% of fundraising for the skatepark is being set aside for future maintenance.

At the council’s Jan. 7 meeting, no one spoke against the project.

Ann Arbor Skatepark Design: Council Deliberations

Although the skatepark design was on the consent agenda, it was pulled out for separate consideration by Christopher Taylor (Ward 3). Taylor sits as a council representative (ex officio non-voting) to the park advisory commission, and he reported that PAC had enthusiastically recommended the skatepark design. He said he looks forward to its implementation.

Chuck Warpehoski (Ward 5) expressed his thanks to the Friend of the Ann Arbor Skatepark for their hard work. He acknowledged that there have been recent concerns expressed about the location. Although it’s been a long-term process, he allowed that not everybody “got the memo.” He lives near the space, and characterized it as currently not well used. He thought it would be a great amenity and looked forward to seeing it in his neighborhood.

Trevor Staples perused the council’s Jan. 7 agenda before the meeting started. He’s chair of the nonprofit Friends of the Ann Arbor Skatepark, and a teacher at Burns Park Elementary School.

Stephen Kunselman (Ward 3) said that it had been a long time coming, and called it a community effort. He noted that it had involved kids, who had come to the meetings. He said the city’s youth had stepped up and shown what’s important to them. He was happy to be there for the vote.

After some lighthearted back-and-forth between Kunselman and mayor John Hieftje about age and skateboarding, Marcia Higgins (Ward 4) weighed in. She said it was very nice to see the resolution come forward. She asked some clarificational questions about some of the elements in the design – highlighting a “multi-event area.”

Trevor Staples responded to Higgins, saying that from the beginning, the skatepark has been conceived as a community gathering space. The multi-event area could be used for award presentations, or a judges’ stand for competitions, or music. He noted that the area Higgins was asking about is designed to be “completely skateable.”

Higgins expressed some concern about the adequacy of the parking at Veterans Memorial Park – if a skateboarding competition were to be held there at the same time as softball games were going on. Sumedh Bahl , the city’s community services area administrator, indicated that he could not give a precise analysis on that. Staples indicated that parks and recreation manager Colin Smith and park planner Amy Kuras had looked at the parking situation.

Outcome: The council voted unanimously to approve the skatepark design.

Conservation Fund Contract

The council was asked to approve a $156,230 contract with The Conservation Fund to manage operations for the city’s greenbelt and parkland acquisition programs. The programs are funded by a 30-year 0.5 mill open space and parkland preservation tax that voters approved in 2003. The contract is for a one-year period, with the option for two one-year renewals.

The city had issued a request for proposals (RFP) in early November, with a Nov. 28 deadline for responses. [.pdf of management RFP] Only one proposal had been received – from The Conservation Fund.

The Conservation Fund has held that contract since the greenbelt program launched. The current three-year contract ends on Jan. 15, 2013. The nonprofit is headquartered in the suburbs of Washington, D.C. Ginny Trocchio is the nonprofit’s Ann Arbor staff member.

The current contract was approved by the Ann Arbor city council on Dec. 21, 2009. It authorized $119,565 in 2010, with two one-year renewal options for $113,661 in 2011 and $106,797 in 2012. The Conservation Fund also was the only bidder for that RFP.

Council deliberations on the issue were limited to a brief remark from Christopher Taylor (Ward 3), who is now the city council representative to the greenbelt advisory commission. Previously, the council representative had been Carsten Hohnke, who left the council in November 2012, having chosen not to seek re-election.

Taylor noted that he’d only attended one meeting of GAC so far, but said that GAC supports the contract with The Conservation Fund.

Outcome: The council voted unanimously to approve The Conservation Fund contract.

New Roofs for Cobblestone Farm

The council was asked to approve a $109,500 contract with Renaissance Restorations Inc. – to allow replacement of roofs at Cobblestone Farm. Roofs on the event barn and on the Tincknor-Campbell House will be replaced. The bid from Renaissance was the lowest of three received for the work. The contract includes a 10% contingency, bringing the total to $120,450.

The project will be funded with proceeds from the parks maintenance and capital improvements millage.

According to a staff memo, the Tincknor-Campbell House is a cobblestone farmhouse that was built in 1844. Its existing wood shingle roof was installed in 1977 and is in serious disrepair. The proposal calls for the new roof to be made of cedar shakes, with flashing done in copper.

The event barn, built in the late 1980s, is rented out for weddings, parties, business conferences, and other events. Its existing roof is over 30 years old and is also in poor condition. Because the building is not historically significant, the proposal calls replacing the roof with a recycled plastic shingle that resembles cedar, but that is less costly and more durable.

The alternative material was approved by the city planning staff who provide support to the city’s historic district commission. The Cobblestone Farm Association has also reviewed the proposal and agreed with the recommendations. The park advisory commission voted to recommend the contract at its Dec. 18, 2012 meeting.

Outcome: Without substantive deliberations, the council voted unanimously to approve the contracts for replacement of roofs at Cobblestone Farm.

721 N. Main Presentation

Two members of the North Main and Huron River Corridor task force – David Santacroce and Darren McKinnon – gave a presentation to the council summarizing the group’s work to date.

A map showing recommendations for the city-owned property at 721 N. Main St.

The group had been tasked with developing recommendations for a future vision of the North Main Street corridor, extending to the Huron River, including the MichCon property.

They focused their presentation on the 721 N. Main property, for which the council had authorized two grant applications at its Dec. 17, 2012 meeting.

The group has a summer 2013 deadline to make recommendations for the whole area. But the council had given the task force an end-of-the-year deadline for a recommendation on the 721 N. Main property – because of grant deadlines. One of the grant applications was due at the end of 2o12, while the other is due at the end of March 2013.

Recommendations were divided into the floodway portion and the non-floodway portion of the site. For the floodway portion, there was not a lot to decide – because a city council resolution from Aug. 15, 2005 calls for the floodway area of the 721 N. Main site to be included within a planned Allen Creek Greenway.

The task force is now recommending that the roughly 2.5 acre floodway portion be developed to include non-motorized paths to connect from Felch Street to North Main and West Summit streets.

Recommendations for the non-floodway portion of the site include:

•  That, consistent with its charge, the NMVT investigate potential uses for the non-floodway portion of the site, beginning with the existing masonry buildings outside of the floodway for potential reuse. And that, in order to do so, Council shall provide City staff with sufficient resources to conduct a structural and environmental assessment of the buildings and a market analysis of the portion of the parcel outside of the floodway and provide those findings to the NMVT no later than April 30, 2013. Based on these findings and other considerations, the NMVT will provide Council with final recommendations for the future use of the non-floodway portions of the parcel with the NMVT’s final recommendations to Council which are due no later than July 31, 2013.
• The NMVT’s initial findings with respect to the non-floodway portion of the parcel are as follows:
  (i) If the buildings are determined to be salvageable, the City should promptly pursue building renovation and occupation. Prior to any public use of the site, efforts should be made to minimize the potential for nuisance activities around the buildings;
  (ii) If any future development occurs on this portion of the site, such development should remain consistent with the residential scale and character of the neighborhood and surrounding zoning districts;
  (iii) That it is essential that development of non-floodway open space coincide with efforts to activate the floodway improvements. Such efforts should consider unique and unmet needs near downtown (e.g., a dog park/community garden/flex space/sustainability demonstration/ trailhead parking).

Santacroce indicated that some resources would be required to help determine the value of the property and whether the buildings are salvageable. For general market considerations, he’d had a conversation with Todd Poole, a land use economist who’d done work recently for the Ann Arbor Downtown Development Authority’s Connecting William Street project. And because Poole wouldn’t be starting from scratch, it would cost perhaps only $5,000 to “tweak” the work he had already done.

For the physical assessment of the property and the buildings, Santacroce estimated it would take about $30,000 to do the necessary analysis.

Jane Lumm (Ward 2) expressed a lack of enthusiasm for salvaging the buildings and ventured that instead of hiring Poole, perhaps some local real estate professionals could be engaged, who might be willing to do the work pro bono.

Outcome: This was not a voting item.

Packard Square

The council was asked to approve changes to the site plan of the Packard Square project, an effort to redevelop the former Georgetown Mall. The site plan – given original council approval on May 2, 2011 – calls for demolition of the existing buildings, and construction of a mixed-use development consisting of 23,858 square feet of retail, up to 230 apartment units, and structured parking.

The changes include altering the facade of the building by reducing the number of balconies by one-third, replacing some brick with Hardi-board siding, changing windows, and changing the color of the siding. The council originally postponed the matter a month ago, on Dec. 3, 2012.

Part of the council’s reluctance to give its approval in December was based on aesthetic dissatisfaction with the changes as reflected in the revised renderings. The renderings showing the changes were not given the same amount of attention to detail as the original drawings – with respect to shading to show depth, for example – which left some councilmembers to conclude that the development looked “flat” and dormitory-like. Councilmembers at the Dec. 3 meeting also gave the new color scheme an unfavorable review.

Responding to the specific request of the council to provide drawings on which they could make “apples-to-apples” comparisons, the developer of the project submitted 3D sketches for the Jan. 7 meeting. [.jpg with original color-scheme for Packard Square] [.jpg with revised color-scheme for Packard Square]

The changes to the building that the council was asked to approve were motivated by a change to the upper level residential portion of the Packard Road facade. It was moved 10 feet to the east to make it line up with the front stairwells. That also increased the footprint of the building by 4,720 square feet.

Packard Square: Council Deliberations

Margie Teall (Ward 4) led things off by asking that the developer Craig Schubiner come to the podium. She wanted to know if the new elevations were in the council’s packet. She asked for a description of changes that had been made since December, in response to the commentary at that council meeting.

Margie Teall (Ward 4) gets a closer look at rendering for Packard Square.

Schubiner explained that they’d had the elevations rendered in the new colors and the old colors in the same way. He said that on the sides, it breaks up what are really long facades on the north and south. The retail “frame” would accentuate the stores in front, he said.

All the windows are six-foot windows, he noted, and there are nine-foot ceilings. If you look at the floor plans that are currently being reviewed by the city for approval, he said, the windows take up most of the wall space in every living and every bedroom. He concluded that these are the largest windows of any non-downtown, garden-style apartment complex ever built in Ann Arbor.

The retail windows had been made bigger and the corner was embellished, he said. He contrasted the new rendering with the original colors. They were a little bit more “washed-out.” The new colors would better break up the long facades, he said. But he noted that colors are, at a certain point, a matter of opinion.

Teall left her seat and examined the drawings up close.

Schubiner noted that the basic building design and footprint had not changed.

Outcome: The council voted unanimously to approve the Packard Square site plan changes.

Summit Townhomes Zoning

The council was asked to give initial approval of a request to zone a 2.95-acre site, just east of Stone School Road, as R3 (townhouse dwelling district). The property was recently annexed into the city from Pittsfield Township.

The city’s planning commission had voted to recommend the zoning at its Nov. 20, 2012 meeting.

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

Summit Townhomes Zoning: Council Deliberations

Jane Lumm (Ward 2) asked for confirmation that what was before the council for its consideration was simply the zoning. City planning manager Wendy Rampson told Lumm that was right.

Christopher Taylor (Ward 3) indicated he’d vote for it at first reading, but he’d heard some concerns about the type of progress and development that it represents. So he wanted to alert his colleagues to the potential that this could be an issue to be discussed when the council is asked for its final approval.

Sabra Briere (Ward 1), who represents the city council on planning commission, reported that she’d been concerned about how children will get to school in a way that won’t require them to walk down Ellsworth. They live too close for busing, but it’s awkward if there’s no internal sidewalks, she said. But she reported her understanding that the developer has committed to achieving the goal of a walkable route to school.

Outcome: The council voted unanimously to give the zoning initial approval. It will need a second approval after a public hearing to be enacted.

Front-Yard Event Parking

On the council’s agenda was the second and final approval of revisions to the parking ordinance that might allow more flexibility for residents to park cars in their front yards.

The change in local law allows the city council to establish “special event dates” for temporary front open space parking. The ordinance had already allowed people to use their front yards for parking for University of Michigan football games. The ordinance change includes a provision explicitly to include “scrimmages,” which will accommodate the UM’s annual intra-squad spring football game.

The ordinance change was motivated in part by the possibility that University of Michigan football stadium events might in the future not necessarily be restricted to football games. For example, a National Hockey League game, between the Detroit Red Wings and the Toronto Maple Leafs, had been scheduled for Jan. 1, 2013 at Michigan Stadium. But it had been cancelled last year due to labor disputes between the NHL and its players’ association.

The city planning commission recommended approval of the change at its Nov. 7, 2012 meeting. The council had given initial approval to the change at its Dec. 17, 2012 meeting.

Front Yard Event Parking: Public Hearing

One person spoke at the required public hearing on the ordinance change – Thomas Partridge. He asked that the ordinance be withdrawn and a different one substituted that would provide for greater monetary and city council policy support for the use of existing parking lots on the outskirts of town that aren’t utilized – an allusion to AATA park-and-ride lots. We don’t need more front-yard parking in residential neighborhoods near the football stadium, he contended.

Outcome: The council voted without discussion to approve the front area parking ordinance change.

LDFA Board Appointment

The council was asked to consider the appointment of Carrie Leahy as one of six Ann Arbor representatives to the 9-member local development finance authority (LDFA) board. She replaces Theresa Carroll, whose term expired six months ago, on June 30, 2012.

The LDFA is a tax-increment finance (TIF)-funded entity that comprises the geographic area of the city of Ann Arbor’s downtown development authority, as well as the city of Ypsilanti’s DDA. The LDFA is separate and distinct from the nonprofit Ann Arbor SPARK, which operates a business accelerator under contract with the LDFA. [The Chronicle is able to offer only occasional coverage of the LDFA. From June 2012: "SmartZone Group OKs SPARK Contract."]

Leahy is an attorney with Bodman who specializes in “general corporate transactions, mergers and acquisitions, compliance with securities regulations, and issues involving venture capital funding.”

Other Ann Arbor representatives on the LDFA board include Richard Beedon and former city councilmember Stephen Rapundalo. Christopher Taylor is another one of the six Ann Arbor representatives, filling the slot that goes to a member of the city council. Based on the city of Ann Arbor’s Legistar online record system, former Ann Arbor representative Lisa Kurek’s term also expired on June 30, 2012. Leahy’s appointment leaves Ann Arbor two representatives short.

The city of Ypsilanti is currently represented by Vince Chmielewski and Phil Tepley. The term for the third Ypsilanti appointment, Mark Maynard, expired on June 30, 2012, according Legistar.

The council deliberations consisted of a remark from Taylor, who joked that no board could have too many lawyers who graduated in 1997 and specialize in corporate and intellectual property law. [Taylor himself shares the description he gave of Leahy.]

Outcome: The council voted unanimously to confirm Leahy’s appointment to the LDFA board.

T-Mobile Antenna

The council considered a resolution to approve a contract with T-Mobile Central LLC – as the successor in interest to Omnipoint Holdings Inc. The city had a previous agreement with Omnipoint, to place antennas on the Plymouth Road water tower. T-Mobile wanted to amend the license agreement to allow additional equipment on the site. The city will also get a bit more revenue, increasing the annual license fee amount by $1,200 to $39,686. That escalates each year by 4%. Under the previous arrangement, the fee escalated 20% every five years.

Council deliberations were relatively brief. But Jane Lumm (Ward 2) wanted confirmation that the additional equipment would not change the appearance of the water tower. And Stephen Kunselman (Ward 3) wanted confirmation that the revenue from such contracts went to pay the cost of the Justice Center construction bonds. City administrator Steve Powers said that he thought Kunselman was right, but would follow up and confirm that.

Outcome: The council voted unanimously to approve the contract with T-Mobile.

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: Dog Park in West Park

Two members of New Hope Baptist Church addressed the council on a topic that had been discussed at a meeting of the park advisory commission late last year, on Dec. 18, 2012.

Left to right: Rodrick Green, pastor of New Hope Baptist Church, Christopher Taylor (Ward 3) and Chuck Warpehoski (Ward 5).

During the public commentary at the conclusion of the special session of the council – which was held before the regular council meeting – Rodrick Green introduced himself as the pastor of the New Hope Baptist Church. He noted that the dog park was not a topic on the council’s agenda, but he wanted to voice on behalf of the entire congregation their unanimous opposition to the proposed dog park. The park is supposed to be located off of Chapin Street, in the area of West Park directly across from the church. Among the concerns the congregation had were issues of safety, noise and odor. They did not think it’s a proper location for a dog park, Green said.

During public commentary at the start of the regular session, Tom Miree, a trustee with New Hope Baptist Church, told councilmembers that he wanted to give them an update on the dog park in West Park. He told them that before the holidays, members of the congregation had met with the city’s park advisory commission, and gave testimony about why the site within West Park that had been selected for the dog park wouldn’t be a good spot. He reported that commissioners had listened politely, but then passed a resolution that said, “Let’s try this for a year to see how it works out.” Miree noted that the dog park site is right across the street from the church. He described the entire area of West Park as about 24 acres, but noted that only about 0.2 acres was designated for the dog park. He described it as a small area on a parcel where a house previously stood.

Miree ventured that anyone who’s done planning work knows you need conflicting land use buffers between properties. He said everyone recognizes that having amenities is a good thing. But he wanted the city to consider the impact a dog park would have on the neighborhood – especially on young children and the ministry in the area. He also asked that they consider the worship service that’s held there, saying that the congregation wants to maintain the dignity of the worship services.

Comm/Comm: Connecting William Street

By way of background, the city council will be holding a work session on Jan. 14 to hear recommendations from the Ann Arbor Downtown Development Authority on future redevelopment of five city-owned sites currently used for parking. The project, which eventually was named Connecting William Street (CWS), began with an April 4, 2011 city council resolution that directed the DDA to engage seek “robust public input” from experts, stakeholders and residents to develop a plan for those parcels.

Jamie Pitts introduced himself as the chief technology officer of a local startup [rapt.fm]. The company is located in Detroit now, but he lives here in Ann Arbor, he said. He wanted to talk about the DDA’s Connecting William Street as it relates to open space. In the space next to the Ann Arbor District Library on South Fifth Avenue, the recommended plan depicts a very large building. He said he couldn’t help but notice how small the green space was that’s allocated on the parcel. There’s an opportunity to do something great, he said, so the council would be forfeiting a huge opportunity by not allocating a greater amount of area on that parcel for green space.

He encouraged councilmembers to envision the people who live downtown. If they want more people to live downtown, they need to think about amenities. People who live in urban centers need a backyard, he said. So he called for the creation of a backyard for future downtown residents.

Alan Haber commented on the CWS recommendations that the Ann Arbor DDA would be presenting to the council on Jan. 14. In many ways, Haber said, it’s an excellent report. But he felt that the DDA understood “development” as only buildings and economic development. Other kinds of development, Haber said, include human development and community development. The DDA is only seeing the economic development perspective, he said. The council needs to see the part of the equation that involves community benefit and growing a space on which something can be created together.

Haber characterized the previous Sunday night caucus discussion as making clear to him that he and a lot of others had been barking up the wrong tree. That approach had been since people wanted a park, they should approach the “parks people” [the park advisory commission]. He wanted the council to hear a citizens report, because the DDA translates everything into money terms, Haber concluded.

During communications time, Jane Lumm (Ward 2) relayed a request from Mike Anglin (Ward 5), who was absent from the meeting. He asked to include in the council’s Jan. 14 work session on CWS an opportunity to hear from citizens on their open spaces ideas.

Comm/Comm: Public Art Committee

During her communications time at the conclusion of the meeting, Sabra Briere (Ward 1) reported that the city council committee created to review the public art ordinance had held a second meeting.

Councilmembers are sometimes asked by students to sign their agendas to prove attendance. Sabra Briere (Ward 1) turned the act into a kind of performance art.

As the committee moves forward, she said, the members want to hear from the public art community, but also want to think about the best way to reach the public.

The goal is to work with the city staff to create a topic on the city’s A2 Open City Hall. [For detailed Chronicle coverage of that committee meeting, see "Council to Seek Feedback on Public Art Program."]

The committee’s next meeting is set for 5:30 p.m. on Monday, Jan. 14.

Comm/Comm: Environmental Commission

During her communications time, Sabra Briere (Ward 1) noted that a resolution to appoint Christopher Graham to serve on the city of Ann Arbor’s environmental commission would be on the council’s next meeting agenda.

Graham was initially appointed in 2006 and has served two three-year terms on the commission.

Graham is also a member of the executive committee of the Michigan Environmental Council.

Comm/Comm: Recall Snyder, Hieftje

During public commentary, Thomas Partridge introduced himself as a resident of Ann Arbor and Washtenaw County, and a recent candidate for the state senate and house. He stated that he was there to advance the cause of the most vulnerable. He called on the council and the public to prioritize affordable housing and countywide transportation, and to recognize that we are one community, whether we like it or not. He called for less attention on stormwater drains, and more on getting sufficient affordable housing. He called on the council to end homeless this month. He concluded by saying that mayor John Hieftje and Gov. Rick Snyder should be recalled.

Comm/Comm: Divestment from Israel

Addressing the council on the topic of divestment from Israel and Palestinian rights were Blaine Coleman and Mozhgan Savabieasfahani.

By way of background, for several years a group of people has regularly demonstrated near the Beth Israel Congregation in Ann Arbor with various anti-Israel signs. Critics of the action have described the regular demonstrations as religious harassment. Coleman has in the past stood with the group. In that context, his opening remarks can be understood as a way of responding to that criticism – by appealing to protests that have happened in the contexts of other religious institutions.

Coleman began by noting that Ann Arbor has a long history of protest against racist oppression at churches and synagogues. He showed the council a copy of the front page of a Michigan Daily from Aug. 20, 1970 that read: “Church Takeover Backs Demands for Reparations.” Another article from the Ann Arbor News, with the headline “Octogenarian Joins Fight Against Poverty,” described a sit-in at the First Presbyterian Church. [The article, from Nov. 29, 1970 also describes a court-ordered injunction against the group for disrupting church services.] Coleman described the point of the sit-ins as insisting that the country and the city keep its promises to black America.

Today, Coleman ventured, “unless you’re a racist, you will keep your promise to the Palestinian people, too. The Palestinian people are still being murdered and robbed and starved by Israel,” he said. It was human rights violations like those, Coleman said, that had led councilmember Chuck Warpehoski’s organization, the Interfaith Council for Peace and Justice (ICPJ), to publicly resolve itself to work for divestment – from all companies that sell arms to Israel.

Coleman called on Warpehoski to “keep that promise” as a city councilmember. Coleman went on to describe Israel’s actions as a “starvation siege.” And he noted that the ICPJ “brags” about its fight against hunger. Coleman ventured that “unless [Warpehoski] wants to look like a racist and liar, he will keep that promise” to work to divest the city from companies selling arms to Israel.

Coleman noted that Israel was an ally of apartheid South Africa and he characterized Israel as the “last apartheid state on earth.” Federal aid that goes to Israel should instead be spent on rebuilding cities like Detroit, Coleman concluded.

Mozhgan Savabieasfahani said she was very hopeful that the city can do more work on human rights and to promote children’s health – particularly the health of children in Gaza. She said she was hopeful because seven of the 11 councilmembers are women, and women, she ventured, are more sensitive to issues involving children’s health.

In addition, she said, Warpehoski has in the past stood for the human rights of Palestinians and against providing military aid to Israel. His election to the council elevated Warpehoski to another level, she said. She wanted to convince the council that it’s past time to stop the “genocide of the Palestinian people.” She criticized continued U.S. aid to Israel, which she called a “racist state.” She wanted to see the city council speak up against the acts that have been committed by Israel and that would lead to a change in policy – and money would be kept in the U.S. That money could be used to clean up neighborhoods, and get the homeless off the streets of Ann Arbor. She concluded her remarks with “Boycott Israel!”

Typically councilmembers do not respond directly to public comment, but occasionally they do. Warpehoski indicated that the public comment from Coleman reminded the council that there are “right ways and wrong ways, productive ways and unproductive ways” to promote respect understanding and coexistence. Eight or nine years ago, he said, the council had passed a resolution saying that democracy and the freedoms it engenders cannot exist without “civil discourse.” [This was a 2004 resolution that condemned the regular demonstrations near the Beth Israel Congregation.] He also pointed to council resolutions in 2008, 2010 and 2011 encouraging people to honor Religious Freedom – on Jan. 16.

One group in town that is “doing it right,” Warpehoski said, is the Interfaith Roundtable of Washtenaw County, led by George Lambrides.

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

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

Absent: Mike Anglin.

Next regular city council meeting: Jan. 22, 2013 at 7 p.m. in the second-floor council chambers at 301 E. Huron. [Check Chronicle event listings to confirm date]

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The LDFA is a tax-increment finance (TIF)-funded entity that comprises the geographic area of the city of Ann Arbor’s downtown development authority, as well as the city of Ypsilanti’s DDA. The LDFA is separate and distinct from the nonprofit Ann Arbor SPARK, which operates a business accelerator under contract with the LDFA. [The Chronicle is able to offer only occasional coverage of the LDFA. From June 2012: "SmartZone Group OKs SPARK Contract."]

Leahy is an attorney with Bodman who specializes in “general corporate transactions, mergers and acquisitions, compliance with securities regulations, and issues involving venture capital funding.”

Other Ann Arbor representatives on the LDFA board include Richard Beedon and former city councilmember Stephen Rapundalo. Christopher Taylor is also one of the six Ann Arbor representatives, filling the slot that goes to a member of the city council. Based on the city of Ann Arbor’s Legistar online record system, former Ann Arbor representative Lisa Kurek’s term also expired on June 30, 2012. Leahy’s appointment leaves Ann Arbor two representatives short.

The city of Ypsilanti is currently represented by Vince Chmielewski and Phil Tepley. The term for the third Ypsilanti appointment, Mark Maynard, expired on June 30, 2012, according Legistar.

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.

The AVL snow plow tracking system is supposed to provide residents with real-time information on the status of plowing activity, through GPS devices mounted on the trucks. The devices monitor not only a vehicle’s location, but also whether the plow is deployed, along with other vehicle performance information. The city’s snow plow status page currently requires manual updates and has not always been a top priority to keep updated during snowstorms. The city council authorized the $88,000 purchase last year at its Nov. 4, 2010 meeting. The system was then hoped to be deployed sometime during the winter of 2010-11. The software purchase was justified not based on the ability to track snow plows, but rather on the ability to monitor all of a vehicle’s various engine codes remotely, which is anticipated to save the city on maintenance costs in the longer term.

The local development finance authority is funded through a tax increment finance (TIF) mechanism for the same geographic district as the Ann Arbor and Ypsilanti downtown development authorities. The LDFA currently receives no revenue from the Ypsilanti portion of its district. The taxes on which the increment is captured are local school taxes. The impact of the LDFA tax capture is spread across school districts statewide, due to the way that local school taxes are pooled by the state of Michigan and redistributed to local districts. Based on data available through A2OpenBook, in fiscal year 2011, the LDFA generated $1.475 million in tax capture. The LDFA contracts with Ann Arbor SPARK to operate a business accelerator.

The presentation by the AATA is likely to focus on a four-party agreement that the city will shortly be asked to sign with AATA, Washtenaw County, and the city of Ypsilanti. The agreement would be a step towards establishing a countywide transit authority under Michigan’s Act 196 of 1986, because it would provide part of the mechanism for a transition from the AATA’s governance (under Act 55 of 1963) to a new countywide transit authority based on Act 196. The agreement would establish an arrangement for Washtenaw County to incorporate a new transit authority under Act 196 and for the two cities (Ann Arbor and Ypsilanti) to pledge their transit tax funds levied currently for use by the AATA to the new Act 196 organization, once its governance and basis for its funding is clear. [For background on the state of transportation initiatives, see recent Chronicle coverage: "Washtenaw Transit Talk in Flux"] [.pdf (annotated) of draft four-party agreement]

At its Nov. 10, 2011 meeting, the council gave initial approval to a further tweak to the city’s pedestrian safety law. The language given initial approval reads: “When traffic-control signals are not in place or are not in operation, the driver of a vehicle shall stop before entering a crosswalk and yield the right-of-way to a pedestrian stopped at the curb or ramp leading to a crosswalk and to every pedestrian within a crosswalk, without regard to which portion of the roadway the pedestrian is using.” The council had agreed to hold a working session on the topic before taking a final vote.

The city council work session officially begins at 7 p.m., but sometimes are 10-15 minutes late in starting. The sessions are broadcast live on CTN Channel 16, and streamed online live.

The LDFA is funded through TIF (tax increment financing) capture in a geographic district comprising the Ann Arbor Downtown Development Authority and the Ypsilanti Downtown Development Authority districts. However, TIF revenue for the LDFA is generated only in the Ann Arbor DDA district. The principal activity of the LDFA is a business accelerator. The LDFA contracts with Ann Arbor SPARK to manage the accelerator.

Staebler took a position starting in the summer of 2011 as vice president of economic development for Wayne State University, after previously serving with the Michigan Economic Development Corp.

Staebler currently serves on the city’s Housing and Human Services Advisory Board, which was established in 2007 to replace two other bodies: the Community Development Block Grant (CDBG) executive committee and the city’s housing policy board. The function of the HHSAB is to make recommendations on policies and programs to address the needs of low-income residents, to monitor the implementation of Ann Arbor’s housing policy and the creation of a city housing coordinator.

Staebler lost a close Democratic primary race for District 53 state representative against Jeff Irwin, who was elected to that position in November 2010.

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]

Christopher Taylor (Ward 3), Marcia Higgins (Ward 4), and Stephen Kunselman (Ward 3) before the city council's Sept. 19 meeting. (Photos by the writer.)

Public commentary was dominated by the theme of public art, with several people weighing in against a proposed change to the city ordinance setting aside 1% of all capital improvement projects for public art. One of the changes would exclude the use of funds generated by the street/sidewalk repair tax from inclusion in the public art program. Those taxes are on the Nov. 8 ballot.

The deliberations on the public art ordinance provoked some overt politicking at the table between Carsten Hohnke (Ward 5) and Stephen Kunselman (Ward 3), which concluded with Kunselman challenging his council colleagues to direct the city attorney to write a formal legal opinion justifying the legal basis for the public art program.

The proposed changes to the public art ordinance were motivated in part by a desire to assure voters that their street/sidewalk repair millage would not instead be spent on public art. However, the council postponed the public art ordinance revision until its second meeting in November – after the vote on the millage. That’s also well after the planned dedication ceremony for the Dreiseitl water sculpture on Oct. 4 – a project paid for with public art funds.

At its Monday meeting, the council also postponed a vote on a resolution of intent expressing the council’s plan for spending the sidewalk/millage money.

The council also considered a proposal to cancel a 10-year contract signed last year with RecycleBank, a company that provides a coupon-based incentive program for city residents to participate in the city’s recycling program. The data from the first year of the contract was not convincing to councilmembers that the RecycleBank program was having a positive impact.

However, councilmembers voted instead to direct city staff to negotiate towards a revised contract that RecycleBank had offered, which reduces RecycleBank’s fee by one-third.

The council approved a settlement with its police union, retroactively to 2009. The new contract is similar to those that other city unions have also settled on – including no wage increases, and pension and health care plans that require a greater contribution from employees than in the past. The city still has two unions (firefighters and police command officers) with contracts yet to be settled. Contracts with those unions will now have to conform to the requirements of new state legislation, effective Sept. 15, that limits the amount that the city can contribute to the health care costs of its employees.

Also related to police staffing, the council authorized the use of federal money to hire five police officers, if the city is awarded a grant for which it has applied.

In another employment-related issue, the council gave final approval to a revision to its retirement system, which lengthens the vesting period to 10 years and computes the final average compensation (FAC) based on five years instead of three.

Land use and property rights were a recurring theme throughout the meeting. Those items included: approval of the sale of a strip of city-owned downtown land to the Ann Arbor Transportation Authority; postponement of a request from a medical marijuana business for rezoning a parcel on South State Street; authorization of city staff to begin with the systematic annexation of township islands located within the city boundaries; and initiation of the process to levy a special assessment of Dexter Avenue property owners to fill in sidewalk gaps.

Items fitting the general category of economic development included a tax abatement for Picometrix, the setting of a tax abatement public hearing for Arbor Networks, and the expression of the council’s intent to establish a property assessed clean energy (PACE) district. The PACE program is a way for the city to offer loans to commercial property owners for the purpose of making energy improvements.

Among other items on the agenda, the council also passed a resolution calling on Gov. Rick Snyder not to sign legislation that would eliminate same-sex domestic partner benefits for public employees. 

Public Art Ordinance Revision

On the agenda was a resolution revise the city’s public art ordinance – a law that currently requires setting aside 1% of all capital improvement projects for the acquisition of public art.

Public Art: Background

The proposal, sponsored by Sabra Briere (Ward 1), would change the Percent for Art program by explicitly excluding sidewalk and street repair from projects that could be tapped to fund public art.

The timing of the ordinance change is related to two ballot proposals on which Ann Arbor residents will vote on Nov. 8: (1) renewal of a 2.0 mill tax to fund street repair; and (2) imposing a 0.125 mill tax to fund the repair of sidewalks – which is currently the responsibility of adjacent property owners.

Some councilmembers had previously understood the public art ordinance already to exclude replacement of sidewalk slabs from its definition of capital improvement projects.

But based on additional information from the city attorney’s office, the proposed ordinance revision was meant to spell that out explicitly [added language in italics]:

Capital improvement project means any construction or renovation of any public space or facility including buildings, parks, recreation areas, parking facilities, roads, highways, bridges, paths, sidewalks in locations where sidewalks do not already exist or as part of a larger capital improvement project, streetscape improvements and utilities. This definition includes only those projects designed to create a permanent improvement or betterment, and does not include projects that are primarily for the purpose of ordinary maintenance or repair. It does not include sidewalk crack repair, sidewalk cold-patching, sidewalk slab replacement, sidewalk leveling or sidewalk slab grinding.

The ordinance revision also would explicitly exclude the Percent for Art program from applying to any projects funded with money from the street repair millage. Another feature of the ordinance revision would exclude general fund money from being allocated to public art under the Percent for Art program.

The ordinance revision would also require that any money allocated for public art under the program be spent within three years, or be returned to its fund of origin.

On two previous occasions in the last two years (Dec. 21, 2009 and May 31, 2011), the council has considered but rejected a change to the public art ordinance that would have lowered the public art earmark from 1% to 0.5%. The city’s Percent for Art program was authorized by the council on Nov. 5, 2007. It is overseen by the city’s public art commission, with members nominated by the mayor and confirmed by the council.

Public Art: Public Comment

Robert O’Neal introduced himself as a retired physician and a 50-year Ann Arbor citizen. He pointed to the history of public art in general and its positive impact. Why should a city like Ann Arbor not be a leader in public art? he asked. He hoped that the city council would not pull back from public art, when now is a time it can use the boost that public art can provide.

Connie Brown introduced herself as a business owner, a 30-year resident of Ann Arbor, and a member of the Ann Arbor public art commission (AAPAC). In times of economic stress, she said, you should not give up on your future. Public art attracts visitors and ensures art is available to all. She noted that AAPAC is charged with master planning and coordinating the effort and selecting artists. She pointed to the commission’s current activity: a call for artists for additional art for the Justice Center; the solicitation of statements of qualifications (SOQs) and a request for proposals (RFP) for Fuller Road Station; a mural project in Allmendinger Park; art in connection with the Stadium bridges project; the possibility of an art walk from the Argo canoe liveries to the greenway. She also pointed to the recently completed West Park sculpture. She asked the council to keep the funding for the public art program the way it is.

John Kotarski spoke in support of public art in Ann Arbor. He said that art creates a sense of place and identity. He asked if Ann Arbor could afford it. Yes, we can, he said. It makes good business sense, he said, citing a May 2009 article in Forbes. From the article:

[Public art] is also, strangely, economically viable, despite its often high price tag. New York’s Waterfalls cost about $15.5 million; they brought in, according to the Public Art Fund, $69 million for the city. “There are 1,400 cultural institutions in New York that [collectively] bring in more than $6 billion to the economy,” says [Susan K.] Freedman [president of the Public Art Fund in New York City]. “More than 40,000 people are employed in the arts, and the arts bring in 25 million annual visitors. I think there is clearly an economic impact.”

Kotarski said that some people would object that it’s not a good comparison, because New York is not Ann Arbor, but added, “I beg to differ.” Ann Arbor, he contended is a “creative hot spot” for the region and the nation. In addition to making good economic sense, it also makes good common sense, he said. We need to be creative, he continued. Every farmer knows not to sell seed corn, and creativity is our seed corn, he said. Public art reminds us that creativity matters. It’s hard to teach creativity, he allowed, but Google encourages its employees to spend 20% of their time working on something creative, not necessarily related to their specific duties. We need to plant more seeds of creativity, not less, he concluded.

Margaret Parker introduced herself as past chair of the public art commission. She began by saying that bad news is easy to find. She said that Ann Arbor is lucky because in 2008 it had started a savings account (the public art fund) by allotting 1% from all capital improvement projects for public art. From that “frugal plan” and a volunteer art commission, she said, public art projects are being realized in the city. She alluded to Connie Brown’s description of some of those projects.

Parker then ticked through some of the many steps that results in a long timeline for project. AAPAC analyzes priorities in the city’s capital improvement plan, and considers a diversity of projects (for example, large and small), and a diversity of artists, materials and styles. The commission considers which projects are going into construction each year and puts together a list. Each project needs a commissioner to champion it, Parker said. A task force gets set up for the selection process. It could take months before an artist signs a contract, and months more before construction is started.

Parker said that the council should not “dump funds” after three years – because that doesn’t acknowledge the time it takes to put a project together.

In support of the idea that the city’s public art program promotes collaboration, Parker mentioned that the Detroit Institute of Arts wants to partner with the city. The Ann Arbor Rotary Club also wants to work on beautifying traffic medians, and the University of Michigan wants to work with the city on Fuller Road Station.

Mark Tucker introduced himself as an art teacher at the University of Michigan. He told the council that with his students, they had started public art projects in the city – Festifools and Foolmoon. He noted that those projects don’t get any money from Percent for Art. He called the decision to establish a public art program one that was made by forward-thinking individuals. He said that 26 states and 90 municipalities have public art programs. Public art is a reminder that there’s a happy, creative, productive community here. It’s not a frivolous expense, he said, but a long-term investment.

Tucker asked rhetorically if Ann Arbor is a city that embraces art. He answered by pointing to the long histories of the art fairs, the Ann Arbor Film Festival, the Ann Arbor Symphony Orchestra, the Ann Arbor Art Center, the University Musical Society, among others, as evidence that “we believe in the arts in this town.” However, he contended that “we’ve missed the boat in branding ourselves with the arts.” He contended that more visitors come to Ann Arbor due to the arts than all the sporting events combined. Yet if you’re a visitor or new resident, it’s not readily apparent that Ann Arbor embraces the arts, he contended. Public art makes Ann Arbor’s commitment to the arts visible. It might be cheaper to not make that commitment, he allowed, but we’ve made a decision to live in a city that has a pulse and a soul, and we’ve decided that living a full, interesting life is a goal worth seeking.

Jill McGinn introduced herself as a citizen of Ann Arbor for over 35 years. She said she supports the public art program. She told the council she teaches world history at Slauson Middle School. Part of the curriculum involves learning the characteristics of a civilization, and one of those is the arts. She described to the council how she tried to connect ancient pieces of art with modern art. To that end, she used a photo of a mosaic on one of the city’s parking structures. She asked the council to maintain “the meager penny on the dollar” for public art.

Public Art: Communications from Council

There are three slots for communications from councilmembers at various points during the meeting. The conversation on public art began in earnest during one of the early slots, before any of the substantive agenda items had been handled.

Tony Derezinski (Ward 2) led things off by reporting on his new assignment as an appointee to the public art commission, replacing Jeff Meyers, who resigned earlier this summer. Derezinski said he’d been to “one whole meeting” of AAPAC. He described the commissioners as incredibly dedicated people. He noted that both a former chair and the current chair of the commission [Margaret Parker and Marcia Chamberlin] were in the audience that night. He contended it’s a “fairly recent” program. [It was approved by the council in November of 2007.]

Derezinski said he was impressed with the commission’s willingness to collaborate. He’d met with members of the Arts Alliance and had an upcoming meeting with the Detroit Institute of Arts. He noted that AAPAC was looking at working with the Rotary Club to put some plantings and signage at the traffic median at the confluence of Washtenaw Avenue and Stadium Boulevard.

Derezinski then turned to other entrances into the city and the need to beautify the city – South State Street as well as North Main. The soul of the city is reflected in its values, Derezinski said. He asked rhetorically: “Do we stick do our guns?” Derezinski described now as a time when the public art program is just getting going. He said it takes a long time for art to be produced under the program.

Derezinski then adduced “Endymion” by the English poet John Keats [1795-1821], quoting its opening line: “A thing of beauty should be a joy forever.” [The passage is a sketch of a pastoral scene, in which the things of beauty are elements of nature – the sun, the moon, trees, sheep, and the like.]

Stephen Kunselman (Ward 3) responded to Derezinski’s comments by saying he appreciated all those who came to the meeting to support public art. But he then read aloud an email he’d received from a constituent about the use of dedicated millage funds, which called the practice of taking dedicated millage funds to pay for a different purpose “government corruption.” If this practice is not illegal, it should be, wrote Kunselman’s constituent. [The city's public art program uses a portion of millage funds designed for specific purposes – like street repair – for public art.]

Kunselman then went on to cite a Michigan Supreme Court case, South Haven v. Van Buren County board of commissioners, and read aloud from the opinion, which included in part:

However, a fundamental rule of statutory construction is that the Legislature did not intend to do a useless thing. If funds that voters approved for the purpose stated on the ballot could be redirected to another purpose without seeking new approval, there would be no reason for including the purpose on the ballot. Indeed, voters could be lulled into voting for a millage for a popular purpose, only to have the funds then used for something they may well have never approved. This is contrary to the General Property Tax Act.

By way of background, the South Haven v. Van Buren case involved a city suing a county over the disbursal of funds collected under a county road millage. The city did not have any county roads for which the millage could be used. The city filed suit, asking the court to force the county to “disgorge the funds” to the city based on a statutory formula, which the county should have used, absent any agreement between the city and the county for a different distribution. The court found that the county should have used the formula, but ruled that it was not the city, but rather the state attorney general who had the ability to enforce that statute. In other words, the legislation did not provide a specific cause of action for the city itself to take.

The passage cited by Kunselman is the court’s explanation for why the city was also not entitled to the funds on some other ground – the city was not a unit of government specified by the ballot language to receive funds from the millage. Voters across the county had not authorized the millage for city roads, but rather for county roads.

Public Art: Council Deliberations

When the actual agenda item came before the council, it was Sabra Briere (Ward 1) who led off the conversation – she had sponsored the amendment to the public art ordinance. Briere said the council could talk at length about public art and could try to be as eloquent as the members of AAPAC who spoke during public commentary. She told her colleagues that the proposed changes are not an attack on public art, but clarify what money can be used to fund it.

In providing an explanation for the thought behind the amendments, Briere explained that it was a surprise to her that taking tar and filling cracks in asphalt with it counts as a “capital improvement” under the current ordinance. Also, replacing a sidewalk slab is a “capital improvement,” under the language of the ordinance, she said, which was a surprise to her.

Briere said it seemed like an easy vote in 2007. [Though Briere was present at the Nov. 5, 2007 meeting, she was not elected to the council until the following day and did not make her first vote until the council's second meeting that month, on Nov. 19, 2007.] She had not been not aware of all the items that count as capital improvements, she said. She said she was dismayed that the funds accumulate for a long period of time. She could appreciate that the program is just getting started, but four years seems like a long time. She concluded her initial remarks by asking for her colleagues’ support on first reading. On the second reading, she said, the council could talk about it.

Responding to Briere’s contention that her amendment was not an attack on public art, Tony Derezinski (Ward 2) insisted that it is, in fact, a diminution of funds to public art and the effect is the same. He pointed to a number of projects in the pipeline and talked about how the entrances to the city can be improved in a way that related to the streets. He suggested that the program risked being eliminated in different ways – either through 1,000 cuts, or just eliminated outright. He insisted that four years is a short time. Before the council takes any action, a comprehensive look should be given to the program, he said, including the strictures on expenditures on the funds.

Marcia Higgins (Ward 4) stated that no one is looking to eliminate the program. But she allowed that she didn’t think the current draft of the ordinance was quite ready yet. She said she didn’t think the council could have a better version ready in two weeks, so she wanted to know when the planned work session on public art was scheduled. Derezinksi said the current thinking was for November. AAPAC could be ready for a report by then, he said. Higgins moved to postpone the vote until the second meeting of November. Higgins stated that during the work session, she would like the public to have an opportunity to talk to the council.

[Michigan's Open Meetings Act requires that public bodies allow the public to address them during meetings. However, Ann Arbor's city council does not allow for public comment during its work sessions, on the basis of the claim that these sessions are not "meetings" under the OMA statute. The American Civil Liberties Union has encouraged the inclusion of public commentary at Ann Arbor city council work sessions. Other entities, including the Washtenaw County board of commissioners, provide time for public commentary at work sessions.]

Briere noted that the public art ordinance revisions mention the street repair millage that’s on the ballot in November. She wanted to know if there were any legal implications to postponing past the election. City attorney Stephen Postema deferred to assistant city attorney Abigail Elias, saying that she has studied that issue. After some back-and-forth, Briere finally elicited from Elias that there was no legal problem with postponing the public art ordinance revisions.

Sandi Smith (Ward 1) said she couldn’t support a postponement. She wanted to see it withdrawn or voted down.

Margie Teall (Ward 4) said she concurred with Smith. She wanted the topic off the table. She said she needed to hear from AAPAC.

Margie Teall (Ward 4). In the background, front to back, are Marcia Higgins (Ward 4) and Carsten Hohnke (Ward 5).

Christopher Taylor (Ward 3) said he was eager to hear from AAPAC and saw no harm in postponing. After the work session, he said, if it’s the council’s collective view to push it forward, then the council would push it forward; if not, they wouldn’t. That’s a perfectly useful process, he said.

Carsten Hohnke (Ward 5) said he supported the postponement, because he generally supported approving an ordinance revision at first reading based on the habit and practice of advancing ordinance revisions to a second reading. However, he said he didn’t support the ordinance revisions.

Hohnke then said he wanted to encourage Stephen Kunselman (Ward 3) to take some action on the topic that Kunselman has been “heatedly expounding on” at recent council meetings. Hohnke said it’s important that the public not have a misunderstanding about what the city is doing. Hohnke characterized the public art ordinance as articulating a policy on how the city builds the things that it chooses to build.

He admonished Kunselman that it’s not appropriate to make statements in order to “score points,” saying it’s important to take action on that which councilmembers espouse.

Kunselman responded to Hohnke by saying that he agreed with Hohnke’s point about action and said he would have co-sponsored the proposed ordinance revision with Briere, but he had been out of town. Kunselman said the council should reflect on the fact that for four years, the council had not received a city attorney opinion on the subject. He said he could not look back at old emails he might have received from the city attorney when he was a member of council from 2006-2008, because they were deleted during the year he was not on the council. [Kunselman voted for the public art ordinance in 2007. He lost the 2008 Democratic primary to Christopher Taylor, but won back his seat the following year by defeating Leigh Greden.]

Kunselman noted that the city attorney had said if the council directs him to do so, he would write an opinion and file it with the city clerk. But that’s not what the charter says, Kunselman noted. [A Chronicle column addressed this issue: "Getting Smarter About City Charter"] Kunselman noted that the public art ordinance had been approved under a previous city administration. He called on his council colleagues who supported public art to bring a resolution to give direction to the city attorney to write a formal opinion explaining the legal basis for the public art ordinance. He said he would not sponsor such a resolution himself.

Stephen Rapundalo (Ward 2) eventually interrupted Kunselman with a “point of order,” a motion that is permitted at all times in order to achieve enforcement of the parliamentary rules. The rule Rapundalo wanted enforced was the requirement that when a postponement has been moved, it’s the postponement that must be the subject of the deliberation. Kunselman responded to Rapundalo by pointing out that he was responding to Hohnke [who had also strayed somewhat from the topic of the postponement] and stated that he would support postponement.

Mayor John Hieftje said he still hears from residents that the public art ordinance takes away from the city’s ability to fund police and firefighters, but he insisted that it does not do that.

By way of background, police and fire protection is paid from the general fund. The public art ordinance reads as follows:

1:834. – Inclusion of public art as part of a capital improvement project; pooling of funds for public art; use of pooled funds.
(1) Funds for public art that are included as part of a capital improvement project financed from the city’s general fund may be used as part of that capital improvement project for the creation, purchase, production or other acquisition of art incorporated as a part of the capital improvement project, including art located on the site where the project is located.
(2) Funds for public art that are included as part of a capital improvement project financed from the city’s general fund may instead be pooled in a separate public art fund within the General Fund.

As a practical matter, general fund dollars are not typically spent directly on capital improvement projects. However, some revenue sources previously received by the general fund, like revenue from antenna rights, were made a part of the financing plan for construction of the police and courts facility, which was a project that contributed to the public art program.

Outcome: The council voted to postpone the public art ordinance revisions until Nov. 21. Dissenting were Margie Teall (Ward 4) and Sandi Smith (Ward 1).

Intent on Use of Street/Sidewalk Repair Tax

The council also considered a resolution of intent on the use of proceeds from a street/sidewalk repair millage that will be on the Nov. 8 ballot.

Voters will be asked to approve two separate proposals: (1) a 5-year renewal of a 2.0 mill tax to support street repair projects; and (2) a 0.125 mill tax to pay for sidewalk repair.

Use of Street/Sidewalk Repair Tax: Background

The resolution of intent would specify that the street repair millage will pay for the following activities: resurfacing or reconstruction of existing paved city streets and bridges, including on-street bicycle lanes and street intersections; construction of pedestrian refuge islands; reconstruction and construction of accessible street crossings and corner ramps; and preventive pavement maintenance (PPM) measures, including pavement crack sealing.

The resolution of intent would stipulate that sidewalk repairs inside the Ann Arbor Downtown Development Authority district will not be funded by the sidewalk repair millage, except when the sidewalks are adjacent to single- and two-family houses. Both inside and outside the DDA district (otherwise put, throughout the city), the sidewalk repair millage would be used only to pay for sidewalk repair adjacent to property on which the city levies a property tax.

One impact of that resolution of intent, if it’s adopted, is that the city’s sidewalk repair millage will not be used to pay for repairs to sidewalks adjacent to University of Michigan property.

Use of Street/Sidewalk Repair Tax: Council Deliberations

Sabra Briere (Ward 1) led off by saying the resolution was simply a clarification of the city’s goals for the millage, not a change of anything in the language on the ballot.

Homayoon Pirooz, head of project management for the city, answered questions about the resolution and the millage.

Christopher Taylor (Ward 3) noted that among the activities listed is construction of pedestrian islands, but not reconstruction. He wanted to know if that was intentional. Pirooz explained that the city had constructed the first pedestrian island in 1986, so it hasn’t been an issue, yet. Taylor pressed on, saying that he understood the items to be “exclusive” – that is, that the money can’t be used for anything else except what’s listed. Pirooz characterized the list as guidelines for activities the city used the money on, and with fact sheets the city had previously distributed.

Taylor responded that he would rather include flexibility in the list to devise solutions, without revising policy on the fly in the future. So he said he wanted to add “reconstruction” of pedestrian refuge islands.

Taylor asked why the information about the securing of grants from the federal surface transportation fund was included. Pirooz explained that the grants are not an extra expenditure, but rather expressed how the street reconstruction millage has allowed the city to secure those matching dollars. It’s significant for the public to understand that the 2.0 mill tax gives them more than 2.0 mills worth of funding for street repair, through the leveraging of federal and state dollars, Pirooz said.

In response to comments from Mike Anglin (Ward 5), Pirooz said that over the life of the millage in the last five years, the city had received an additional $27 million in outside funding, which includes around $17 million for the Stadium bridges reconstruction project.

Margie Teall (Ward 4) questioned the need for the resolution. Normally, she said, there’d simply be a “fact sheet.” Briere responded by saying that the council had expressed its intent in connection with the parks capital improvement and maintenance millage, when it was on the ballot in 2007 – the resolution answers questions about how the city would spend the money. It’s a benefit to the public and to the council to have a record of the goals of the millage, Briere said.

Stephen Kunselman (Ward 3) scrutinized “crack sealing” as an activity – he wanted to know if that has always been the city’s practice. Pirooz explained that the city has not typically used millage money for that, and has instead used Act 51 money. [Act 51 funds are revenues from the state, collected primarily from gas taxes.] The crack sealing is preventive maintenance, Pirooz said, when 3-4 years after a road is repaved, you see cracks due to natural oxidation of the asphalt. That’s the time to seal those cracks, he said. Although the city hasn’t done much crack sealing with street millage money, he said that in 2011, the city is using $80,000 for crack sealing. He called it a good investment. Contrasting with crack sealing is pothole repair. That’s “ordinary maintenance,” said Pirooz, and not paid out of millage funds.

Stephen Rapundalo (Ward 2) identified a redundant inclusion of the word “separately” in the list.

Taylor then asked what the rationale was for the restrictions on spending within the DDA for properties that are not single- or two-family houses. Pirooz noted that it’s part of the ballot language the council had approved in August. The rationale, he said, was that the DDA receives a share of the street repair millage [through its tax increment finance capture district] so it makes sense for the DDA to cover the costs within its geographic district.

Taylor then suggested that to the bullet points it might be useful to include language to allow more flexibility: “… may be used for street and bridge projects, including without limitation …”

Briere asked how Taylor’s suggestion would apply to how money was spent. Pirooz said it would not have any impact that he could think of that night. Briere said she was fine with Taylor’s suggested change.

Marcia Higgins (Ward 4) then expressed concern that the council was amending things on the fly, and wanted to see a complete version. She asked Pirooz if a postponement would interfere with the timing of the preparation of the city’s fact sheet. Priooz said it wouldn’t.

Outcome: The council voted unanimously to postpone the resolution of intent on the use of the street/sidwalk millages.

RecycleBank Contract

On the council agenda was a resolution to end its 10-year contract with RecycleBank, a company that organizes a program to provide incentives to residents to set out their single-stream recycling carts for curbside collection. The contract has been in place for a year.

RecycleBank Contract: Background

A substitute resolution was eventually put forward directing the city administrator to negotiate a contract revision offered by RecycleBank that would reduce the per-household charge by about one-third, from $0.52 to $0.35 – which translates into a monthly payment reduction from $12,400 to $8,371. Under the new to-be-negotiated contract, if the tonnage of recyclables collected increases above current levels, RecycleBank could earn an additional $50 per ton, for each ton collected above existing levels. There would be a cap of $150,000 per year.

The resolution to cancel the contract had been postponed from the council’s Aug. 4 meeting. The cancellation resolution indicates termination would have given savings to the city of $149,167 per year on that contract. RecycleBank would have been entitled to $120,000 for the depreciated cost of equipment in recycling trucks as part of this program.

The impetus for canceling the contract had been based in part on skepticism that the first year’s worth of data really showed a measurable positive impact on recycling in Ann Arbor due purely to ReycleBank’s coupon incentives.

The interest in canceling the contract was also based in part on a desire by some councilmembers to find replacement revenue to fund a $107,042 annual increase in the contract with Recycle Ann Arbor (RAA), the company that the city hires to empty the curbside recycling carts. That increase was seen as necessary due to the financial stress under which RAA was operating, exacerbated in part by the lower-than-expected value of the contract with the city. The city deployed fewer curbside carts citywide than projected, and because RAA’s contract was based in part on the number of carts deployed, it received less revenue than had been forecast.

RecycleBank Contract: Public Comment

Atul Nanda, of RecycleBank, ticked through some points showing the positive impact of RecycleBank’s program. Among other items, he said that there’d been a 36% increase in recycling participation. Households that participate in the program have higher cart set-out rates than those that don’t participate. Last month, he said, residents had been able to order 2,400 rewards, the highest number of rewards since the program’s rollout. He pointed to avoided landfill disposal costs as a result of the program. He also reported that RecycleBank had received tremendous feedback from residents.

He then sketched out some of the terms of the offer that RecycleBank had made to reduce the cost of its contract with the city. That includes reducing RecycleBank’s per-household charge by about one-third, from $0.52 to $0.35 – which translates into a monthly payment reduction from $12,400 to $8,371. Also, RecycleBank would be willing to accept current recycling levels as a new baseline (680 pounds per household). If recycling levels increase beyond that, RecycleBank could earn an additional $50 per ton, for each ton collected above existing levels. There would be a cap of $150,000 per year.

RecycleBank Contract: Council Deliberations

Carsten Hohnke (Ward 5) asked city solid waste coordinator Tom McMurtrie to describe in more detail some of the options sent to the city, including the one that RecycleBank’s representative had characterized during public commentary.

McMurtrie went over the features of the RecycleBank proposal, which he described as a “hybrid” proposal from RecycleBank. On the hybrid approach, he said, the reduction of the fee by one-third would cut city costs by $50,000 per year. The incentivized system (of additional payments based on increased tonnages from current levels) would allow for RecycleBank to prove its worth, McMurtrie said, with a cap of $150,000. If recycling tonnage increased dramatically, the city wouldn’t see its costs increase beyond what they are today, McMurtrie said.

Another option was to discontinue RecycleBank for one collection day (Wednesday). On that option, on Oct. 1, RecycleBank would discontinue their coupon incentive program in the area served on that collection day. Then, after six months, the city would measure that collection day compared with the other four days. In April 2012, the city would look at the impact. That approach would provide some measurable data to show the effect of RecycleBank’s program.

On either option, McMurtrie said, the city could look at the contract at budget time and decide whether to cancel the contract or not.

Hohnke reviewed the points of the “hybrid” option and concluded that the downside was that if recycling tonnage did not increase, the city would continue to pay the contract – but he noted that the city is already doing that. McMurtrie agreed with that characterization, but noted that the city would continue to pay the contract at a lower rate – $100,000 annually compared to $150,000.

Hohnke confirmed that the city maintains the option of exiting the contract if funds aren’t available in the budget.

[The 10-year RecycleBank contract's termination clause includes language about terminating the contract based on availability of funds. To reduce legal risk, the city could decline to allocate the funds for the contract during its regular annual budgeting process. At Monday's meeting, the council revised its agenda to include a closed session just before deliberating on the RecycleBank contract, claiming an exception under the Open Meetings Act that allows a public body to consider written documents in a closed session if those documents are not required to be disclosed by statute.]

Christopher Taylor (Ward 3) wanted some clarification about the $50/ton payment for additional tonnage. He wondered if the city’s “profit” on extra tons covered the payment to RecycleBank. McMurtrie explained that currently the city clears $75 on the tonnage as a commodity and avoids $25 in landfill disposal fees – so RecycleBank’s payment for increased tonnage would take half the $100 the city realized.

Tony Derezinski (Ward 2) asked if RecycleBank had had a chance to review the options. Which one does RecycleBank favor? he asked. Derezinski also wanted to know if there would be sufficient data by the end of the fiscal year to evaluate the impact of RecycleBank. McMurtrie explained that RecycleBank had a preference for the hybrid solution – it was RecycleBank that came up with it. As for the question of sufficient data, he said the city could get a good indication of what RecycleBank’s incentive program is doing in that time frame.

Briere noted it’s unusual to face three options for a single resolution. She said she’d be happy to see a substitute resolution on the floor with the direction to negotiate the hybrid contract. [From a parliamentary point of view, the wholesale substitution of an alternate resolution is an "amendment" to the original resolution.]

Briere then read aloud the resolution, which directed city staff to renegotiate the RecycleBank contract along the lines of the hybrid solution.

Margie Teall (Ward 4) said that the direction the city is going is to try to increase recycling. She invited a student who works with RecycleBank, promoting its services to residents, to the podium – the student told the council that they’d never received a negative response.

Briere noted that one of the city’s goals was eventually to roll out the RecycleBank program to multi-family housing. She wondered if there is a way to address that part of the proposal. McMurtrie suggested that this could come back at a future meeting. Briere ventured that extending the program to multi-family housing is already in the contract. McMurtrie clarified that the contract says RecycleBank would provide pricing to the city to expand the service to multi-family housing units.

Teall said she supported that idea and thought that RecycleBank programs would appeal to a greater degree to multi-family housing.

Sandi Smith (Ward 1) said she appreciated the additional time the council had spent on this issue. [She was alluding to the fact that it had been postponed from the council's Aug. 4 meeting.] Smith said she was happy the council didn’t respond with a knee-jerk reaction of eliminating the program. In hindsight, Smith said she wished the city had not rolled out the single-stream system with automated carts at roughly the same time as the RecycleBank incentive program. She said she still hears that people love the single-stream recycling, but she has not heard that people like RecycleBank.

Taylor said he’d support the hybrid option and thanked RecycleBank for its flexibility, even though the contract is suboptimal from the company’s point of view.

Stephen Kunselman (Ward 3) said he’d support the hybrid option, but stressed that it’s important to keep their eye on the ball – namely, the next budget year. The city staff has indicated the solid waste fund will be challenged, he said, so it’s about fiscal responsibility as the city moves forward.

Hohnke concluded deliberations by saying that he took “gentle issue” with Smith’s description of the original resolution as a “knee-jerk reaction.” He said that after looking at the data, it wasn’t clear that the city was getting value out of that contract.

Outcome on the amendment and the full resolution: The council voted unanimously to renegotiate the RecycleBank contract.

Police Union Settlement

The council was asked to approve a new contract with the city’s police officers union, based on an agreement mandated by an arbitration panel’s award signed on Sept. 14, 2011.

The arbitration panel worked through the binding arbitration procedure for labor disputes in police and fire departments, which in Michigan is governed by Act 312 of 1969.

The new contract is retroactive for the period from July 1, 2009 to June 30, 2013. In an email to The Chronicle, Tom Crawford, the city’s CFO, wrote that the panel’s determination does not include any liability for the city dating back to the start of the contract.

Highlights of the new deal include a redesigned health care plan, which offer options for health care contributions based on a calendar year. For single-person coverage, for example, the “low plan” would include no monthly premium but a $1,000 deductible. The “high plan” would include a 10% monthly contribution with a $300 deductible.

The new contract includes no across-the-board wage increases.

Pension contributions by employees would increase from 5% to 6% of pay on a pre-tax basis starting Jan. 1, 2012. Employees hired after Jan. 1, 2012 would not be vested in the pension program until 10 years, and their final average compensation (used to determine pension benefits) would be based on the last five years of service. Retirees would have an access-only type retiree health care plan with a retiree health care reimbursement account. Each employee would receive a one-time deposit of $500 in a health retirement account on Jan. 1, 2012.

Stephen Rapundalo (Ward 2), who chairs the city council’s labor committee, ticked through the highlights of the contract. He said he was sorry that 312 arbitration had to be used to get to that conclusion. If the city had had the agreement in place at budget time in May, he said, that would have saved a number of police positions that had to be laid off.

Rapundalo said that now six of eight city unions have settled contracts, so the city has slowly but surely made a lot of progress. He said he appreciated unions and employees stepping forward, but noted that some “rich contracts” had been put in place in the 1990s.

There’s still no contract with the firefighters or command officers union, Rapundalo said. Now that Gov. Rick Snyder has signed new labor legislation that restricts how much the city can contribute to employee health care, Rapundalo said the city would have a couple of options to discuss with those two unions: whether to take the 80/20 percentage – in which the city would pay for no more than 80% of an employee’s health care premiums – or the hard cap. Those unions had the opportunity to come on board before the legislation was signed, Rapundalo said, but didn’t.

Outcome: The council voted unanimously to approve the police union agreement.

Federal Grant Application to Fund Police

On the agenda was a resolution to authorize acceptance and appropriation of a federal grant, if it is eventually awarded to the city, to fund the hiring of additional police officers. The city submitted an application on May 24, 2011 to ensure a May 25 deadline was met.

The application was submitted for five officers at a total amount of $1,398,745. The grant would pay for the officers for three years.

The competitive grants were announced in May 2011 as part of the U.S. Dept. of Justice office of community oriented policing services (COPS).

At Monday’s council meeting, chief of police Barnett Jones described the features of the funding.

Sabra Briere (Ward 1) asked what the effects of grant funding would be, were it to be awarded, on next year’s budget. Jones said there was no effect, because the grant doesn’t require a local match. Briere said in the past the city has not embraced this kind of grant because it comes with certain conditions. She ventured that there was a required commitment not to lay off officers hired under the program. Jones allowed that was true, and that a kind of “super-seniority” would need to be established for those officers, and that would need to be talked through with the union.

Jones said that a previous requirement associated with such grants, that officers hired under the program would need to be retained for a year after the grant funding ended, no longer existed. In response to a question from Christopher Taylor (Ward 3), Jones said that the grant did not require maintaining any particular overall level of staffing.

Briere asked if laid-off officers could be brought back under the program. Jones said it was a matter of timing. If the grant were approved next week, then he’d use the funds to rehire the same officers who were laid off.

Outcome: The council voted unanimously to authorize receipt of the grant, if it is awarded.

Retirement System Revision

The council considered a resolution to give final approval to an ordinance revision that increases the city’s pension vesting period for non-union employees hired after July 1, 2011 – from five years to 10 years. It also changes the final average compensation computation so that it’s based on the the last five years of employment, not the last three years.

Retirement System: Background

The ordinance change had been given initial approval at the council’s Sept. 6 meeting.

The preparation of the ordinance change came at the direction of the city council, which passed a resolution at its June 6, 2011 meeting asking the city administrator to bring forward ordinance revisions that for non-union employees would change health care benefits and aspects of the city’s pension plan.

Specifically, the June 6 resolution pointed to ordinance revisions that would base the final average contribution (FAC) for the pension system on the last five years of service, instead of the last three. Further, employees would be vested in the pension plan after 10 years instead of five. Finally, all new non-union hires would be provided with an access-only style health care plan, with the opportunity to buy into whatever plan active employees enjoy.

At its Aug. 4, 2011 meeting, the council gave final approval to an ordinance change that addressed the health care provision from the June 6 resolution. That ordinance change distinguishes between “subsidized retirees” and “non-subsidized retirees.” A non-subsidized retiree is someone who is hired or re-employed into a non-union position with the city on or after July 1, 2011. In their retirement, non-subsidized retirees will have access to health care they can pay for themselves, but it will not be subsidized by the city.

The city expects that when it reaches a point when all non-union employees have been hired under the revised pension plan, the city’s costs will be $230,000 less than they would be under the current plan.

Retirement System: Public Hearing

During the public hearing, only one person spoke. Thomas Partridge introduced himself as a recent candidate for 18th District state senate seat and as an advocate for senior citizens and public employees.

Partridge said he took exception to the mayor’s continuing to abrogate freedom of speech by making the equivalent of “shots across the bow” – it’d been done repeatedly, Partridge said, and he thought it was abhorrent. He said he opposed the passage of the ordinance because he didn’t think the council and the community had considered implications of going back on past promises. The council should think long and hard, he said, and postpone taking a vote. They should find a way to fully support the funding of pensions.

Outcome: The council voted unanimously, without discussion, to approve the revision to the retirement ordinance.

Land Sale to AATA

On Monday’s agenda was a resolution to authorize the sale of a six-foot-wide strip of city-owned downtown land to the Ann Arbor Transportation Authority. The strip forms the southwestern border of one of the parcels where the AATA’s Blake Transit Center is located. The $90,000 sale price of the 792-square-feet of land was determined to be the fair market value by an independent appraisal.

Land Sale to AATA: Background

The desire of the AATA to acquire the six-foot strip has been mentioned at several AATA board meetings during routine updates. It’s part of the AATA’s plan to reconstruct the BTC on the South Fifth Avenue side of the block; the BTC currently stands on the South Fourth Avenue side, with a canopy that stretches towards Fifth. The AATA hopes to finalize the design of the new transit center by the end of December 2011, with construction to start in early 2012.

Although she was an alternate speaker for public commentary reserved time at the start of the council meeting (there’s a limit of 10 speakers), Rita Mitchell did not have an opportunity to speak at that time. At The Chronicle’s request, she forwarded her prepared remarks. [.pdf of Mitchell's prepared remarks]

In Mitchell’s remarks, she acknowledges the fair market value approach used to establish the price of the land sale to AATA, but then asks:

Why not use the same approach for Fuller Road Park? Show us, the public, the business plan for the parking structure project that addresses the risks, costs and potential benefits of the project. Get an updated appraisal of the land, and propose its sale to the University, followed by the public vote on sale of park land that is required by our city charter.

Mitchell was referring to the site where the proposed Fuller Road Station – a joint city of Ann Arbor/UM parking structure, bus depot and possible train station – is planned.

Land Sale to AATA: Council Deliberations

Sabra Briere (Ward 1) asked what the impact would be for the future of the former YMCA (now city-owned) lot at Fifth and William, of which the strip of land was a part. The city’s chief financial officer, Tom Crawford, offered that he was not the most knowledgable person on that issue, but that the site to the south of the strip (the former Y lot) is maintained as buildable, with the zoning that’s currently on it. Wendy Rampson, head of planning for the city, indicated that the allowable floor-area-ratio (FAR) goes down a very little amount, as a result of removing that strip of land. But from a configuration standpoint, she said, it shouldn’t have an impact.

Stephen Kunselman (Ward 3) asked Crawford if the real estate appraisal was based on taking a proportional fraction of the $3.5 million the city had paid for the land, on which it is still making interest-only payments. Crawford stated that the city did not get an appraisal of the larger parcel in connection with the strip of land. Kunselman noted that the $90,000 proceeds are stipulated to go into the general fund, not to make payments on the interest for the property. Crawford noted that the council could direct finance staff to use the proceeds towards the interest payment, but that the interest payment has already been budgeted.

Mayor John Hieftje called the deal a good example of intergovernmental cooperation.

Outcome: The council voted unanimously to approve the sale of the land to the AATA.

Rezoning for Medical Marijuana

The council was asked to consider a resolution to rezone a property on State Street, so that it could be used as a medical marijuana dispensary.

Rezoning for Med Marijuana: Background

The owner of Treecity Health Collective, a dispensary at 1712 S. State, had requested that the city planning commission recommend the location be rezoned from O (office) to C1 (local business). The owner had also asked that the area plan requirement for that location be waived.

However, at their Aug. 16, 2011 meeting, planning commissioners recommended denial of the requests, based on a staff recommendation, stating that C1 zoning is not consistent with adjacent zoning, land uses and the city’s master plan.

And at their Sept. 19 meeting, councilmembers were hesitant to vote down the rezoning, and instead decided to delay their vote.

The Treecity Health Collective opened in 2010. This summer, the Ann Arbor city council approved amendments to the city’s zoning ordinances that prevent medical marijuana dispensaries from operating in office zoning districts – those changes were set to take effect on Aug. 22, 2011. Rather than relocate the dispensary, the business owner is asking for the zoning change. The property – located on the west side of State, south of Stimson – is owned by Francis Clark.

A recent court of appeals ruling has raised legal questions about the existence of dispensaries under Michigan’s Medical Marijuana Act. However, the Ann Arbor city council decided at its Sept. 6 meeting to proceed with the appointment of four out of the five members of its medical marijuana licensing board. At Monday’s meeting, council appointed the fifth member, Gene Ragland. That body was to meet for the first time on Sept. 21.

Rezoning for Medical Marijuana: Public Comment

Dori Edwards spoke in favor of rezoning the property. She described Treecity as a nonprofit medical marijuana collective. Though the land is zoned for office, she said it’s not a traditional office use. There’s a set of converted old houses along that stretch of South State – one is a palm reader, another is a masseuse. She noted that Treecity occupies the whole building, so no one else in the building can be disturbed by Treecity’s patients. She also told the council: “Our neighbors like us!”

Edwards noted that the planning commission had expressed concerns about “spot zoning” at its Aug. 16 meeting. But she reminded the city council that they had the discretion to do that and in fact the city already does that in the form of planned unit developments (PUDs). A PUD requires that the project be in the public interest, she noted, but she contended that allowing Treecity to continue is in the public interest.

Rezoning for Medical Marijuana: Council Deliberations

Sabra Briere (Ward 1) led off deliberations by alluding to another parcel rezoning request that will be coming to council – for a site where Biercamp Artisan Sausage & Jerky is located, across the street from Treecity. The purpose of the rezoning might differ, but the council has the same kind of issue to contemplate, she said. Briere suggested the council should think about the effect of rezoning that stretch of State Street collectively.

Wendy Rampson, head of planning for the city, explained the planning commission’s unanimous recommendation against the rezoning request for Treecity’s parcel. The requested commercial zoning is inconsistent with the city’s master plan, Rampson explained – the site is recommended to be zoned as office. Zoning it as commercial would result in “spot zoning.”

Responding to a query from mayor John Hieftje, Rampson explained that the parcel where Biercamp is located includes an annexation request. The rezoning request won’t come to the council until it’s annexed into the city. The owners of Biercamp have requested a commercial zoning (C3), but the city planning commission has also recommended denial of that request, reported Rampson.

Hieftje asked about possible traffic issues. Rampson explained that rezoning to a more intense use allows for expansion of use. The planning commission is uncomfortable with rezoning, Rampson said, until the city moves forward with a corridor study of South State Street. [Earlier this year, plans for that study were put on hold amid concerns over its cost – even though the council had previously authorized funding for it as part of the annual budget.]

The planning commission had left the door open for expanding the commercial node at the intersection of Stimson and State, but not before revising the master plan after a study of the whole corridor. Responding to a query from Hieftje, Rampson explained that the light industrial zoning the Biercamp parcel will inherit from Ann Arbor Township would allow the sale of products produced on that site.

Tony Derezinski (Ward 2), who is the city council’s representative to the planning commission, noted that Rampson had underscored the fact that the corridor study was a factor. The challenges of the study would be exacerbated by having a big box store across the border, he said. [Derezinski was alluding to the planned construction of a Costco at the intersection of State and Ellsworth, in Pittsfield Township.] A similar issue with State Street had been confronted by a committee charged with the task of reevaluating the areas of the city zoned as R4C – the area has outgrown the zoning, Derezinski contended. We need a comprehensive look at the corridor, Derezinski said.

Stephen Kunselman (Ward 3) asked Rampson if “conditional rezoning” had been considered. Rampson said that in the early part of the process that came up as an option, but the request needs to come from the applicant – which they’d opted not to pursue. Asked why the applicant had not considered conditional rezoning, Rampson indicated that staff did not know. Also in response to Kunselman, Rampson said it would be possible to consider that as an option, but that the planning commission would need to review it, and see if the restrictions imposed as conditions would satisfy concerns about spot zoning, traffic, and use.

Sandi Smith (Ward 1) asked what the implications are for “spot zoning,” given that such a rezoning would not change the current use that Treecity has for the property. Rampson responded by saying that the current use, as a medical marijuana business, was not authorized, so that’s not a measuring stick that can be used. Spot zoning, Rampson explained, is when a single parcel is not zoned as other surrounding similar properties. Responding to a query from Smith, Rampson said she felt like spot zoning the parcel could set a precedent citywide.

Outcome: The council voted unanimously to postpone the decision on rezoning the 1712 S. State parcel.

Nominations/Appointments: Medical Marijuana

Ordinarily, nominations and appointments to boards and commissions are a two-step process, with nominations coming from the mayor at one meeting and confirmation at a subsequent council meeting.

In the case of the fifth member appointed to the medical marijuana licensing board, a physician, the mayor asked the council to make the appointment of Gene Ragland in a one-step process so the entire board could be seated for its meeting later in the week. The four other members had been previously appointed.

Outcome: Gene Ragland was unanimously approved as the fifth member to the medical marijuana licensing board.

Systematic Annexations from Townships to City

A resolution on the agenda directed the city staff to begin taking a strategic but systematic approach to annexing the 580 township islands from Ann Arbor, Pittsfield and Scio townships into the city of Ann Arbor.

Staff would begin with the annexation of properties owned by utility companies and publicly owned lands within the ultimate boundary area of the city. After that, the next priority for annexation are clusters of township islands. [.pdf of staff recommended analysis and strategy]

The council’s resolution calls for a report back to the council in January 2013 on progress with the annexation work.

The only person to speak at a public hearing on the issue was Thomas Partridge, who told the council he’d moved to the Ann Arbor area in the early 1990s. He said he didn’t think it’s in the interest of neighboring townships to give up valuable land using “ancient, unjust annexation laws” that should have long ago been replaced. He called it a part of the “bullying mindset” that is all-too prevalent in the state of Michigan. He said he’d not heard one word justifying the annexation action. He said the council had also not heard from the townships. If annexation happens, it should be done through the merging of local units into one regional government, he said.

During the communications time immediately following the public hearings, Sabra Briere (Ward 1) noted that the council had just heard Partridge discuss annexation of clusters – some of which have houses on them. She said that she could not speak to the concerns of each township supervisor. However, she reported that she had spoken to Ann Arbor Township’s supervisor [Michael Moran]. She was told they’d been prepared for years for these annexations and had based their budgets on that expectation. So it doesn’t cause a significant hardship, she concluded. Briere allowed that she couldn’t say that the same opinion is held by all township supervisors, because she had not met with them all.

When the item came up, mayor John Hieftje echoed the sentiment that Briere had previously expressed, saying the annexations have been planned for a decade. He described the townships as happy, because they don’t have to provide services across the boundary into Ann Arbor.

Outcome: The council voted unanimously to give staff direction to begin systematic annexation of township islands within the city.

Dexter Avenue Special Sidewalk Assessment

Before the council was a resolution to start the process for a special assessment on property owners along a stretch of Dexter Avenue, in order provide the required 20% local funding component for sidewalk, curb and gutter improvements. The other 80% of the project would be paid with federal funds.

There are several gaps in the sidewalks along that stretch [photo]. An administrative hearing for residents is planned for Oct. 3.

This first step by the council essentially directs the city administrator to prepare plans and provide an estimate of the cost. The project is part of the city’s capital improvement plan (CIP). A neighborhood meeting was held on the topic in June 2011.

Next steps, with their expected timing, include: Sept. 20 – mail administrative hearing invitation to residents; Oct. 3 – administrative hearing with residents; Nov. 10 – council approval of resolutions specifying costs to property owners, and a public hearing date; Dec. 5 – public hearing and a council vote on the special assessment.

During deliberations, Sabra Briere (Ward 1) noted that the resolution is a good reminder that special assessments are how the city builds new sidewalks – it’s not done that often. She observed it’s not paid for with millage dollars that could be approved in November. The sidewalk repair millage dollars would be restricted to existing sidewalks. Dealing with gaps in the sidewalk are a challenge, she said, and a property assessment is a good solution.

Carsten Hohnke (Ward 5) noted that this work is in preparation of the reconstruction of Dexter Avenue between Maple and Huron.

Stephen Kunselman (Ward 3), noting the portion of the project to be paid by the Michigan Dept. of Transportation, observed that a lot of the city’s sidewalk gaps are in neighborhoods. He wanted to know if those gaps were eligible for such MDOT funding. The answer Kunselman got from Homayoon Pirooz, head of project management for the city, was basically no.

Mike Anglin (Ward 5) reported that there’d been good turnout at the meetings with the community on this project in the spring, and those meetings went well. He said it might be a hard pill for people to swallow, but 80% of the cost is being picked up, which would be a “salve for their pocketbooks.”

Outcome: The council voted unanimously to start the process for the Dexter Avenue special assessment.

Tax Abatements: Picometrix, Arbor Networks

On the agenda were resolutions to approve one tax abatement and to set a public hearing for another.

The resolution on a tax abatement was for Picometrix LLC, located at 2925 Boardwalk in Ann Arbor. Picometrix is a supplier of high-speed optical receivers.

The five-year abatement would apply to $2,434,882 worth of personal property that Picometrix is acquiring. From the application for abatement: “Due to the projected increase in production volume, the company will need to purchase assets to maximize production and support added staffing.”

The list of personal property included in the application ranges from garden-variety desks and cubicles to digital oscilloscopes and laser beam profilers. The abatement will reduce the company’s annual tax bill for the new equipment by about $16,500 annually. The new personal property is expected to generate approximately $20,700 in property taxes for each year during the abatement period, according to the city staff memo accompanying the resolution.

The industrial development district in which the Picometrix tax abatement is sought was established in 2006. The public hearing on the request from Picometrix was held at the council’s July 18 meeting. Only one person spoke at the hearing.

Also at its Sept. 19 meeting, a separate resolution set a hearing for a tax abatement for Arbor Networks. That hearing will take place at the city council’s meeting on Oct. 17, 2011. Arbor Networks is a computer network security company. The abatement would be on $883,527 in real property and $7,790,454 in personal property. Under the requested abatement, the tax bill on the additional real and personal property for Arbor Networks would be reduced by about $84,700 annually for five years. The new building improvements and personal property investments are estimated to generate about $107,800 in property taxes for each year during the five-year abatement period.

During the brief deliberations, Stephen Kunsleman (Ward 3) wanted to know how previous abatements had worked out with Picometrix. The city’s CFO, Tom Crawford, told Kunselman it had worked out well – they’ve met their requirements. Kunselman noted he’d had a tour of the facility and said it’s very impressive.

Outcome: On separate votes, the council unanimously approved the Picometrix tax abatement and the setting of a public hearing on Arbor Network’s abatement request.

Property Assessed Clean Energy (PACE) Program

The council considered a resolution to formally express its intent to establish an Energy Financing District and a Property Assessed Clean Energy program (PACE). The resolution also included setting a public hearing for the council’s first meeting next month, on Oct. 3, 2011.

The resolution of intent refers to a report, which describes in detail the project and property eligibility for PACE, as well as project size, application process, and financing, among other elements.

At its March 7, 2011 meeting, the council had voted to set up a $432,800 loan loss reserve fund to support the city’s planned PACE program. The money for the fund comes from an Energy Efficiency and Conservation Block Grant (EECBG) awarded to the city by the U.S. Department of Energy.

Through its PACE program, the city of Ann Arbor will help commercial property owners finance energy improvements through voluntary special assessments. By establishing a loan loss pool, the city can reduce interest rates for participating property owners by covering a portion of delinquent or defaulted payments. [Some previous Chronicle coverage of PACE: "Special District Might Fund Energy Program"]

After the public hearing, the city council would still need to pass a resolution establishing the program.

During deliberations, Carsten Hohnke (Ward 5) asked Matt Naud, the city’s environmental coordinator, to sketch out how the program works. Naud also brought Wendy Barrott to the podium, who is coordinating the PACE program for the city. One point that was highlighted was the fact that the state enabling legislation currently covers only commercial property, but that includes multi-family housing.

Sabra Briere (Ward 1) noted that she was already fielding questions about when property owners can apply, and she drew out the fact that on Oct. 3 after the public hearing, the council can establish the program. At that point the city can accept applications from commercial property owners who already have an energy assessment in place.

Outcome: The council voted unanimously to pass the resolution of intent to establish a PACE program.

Same-Sex Benefits

On the agenda was a resolution urging Gov. Rick Snyder not to sign House bills 4770 and 4771, which prohibit public employers from providing certain benefits to public employees and which will eliminate benefits for domestic partners of the same gender.

Steve Powers, the new city administrator, shares a laugh with Sandi Smith (Ward 1) before the Sept. 19 meeting.

The language of the resolution notes that a number of public entities provide health care benefits for domestic partners of either gender – including the state of Michigan, public universities, as well as city and county governments, and public school districts.

The resolution was sponsored by Sandi Smith (Ward 1).

Jeff Irwin – a Democrat who represents state House District 53, which includes most of Ann Arbor – voted against the bills and argued on the House floor against them: “If this becomes law, we will have two employees working side by side with the same qualifications and experience and the employee living in a traditional family will receive significantly greater compensation. That is clearly unfair and discriminatory.”

The council resolution reaffirmed Ann Arbor’s “commitment to a diverse and accepting culture.”

Smith led off the brief deliberations by saying that Ann Arbor has always been a leader in human rights. She noted that many public employers provided benefits to domestic partners. She cast it as an economic issue – it’s about attracting talent to Michigan, she said. If Michigan puts forward that it’s intolerant, Michigan will not be able to attract the best and the brightest.

Mayor John Hieftje said he appreciated Smith bringing it forward. She’d done a good job of citing the reasons, he said.

Outcome: The council voted unanimously to urge Gov. Rick Snyder not to sign the two bills affecting same-sex benefits.

Cleaning Contract

The council was asked to authorize a $580,680 cleaning contract with Kristel Cleaning Inc. for janitorial service at the city’s municipal center, Wheeler Service Center, the water treatment plant, the Ann Arbor Senior Center and various smaller locations.

The contract had been postponed from the council’s Sept. 6 meeting, when Sandi Smith (Ward 1) had raised questions about the need for a 5-day cleaning schedule for the new municipal building and city hall.

At the Sept. 6 meeting, Smith had wanted to understand what factored into the frequency of cleaning: Does it depend on the number of public visitors or the number of people who work there? What are the problems with a 3-day schedule? Alluding to the fact that the city had dropped down to a 3-day schedule from a 5-day schedule, mayor John Hieftje suggested that it would be appropriate to ask if the city is spending more for cleaning now than three years ago. Interim city administrator Tom Crawford had said “fruit flies and critters like that” were an example of some problems with the 3-day schedule.

The council did not deliberate on the resolution at its Sept. 19 meeting.

Outcome: The council voted unanimously to approve the cleaning contract.

Thank You to Interim City Administrator

The council acted on a resolution to recognize the service of the city’s CFO, Tom Crawford, who served as interim city administrator from the end of April until Sept. 15.

New city administrator Steve Powers attended his first council meeting. He’d attended a work session the previous week, though he had not officially assumed the post at that time.

Marcia Higgins (Ward 4) introduced the resolution, added late to the agenda. She said Crawford would be given a $10,000 bonus in recognition of his service. [Crawford was selected from internal candidates who applied to be interim administrator.]

In accepting the acknowledgment and the ovation he received from the council, Crawford’s comments were brief, saying that the work that gets done is done by city staff.

Outcome: The council voted unanimously to approve Crawford’s bonus.

Local Development Finance Authority (LDFA) Board Membership

On Monday’s agenda was a resolution to amend the agreement between Ann Arbor and the city of Ypsilanti so that a councilmember who serves on the local development finance authority (LDFA) board will not serve on that board past the time they are a member of the city council.

Under the change to the agreement, the city council representative to the LDFA board would cease to be a member of the LDFA immediately when that person ceases to be a member of the city council. The change addresses the fact that appointments to the LDFA board are for four years, while councilmembers are elected to just two-year terms on the council.

To take effect, the change must still be approved by the Ypsilanti city council, and then the LDFA board must change its bylaws to be consistent with the agreement.

The change was previously discussed at the council’s July 18, 2011 meeting, when Stephen Rapundalo (Ward 2) was appointed by his council colleagues to a four-year term on the LDFA. Rapundalo, a Democrat, faces a challenge in the Nov. 8 general election from Jane Lumm, who is running as an independent. Lumm has assembled a long list of endorsements from prominent Democrats and Republicans.

The LDFA is funded through tax-increment financing (TIF) in a manner similar to the way the Ann Arbor Downtown Development Authority is supported. A TIF district allows authorities like the LDFA and the DDA to “capture” some of the property taxes that are levied by other municipal entities in the district. The LDFA contracts with the economic development agency Ann Arbor SPARK for various business development services. [For more background on the LDFA, see Chronicle coverage: "Budget Round 5: Economic Development"]

Rapundalo explained that the bylaws for LDFA board appointments, specifically with respect to councilmembers, are inconsistent with the agreement. But the agreement between Ypsilanti and Ann Arbor has to be amended first.

Marcia Higgins (Ward 4) wanted to know when the Ypsilanti city council was meeting to decide the issue. At their Oct. 4 meeting, Rapundalo said.

Outcome: The council voted unanimously to approve the change in the Ypsilanti-Ann Arbor LDFA agreement.

Leaf Trucks

In his first communication as city administrator, delivered earlier in the meeting, Steve Powers had ticked through the various options available to residents for leaf pickup – carts, bags, or mulching in place.

Steve Powers, Ann Arbor city administrator.

The council was asked to consider a resolution to rent eight rear-load trucks for $138,000 for use in connection with fall leaf collection.

Sue McCormick, public services area administrator, answered some questions from councilmembers about the truck rental.

Sabra Briere (Ward 1) noted that the city no longer picks up leaves by asking people to rake them into the street, and instead requires residents to use carts or bags. McCormick allowed that Briere was right – the trucks to be rented simply supplement the city’s regular trucks, and reduce the number of times that trucks would need to be emptied as they cover their routes. They supplement the fleet, she explained.

In response to a query form Sandi Smith (Ward 1), McCormick said that when the city budgeted for 2011, it expected to save $104,000 by moving to containerized leaf collection. In fact, there’d been a $200,000 reduction. She cautioned that the figure was unaudited. For the 2012 fiscal year, the city is estimating $150,000 in savings, she said. There would be a slight increase in truck rental costs, she said, but it’s still expected to be more efficient than bulk leaf collection.

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: City Council Liaison to Housing Commission

During council communications at the conclusion of the meeting, Stephen Kunselman (Ward 3) elicited from mayor John Hieftje that Hieftje had decided not to accept Kunselman’s offer, made at the council’s Sept. 6 meeting, to serve as the city council’s liaison to the Ann Arbor Housing Commission.

The post of council liaison to the commission became vacant when it was announced at the council’s Aug. 4 meeting that Tony Derezinski (Ward 2) had volunteered to replace Jeff Meyers on the city’s public art commission, if some other councilmember could be found to replace Derezinski as housing commission liaison.

Hieftje announced at the Sept. 19 meeting that two councilmembers had volunteered to be the housing commission liaison: Kunselman and Margie Teall (Ward 4). Hieftje said he’d be bringing forward Teall’s name as the nomination at the council’s next meeting.

Were Kunselman appointed as council liaison to the housing commission board, he would have been working closely with a body that now includes Leigh Greden, whom Kunselman defeated in the 2009 Ward 3 Democratic Party primary election. Teall was one of Greden’s strongest allies on the council during the time that he served.

Comm/Comm: Welcome to New Administrator

Mayor John Hieftje welcomed new administrator Steve Powers to his first council meeting.

Powers thanked the council for its confidence in him. He said he was excited to be living in Ann Arbor. He was eager to join the team and to move the community forward.

Comm/Comm: Video Surveillance Ordinance

Sandi Smith (Ward 1) has told her colleagues at previous meetings that she expected a video surveillance ordinance to be brought forward soon. She told them there’d been some additional concerns about homeland security issues that had delayed it. She thought it would be ready for the council’s next meeting and the text would be available well before the next meeting.

Comm/Comm: Audit Committee

Stephen Kunselman (Ward 3) said he was a member of the audit committee and there had not been a meeting held the previous year, but that he would try to meet with the auditor to discuss the FY 2011 audit this year. [Other members of the council's audit committee include: Carsten Hohnke (Ward 3), Stephen Rapundalo (Ward 2), Sandi Smith (Ward 1) and Margie Teall (Ward 4).]

Rapundalo responded to Kunselman’s point on the audit and the apparent lack of a meeting. He said the decision not to call a meeting of the audit committee was based on the fact that there was little to discuss in the report and that instead, the audit came to the full council, which accepted it and passed it. There was no need to meet, he said. Rapundalo said he was awaiting the FY 2011 audit to see if it merits a meeting of the audit committee or if it can go straight to the full council.

Comm/Comm: A2OpenBook

At the Sept. 19 meeting, CFO Tom Crawford announced the launch of A2OpenBook, an online tool that residents can use to follow the city’s revenues and expenditures. The information on the system is refreshed daily from the city’s LOGOS financial system.

The online system allows users to look at expenses and revenues by service area, by fund and by expense type. The information is downloadable in MS Excel format so that users can search for and manipulate data as desired. Information is available for expenses beginning July 1, 2010 – data is updated daily.

There’s a possibility that data for P-Cards – the city’s purchasing cards – might be added in a second phase of the project.

A similar system – called OpenBook – was launched a year ago by Washtenaw County government.

Comm/Comm: Public Speaking Time

Michael Benson introduced himself as a Ward 2 resident. He noted that councilmembers might also recognize him as president of the University of Michigan graduate student body, but he said that’s not why he was there.

Benson led off by thanking councilmembers for their service. He pointed out that the council would soon be reviewing its rules. [This is a regular activity each November after the new edition of the city council is elected.] With respect to public speaking turns, he asked that the council enforce the current rules. Specifically, in selecting speakers for the 10 slots available at the start of a meeting, people who are speaking on agenda items are supposed to be given priority over those who are not speaking directly to some agenda item.

Benson also asked the council to consider looking at the topic of diversity. The whole point of Michigan’s Open Meetings Act is to let people participate, he said. Benson also noted that some people speak on similar issues over and over again – it might be useful to give preference to people who have not spoken at an immediately preceding meeting.

Comm/Comm: Sidewalks, Line-of-Sight

Kathy Griswold began by thanking the city for its cooperation with the Kiwanis Club – the council had agreed at its Sept. 6 meeting to lease part of the building at 415 W. Washington to Kiwanis for its warehouse sale.

Alluding to the Dexter Avenue sidewalk assessment the council had voted on, Griswold noted that for a section of sidewalk near King Elementary that would need to be installed to allow moving a crosswalk to a four-way stop intersection, neighbors had been willing to pay for it. She pointed to an ongoing $5,400 expense for a crossing guard that could be eliminated if the crosswalk were moved.

Griswold pointed to a problematic area located off Stone School road where branches are obscuring sight lines. On Sept. 9, a woman pulled out and was hit by someone travelling southbound, Griwold reported. She said she sent photos to the police chief. We shouldn’t have to wait for an accident, she said. There needs to be adequate site distance.

Comm/Comm: Recall Snyder

Thomas Partridge introduced himself as an advocate for people who can’t attend the meetings. He called on people to support the recall of Gov. Rick Snyder and other Republican members of the legislature. He called on everyone to protect the most vulnerable citizens – ethical access to law enforcement and affordable transportation, housing and education and health care. Things are going downhill under Gov. Snyder, and under the Republican-dominated U.S. Congress, he contended. He asked people to re-examine their political viewpoints and to unite everyone under a new governor.

Later, during public comment time at the end of the meeting, Partridge reiterated complaints he’s made before the Ann Arbor Transportation Authority board about quality of service provided by AATA. Responses from the AATA are too often surly and resentful, he said.

Comm/Comm: Energy Farms

Kermit Schlansker called for a variety of approaches to deal with the diminishing resources caused by increased affluence. He told the council that solutions needed to be found for feeding and housing the poor. He described a wide range of initiatives, including the planting of nut trees in city parks and digging cisterns. He called for the creation of energy farms that would include biomass digesters, solar and wind energy generation.

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

Next council meeting: Oct. 3, 2011 at 7 p.m. in the council chambers at 301 E. Huron. [confirm date]

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