Political wrangling between the Ann Arbor Downtown Development Authority and the city of Ann Arbor over which entity would pay for the project likely won’t be remembered by many people.

On Dec. 4, 2013, city administrator Steve Powers attended his first DDA board meeting as a member. (Photos by the writer.)

The board also considered a resolution added to the agenda on the day of the meeting, related to the contribution-in-lieu (CIL) parking agreement for the 624 Church St. project – but ultimately decided to table that resolution pending further review at the committee level.

The DDA’s Dec. 4 resolution allocating $280,000 for the Main Street light pole replacement ended the political wrangling over who should pay for those downtown Ann Arbor light poles. Replacement of the deteriorating poles was identified by the city as a need in the first half of 2012. The source of an estimated $600,000 required for the project was specified in the city’s CIP (capital improvements plan) that year as coming from the DDA – though the funds were at that time not authorized by the board.

In the spring of 2013, the city council weighed how it might clarify the city’s ordinance that restricts the DDA TIF (tax increment finance) capture. In that context, DDA executive director Susan Pollay told the council that the DDA might not be able to afford to pay for the Main Street light pole project – if the council changed the ordinance language to clarify the calculations in a way that did not favor the DDA. The question of the DDA’s TIF capture was not ultimately settled until the council’s Nov. 18, 2013 meeting.

In the interim, the city council voted at its May 20, 2013 meeting to request that the DDA allocate at least $300,000 for the $580,000 light pole project. After the council then declined at its Oct. 21, 2013 meeting to approve a budget allocation for the remaining $280,000 that was needed for the project, the DDA board passed its Dec. 4 resolution, citing the urgency of replacing at least 36 of the poles as the reason for its decision.

According to the DDA’s resolution, staff will use the DDA funding to begin now with replacement of those poles most in need of being removed, with the remainder replaced in the summer of 2014.

Also at its Dec. 4 meeting – in connection with the city’s pending sale to Dennis Dahlmann of the former Y lot, at William Street and Fifth Avenue – the DDA board passed a resolution that waived claim to $1,439,959 in reimbursements from the sale that the DDA has calculated it might be owed. The city council adopted a policy on Oct. 15, 2012 that included depositing net proceeds (after reimbursements) from the former Y lot sale into the city’s affordable housing trust fund.

So the DDA board’s action is an attempt to increase the amount that will be deposited into the affordable housing trust fund. The resolution passed by the DDA board also calls on the city council to waive the city’s claim to reimbursements. The city purchased the property in 2003 for $3.5 million and has made interest-only payments for the last 10 years on a loan for that amount. The agreed-upon sale price to Dahlmann is $5.25 million.

In another formal action taken on Dec. 4, the DDA board accepted the audit report from the most recently concluded fiscal year – FY 2013, which ended June 30, 2013. The auditor issued an “unmodified” or clean opinion.

The board also considered a request, which was ultimately tabled, from the developer of the 624 Church St. project. The developer is asking for an extension of the contractual agreement under which parking permits could be purchased using the city’s contribution-in-lieu (CIL) program. The program allows a developer to satisfy certain zoning requirements that parking spaces be provided for a project – by purchasing monthly permits in the public parking system at a premium rate, instead of building the spaces on site. The developer of the 624 Church St. project wants the ability to extend the 15-year minimum to cover a 30-year financing period – based on feedback from firms that would be providing the financing. The DDA board ultimately voted to table the question pending further review by the board’s operations committee.

The board’s newest members introduced themselves at the meeting: city administrator Steve Powers and Main Street retailer Cyndi Clark.

Also at its Dec. 4 meeting, the board heard a range of updates on various projects and public commentary. Highlights included a report from the Main Street BIZ (business improvement zone), which has enough money in its fund balance to handle sidewalk snow removal for the coming winter, without collecting the winter tax assessment to which it is entitled. In a separate update, there’s a possibility that downtown ambassadors could be hired by the DDA as soon as the summer of 2014.

Other topics covered in updates included the effort to save the State Theater, the NHL’s Winter Classic on New Year’s Day, and The Puck Drops Here festivities on New Year’s Eve.

Main Street Light Poles

The need to replacement the Main Street light poles due to rusting bases has been known since last year – in early to mid-2012.

Downtown Ann Arbor Main Street light pole on northeast corner of Main & William. Photograph is from the city of Ann Arbor, taken in April 2012.

This spring, at city council meetings, replacement was characterized as an urgent public safety issue, because the bases of some of the poles are rusting. Various statements were made about the number of light poles that had failed, but responding to an emailed query from The Chronicle earlier this year, city of Ann Arbor staff indicated that in early 2012 two of the light poles fell – due to a structural failure at the base of the poles caused by rust. After inspection of all the poles, two additional light poles were deemed to be in immediate risk of falling and were also replaced.

The poles were part of the city’s CIP last year with the source of the funds identified in the CIP that year as the DDA’s TIF (tax increment finance) fund. The status of the funding – estimated at that time to be $600,000 – was identified as not yet authorized.

Over the course of the year, the replacement of the light poles became part of the fractious politics between the city council and the DDA.

In timeline overview form:

• April 1, 2013: Initial approval of DDA TIF capture ordinance revision (Chapter 7). Main Street light poles were cited as a project the DDA might not be able to pay for if the Chapter 7 revisions were approved.
• April 15, 2013: City council approves an amendment put forward by Sally Petersen (Ward 2) to the Chapter 7 revision, which delayed applying the revised language until FY 2015.
• May 20, 2013: City council approves FY 2014 budget amendment that affects DDA budget.
  

  Whereas, The DDA is forecasted to receive $568,343 more in TIF revenues than anticipated in the proposed FY14 budget;
  Whereas, Council desires to support the public housing program in the DDA area;
  RESOLVED, The DDA TIF fund revenue and expenditure budgets be increased by $568,343 for the purposes of creating a one-time transfer;
  RESOLVED, The DDA Housing fund revenue and expenditure budgets be increased by $300,000 to reflect Council’s desire for the DDA to support affordable housing in the DDA area; and
  RESOLVED, Ann Arbor City Council requests that the DDA allocate at least $300,000 for the replacement of the light poles on Main Street.

• June 5, 2013: DDA board meets and executive director Susan Pollay reports the council’s action. She tells the board that she’s meeting with city staff to figure out how the light poles will be paid for.
• July 3, 2013: DDA board allocates $300,000 for the light pole replacement project at the same meeting it allocates $250,000 for other capital projects, and $59,200 to support the creation of a business improvement zone in the South University area. One “whereas” clause characterized the council’s action in a way that is not based on the wording of the city council’s May 20 budget amendment.
  

  Whereas, Through the 2013/14 budget approval process it was determined that the City would undertake this street light replacement in calendar year 2013, with the DDA allocating $300,000 toward the cost of the project, and the City allocating $216,000; [.pdf of complete DDA light pole resolution]

• Oct. 21, 2013: City council resolution allocating $280,000 toward the project fails on a 7-4 vote. It needed eight votes for approval.
• Oct. 31–Nov. 1, 2013: City staff inspect the 81 light poles, determining that 36 need to be replaced within 6 months and the remaining 45 within 1-2 years.

Until the Oct. 21 council resolution failed, according to city of Ann Arbor public services area administrator Craig Hupy and DDA executive director Susan Pollay, their intent was that a cost-sharing arrangement between the city and the DDA would allow for the DDA to purchase the fixtures for all the poles, with the city paying for the poles. The DDA proceeded with the purchase of the fixtures. That left insufficient funds to deal with the 36 Main Street light poles most in need of replacement. The initially planned splitting of the costs, which did not come to fruition, appears to have contributed to the timing of the DDA’s resolution to allocate the additional $280,000 on Dec. 4.

Main Street Light Poles: Board Deliberations

Roger Hewitt began deliberations on Dec. 4 by indicating he believed it was back in May when it was determined that the light poles on Main Street were rusting out at the bases, and that they all needed to be replaced. [The need to replace the poles was identified a year earlier in 2012, with the source of the funds identified in the city's CIP that year as the DDA's TIF fund. The status of the funding – estimated at that time to be $600,000 – was identified as not yet authorized in the CIP.]

Hewitt indicated that in May, the DDA passed a resolution that it would allocate $300,000 of the $580,000 for the total cost of the project – which would be carried out by the city, he said. [The DDA's resolution was actually passed on July 3, 2013. What was passed in May – on May 20, 2013 – was a city council budget amendment that included a request for the DDA to allocate at least $300,000 toward the light pole project.]

Hewitt continued by saying that the city’s portion was going to be $280,000, but when asked to approve the additional funds, that resolution “was not successful at the city council.” There was therefore a shortage of $280,000, Hewitt said. An examination had been done, and many of the light poles are a safety hazard, he said. So the DDA was recommending that $120,524 be allocated in this fiscal year. That’s the amount remaining in a bond fund for State Street improvements that were done back in 2000 or so, Hewitt said. It’s money that had been sitting in a fund that had been unspent for about 10 years. This would require changing the budget, he said. And then in the next fiscal year [FY 2015], Hewitt continued, the remaining money would be allocated. Hewitt alluded to the fact that the FY 2015 budget has not yet been adopted by the DDA board.

DDA board chair Sandi Smith.

DDA board chair Sandi Smith offered what she described as a “super friendly amendment” to change the description of the fiscal years to match the city of Ann Arbor’s labels. [The current fiscal year, which started July 1, 2013 is FY 2014 under the city's labeling scheme. The DDA has historically named the calendar years spanned by the fiscal year – e.g., calling this year FY 2013-14.]

John Mouat asked if there was conversation about the State Street improvement project. He wanted to know what the status of the project was. Hewitt told Mouat that the project was completed over 10 years ago. Hewitt said that in the upcoming fiscal year, the DDA should take a look at improvements in that area. Some of the improvements made back then had taken a beating, Hewitt said, so he felt it would be appropriate to spend some money in the State Street area to do repairs in the existing streetscape.

Mouat wondered whether some aspects of the State Street project had not been completed in the context of the moratorium on new streetlights.

By way of background, the “moratorium” on additional streetlights has its origins in a budget amendment approved by the city council in 2006. The history and current policy (which includes the moratorium) was reviewed in a message to councilmembers from city administrator Steve Powers this past summer. [.pdf of July 9, 2013 email]

At the Dec. 4 meeting, Hewitt said he didn’t think there were any streetlights that were a part of the State Street project plan that were not completed. DDA executive director Susan Pollay explained that as the lights were installed, the DDA discovered that the streetlights that had been selected didn’t cast as much light as they’d hoped. There were some very tall lights that fit that description, she said – at that time, light pollution was a very big concern, she added. The light levels were low, she said. Some light was supposed to be provided by store windows.

Pollay described how “dollars were held back” so that additional light could be added to the area. Ultimately the design, which looked good on paper, was not successful in achieving the desired light levels, she said. There’s an unofficial understanding that the city’s electric bills are not supposed to be increased by adding more lights. As the DDA waits to understand what the city policy on replacing streetlights might be, Pollay said it was appropriate to use that money to replace the light poles on Main Street. At some point, the light levels on State Street would be revisited, she said.

Mouat thanked Pollay for that clarification. John Splitt wanted to reaffirm that he hoped something could be done in the coming year in the State Street area – in connection with the lighting, as well as with the planters. Russ Collins offered what he called a “niggling point” about the Washington Street area: The streetlights on Washington Street are off – they’re not functioning on the south side, Collins said.

Outcome: The board voted unanimously to approve the additional $280,000 in funding.

Proceeds of Y Lot Sale

By way of background, at its Nov. 18, 2013 meeting, the Ann Arbor city council approved the sale of city-owned property downtown – a parcel north of William Street between Fourth and Fifth avenues – to Dennis Dahlmann for $5.25 million. The city purchased the property for $3.5 million 10 years ago and has been making interest-only payments on the property for that time. A balloon payment is due at the end of this year. The DDA has been shouldering roughly half of the interest payments on the loan taken out by the city.

The former Y building offered 100 units of single-resident occupancy (SRO) low-income housing. Soon after the city’s purchase, the mechanical systems in the building failed, and all the residents needed to be relocated. The building was subsequently demolished, which the DDA paid for. Equipment was installed so that it could be used as a surface parking lot until its ultimate disposition was determined.

At its Nov. 18 meeting, the council did not delve into the question of how the net proceeds of the pending sale would be defined, but some councilmembers indicated they were pleased that the result would be a deposit into the city’s affordable housing trust fund. A year ago at the council’s Oct. 15, 2012 meeting, councilmembers adopted a resolution that indicated the proceeds of the sale would:

“… first be utilized to repay the various funds that expended resources on the property, including but not limited to due diligence, closing of the site and relocation and support of its previous tenants, after which any remaining proceeds be allocated and distributed to the Affordable Housing Trust Fund …

That council policy was approved after the DDA board passed its own resolution on Sept. 5, 2012, encouraging the city to return to a previous policy that dedicated the net proceeds of sales of all city-owned land (not just the Y lot) to support affordable housing.

On Dec. 4, Keith Orr offered a replacement to the resolution that was included in the board packet. Orr alluded to the fact that he was bringing forward the resolution – because he served in the “Dave DeVarti seat” on the DDA board – even though many people had worked on it.

By way of additional background, during his period of service on the DDA board, DeVarti was a staunch supporter of funding for affordable housing. DeVarti was not reappointed, and in late 2008 Orr was appointed to replace him. After DeVarti left, board members sometimes have quipped that they were “channeling Dave DeVarti” when they spoke in support of affordable housing.

During public commentary at its Nov. 6, 2013 meeting, DeVarti addressed the board on the topic of the former Y lot, suggesting that the DDA purchase the lot outright, so that the need to repay the loan would be removed as the impetus toward selling the lot. That approach would give the city a lot more flexibility, he had argued.

The substitute resolution offered by Orr at the board’s Dec. 4 meeting included a separate “whereas” clause establishing the DDA’s position that affordable housing is in the interest of the downtown. The revision also named specifically the net amount that the DDA believes it has invested in the property: $1,439,599. And finally, the revised resolution separately recommended the city council waive its own reimbursement of its costs in connection with the sale of the former Y lot parcel.

Orr pointed out that the address of the property is 350 S. Fifth. He noted that the city now has a purchase agreement. Orr said that part of the sales agreement is that entities that had investment money in the property would be reimbursed. [Later in the meeting, city administrator Steve Powers, who was attending his first meeting as a DDA board member, corrected Orr's statement, pointing out that this was not part of the sales agreement but rather a city council resolution, passed in 2012.] The largest portion of the DDA’s contribution was paying for the demolition of the former Y building and picking up a portion of the interest payments.

A document provided at the DDA board meeting showed the demolition costs at $1.469 million and interest payments totaling $600,426 since 2004. The net contribution, factoring in the income the DDA received from the surface parking operations it established on the parcel after demolishing the building, was $1,493,959. So the resolution asked the DDA board to waive reimbursement of that amount. [The copy of the resolution distributed to the audience named $1,439,959 as the amount of the DDA board was waiving. That's the amount Orr named in reviewing the resolution. A separate document distributed at the meeting with the actual breakdown of payments and costs showed $1,493,959. The correct math based on those figures is the greater amount: $1,493,959.]

The resolution also asked the city council to waive its claim to reimbursements, which Orr said was around $ 2.7 million. The goal, Orr said, was to ensure that a substantial investment in affordable housing can be made.

Joan Lowenstein followed Orr’s description by saying that the DDA’s goal has been to see that the maximum amount from net proceeds of the sale go into the city’s affordable housing trust fund.

Orr confirmed Lowenstein’s understanding, but added that the resolution reflected everything that the DDA could do to maximize the investment in affordable housing as a result of that property sale. The DDA’s commitment to affordable housing, Orr said, was confined to investments within the district, or within 1/4 mile of the district. The city had more flexibility, Orr said.

Al McWilliams asked about the general motivation to use the proceeds from the Y lot to support affordable housing. Orr said that one reason is historical: The former Y building had included 100 single-resident occupancy units that provided low-income housing.

Orr continued by saying there’s always been this feeling that the proceeds of the sale should help low-income and affordable housing. Orr also pointed out that when board chair Sandi Smith served on the city council, the council was already talking about doing that. “It’s not a particularly new idea,” he concluded.

Bob Guenzel said that in his mind, it was more than a promise that those 100 units would be rebuilt in the downtown area, even if not on the same piece of property. That hasn’t happened for a number of reasons, Guenzel said, but the “substitute” is that the proceeds of the sale would be used for affordable housing. A lot of people remember that community commitment that was made, he concluded.

Russ Collins asked: Does the city have specific plans to build – or cause to be built – affordable housing? Collins wondered if there was any plan to contract with the Delonis Center [a homeless shelter located in Ann Arbor] to operate supportive housing? He wondered if there was any strategic plan to actually execute anything?

City administrator Steve Powers said that the city council’s first action would be to complete the sale of this property. He said he was not aware of any specific steps pending after that.

Collins ventured that there’s no strategic plan that the city is party to, other than “collect a bunch of money and use it for affordable housing?” “Council has no strategic plan …? If they do, that’s great,” Collins said. Powers responded to Collins by saying that the city is a party to work with the Washtenaw Housing Alliance (WHA) and the county’s office of community and economic development. There’s not a city-specific plan at this time, Powers said. WHA and the county’s office of community and economic development are talking about doing an assessment of affordable housing needs.

There’s a continuum, Guenzel said, from the very poorest to what is called workforce housing. He told Collins that there are a lot of discussions about it.

Historically, Smith said, there were funds in the affordable housing trust fund, and that has been spent down. There was no ability to plan for those funds, she said, because the balance is under $200,000 right now. It’s pretty nominal, she said, and you can’t build a unit for that amount. Guenzel noted that the question of whether some funds could be used for bricks-and-mortar versus supportive services was yet to be determined.

Collins had concerns about how prudent it is to allocate money toward a generally good idea without a clear strategy of what to do. “It’s great to do nice things. The DDA tries to do nice things, and we’re told that we’re a shadow government,” he said. If there’s no community strategy for addressing this, the DDA is doing something that might be nice in the future, he said, but he indicated he didn’t feel this was genuinely addressing the issue.

Smith replied that she didn’t necessarily think the DDA was the organization to tackle affordable housing. Smith noted the DDA has historically set aside money for affordable housing – and it’s now built into the DDA ordinance that the DDA is required to set aside $300,000 annually for affordable housing. She strongly supported the resolution because the DDA would then be able to leverage funds with the city and the county. She pointed to the last “resolved” clause that called on the city to follow the DDA’s example. Then those resources could be used to create a solid plan and move forward, she said.

John Mouat asked if it would be possible to take advantage of the city’s housing and human services advisory board (HHSAB). That would be a good entity to consult with in its advisory capacity. Powers indicated that he thought HHSAB had already had those kinds of discussions.

Outcome: The board unanimously approved the resolution waiving the DDA’s interest in proceeds of the sale of the former Y lot.

Proceeds of the Y Lot Sale: Parking Contract

Toward the end of the meeting during communications time, John Splitt indicated that he had some concerns about the sale of the former Y lot, based on the contract – under which the DDA manages the public parking system for the city. Under the contract, he said, the DDA is supposed to be given notice about the removal of parking spaces from the system. Sandi Smith stated that “We have not received written notice.”

Roger Hewitt responded to Smith by saying that he’d reviewed the most recent contract and he was not sure that the city actually is required give notice. DDA executive director Susan Pollay said that the contract refers to a “lease” and not a “sale.” Splitt said he just wanted to make sure that there was enough time to move equipment.

City administrator Steve Powers responded by saying that the city would be providing information about that, quipping: “It’s in the mail.” In connection with the sale of the property, the city would work through the removal of the parking equipment with the DDA, Powers said.

From the parking contract [emphasis added]:

The City shall not lease any portion of individual Facilities to third parties where such lease (either alone or cumulatively with other leases in such Facility) would reduce the number of usable parking spaces in such Facility by more than one percent (1%) or five (5) parking spaces, whichever is less, without first (i) providing DDA with thirty (30) days prior written notice; (ii) consulting with DDA about the location and terms of use of such leased spaces to reduce the impact of such use on DDA’s use of the Facility; and (iii) upon DDA’s written request delivered no more than fifteen (15) days after notice of the proposed lease, executing a side letter between City and DDA, the sole purpose of which is to make DDA whole for the loss of Gross Parking Revenue associated with the reduced parking spaces.

FY 2013 Audit

Board member Roger Hewitt made the motion to accept the DDA’s 2013 financial audit. Every year the DDA has an audit performed to ensure the DDA’s financial position is accurately stated. [.pdf of DDA FY 2013 audit]

DDA board member Roger Hewitt.

The DDA uses the same firm as the city [Rehmann], Hewitt said. The audit came back this year with an “unmodified” opinion, meaning there were no changes. He explained that the outcome essentially means that it was “clean” and that the DDA’s financial statements are an accurate reflection of the DDA’s financial position.

There was a suggestion, he allowed, to have an independent review of general journal entries. That’s been put in place, he said. A CPA the DDA has on contract will review those journal entries, he reported.

“Everything is just fine, according to our auditor,” Hewitt said. The conversation with the auditor was a good conversation that will help shape the budget in the upcoming year, Hewitt said.

Outcome: The DDA board voted unanimously to accept the FY 2013 audit report.

624 Church Street Parking CIL

By way of background, on Nov. 6, 2013 the DDA board approved the purchase of 48 parking permits under the contribution-in-lieu (CIL) program for a revision to a proposed residential development at 624 Church St. in downtown Ann Arbor. The spaces were approved to be provided in the Forest Avenue parking structure.

The CIL program allows a developer the option of purchasing permits to satisfy a parking requirement that would otherwise be satisfied by providing parking spaces on site as part of the project.

The original proposal for 624 Church, which received site plan approval from the city council at its March 4, 2013 meeting, was for a 13-story, 83-unit apartment building with approximately 181 beds. And for that version, the Ann Arbor DDA had authorized the project to purchase up to 42 monthly permits through the city’s contribution-in-lieu program.

The newly revised 624 Church St. project, which still needs planning commission and city council review, is larger than the original project, with roughly 122 units and 232 beds. The parking requirement is a function of the by-right premiums for additional square footage beyond the basic by-right of 400% floor area ratio (FAR). So the parking requirement for the revised project is greater than for the original version of the project. That’s why the DDA was asked to increase the number of permits from 42 to 48. The number of required parking spaces for the revised version of the project is actually 53, but five of them will be provided on site.

The DDA makes the decision about whether there’s adequate capacity in the parking system to allow the sale of additional monthly permits – because the DDA manages the city’s public parking system under a contract with the city.

Ann Arbor’s “contribution-in-lieu-of-parking” program was authorized by the city council on April 2, 2012. That program allows essentially two options: (1) purchase monthly parking permits in the public parking system for an extra 20% of the current rate for such permits, with a commitment of 15 years; or (2) make a lump sum payment of $55,000 per space. It’s option (1) that the 624 Church St. project is using.

624 Church Street Parking CIL: Public Commentary

Brad Moore, architect for the 624 Church St. project, appeared before the DDA board during public commentary time at the start of the meeting. He asked board members to consider modifying the terms under which the 624 Church St. project would be able to lease spaces monthly parking spaces under city’s contribution-in-lieu (CIL) program. Currently the project has been allocated 48 spaces for the minimum period under the CIL, which is 15 years. It’s come to the attention of the developer (Opus) that as it lines up financing, the financing companies would like to have two 10-year extensions added to the agreement, so that the length of the agreed-upon leasing of the parking spaces would cover at least a standard 30-year mortgage.

Moore said that Opus was asking that the agreement be amended – to add an option for two 10-year agreements that would exceed the minimum financing period. DDA executive director Susan Pollay told Moore that the item could be brought to the board in the next few minutes as an action item during the operations committee report.

624 Church Street Parking CIL: Board Deliberations

A draft resolution was distributed to the board at the meeting that would have addressed the issue that Brad Moore had raised. Roger Hewitt said the issue had only been brought to his attention that day.

He said that in his experience, funding for large commercial real estate projects tended to be for a 20-year financing period. He referred to Village Green’s City Apartments project as well as Ashley Mews as examples.

The resolution would add an additional five years to the existing agreement so that it could run, at the owner’s option, for 20 years instead of 15 years.

The indication from Moore was that the five-year extension would still endanger the financing for the 624 Church St. project. Hewitt indicated a reluctance to commit to a parking agreement for the length of time that Moore was requesting. He wanted to see some evidence that a 20-year financing plan – which in his experience is typical – is not possible before setting a new precedent.

Russ Collins ventured that the matter could be tabled until more information is received. Moore said that the parking would not necessarily be tied up in a single structure. Hewitt reiterated his concern that a 30-year term in this case would set a precedent for other developers.

Al McWilliams proposed an approach that would provide for optional renewal.

After some back-and-forth, Sandi Smith indicated that her preference would be for Moore to come back to the operations committee and allow the committee members to “chew on it” a bit more. The next operations committee meeting will take place on Dec. 18 at 11 a.m. Hewitt said.

Outcome: The board tabled the question of the CIL agreement in connection with the 624 Church St. project.

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council, as well as public commentary. In addition to information reported earlier in this article, here are some highlights.

Comm/Comm: Main Street BIZ

During public commentary time at the start of the meeting, Ellie Serras introduced herself to the DDA board as the community relations director for the Main Street Business Improvement Zone (BIZ).

By way of background, the Ann Arbor DDA board voted on April 1, 2009 to award $83,270 to defray various costs associated with the formation of the Main Street BIZ. Those costs included accounting, auditing, operations and legal services.

On Dec. 4, Serras told the board she was there to bring them up to date on the organization’s activities and plans for the future, and to thank the board for their investment from the very beginning. A BIZ allows property owners to establish a vision and to select services compatible with that vision, she said. The DDA’s support of the Main Street BIZ allowed development of a successful campaign that has grown into a fully-functioning provider of important services that have improved the quality of the Main Street neighborhood, she told them.

The Main Street BIZ was established in 2010 according to the state enabling legislation, receiving overwhelming support from property owners in the three-block area of Main Street from Huron Street down to William Street, she said. The Main Street BIZ provides sidewalk snow removal, sweeping, handbill removal and landscape improvements in that area.

The services and contractors had been “skillfully managed” by the Main Street BIZ board of directors within the parameters of an annually approved budget, Serras said. Funding for the BIZ is generated by an assessment added on to the property owners’ summer and winter tax statements, she said. The BIZ board had been diligent in protecting the property owners’ investment and as a result, the existing fund balance is adequate so that even if this winter brings a severe snowstorm, the snow removal could be handled without imposing the winter tax assessment this year.

So the BIZ board has determined that no BIZ assessment would be on their 2013 winter tax statements. Even though the assessment will not be imposed, the area will still receive the same level of consistent services that it has over the last three and a half years, Serras said.

The Main Street BIZ is now currently contemplating the possibility of expanding its boundaries, she reported, based on positive comments from surrounding property owners. As it contemplates such an expansion, she continued, the Main Street BIZ would be using the blueprint that had been developed in connection with the grant that the DDA had awarded to the Main Street BIZ. The blueprint will be updated to include changes to the state statute and the procedures used for establishing a BIZ.

In appreciation to the DDA, Serras said, the BIZ board wanted to invite the DDA board to join the BIZ for coffee and pastries to talk about the BIZ – on Jan. 28 at 9 a.m. at the DDA offices. The BIZ would not be asking the DDA for anything, but wanted to express its appreciation for the DDA’s support. She alerted the board to the BIZ website: annarbormainstreetbiz.com

Comm/Comm: Downtown Citizens Area Advisory Council

Ray Detter addressed the board as chair of the downtown area citizens advisory council. He told the DDA board that the CAC has a holiday party every year when it discusses developments over the last year and things that it wants to work for in the coming year. He said the CAC supports more public art, more trees – and taking better care of those that are already in place. The group also supports improvements to the alley between East Liberty and East Washington near The Liberty Square parking structure, to make it a more public place, he said.

The CAC supports the DDA’s development of a streetscape framework plan, and its parking and transportation management plan. The downtown transportation plan is part of a transportation plan for the entire county, Detter said, that includes Zipcars, mopeds, the Ann Arbor Area Transportation Authority’s AirRide service and the getDowntown go!pass program. Detter continued by mentioning the north-south commuter rail project (WALLY), and the possible connector. The CAC wanted to avoid any need for additional above-ground parking structures, Detter said.

But the two most important areas of focus, he said, were population and retail. Retail will not thrive, he said, without a commitment to residential. The CAC applauded the success of Urban Outfitters, Bivouac and Renaissance, but was appalled by the loss of Selo/Shevel Gallery and Seyfried Jewelers.

Comm/Comm: State Theater

Ray Detter, speaking on behalf of the downtown area citizens advisory council, continued by saying that the CAC was committed to the survival of the State Theater as part of a historic theater district in downtown Ann Arbor. The theater helps define the essential identity of downtown Ann Arbor, he said. Detter noted that many people remembered the Campus Theater.

Detter acknowledged the demand for office space, but that can’t equal the value of the two theaters, he contended. The Michigan Theater, Detter said, had provided the venue for the first “talking pictures” in Ann Arbor in 1928 and the State Theater had been around since 1942. [DDA board member Russ Collins, who's executive director of the Michigan Theater, corrected Detter, pointing out that it was the Orpheum that was the first "talking picture" movie theater.]

The State Theater attracts 50,000 people a year, Detter said. Some people “might think it’s a dump at this point,” but there are ways of fixing it up, he said. Detter added that he was looking forward to the expansion of the Cinetopia series with the State Theater as one of the venues.

It’s a challenge to save the State Theater, Detter said. But the Michigan Theater board has taken the initiative to open a conversation with State Theater LLC to work on a way for the community to purchase and retain the State Theater as part of the “theater district.” The DDA should be a part of that process, Detter said. Other DDAs have done this kind of thing, “and we can do it, too.” Detter said he still remembered the $250,000 that had been given by the DDA for the lobby of the Michigan Theater.

Later in the meeting, Russ Collins followed up on Detter’s commentary by saying it was not a DDA matter per se. But regarding the State Theater, the Michigan Theater is in talks with the owners of the State Theater building. He was hopeful that would have a positive outcome with respect to preserving the cinema exhibition capability at the State Theater. He was happy with the owner’s willingness to talk.

Comm/Comm: New Board Members

Board chair Sandi Smith invited the new board members who’d been added since the last meeting to introduce themselves.

City administrator Steve Powers quipped that he would not need four minutes [the time limit afforded public speakers]. “It’s a pleasure to be with you,” he said. When mayor John Hieftje had asked him to serve, he’d agreed with enthusiasm, he reported. He appreciated and understands the importance of the DDA to the overall mission of the city. The city council had confirmed his appointment Monday night [Dec. 2]. He told the board he’d worked as city administrator for a little over 2 years. In that time, he’d gotten to know executive director Susan Pollay and had enjoyed the professional relationship between the city and the DDA. Powers saw his service on the board as strengthening that existing relationship between the city and the DDA.

Cyndi Clark introduced herself as a retail owner on Main Street for Lily Grace Cosmetics. A month ago, she’d just opened up a second business, she said – a spa. She was delighted to be on the DDA board. Her family lives in Ann Arbor and she was born and raised here, she said. She was delighted to be working with everyone. “It’s a full term for me!” she concluded.

Comm/Comm: Connector

By way of background on the connector study, the Ann Arbor Area Transportation Authority is currently conducting an alternatives analysis study for the corridor running from US-23 and Plymouth southward along Plymouth to State Street, then farther south along State to I-94. The alternatives analysis phase will result in a preferred choice of transit mode (e.g., bus rapid transit, light rail, etc.) and identification of stations and stops. A previous study established the feasibility of operating some kind of high-capacity transit in that corridor.

Roger Hewitt participates on the technical committee for that study. The DDA has contributed funding toward the study.

At the Dec. 4 DDA board meeting, Hewitt reported that three public meetings had been held on the connector project recently. The board then watched a video created to explain the project. After presentation of the video, Hewitt described the public meetings as an effort to get input on the different route options. The turnout was pretty good, he said. The morning session wasn’t all that well attended, with perhaps 10 people, Hewitt said, but the noon and evening sessions each had over 25 people attend, he said. People had a lot of questions and a lot of information was exchanged, he said, but he allowed there wasn’t as much feedback on specific transit routes as they would have liked.

Unless you’re in the “nitty gritty of it,” Hewitt felt that it’s a bit overwhelming to consider all the possibilities. The next meeting of the technical committee would take place on Friday [Dec. 6], he said, with a follow-up meeting the next Monday [Dec. 9]. The study needs to be completed in the first quarter of 2014, he said. The outcome of the study would be the “preferred local option,” Hewitt said, and he’d keep the board up to date on that.

Joan Lowenstein asked Hewitt to confirm that in the context of the basic “boomerang” route, there would still be a significant impact depending on how the route was planned through the downtown. Hewitt confirmed that, and said there had been a lot of discussion about it. One possibility that had been suggested was to just head south on State Street. There are significant problems with the width of all streets. He’d been pushing for the idea that the route needed to come at least as far west as the Blake Transit Center [on Fifth Avenue].

Right now, the group is looking at two stations – one in the central campus (State Street area) and one in the center of downtown (Main Street area). Neither the route nor the station locations have been determined, he said. There was some desire not to cross Main Street, he noted. That’s because the amount of federal support would depend on a demonstration that there’d be a savings in travel time – because “that’s how the feds measure things,” he said.

If the route crosses Main Street, then it would have to cross back over Main Street to get to the South State Street area, Hewitt explained, and with the current traffic backups on Main Street, it would be easy to get backed up during rush hour in the Main Street area. So the group is looking to stay east of Main Street.

From left: John Mouat and Roger Hewitt.

John Mouat asked for an analysis of the economic impact of such a project. In that context, he asked about the planned timing of the project. Hewitt responded by saying, “We’re talking about a while!” He noted that this is the second phase of the study, after the initial feasibility study. That study had shown that the existing ridership justifies a more robust form of transit than is currently in place. The current phase is an alternatives analysis, which would determine the local “favorite” route and mode of transportation. After that an environmental study would be done.

After all of that, you “stand in line for federal dollars,” Hewitt said. For a project that meets the right criteria, the federal government might fund up to half the cost of the project, he said. The cost, depending on the route and the mode, could be as little as $100 million and as much as $500 million. After getting the federal dollars lined up, he continued, you’d have to line up the local match. The University of Michigan has stated publicly that they’d be involved, he said, without putting a particular dollar figure on their participation. After construction and ordering of vehicles, Hewitt said, we shouldn’t expect anything rolling for 10 years.

But this phase of the study, Hewitt said, would be completed in the next three months or so. He felt that a decision was pretty close for the downtown route. It would mean a pretty big change to downtown, Hewitt said. He allowed that it’s hard to get people excited about this now, when the project is 10 years off.

Comm/Comm: Bicycles, Alt Transportation

Keith Orr gave an update on the bike share program. A representative from B-Cycle, the selected vendor, had been brought in by the Ann Arbor-based Clean Energy Coalition (CEC). They looked at potential sites for locating stations. The few on-street spots were too narrow for a station, Orr reported. So as of now, there were no requests from the CEC of the DDA for an on-street parking spot. The CEC still anticipates an Earth Day opening in the spring of 2014. Right now, the plan is for 14 stations, Orr said. Stations will be located as far north as the University of Michigan north campus, and as far west as Ashley Street.

Orr also reported out on the first usage stats for the Bike House – an enclosed facility in the Maynard Street parking structure. Orr reported that people love having it there, saying that it’s largely a commuting option for people. The time records for when people use it show that people use it primarily at the beginning of the day and the end of the day, he said, but it’s not the same people all the time. He concluded that people who are using the Bike House are not relying on one mode of transportation. Discussion is taking place about other locations where similar facilities could be constructed, Orr reported.

And based on recent go!pass stats, it continues to be a very robust program, Orr said. [The DDA funds the go!pass program, which is administered by getDowntown, whose staff are employees of the Ann Arbor Area Transportation Authority.] More rides were taken and more cards were sold and used. Orr concluded that it continues to be a very popular and important program.

Comm/Comm: Winter Classic, The Puck Drops Here

By way of background, two major events are scheduled for New Year’s Eve and New Year’s Day in Ann Arbor: The Puck Drops Here and the National Hockey League’s Winter Classic Game. In connection with the NHL Winter Classic Game to be played on New Year’s Day, the Ann Arbor Area Convention and Visitors Bureau is hosting a New Year’s Eve event called The Puck Drops Here, which will mimic the dropping of the lighted ball in Times Square, but with a 6-foot diameter lighted “puck” that is being fabricated by METAL.

At the DDA board’s Dec. 4 meeting, DDA executive director Susan Pollay reviewed highlights of the strategy that will be deployed for the NHL Winter Classic and The Puck Drops Here events.

For New Year’s Eve, the Fourth and William parking structure, as well as the Forest structure, will have a flat rate fee. That way, people will not have to stop at the cashier booth on their way out.

On New Year’s Day, the city council had approved the street closures that will be in place. The NHL has asked that staffing be provided at public garages, Pollay said. That would allow for the reservation of a parking space in advance. If people reserve in advance, that would allow them to drive directly to a specific location.

Staff would also be handing out maps – mostly with an eye to help people after the game find the place where they’d parked. Pollay also told the board that the names of those businesses that are going to be open on Jan. 1 would be listed on the back of the map.

At all structures and lots, Pollay said, a flat fee of $5 would be charged on New Year’s Day. It’s meant to reimburse the DDA for its costs, not to make a lot of money.

John Mouat asked if anyone had developed a projection of how many people will be needing to park. Pollay said that to her knowledge, no. As much as possible, people are being encouraged to use the buses and shuttles that will be provided. They’re also working to communicate to people about the parking that’s available at locations away from the stadium.

City administrator Steve Powers noted that lawn parking will be allowed, as it is on home football game days.

Comm/Comm: Downtown Ambassadors

By way of background, for several years, the Ann Arbor DDA has had an interest in maintaining some kind of additional police patrol presence in the downtown. In the mid-2000s, the DDA entered into a contract with the city of Ann Arbor with the implicit hope that the city would maintain the dedicated downtown beat cops. That contract was structured at the time to pay the city $1 million a year for 10 years, with the city able to request up to $2 million a year for a maximum of $10 million.

That hope was not realized, and the DDA has since discussed the idea of providing additional funding for police or for “ambassadors.” The idea of ambassadors was explored in the context of subsequent re-negotiations of the contract between the city and the DDA under which the DDA operates the parking system. The DDA wanted to be assigned responsibility for parking enforcement (a function performed by the city’s community standards officers) and imagined that activity to be performed in an ambassador-like fashion.

At its June 3, 2013 meeting, the city council approved a resolution encouraging the DDA to provide funding for three police officers (a total of $270,000 annually) to be deployed in the DDA district. DDA board members visited Grand Rapids this fall to observe a new downtown ambassador program in that city. The initial report from that visit was given at the Ann Arbor DDA board’s Nov. 6, 2013 meeting.

At the board’s meeting on Dec. 4, Roger Hewitt reported that the operations committee had a lengthy discussion about the idea of hiring ambassadors, based on the visit by some board members to Grand Rapids to see the ambassador program there. A number of views were expressed, Hewitt said, but most people thought it was a good idea and that the Ann Arbor DDA should aggressively pursue it. At the next operations committee meeting, Hewitt said, it would be pursued. Personally, he said, he would like to see something in place for the summer of 2014, if it’s possible to move that quickly.

Comm/Comm: Prosperity

Joan Lowenstein reported out on the partnerships committee discussion about the A2 Ypsilanti Regional Chamber’s annual Impact conference.

Keith Orr and Joan Lowenstein.

The focus this year was based on a presentation made by Lou Glazer of Michigan Future Inc. Glazer’s work suggested that there’s a strong connection between prosperity and placemaking, and attracting young talent. The trends indicate that prosperous states show a higher proportion of wages from the “knowledge industries” – medical, technical and legal professions, Lowenstein said. Prosperous states also have a high proportion of college grads. Taxes don’t play as much of a role in prosperity, she said – it’s all about educational attainment and quality of place. Michigan and Ann Arbor are lagging behind other places in terms of the number of young professionals who are attracted here.

For example, she said, Madison, Wisc. has twice the number of young professionals as Ann Arbor does, Lowenstein reported. Glazer had said that Ann Arbor has an important role to play in prosperity, but the elements that are key to that need to be embraced: transit, private sector growth and density, she said. A lot of people want to attract families, but attracting young professionals will lead to that, she said, because people tend to establish families where they get their first job. Ann Arbor needs to do a better job of engaging young professionals in the community by giving them a better voice, Lowenstein said.

One of the panels at the Impact conference included young people who are reluctant to put themselves out in public positions, because of the nature of the media and social media – because you can get trashed by putting yourself out in public, Lowenstein said. She called it an unfortunate element of our modern life.

DDA board member Al McWilliams will be working on DDA communications.

Lowenstein also reported that the partnerships committee meeting will establish a subcommittee focused on communications. Al McWilliams and Rishi Narayan will head up that subcommittee, she said – noting that McWilliams is involved in that sort of thing all the time. [McWilliams is founder of the ad agency Quack!Media.]

January’s board meeting, which was originally scheduled for Jan. 1 – because it’s part of the first-Wednesday meeting pattern – was shifted to Jan. 8. There was no traction for the possibility of changing the day of the week or the noon meeting time for the regular board meetings.

Comm/Comm: Pedestrian Crashes

During public commentary time at the end of the meeting, Ed Vielmetti addressed the board about pedestrian safety issues. He noted the outcome of the city council’s recent action on the city’s crosswalk law [and the announcement by mayor John Hieftje that he would be vetoing the change the council had voted 6-4 to approve]. The current ordinance mostly addresses outside-downtown issues, Vielmetti said, with its reference to non-signalized crosswalks. In preparing for the city council meeting, Vielmetti said, he’d looked at about eight years of car crash data. What he’d noticed consistently is that the majority of pedestrian crashes happen in the downtown and campus area – probably because lots of people are walking downtown.

The narratives in some of the accident reports often describe how the pedestrian was crossing with a walk light, while the car had a green light and was turning, but didn’t see the pedestrian, Vielmetti said. This is an issue that’s within the purview of the DDA to address, he added. There’s only so much education you can do, with a transient student population. And there’s only so much enforcement you can do without adding to the police force. But the engineering could be addressed, he said – through careful attention to the built infrastructure where people cross the street, or near parking structures where there are a lot of pedestrian-car interactions.

Present: Al McWilliams, Cyndi Clark, Bob Guenzel, Roger Hewitt, Steve Powers, John Splitt, Sandi Smith, Russ Collins, Keith Orr, Joan Lowenstein, John Mouat.

Absent: Rishi Narayan.

Next board meeting: Noon on Wednesday, Jan. 8, 2014, at the DDA offices, 150 S. Fifth Ave., Suite 301. [Check Chronicle event listings to confirm date]

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DDA board action on the $280,000 was taken at its Dec. 4, 2013 meeting, and came after the Ann Arbor city council had declined to approve an additional $280,000 budget allocation.

Downtown Ann Arbor Main Street light pole on the northeast corner of Main & William. Photograph is from the city of Ann Arbor, taken in April 2012.

According to the DDA’s resolution, staff will use the DDA funding to begin now with replacement of those poles most in need of replacement, with the remainder replaced in the summer of 2014.

The DDA board action was somewhat expected based on a mid-November email sent by city administrator Steve Powers to Ann Arbor city councilmembers, indicating that no further city council action would be required to get all 81 light poles replaced. Powers’ email indicated that on Oct. 31 and Nov. 1, city staff had inspected the Main Street light poles – and based on assessment of the city’s signs and signals staff, it was determined that 36 poles should be replaced within six months or sooner and that the remaining 45 light poles should be replaced within 1 to 2 years. It was the DDA that was developing a plan for the 45 remaining light poles, Powers wrote.

The issue has a history that’s interwoven with the oftentimes fractious relationship between the Ann Arbor city council and the DDA.

By way of additional background, in April 2013 when the council gave initial approval of the change to the city ordinance that regulates the DDA’s TIF (tax increment finance) capture, one argument against that move was that it would leave the DDA without sufficient revenue to pay for the roughly $580,000 cost of replacing the decorative light poles, which are described by some as an iconic feature of Main Street.

Replacement was characterized as an urgent public safety issue, because the bases of some of the poles are rusting. Various statements were made about the number of light poles that had failed, but responding to an emailed query from The Chronicle earlier this year, city of Ann Arbor staff indicated that in early 2012 two of the light poles fell – due to a structural failure at the base of the poles caused by rust. After inspection of all the poles, two additional light poles were deemed to be in immediate risk of falling and were also replaced. As part of the council’s FY 2014 budget deliberations, the council altered the DDA’s budget and directed the DDA to allocate $300,000 toward the replacement of the Main Street light poles.

The council’s specific action on May 20, 2013 was to alter the DDA’s budget by recognizing additional TIF revenues of more than $568,000, and shifting $300,000 of that revenue from the DDA’s TIF fund to the DDA’s housing fund. The council’s budget resolution also recommended that the DDA spend $300,000 of its TIF fund on the Main Street light pole replacement. Earlier this year, in response to an emailed query from The Chronicle, city administrator Steve Powers indicated that the city council was expected to be asked to act on the matter either at its July 15 or Aug. 8 meeting. But the issue was not placed before the council until Oct. 21.

In timeline overview form:

• April 1, 2013: Initial approval of DDA TIF capture ordinance revision (Chapter 7). Main Street light poles were cited as a project the DDA might not be able to pay for if the Chapter 7 revisions were approved.
• April 15, 2013: City council approves an amendment to the Chapter 7 revision, put forward by Sally Petersen (Ward 3), which delayed application of the revised language until FY 2015.
• May 20, 2013: City council approves FY 2014 budget amendment that affects DDA budget:
  

  Whereas, The DDA is forecasted to receive $568,343 more in TIF revenues than anticipated in the proposed FY14 budget;
  Whereas, Council desires to support the public housing program in the DDA area;
  RESOLVED, The DDA TIF fund revenue and expenditure budgets be increased by $568,343 for the purposes of creating a one-time transfer;
  RESOLVED, The DDA Housing fund revenue and expenditure budgets be increased by $300,000 to reflect Council’s desire for the DDA to support affordable housing in the DDA area; and
  RESOLVED, Ann Arbor City Council requests that the DDA allocate at least $300,000 for the replacement of the light poles on Main Street.

• June 5, 2013: DDA board meets and executive director Susan Pollay reports the council’s action. She tells the board that she’s meeting with city staff to figure out how the light poles will be paid for.
• July 3, 2013: DDA board allocates $300,000 for the light pole replacement project at the same meeting it allocates $250,000 for other capital projects, and $59,200 to support the creation of a business improvement zone in the South University area. One “whereas” clause characterized the council’s action in a way that is not based on the wording of the city council’s May 20 budget amendment:
  

  Whereas, Through the 2013/14 budget approval process it was determined that the City would undertake this street light replacement in calendar year 2013, with the DDA allocating $300,000 toward the cost of the project, and the City allocating $216,000; [.pdf of complete DDA light pole resolution]

• Oct. 21, 2013: Ann Arbor city council rejects a supplemental budget allocation of $280,000 toward the downtown light pole replacement project on a 7-4 vote. It needed eight votes to pass.
• Dec. 4, 2013: DDA board approves $280,000 allocation from the remainder of its 2002 State Street Improvements Project and with funds to be assigned in the DDA’s FY 2015 TIF capital improvements budget.

This brief was filed from the DDA offices at 150 S. Fifth Ave., Suite 301. A more detailed report will follow: [link]

Downtown Ann Arbor Main Street light pole on northeast corner of Main & William. Photograph is from the city of Ann Arbor, taken April 2012.

The $280,000 needed to be allocated from the general fund to the field operation’s unit FY 2014 street lighting budget. And as a budget amendment, the resolution needed eight votes under the city charter.

The light poles were to have been purchased from Spring City Electrical Manufacturing at a cost of $173,307, with additional costs for installation and labor bringing the total to $280,000.

Voting against the allocation at the council’s Oct. 21 meeting were Sumi Kailasapathy (Ward 1), Sally Petersen (Ward 2), Stephen Kunselman (Ward 3) and Mike Anglin (Ward 5).

The vote reflected ongoing political wrangling between the Ann Arbor Downtown Development Authority and the city council.

By way of additional background, in April 2013 when the council gave initial approval of the change to the city ordinance regulating the DDA’s TIF (tax increment financing) capture, one argument against that move was that it would leave the DDA without sufficient revenue to pay for the roughly $580,000 cost of replacing the decorative light poles, which are described by some as an iconic feature of Main Street.

Replacement was characterized as an urgent public safety issue, because the bases of some of the poles are rusting. Various statements were made about the number of light poles that had failed, but responding to an emailed query from The Chronicle earlier this year, city of Ann Arbor staff indicated that in early 2012 two of the light poles fell – due to a structural failure at the base of the poles caused by rust. After inspection of all the poles, two additional light poles were deemed to be in immediate risk of falling and were also replaced. As a part of the council’s FY 2014 budget deliberations, the council altered the DDA’s budget and directed the DDA to allocate $300,000 toward the replacement of the Main Street light poles.

The council’s specific action on May 20, 2013 was to alter the DDA’s budget by recognizing additional TIF revenues of more than $568,000, and shifting $300,000 of that revenue from the DDA’s TIF fund to the DDA’s housing fund. The council’s budget resolution also recommended that the DDA spend $300,000 of its TIF fund on the Main Street light pole replacement.

Earlier this year, in response to an emailed query from The Chronicle, city administrator Steve Powers indicated that the city council was expected to be asked to act on the matter either at its July 15 or Aug. 8 meeting. But the issue was not placed before the council until Oct. 21.

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]

From left: Chuck Warpehoski (Ward 5), Christopher Taylor (Ward 3) and Stephen Kunselman (Ward 3). Budget deliberations pushed the meeting until nearly 2 a.m.

The council considered several amendments to the FY 2014 budget. But the total impact on the general fund of all the successful amendments was not significant, leaving mostly intact the “status quo” budget that had been proposed by city administrator Steve Powers a month earlier. That was a budget with $82.9 million in general fund expenditures. [.pdf of one-page summary of possible amendments] [.pdf of longer detail on FY 2014 budget amendments]

Most of the successful amendments were voted through with relatively little debate, and involved amounts of $100,000 or less. For example, the Washtenaw Health Initiative received an additional $10,000 allocation, and the Miller Manor senior meals program received a $4,500 boost. Allocations to human services nonprofits were increased by $46,899. And the general fund balance was tapped to conduct a $75,000 study of sidewalk gaps so that projects could be prioritized.

The affordable housing trust fund received an infusion of $100,000 from the general fund reserve. The council also approved an amendment prohibiting the spending of $326,464 that was set aside in the FY 2014 budget for public art, in anticipation of a final affirmative vote on a change to the public art ordinance. A vote on amending that ordinance is likely to take place on June 3, before the fiscal year begins on July 1.

The “parks fairness” amendment, which came after deliberations on all other amendments, was a straightforward calculation in accordance with a city policy. The policy requires that any increase in general fund spending be matched by a parallel increase for parks. The council approved that $22,977 amendment with scant remark.

Just three issues took about 80% of the council’s roughly 4.5-hour budget deliberations: (1) the budget of the Ann Arbor Downtown Development Authority, (2)  the possible reduction of the 15th District Court budget in order to pay for three additional police officers, and (3) the proposed restoration of loose leaf collection in the fall.

Of the most time-consuming items, the change to the DDA’s budget was ultimately approved – after escalating political rhetoric led to a kind of compromise that had almost unanimous support. The DDA compromise budget amendment called for a $300,000 transfer from the DDA’s TIF (tax increment finance) fund to the DDA’s housing fund, and a recommendation to spend $300,000 of TIF money on the replacement of Main Street light poles. Only Christopher Taylor (Ward 3) dissented.

The lone dissenting vote on the budget as a whole was Jane Lumm (Ward 2), who issued a verbal spanking of her colleagues and the city administrator – for proposing and approving a budget she did not feel reflected a priority on public safety. Countering Lumm was Taylor, who pointed out that roughly half of the general fund expenditures are related to public safety.

Budget: Time Overview

For a time-stamped chronological account of the deliberations that was posted live during the meeting, see “May 20, 2013 Ann Arbor City Council: In Progress.” The summary of deliberations below is presented in the rough order of time spent on each of the amendments.

FY 2014 budget: Time spent on deliberations, by topic. The proportionate times are estimated from time stamps from The Chronicle’s live updates. Time from the roughly 10-minute recess was assigned to the immediately preceding item of discussion, which was the DDA budget debate.

Occupying most of the council’s time – around an hour and a half – was discussion of the Ann Arbor Downtown Development Authority’s budget. The council wound up with a compromise that transferred $300,000 from the tax increment finance (TIF) fund to the housing fund, and a recommendation from the city council to spend $300,000 on replacement of light poles on Main Street. The sole dissent on the compromise was Christopher Taylor (Ward 3).

The second-longest amount of time spent in the council’s budget deliberations related to a service previously provided by the city but discontinued a few years ago: collection of loose leaves in the fall. The loose leaf collection program invited residents to push leaves into the street, where the leaves were collected on a neighborhood-by-neighborhood schedule. That’s been replaced with collection through carts and bags – a purely “containerized” approach. The discussion lasted over an hour and did not result in the restoration of the mass leaf collection service. The proposal got support only from Jane Lumm (Ward 2), Sally Petersen (Ward 2), Mike Anglin (Ward 5), and Sumi Kailasapathy (Ward 1).

And taking a bit under an hour’s worth of deliberations was 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, Anglin, Kailasapathy, 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.

DDA Budget: Background

In the summary of possible amendments compiled for the council before the meeting, there were competing amendments on the DDA budget – one championed by mayor John Hieftje, with the other put forward by Stephen Kunselman (Ward 3). Both dealt with the fact that the DDA’s tax increment finance (TIF) capture is now expected to be $568,000 more in FY 2014 than the roughly $3.9 million on which the DDA based its FY 2014 budget.

Hieftje’s version of the amendment specified three areas on which the additional revenue was supposed to be spent: housing, replacement of failing Main Street lamp posts, and the economic development agency Ann Arbor SPARK. It specified a $100,000 transfer to the DDA’s housing fund. Kunselman’s version was confined to housing, and transferred $500,000 from the DDA’s TIF fund to the DDA’s housing fund.

The council considered Kunselman’s amendment, and ultimately approved it in amended form – transferring $300,000 to the housing fund from the TIF fund and recommending that an additional $300,000 be spent on light poles on Main Street.

By way of background, the DDA is financially a “component unit” of the city. The DDA captures some of the taxes that would otherwise go to the jurisdictions that levy taxes within a specific geographic area. But it’s just the initial increment – between the taxable value of an unimproved property and the value of a property after improvements are built – on which the Ann Arbor DDA captures taxes.

The Ann Arbor DDA was established under a city ordinance in Chapter 7 of the city code, which appears clearly to limit the amount of the TIF revenue the DDA is supposed to receive to an amount that’s a function of the forecasted revenue in the TIF plan – a foundational document of the DDA.

The Ann Arbor DDA has given Chapter 7 a different interpretation since 2011, when the implications of Chapter 7 were reportedly first noticed. On the Ann Arbor DDA’s interpretation, the relevant language does not actually limit the amount of TIF revenue that the DDA receives. That led to an attempt earlier this spring by the city council to clarify the language of the ordinance so that the DDA did not have the flexibility of interpretation in the future. At its May 6, 2013 meeting, the council postponed that effort at clarification until September 2013.

The Ann Arbor DDA also operates the city’s public parking system under a contract with the city. Under the terms of that contract, the city receives 17% of gross revenues from the parking system.

With respect to the DDA’s budget, the state’s enabling statute for downtown development authorities indicates that an authority is supposed to adopt its budget after the governing municipality approves it [emphasis added]:

125.1678 Budget; cost of handling and auditing funds. Sec. 28. (1) The director of the authority shall prepare and submit for the approval of the board a budget for the operation of the authority for the ensuing fiscal year. The budget shall be prepared in the manner and contain the information required of municipal departments. Before the budget may be adopted by the board, it shall be approved by the governing body of the municipality. Funds of the municipality shall not be included in the budget of the authority except those funds authorized in this act or by the governing body of the municipality. (2) The governing body of the municipality may assess a reasonable pro rata share of the funds for the cost of handling and auditing the funds against the funds of the authority, other than those committed, which cost shall be paid annually by the board pursuant to an appropriate item in its budget

However, the Ann Arbor DDA board has typically adopted its budget before the city council approves the city’s fiscal year budget, of which the DDA’s budget is a component. That was the case this year as well, when the DDA board adopted budgets for FY 2014 and 2015 on Feb. 6, 2013. [.pdf of DDA FY 2014-15 budget]

DDA Budget: Deliberations

Stephen Kunselman (Ward 3) led off the deliberations by reminding his council colleagues of some proposals he’d mentioned at the council’s May 6, 2013 meeting. That was the occasion on which the council postponed the DDA ordinance amendments until Sept. 3.

On May 6, Kunselman had sketched out a number of possible proposals: (1) 10% of the DDA’s TIF capture would be earmarked for affordable housing; (2) the DDA’s housing fund would be reserved for affordable housing at 30% of the area’s average median income; (3) 50% of the city of Ann Arbor’s TIF “rebate” would be deposited into the city’s affordable housing trust fund; and (4) for the FY 2014 budget, $0.5 million of the DDA’s TIF would be transferred to the DDA’s housing fund.

On May 20, Kunselman continued deliberations by specifying how he wanted to see the DDA spend the $500,000 that his budget amendment would transfer into the DDA housing fund. Kunselman wanted it to be used on Miller Manor, an Ann Arbor housing commission property located at 727 Miller Ave. Miller Manor is not located within the DDA district.

Ann Arbor Housing Commission properties. The size of the dot is proportional to the number of units in the location. The largest dot is Miller Manor. (Map by The Chronicle. Image links to interactive map.)

However, under an adopted Ann Arbor DDA policy, investments of DDA TIF can be made outside the geographic boundary of the district, as long as they are within 0.25 miles of the boundary. The western edge of the DDA district boundary on Miller Road is Chapin Street, and Miller Manor is located about 0.21 miles from Chapin – within the area described in the DDA’s policy. But Kunselman noted that the city could not tell the DDA how to spend the money – saying the city could simply put the money into the housing fund. And that meant it would have to be spent on housing.

Leaving most of the additional money in the TIF fund – as mayor John Hieftje’s proposed amendment would do – still provided complete flexibility for the DDA to spend the money as it wished, cautioned Kunselman. Under his own amendment, Kunselman argued, the DDA would need to spend it all on housing. But he argued for spending the money on Miller Manor, because it was public housing stock, which was meant to be accessible to those with incomes of 30% of the area median income (AMI). Kunselman described the kind of housing the DDA had supported with City Apartments, a private development under construction at First and Washington, as supporting the 80% AMI level.

Kunselman also contended that it was not a surprise to anyone that the DDA would be receiving the additional $568,000, and he didn’t understand why the DDA had not put that additional revenue in its proposed budget when it was adopted in February. Kunselman called it a “lowballed” budget. The additional funds had not been brought up until he’d advanced his proposed amendment to the DDA ordinance earlier in the spring, he said. Kunselman’s contention was that the DDA could have reasonably known that its TIF revenue would be closer to $4.5 million than to the $3.9 million it budgeted near the end of February.

Hieftje invited city CFO Tom Crawford and Susan Pollay, executive director of the DDA, to the podium to answer questions. Hieftje asked Pollay when the numbers for the tax assessment are available to the DDA. She said that the DDA saw the numbers when the council did – April 1. Pollay contended that the DDA is not privy to the estimates that are being formulated. So the DDA does its best to estimate based on previous years, she said.

Kunselman asked Crawford to confirm what Crawford had told Kunselman in response to the question of when estimates of assessed value were available – saying he’d been told it was Jan. 1. Crawford said there are a lot of things that go on between January and April. It’s closer to April when it’s final, explained Crawford. But Kunselman pointed out that the board of review notices are sent out in March, which means that the numbers are available before then. Crawford responded by saying that “they have to process that stuff.” It’s around April that the numbers are actually known. Crawford allowed that estimates can be done on fairly good data in January, but the final numbers are available in April.

Pollay then responded to Hieftje’s prompting about the nature of the DDA board’s discussion at a special meeting on May 13. Hieftje contended that the DDA achieved a quorum on that occasion and reached a consensus on the allocation of additional TIF revenue. A quorum would be seven of the 12-member DDA board.

Later in the meeting, Hieftje described his own resolution as based on the “DDA action last week.” [In an email to the council, DDA board chair Leah Gunn had characterized the May 13 meeting as "informal." That description is consistent with the fact that no resolutions were voted on or discussed. Gunn's email indicated that seven board members had attended. The Chronicle recorded only the following six board members as present: Leah Gunn, Joan Lowenstein, John Splitt, Sandi Smith, Roger Hewitt and Newcombe Clark.]

Pollay told the council that there’s an interest on the board in replacing the lamp posts on Main Street, which are rusting from the inside.

Ann Arbor Main Street rusted light pole. (Photo from April 2012 by city of Ann Arbor staff.)

Pollay also indicated that the DDA wants to support some affordable housing efforts and economic development, which are council priorities. She described the possibility of sending DDA board members and SPARK officials to other communities to find out what they’re doing better than Ann Arbor. Specific places to visit, for example, were Chapel Hill, North Carolina, and Madison, Wisconsin. [.pdf of DDA's summary of May 13, 2013 meeting]

Sabra Briere (Ward 1) noted that the amendment proposed by Kunselman is to allot 100% of the additional TIF revenue to affordable housing. She asked Pollay how those funds would be used in the future.

Pollay responded by saying that that the DDA is planning to meet with housing providers in the near future, and that will help determine how the board might spend the $500,000 on affordable housing.

Briere asked if the DDA has a plan for housing that has criteria to determine how grants are made to housing. Pollay responded to Briere by describing the “full spectrum” of housing. The DDA is interested in housing at all levels for all people, Pollay said.

Sally Petersen (Ward 2) contrasted the alternative amendments – Kunselman’s compared to Hieftje’s. She wanted to see if they could be combined. She asked Kunselman if he’d consider lowering the amount to $300,000 – as a friendly amendment to his budget resolution. [Amendments that are considered friendly by the sponsors don't require a vote.] Kunselman rejected Petersen’s offer by saying he felt a vote should be taken on that.

Sumi Kailasapathy (Ward 1) reminded the council that the public hearing on the DDA ordinance – on April 15 and May 6 – made clear there’s a gap that’s perceived by the community in affordable housing. [Several members of the homeless community spoke during that hearing in support of the DDA.] Some residents have been left behind, she said. Not everybody is meant to be a Google worker. She wanted to stick with the $500,000 for affordable housing that was in Kunselman’s resolution.

Hieftje then invited public services area administrator Craig Hupy to the podium to talk about the urgent need to replace the light poles on Main Street. Hupy indicated that no provision has been made in the city’s budget to replace them. Up to now, Hupy said, the discussion has been centered on the idea of the DDA paying for the light pole replacement, because the DDA did the original installation. He identified the general fund as the source of the funding, if the city were to pay for the light pole replacement.

[At the May 13 gathering of the DDA board, Pollay indicated that she'd been informed that if the city undertook the installation, it would take a more functional approach and install a fewer number of replacement light poles – using "cobra head" fixtures, instead of the decorative lamp posts currently in place. That cost for the functional approach was estimated at $50,000.]

Responding to a question from Kunselman, Hupy described an interest in not having the same “design error” going forward. [At the May 13 gathering of the DDA board, Pollay had described how the light poles that are rusting sit flush on the concrete and may sit in water. A newer design has the base of the poles elevated on "fingers."]

The cost is estimated to be around $465,000, Hupy said. [In a follow-up email responding to a query from The Chronicle, Hupy indicated that no detailed specification and bidding has been done at this point. So the pricing is somewhat "soft," indicating that when staff puts initial estimates together, they try to make sure they can do the job for the price that's estimated.]

Chuck Warpehoski (Ward 5) got clarification from CFO Tom Crawford about how much the council could control in the DDA’s spending. Essentially, Crawford indicated that the council could make transfers between funds, but could not mandate which projects the money was spent on or in which year it was spent. Warpehoski said the light pole replacement is important – as they’ve been falling down. He proposed a change from $500,000 to $400,000 for the transfer to the DDA’s housing fund, with $100,000 for light poles. Kunselman indicated that would be a friendly amendment. Kunselman stressed that it would actually just reduce the amount of the transfer to $400,000, but not specify the $100,000 be designated to light poles.

Some back-and-forth ensued between Crawford and Christopher Taylor (Ward 3) about the nature of one of the resolved clauses and the importance of recognizing the additional revenue to the TIF fund.

Briere drew out the fact that the unbudgeted TIF amount, not originally anticipated by the DDA in its budget, is actually $568,343. She wanted to know why the full amount is not being dealt with. City administrator Steve Powers explained that it’s because $500,000 is the amount Kunselman put in the resolution and city staff didn’t take the liberty of changing it. Briere wanted to change the amendment to reflect the actual amount. The council was amendable to revising the amount of additional TIF revenue recognized to $568,343.

Briere highlighted another project the DDA wants to undertake – South University improvements. Pollay also mentioned that the brick streets of North Fifth Avenue are “waiting for us” to be improved.

Kailasapathy described the additional TIF revenue as a “windfall.” Pollay countered Kailasapathy by saying that $3.4 million will go toward debt service. Pollay also brought up the $508,000 that the DDA gives the city annually – as part of an $8 million grant the DDA awarded toward the bond payments for the new Justice Center.

Warpehoski introduced an idea promoted by Dave DeVarti and Alan Haber – that the DDA would pay off the loan on the former Y lot, located between Fourth and Fifth avenues, north of William. Such an action would free up the proceeds of the eventual sale of that city-owned land to be dedicated to affordable housing. This approach has the advantage that the proceeds wouldn’t have to be spent on properties within the DDA district, he noted.

Alluding to Hieftje’s version of the DDA budget amendment, Briere indicated that she’s not a 100% fan of SPARK. But she’s still concerned about allocating funds for some kind of economic development.

Referring to a resolution approved by the council earlier in the meeting, Petersen indicated she’s not expecting the need for the economic development task force to incur expenses by traveling to other cities. The task force was not set up with a budget, she noted. She was grateful for the spirit of generosity in Hieftje’s amendment that would put the DDA in a position to provide those funds. But she figured any expenses would be nominal and would be shared among the entities represented on the task force – the city, the DDA, and SPARK.

Hieftje returned to the issue of the light poles on Main Street. Hupy indicated that it would not be possible to hang banners on the poles until the poles were replaced. Responding to Warpehoski’s idea that the light poles could be replaced over a period of time, Hieftje asked Hupy if efficiencies would be gained by replacing them all at one time. Essentially, Hupy’s response was yes. He identified issues like a need to inspect the light poles that were in need of replacement, and the possibility that replacing only selected poles could result in mismatches in the style of poles.

As far as other projects the DDA is looking to pursue, Hieftje returned to the issue of South University and Pollay described wanting to finish off the Fifth and Division street project in the Kerrytown area.

Hieftje then said he had some concerns about trying to tell the DDA what to do. He referred to Kunselman’s approach as a command-and-control strategy. He reiterated his concern about the light poles on Main Street.

Taylor concurred with Hieftje, saying that the resolution was an attempt to micromanage the DDA. Downtown is a complex place, Taylor said, and the city doesn’t understand the downtown as well as the DDA – “that’s just the truth.” He called on the council to approach the DDA’s budget with humility, in light of the fact that the council does not have all the information – but the DDA does. He contended that the amendments offered by Hieftje and Kunselman took different approaches. [The original amendments differed materially only with respect to the dollar amount to be transferred from the DDA TIF fund to the DDA housing fund – $500,000 versus $100,000. With the friendly amendment that was in place at the time of Taylor's remarks, the difference was $400,000 versus $100,000.] Taylor called Kunselman’s amendment a blunt instrument for a delicate task, and stated that he’d vote against it.

Jane Lumm (Ward 2) responded to Hieftje’s characterization of the amendment as a “command-and-control” approach. She stressed the fact that the message the council had heard in response to the proposed DDA ordinance changes was clearly about affordable housing.

Kailasapathy disagreed with Taylor’s assessment of the DDA as a sophisticated organization. She quoted from an email Pollay wrote back in October 2008 to a resident. [The resident was Peter Zetlin, who subsequently pasted Pollay's email to him in a comment on The Chronicle's live updates filed from the meeting.] Pollay wrote:

For what it’s worth, the proposed parking structure would be paid for with parking revenues (not tax dollars), and unnoted in the local press, the demand for public parking has been increasing every year – including this year, where the numbers of people paying to park exceeds the numbers in all previous years.

Kailasapathy noted that it did not prove to be the case that the new Library Lane parking structure was paid for only with parking revenues. This year, she noted, 87% of the TIF dollars went to bond payments. She disagreed with the idea that the DDA was a sophisticated organization. She said it was good to have oversight of the DDA and important to give guidance.

Hieftje reminded Kailasapathy that she wasn’t serving on the council back in 2008: “Just to point out, Councilmember Kailasapathy, because I know you weren’t here, the underground parking structure was fully supported by city council.”

[The Feb. 17, 2009 vote on issuing the bonds for the underground parking structure was 10-1, with dissent from Mike Anglin. Hieftje's remark was reminiscent of one he made at the council's Dec. 1, 2008 meeting, in reminding Sandi Smith, Kailasapathy's predecessor in that Ward 1 seat, that she had not served on the council at the time the former YMCA property had been purchased.]

Kunselman then told Hieftje, “Of course, you’re not going to support anything that I bring to the table.” [Kunselman was in some sense echoing Hieftje's opening to an email that Hieftje had sent to Kunselman a few weeks earlier, which Hieftje began with: "I understand your need to automatically oppose anything I may be in favor of but wanted to reply just to try and put us all on the same page."]

Kunselman pointed out that there’s only a $300,000 difference between the amended amendment Kunselman was proposing and Hieftje’s proposal. Kunselman indicated he felt that Hieftje’s criticism of the approach as “command and control” could be applied to Hieftje’s own proposal. Kunselman contended that “This is about loyalty to the DDA; this is not about loyalty to the citizens of Ann Arbor.”

Kunselman pointed out that next year, the DDA’s bond payments made out the TIF fund will go from $3.4 million down to $2 million – $1.4 million less. That could be spent on all kinds of light poles, he said. Kunselman discounted the idea that $300,000 was a big difference in that context. He ventured that Hieftje would not have even proposed a DDA budget amendment if Kunselman had not indicated his intent to bring one forward.

Kunselman then addressed Hieftje’s description of the DDA’s board meeting on May 13 and the attendance by the press. From what Kunselman understood from the press, the board didn’t pass a resolution at that meeting, and the DDA didn’t amend its budget. He characterized it as “all talk.” Kunselman accused Hieftje of playing politics.

Marcia Higgins (Ward 4) then said she was not opposed to putting more money toward affordable housing. But she was not sure that this support for affordable housing should come through the DDA. Even if the council transfers $400,000 to the DDA housing fund, the council has no guarantee that the DDA will spend that $400,000 in the way the council would like to see it spent. If the council really wants to support affordable housing, it should simply take money out of the general fund, she said, and put it in the city’s affordable housing trust fund. If the council wants the DDA to be independent, she didn’t see how the resolution did that.

Higgins noted that the light poles fell down a year ago, so she wondered why it had become a crisis situation that had to be dealt with. She didn’t remember hearing about how it was a crisis. She indicated a lack of support for either Kunselman’s or Hieftje’s amendment.

Margie Teall (Ward 4) said she had the words “micromanagement” in her notes as well. She wanted to work with the DDA collaboratively, not by directing the DDA. She wanted the city to be the entity that supports affordable housing. She didn’t want the city to tell the DDA “how to run their business.”

Briere responded to Kunselman’s remarks about the resolution being about “loyalty to the DDA” – saying she didn’t believe the vote is a litmus test on blind support for the DDA or not. She was disappointed by the direction the rhetoric had taken. Responding in part to Higgins’ question about why the light poles had suddenly become a crisis, Briere reported that she’s been nagging about the light poles for a year. City staff have said they don’t have it in the budget, she said. The Main Street Area Association asked the DDA if the DDA could pay for the light poles, and Pollay had responded by saying the DDA would have to find a way to pay for it, Briere reported. Briere stressed that the DDA is responsible for downtown infrastructure. For her, spending the money on infrastructure is the most important part of the DDA’s work.

Briere stressed the fact that the DDA’s housing fund is not specifically designated for affordable housing. She again rejected the idea that the vote on the resolution is a loyalty test.

Hieftje responded to Kunselman’s earlier remark by saying he didn’t disagree with everything Kunselman brought forward. Hieftje just wanted to make sure the light poles are fixed. He suggested a compromise, splitting the amounts between light poles and affordable housing.

Kunselman agreed to the split, saying it was a nominal difference anyway.

Lumm then proposed to divide the question on affordable housing and to vote separately on affordable housing and light poles. Hieftje responded to Lumm by saying that’s not what he was proposing to do.

The specifics of the compromise budget amendment resolution were to transfer $300,000 of the additional TIF to the DDA’s housing fund and to request that the DDA spend $300,000 on Main Street light poles.

Outcome: The council approved the DDA budget amendment, with dissent only from Christopher Taylor (Ward 3). After the vote, the council went into a short recess.

Leaf Collection

By way of background, leaf collection is now provided as part of the city’s containerized compost pickup program. Residents can place yard waste, including leaves, in carts – which can be emptied with automatic robot-arm-equipped trucks. The city also collects yard waste in paper bags.

In the past, the city invited residents to push their leaves into the street after they fell every autumn. The pickups occurred on a predetermined schedule, with each area of the city serviced twice per autumn. The city then used street sweepers equipped with pusher adaptations to pile the leaves together, and then used front-end loaders to load dump trucks with the leaves. Eliminating the loose leaf pickup program was originally estimated to save $100,000 a year starting in FY 2011. According to the city, it’s proven to save closer to $300,000 a year.

From left: Jane Lumm (Ward 2), Marcia Higgins (Ward 4) and public services area administrator Craig Hupy.

The solid waste fund is supported by a millage levied at a rate of 2.4670 mills. A mill is $1 for every $1,000 of taxable value. That millage generates roughly $11 million a year. The funds are used for compost collection, recycling collection as well as garbage collection. [.pdf of solid waste fund status]

Details of the resolution brought forward by Jane Lumm (Ward 2) were as follows: Use $395,000 of the solid waste fund balance to buy two street sweepers; use projected savings from reduced tipping fees and other expenses to cover the $311,000 annual recurring cost. The proposal also included the restoration of holiday tree pickup. It was essentially the same proposal she’d brought to the council last year, when it approved the FY 2013 budget. Last year in Lumm’s bid to have fall loose leaf pickup restored she was joined only by her then-wardmate Tony Derezinski and Mike Anglin (Ward 5).

This year, Ward 2 was again unified in its support – with recently-elected Sally Petersen substituting for Derezinski. Anglin was also consistent in his support. The effort picked up one other vote – from Sumi Kailasapathy (Ward 1). So Lumm’s attempted resolution was defeated on a 4-7 vote, but not before the council took an hour and 10 minutes to debate the issue.

Leaf Collection: Council Deliberations

When she introduced the amendment, Lumm described her attempt the previous year, as well as the technical details of the funding. She contended that for some areas of the city, taking away the service had been a hardship. She contended that loose leaf pickup is a basic service that residents reasonably expect the city to provide – especially in light of the fact that they pay a dedicated solid waste millage that generates over $11 million a year. The holiday tree pickup, she allowed, might not be considered a “core” service, but she felt that it’s a nice, convenient service that can be provided cheaply, for $26,000 a year. Bagging and mulching for some residents isn’t a feasible option, she said. So residents still wind up paying someone to haul their leaves away, which loses the economy of scale that the city could achieve, Lumm contended.

She allowed that there are risks to the fund balance of the solid waste fund. [In round numbers, of the $28.6 million solid waste fund balance, only about $8.6 is "available" for use. Up to $9.4 million in risk has been identified by city staff just to cover the cost of building a replacement drop-off station and to cover requirements of GASB 68, a new accounting standard that must be implemented starting in FY 2015.] But Lumm felt that using $395,000 of the fund balance was appropriate, characterizing it as 4% of the fund balance. The recurring cost was only 2% of the revenue brought in by the millage, she said. Lumm saw value in restoring the service.

After the amendment was introduced by Lumm, Anglin was first to be called on to speak by mayor John Hieftje. Anglin said that in certain areas of the city, leaf pickup is a problem. Ward 2 makes a contribution to the city with its plentiful trees, he indicated, through regulation of stormwater runoff and temperature regulation. He said he wanted to see the amendment approved and “see how it works out.” He said he’d continue to rake his own leaves and put them in the compost carts – because he lives in that kind of neighborhood. In a limited part of Ward 5, he said, there’s a similar problem to Ward 2 for leaf pickup. He cited the stress that the aging population feels about the situation.

Kailasapathy argued from the perspective of economies of scale. She stated that the role of a local government is to provide good services to its citizens. She compared privatizing a certain part of the leaf collection to school busing: If you eliminate school busing, a few children might walk instead, or a few might ride their bicycles, but most parents will drive their children in cars. She stated that it’s more efficient to pick up holiday trees all at one time, instead of thousands of people taking their individual trees to a drop-off point.

Petersen, Lumm’s wardmate, also said she’d support the amendment. She compared the leaf pickup service in its monetary impact to that of the service the city provided recently – on Feb. 28 – when a storm hit and brought down a lot of branches. The city’s effort to pick up storm debris after that happened had been extended to residents citywide, Petersen pointed out, not just to Ward 2 residents. The city was able to absorb that into the budget, and she felt that the city could absorb leaf pickup into the budget as well. Leaves would fall onto the street, whether the city picks them up or not, so she figured it made sense to try to pick them up and take advantage of the economies of scale.

Margie Teall (Ward 4) noted that she’d previously argued against continuing this kind of leaf pickup service. She noted that the city still provides leaf pickup, but it’s done differently now – with compost carts. She felt that the community’s values are in keeping the Huron River as clean as possible and in keeping the streets as clean as possible.

Responding to photographs that Lumm had circulated of piles of leaf bags, Teall said she was sorry that’s happening – but said she didn’t know why those leaves were in the street, because they were not supposed to be in the street. She noted that leaves can be raked every week and a few bags can be put out every week. “There are ways to do this.” She expressed concern about bike lanes – when leaves freeze in the street. She advised keeping holiday trees in your backyard for the birds. So there are ways to deal with the issue that don’t cost the city any money, she ventured.

From left: Sumi Kailasapathy (Ward 1), Sabra Briere (Ward 1), Sally Petersen (Ward 2) and mayor John Hieftje.

Teall argued against Petersen’s point about the city’s effort this year to pick up storm debris – by saying that if the city spends money on loose leaf pickup, it might not have the capacity in the future to implement pickup of storm debris as it did this year.

At Briere’s request, public services area administrator Craig Hupy and solid waste manager Tom McMurtrie came to the podium to field questions. Briere asked Hupy for an explanation of why the city had changed its policy. She reported she’d received emails from people that same day advocating for keeping things the way they were – with no loose leaf pickup. Hupy told Briere the change to the current system of containerized pickup originally had been advocated by those who were concerned about pollution loading to the streams, but that argument had never gained traction.

However, when the “Great Recession” occurred, the city was forced to look at it from an economic point of view, Hupy said. Using only the containerized approach had been expected to save $100,000, Hupy said. Now that the city has gained some experience with that approach, the city saves about $300,000, he said. Community feedback has been heard on both sides, he said. Some people miss being able to rake the leaves out into the street, Hupy said. Others say the streets are cleaner and neater. If he were asked which sentiment was more prevalent, he felt that unscientifically, the “cleaner streets” had it by a margin. But the reason for the change was the economic reality, he reported.

Briere ventured that the amount of compost collected has decreased as a result of the change in leaf pickup method. McMurtrie explained it’s been reduced in part because people mulch the leaves into their lawns or compost leaves in their backyards. Hupy also noted that the amount of leaves picked up by the city is measured by the ton. And when leaves sit in the street, they pick up moisture, making them heavier. When they’re bagged, they stay drier. So the staff believe, Hupy said, that less weight is being recorded on the scales due to drier leaves.

McMurtrie allowed that the tonnages have declined since the containerized program was implemented. He also added that there are seasonal variations. Briere offered an anecdote about a mother and her kids who now use a tarp to drag the leaves out to the back of the house into the woods.

Lumm asked about the private contractors who are now hauling leaves for people: Are they hauling the leaves to the city’s compost site? Yes, said McMurtrie. He noted that haulers are not being charged a tipping fee for bringing in the material.

Chuck Warpehoski (Ward 5) inquired about the quality of the composting product you get from a cart-based approach versus storing the leaves on the street for a while. He recalled reading in the city’s “Waste Watcher” publication that the advice to residents is not to put street leaves into their home compost. Hupy reported that the city has sampled the quality of the leaves. There’s not a difference revealed in the testing so far, he said.

Warpehoski’s question was motivated by the fact that the product resulting from the city’s composting operation is sold. Hupy said that nothing has triggered Michigan Dept. of Environmental Quality (MDEQ) regulations. Hupy indicated that the city’s concern was actually with the reduced amount of organic material that was swept up by street sweepers in the fall – because the leaves were not being swept into the street as a result of the leaf pick up program. So far things are ok, Hupy said. There’s one more round of sampling to be done this fall.

Chuck Warpehoski (Ward 5).

Warpehoski asked about an anticipated revenue shortfall in the city’s solid waste fund. It’s anticipated to come in FY 2016, he said. Later clarification confirmed that a $375,000 shortfall is projected for that year.

Warpehoski asked Hupy to comment more on pollution-loading issues. Hupy explained that back in the timeframe of the early 2000s, there was more concern about pollution loading, with a focus on phosphorus. Hupy indicated that the concern is at the level of TSS (total suspended solids) – the particulate matter itself, not necessarily the chemical makeup. Warpehoski referred to a letter that the council had received from Washtenaw County water resources commissioner Evan Pratt about the impact of sedimentation in places like the Sister Lake area. Hupy indicated that leaves on the bottom of such lakes don’t necessarily decompose. He ventured that the containerized approach would cause less sedimentation. Hupy also ventured that the approach of sweeping leaves into the street could lead to a detrimental effect on stormwater detention facilities – like the one at Pioneer High.

Stephen Kunselman (Ward 3) got clarification that the city sweeps the leaves that happen to fall naturally into the street. Residents aren’t asked to sweep those leaves. Hupy indicated that whatever falls into the street naturally is well within the capability of a street sweeper to handle. Kunselman described last winter seeing places where no sweeping had been done. He ventured that it’s just a guess as to the environmental loading. He felt it would be a great service if the city could provide the loose leaf collection. He also understood the environmental issues.

Kunselman’s statement “I don’t bag leaves by any means” prompted Warpehoski to kid him: “Do you burn ‘em?” This was a reference to a discussion the council had previously about the fees charged to residents for open burning.

Kunselman questioned whether there is now any enforcement against people pushing leaves into the street. Hupy said that people are given a door-tag notice. Kunselman said when he lived on Seventh Street near Pauline, he watched the neighbors push the pile of leaves down in front of somebody else’s house. “Have you ever actually issued a ticket?” Hupy told Kunselman he didn’t think so. The city had, however, made repeated “educational visits.” Kunselman concluded that enforcement is a cost.

Kunselman got clarification that the $311,000 recurring cost would be for two pickups in the fall. On the $395,000 one-time purchase cost for sweepers to push the leaves, Hupy also explained that the pushers the city had used in the past were modified with a blade for pushing. Renting wasn’t an option, because the rental companies would not accept the vehicles being returned with weld and burn marks on them from the necessary modifications. Kunselman indicated he was not sure how he would vote.

Mayor John Hieftje asked Hupy to explain the capital expenditures in the solid waste fund budget. Hupy described an expansion of two programs – residential recycling into multifamily residences, and the addition of food waste to the composting stream. A long-term goal is concern about the drop-off center at Platt and Ellsworth. It’s sitting on the old landfill, Hupy said, and it’s slowly becoming part of the landfill. One corner is sinking and will need to be rebuilt.

McMurtrie described discussions with Recycle Ann Arbor and other jurisdictions to see which of them might be willing and able to partner on construction of a new facility. In the coming months, he hoped to be able to bring forward some proposals. The draft solid waste plan needs to be approved by the council, McMurtrie indicated. After that, there can be some capability added for food waste composting. Hieftje asked Hupy and McMurtrie to confirm that there was, in effect, a plan to spend the fund balance in the solid waste fund.

Hieftje then explained that he’d be opposing the restoration of loose leaf pickup. He reiterated Teall’s point that the city still does pick up leaves – in compost carts and paper bags. Hieftje then described how he lives in a relatively leafy neighborhood, but is able to dispose of them with the compost carts and by composting them in his back yard.

Sumi Kailasapathy (Ward 1) and Mike Anglin (Ward 5).

Kailasapathy then inquired about the cost savings that were supposed to have resulted from a conversion to single-stream recycling. McMurtrie confirmed that collection costs have gone down, even with an upwards contract adjustment with Recycle Ann Arbor. But he allowed that revenue has declined. Two factors contributed to that. First, the market has dropped. And the material the city previously processed from Lansing and Toledo no longer comes to Ann Arbor, McMurtrie explained. That’s due to competition, he said.

Petersen then opened up a line of inquiry about alternative solutions to pushing the leaves into big piles, and asked about the possibility of using trucks equipped with large vacuums. She mentioned Cummins engines as the possible power plant for such trucks. [That's a reflection of employment with Cummins early in her professional career.] She wanted to know why the city can’t explore that kind of approach?

Hupy explained that “pushing and loading” is more efficient than vacuums. He explained that sticks, branches and pumpkins after Halloween get included in the piles that are put on the street, which clogs the vacuums. This has been demonstrated by vendors who’ve sought to sell the city on the idea of using large vacuums, but then discover that when the “pushing and loading” method is matched against vacuuming, the “pushing and loading” method has proved superior – to the surprise of the vendors.

Briere inquired if other options exist besides pushing or vacuuming. Responding to Briere, Hupy described a conveyer system as a possible alternative. Briere ventured that whatever method the city uses, it’s still labor intensive for her. She reported that of the various methods, she prefers bagging or putting leaves in the carts. About the current containerized approach, she keeps asking herself, “Is it broken?”

At that point Hieftje indicated that he was hoping the council could soon move to a vote on the question. However, Christopher Taylor (Ward 3) asked for a more detailed explanation of the impact that Lumm’s amendment would have on the solid waste fund.

Hupy reviewed Lumm’s list of cuts, which she proposed to offset the expense of loose leaf collection. The $105,000 reduction in tipping fees might or might not be achievable, Hupy explained. He indicated that street leaf pickup could have the impact of heavier loads, which based on his previous remarks would result from increased moisture. And that would cause increased tipping fees.

For the $14,000 in contingencies for field operations, those are step increases based on labor contracts if they progress in their skill levels, Hupy explained. The $25,000 in solid waste systems planning would take away from the consultant work to be done on an educational campaign. Hupy described the retirement of a person in the solid waste department who works on communication issues. The city is proposing that some of her work would be picked up by a consultant. The $15,000 in printing of promotional material would be for “Waste Watcher,” a publication that is sent out each year to residents. The $76,500 in other service budgets identified by Lumm as a source of savings is for equipment and contracted services – which he described as a difficult cut to make.

Teall then followed up on her earlier point about the storm debris collection this year. She asked how much the storm debris pickup cost earlier this year. Hupy reported that cost at about $375,000. The staff would be coming to the council with a request for an appropriation from the solid waste fund balance, Hupy said. Teall ventured that storms generating debris that might need to be picked up could be happening more frequently. Hupy allowed that if money had to be taken out of the fund balance, then it left less in reserves to deal with various issues.

Teall also highlighted the problem that in-street leaf collection had caused for streets like White Street, where there is parking on both sides of the street. It’s a student neighborhood where the vehicles aren’t moved frequently.

Lumm then defended the savings that she’d identified to fund the restoration of loose leaf pickup, responding to Hupy’s assessment of the impact of her identified savings. She gave a shout-out to the Ann Arbor Newshawks’ satirical treatment of the loose leaf pickup issue – inviting people to look for the video, which is posted on YouTube. She described living in her neighborhood for 35 years, saying that previously the leaves didn’t sit as long in the street before they were picked up. Eventually, she declared: “I think I’ve exhausted this topic.”

Hieftje reiterated his objections, based on the stress it would place on the solid waste fund, given the projection of a shortfall in FY 2016.

Stephen Kunselman (Ward 3).

Kunselman asked for a description of practices in comparative communities. McMurtrie listed off communities that collect leaves in a containerized way (Lansing, Ypsilanti, Beverly Hills, Hazel Park, Troy, Saugatuck, Plymouth Township, Douglas, Tecumseh), compared to loose leaf collection (Berkeley, Birmingham, Clawson, Ferndale, Huntington Woods, Oak Park, Pleasant Ridge, Royal Oak, Adrian, Midland and Holland).

Taylor stated that if the city could provide the service perfectly, he might have a different position – but he stressed “might.” Even with the city’s best efforts, however, he felt there’s no possibility the city would be able to perform the service well. “Leaves will not cooperate, rain and wind and snow will not cooperate,” he said. The costs are material, he said. The cost and benefit were not right for him, so he wouldn’t support the amendment.

Anglin then contended that the failure to provide this service targets those who take virtually no services from the city – the elderly. Even though their kids are out of school, they still pay school taxes, he said. They don’t use the parks, yet their taxes go to support that. The elderly are asking what they get from the city in the way of service.

The council should look at all the demographics of people and ask what services are provided by the city to them. The elderly feel they’re not being fairly treated, he said. The projected shortfall is just a projection, not a reality, he said. So Anglin indicated he’d vote for the amendment.

Warpehoski said he still wasn’t sure how he’d vote. He asked for more information about the financial impact of leaf pickup in the context of freezing weather. Warpehoski also asked about the impact of flooding due to clogged storm grates. Hupy said it’s more labor intensive to clear storm grates when the approach to leaf collection is to push leaves into the street.

Hieftje called on Petersen to speak, but Higgins offered a mild objection, venturing that the councilmembers were exceeding their allotted two speaking turns. Hieftje contended Petersen had a speaking turn left.

Petersen countered Taylor’s point about the ability of the city to perform the task well. She ventured that the city doesn’t do snow plowing well, either, but it’s still a basic service that the city should try to provide.

Kunselman then stated he’d vote no. He cited technological advancements that people can use to take care of their lawns: “Why anybody would vacuum their lawn I have no idea, but they do.” He didn’t want to base leaf collection policy just on the needs of the older population. They’d still have to rake their leaves or hire someone to do it, he said. He suggested that if the city were to provide the service, then some kind of subscription service might be best.

Outcome: The vote on the leaf collection budget amendment was 4-7, getting support only from Jane Lumm (Ward 2), Sally Petersen (Ward 2), Sumi Kailasapathy (Ward 1), and Mike Anglin (Ward 5).

Police Officers/15th District Court

Another amendment put forward by Jane Lumm (Ward 2) was to provide funding for three police officers, with $270,000 taken from the 15th District Court budget.

Lumm indicated that she’d been encouraged by the city council’s identification of public safety as a priority at its December 2012 retreat. She’d also been encouraged by a success statement embraced by the council that defined success in terms of police officers having 25-30% of their time available for proactive policing.

Lumm said the amendment was not meant to “pick on the courts.” She cited the court’s decreasing caseload as one reason to decrease the court’s budget compared to the previous year’s amount.

By way of background, Ann Arbor’s caseload downward trends are in line with the overall trend for other comparable courts [.pdf of caseload trends for 15th District Court]:

               Misdem       Civil Inf    Gen Civil
D15 Ann Arbor  3,109 ‐31%   13,894 ‐49%  1,742 ‐16%

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In her proposal, Lumm was comparing the FY 2014 request of $4,379,290 to the FY 2013 budgeted amount of 4,066,865. She reasoned that the $270,000 by which she was proposing to reduce the FY 2014 budget still left the court with more money than was budgeted in FY 2013.

Sumi Kailasapathy (Ward 1) compared 2002 and 2013 FTE levels across departments. The police department has been reduced by about 40%, she said, which was the most of any department. She wanted to restore FTEs. She pointed out that Lansing and Ann Arbor have comparable populations, but Lansing has 226 sworn officers. She allowed that Ann Arbor also has the University of Michigan campus police, but contended that Lansing does as well. She said it was an “apples to apples” comparison. She noted that Ann Arbor’s police force was effective on a reactive basis, but she wanted to make sure it was also able to be proactive, to enhance quality of life and a sense of security that Ann Arbor residents deserve.

Mayor John Hieftje pointed out that Lansing doesn’t have campus police, because Michigan State University is in East Lansing.

Keith Zeisloft, the administrator for the 15th District Court, was asked to come to the podium to answer questions.

Sabra Briere (Ward 1) asked Zeisloft what the impact would be of a $270,000 reduction. He replied that the court would need to look at the only area that’s not mandated by law – the probation department. He felt that a $270,000 would mean losing three of six probation officers. He felt that would mean the loss of the “eyes and the ears of the court.” Without probation officers, the judges would have less ability to sentence offenders in a way that was thoughtful and had any real meaning, he said.

Zeisloft also raised the possibility of impacts to the specialty court dockets: veterans court, sobriety court, domestic violence court, and street outreach court. He said the loss of probation officers could “severely cripple” those programs. The court would lose a probation officer who arrives at work at 6 a.m. every day to conduct preliminary breath tests. That ensures that participants in the sobriety court start the day sober. Zeisloft also pointed out that there’s a reduction in revenue that would come from probation fees. Reducing probation officers might reduce the recovery rate of fines, he said.

Chief financial officer Tom Crawford and Sumi Kailasapathy (Ward 1).

Kailasapathy highlighted the 49% decline in civil infractions – from 2007 to 2011. Responding to Kailasapathy, Zeisloft allowed that there’s been a dramatic decrease in the number of cases. In the last six months, however, there’s been a one-third increase in citations. He described how the workforce has also somewhat declined as the caseload has declined.

Zeisloft called the court “frugal.” Lumm responded by saying she had a different definition of frugal. She listed out increases in various categories.

Lumm and Zeisloft went back and forth about an executive secretary position that was restored last year. She told Zeisloft that historically, the 15th District Court has not met its budget reduction targets.

Then Lumm cited an average 9.6% pay increase given to court workers in October 2012, which was authorized by chief judge of the 15th District Court – Libby Hines. Zeisloft allowed that’s correct. But he pointed out that until then, the court employees had four-and-a-half years of a wage freeze, with a decrease in one of those years. Retention of workers had become an issue.

Zeisloft described how human resources had been asked to do a comparative analysis, and that some of the workers had been found to be dramatically underpaid – in some cases $10,000-$16,000 less than their counterparts in other courts. The increase brought them up to a competitive wage. He ventured that this “softened the blow” of a 9.6% average wage increase. Lumm seemed unpersuaded: “It doesn’t soften the blow for me.” She pointed out that the council had heard from the Ann Arbor Housing Commission director about her struggles with keeping her staff’s pay at a competitive level.

Kailasapathy pointed out that the wage increase given to court workers was an average of 9.6% increase – which meant that some workers would have received an even higher increase.

By way of background, this increase did not apply to judges’ salaries, which are reimbursed to jurisdictions based on state statute. However, the district courts in Michigan fall under the administrative orders of the state Supreme Court, and do not have complete latitude to set wages of their employees independently of their governing municipality.

From Administrative Order No. 1998-5, which applies to district courts, among others.

II. COURT BUDGETING If the local funding unit requests that a proposed court budget be submitted in lineitem detail, the chief judge must comply with the request. If a court budget has been appropriated in line-item detail, without prior approval of the funding unit, a court may not transfer between line-item accounts to: (a) create new personnel positions or to supplement existing wage scales or benefits, except to implement across the board increases that were granted to employees of the funding unit after the adoption of the court’s budget at the same rate, or (b) reclassify an employee to a higher level of an existing category. A chief judge may not enter into a multiple-year commitment concerning any personnel economic issue unless: (1) the funding unit agrees, or (2) the agreement does not exceed the percentage increase or the duration of a multipleyear contract that the funding unit has negotiated for its employees. Courts must notify the funding unit or a local court management council of transfers between lines within 10 business days of the transfer. The requirements shall not be construed to restrict implementation of collective bargaining agreements.

It’s not clear if the 15th District Court is required by the city of Ann Arbor to submit a “lineitem detail” budget.

Mayor John Hieftje asked Zeisloft to review the cuts that would have to be made. Zeisloft again identified non-mandated services – probation. He reviewed how three out of six positions would have to be eliminated.

Lumm pointed out that the cut would still leave a slight increase comparing the FY 2013 budget to the FY 2014 budget.

Hieftje asked chief of police John Seto to field questions. In 2011, Ann Arbor crime levels were at a record low, Seto reported. In 2012 there was a slight increase, but it was still relatively low.

Hieftje argued that 226 Lansing officers compared to the 179 in Ann Arbor – when you count UM campus safety officers – is comparable, when you consider the reduced crime in Ann Arbor compared to Lansing.

Briere said she sees both the courts and the police officers as safety services. We need the police officers but we also need the courts as well, Briere said.

Christopher Taylor (Ward 3) agreed with Briere that this amounts to a service cut. His focus was not the change in the budget from this year to last year, he said, but the amount of services those budgets could purchase. He didn’t think the three police officers who would be added would add to the actual or perceived safety in the community. The total city budget for FY 2014 reflects around 50% in support of safety services, so he felt the administrator’s budget reflected the council’s priority on public safety. He wouldn’t support the amendment.

Stephen Kunselman (Ward 3) asked where the court revenue goes. It’s based on a state formula, Zeisloft explained.

Kunselman ventured that there would be other ways to accommodate the $270,000 reduction besides laying people off. Zeisloft countered Kunselman by saying that the main costs of the court, like any governmental entity, is personnel.

Hieftje recited some statistics in support of the idea that Ann Arbor is safe. Hieftje indicated he’d be supporting the allocation of DDA budget funds for police in the downtown area. He didn’t think that the proposed budget amendment would have a net public safety benefit when it would have a negative impact on the probation system.

Lumm drew out the fact that in the last 10 years, the DDA hasn’t provided any money for beat cops. She did this by asking CFO Tom Crawford how much money the DDA had allocated for downtown beat cops. Crawford, who was visibly under the weather at the meeting, said he didn’t know off the top of his head. Lumm told Crawford it was a softball question. She’d previously submitted that question to staff, she said, and “The answer is zero.” [.pdf of memo from Crawford on beat cops]

Kunselman asked Hieftje how the DDA could provide recurring revenue to support downtown beat cops, when it can’t plan to replace light poles.

Susan Pollay, executive director of the DDA, traced the original parking agreement from 2005 between the city and the DDA as originating in a desire to provide support to downtown beat cops. A $300,000 allocation escalated to $1 million a year, she noted, but even that did not result in the preservation of beat cops downtown.

Kunselman objected to the idea that increases in parking rates might be used to fund police officers. He cited $1.20/hour parking in Pasadena, which he recently visited, compared to $1.50/hour in Ann Arbor.

Mike Anglin (Ward 5) wanted to send a message about support for public safety that would come from hiring more police officers.

Sally Petersen (Ward 2) observed that there seems like a lot of agreement that more police are needed downtown, but she wonders what that would mean for this amendment.

Kunselman indicated he’d support the amendment. He didn’t take the possible cut to three probation officers lightly but thought there could be other ways to deal with a reduced budget. He pointed out that the 15th District Court had a nice new building. And responding to Hieftje’s count of UM campus safety officers with the total number of sworn officers in Ann Arbor, Kunselman said the campus police don’t help Ann Arbor neighborhoods.

Outcome: The amendment to reduce 15th District Court funding by $270,000 failed on a 5-6 vote, getting support only from Jane Lumm (Ward 2), Stephen Kunselman (Ward 3), Mike Anglin (Ward 5), Marcia Higgins (Ward 4), and Sumi Kailasapathy (Ward 1).

Police Officer/City Attorney

Another public safety amendment was to allocate $90,000 of the recurring savings from the retirement of assistant city attorney Bob West to the police services area – to pay for an additional police officer. The recommendation associated with the amendment was to eliminate an FTE from the city attorney’s office for next year – that is, FY 2015.

In introducing the amendment, Sumi Kailasapathy (Ward 1) noted the attorney’s office has had the least amount of decline in FTEs over the last 10 years.

From left: Ward 1 councilmembers Sumi Kailasapathy and Sabra Briere.

Sabra Briere (Ward 1) seconded Kailasapathy’s amendment. But she offered a friendly amendment that specified the assignment of the saved funds simply be returned to the general fund. That is, the outcome of the amendment was simply to reduce the FTE count by one, without specifying that a police officer would be added. Briere was interested in staying consistent with the argument that she’d given against the 15th District Court budget reduction, which was based on the idea that she didn’t favor shifting funds between two positions that served public safety.

Kailasapathy appeared amenable to the amendment.

Then Jane Lumm (Ward 2) said she had been set to support the original amendment, but only because it would have added a police officer. Lumm knew from her experience serving on the liquor license review committee that West played a significant role in that. If it meant that West’s position would have to be absorbed with no hire of an additional police officer, Lumm would not support the budget amendment.

Faced with a choice between having Briere’s support or Lumm’s, Kailasapathy reverted to her original amendment – which specified that a police officer would be hired with the savings.

Christopher Taylor (Ward 3) asked chief of police John Seto to come to the podium. Taylor wanted to know if he’d been asked about this change. Seto indicated that the police department worked closely with West.

City attorney Stephen Postema explained that West did more in his job function than just prosecute civil infractions. Among those duties was the defense of police officers in lawsuits and the training of the officers. In contemplating West’s replacement, that person would take more time than West does to complete those duties, Postema said. It’s incorrect to say that the attorney’s office has been reduced less, he contended. He described going from 14 FTEs to 12 FTEs. He said that eliminating the position “willy nilly” would do a disservice to the police department and the city attorney’s office.

Outcome: The amendment to eliminate the retiring assistant city attorney position failed on a 2-9 vote. Only Sumi Kailasapathy (Ward 1) and Jane Lumm (Ward 2) supported it.

Affordable Housing

This budget amendment brought forward by Sabra Briere (Ward 1) tapped the general fund for $100,000 and placed it in the city’s affordable housing trust fund. She led off deliberations by saying that before she was elected to the council, the city transferred $100,000 every year into the city’s affordable housing trust fund. That practice had ended even as the city continued to spend money in the fund, she said.

Mayor John Hieftje hoped there’d be agreement and that the vote could be taken quickly. Briere called the $100,000 a modest amount. She said that in the context of the earlier discussion about altering the DDA’s budget to transfer $300,000 from the DDA’s TIF fund into its housing fund, she wanted the city to demonstrate that it, too, had some “skin in the game.” She wanted it to be a recurring amount each year, not just a one-time allocation.

Jane Lumm (Ward 2) said she wouldn’t support the budget amendment. She asked that her name be removed as a sponsor, saying that had been mistakenly attached. She supports affordable housing, she said, but did not support the amendment. She would prefer to use the increased DDA TIF revenues as the funding source for additional affordable housing support.

Sally Petersen (Ward 2) indicated that if Lumm’s name was coming off as a sponsor, that would leave room for Petersen’s name to be added as a sponsor. Like Briere, Petersen felt the city should have “skin in the game.” Affordable housing is one of the council’s priorities, she noted. One of the outcomes of the economic development task force, she said, was to help determine when support for affordable housing would come from the DDA and when it would come from the city. Until that could be done, both entities should have skin in the game.

Lumm reiterated that she supported affordable housing and also thought the city should have “skin in the game,” but stated that it matters where the “skin is found.” She felt the $100,000 should be transferred from identified savings, not simply by making an additional expenditure – saying that in this regard she was a fiscal conservative. She asked CFO Tom Crawford if he could identify $100,000 in savings. Crawford was circumspect: “Staff’s work is reflected in the city administrator’s recommendation.”

Hieftje ventured that early in his service as mayor, the city’s budget was such that $100,000 could be found somewhere. Now that the city is leaner, it’s not easy to find that $100,000, he said.

Marcia Higgins (Ward 4) indicated that she’d support the $100,000 transfer because the direction is for staff to find a way to put it in the budget every year.

Outcome: The $100,000 transfer from the general fund reserve to the city’s affordable housing trust fund was approved, with dissent only from Jane Lumm (Ward 2).

Washtenaw Health Initiative

This amendment, brought forward by Sabra Briere (Ward 1), was to allocate $10,000 to the Washtenaw Health Initiative (WHI), a countywide collaboration focused on how to make healthcare more accessible and improve care coordination for disadvantaged populations. It was meant to help prepare for federal healthcare reform.

The WHI is co-chaired by former county administrator Bob Guenzel and retired University of Michigan treasurer Norman Herbert, along with Ellen Rabinowitz, executive director of the Washtenaw Health Plan. The city joined the WHI on July 2, 2012. Washtenaw County is also a member of WHI.

Outcome: The council unanimously approved the $10,000 for WHI without debate.

Public Art Funding

The amendment proposed eliminating $326,464 in spending on public art. This anticipates possible approval of revisions to the public art ordinance. If the council enacts those revisions – likely on June 3, 2013 – it would require a subsequent vote with an eight-vote majority to restore the public art monies to their funds of origin.

By way of background, the current Percent for Art funding mechanism sets aside 1% from all capital projects, to be used for public art. Those monies are pulled from numerous funding sources, depending on how the capital project is funded. The ordinance revisions that are being brought forward would, if approved, eliminate the Percent for Art approach.

Chuck Warpehoski (Ward 5) questioned whether it’s possible to make this amendment, under the existing ordinance. Assistant city attorney Abigail Elias explained that the amendment continues the public art set-aside, but prevents spending it.

Christopher Taylor (Ward 3) indicated that he expects there’ll be a change in the public art ordinance, but until it’s changed he wants to stay the course and support the existing program. So he’d oppose the amendment.

Mayor John Hieftje concurred with Taylor’s reasoning.

Outcome: The vote on preventing the spending of the FY 2014 public art set aside was 7-4, with dissent from Chuck Warpehoski (Ward 5), mayor John Hieftje, Christopher Taylor (Ward 3) and Margie Teall (Ward 4).

Sidewalk Gaps

This budget amendment would tap the general fund for a one-time use of $75,000 to fund a sidewalk gap prioritization study.

Sabra Briere (Ward 1) asked why neither Act 51 money nor the sidewalk millage could be used for new sidewalk construction. Public services area administrator Craig Hupy explained that millage money is supposed to be used only for repair and maintenance of existing sidewalks. Act 51 is not for first-time improvements, Hupy said.

Citywide, there’s more than $25 million worth of sidewalk construction that could take place, Hupy explained. That’s why it’s important to prioritize.

Mayor John Hieftje said that reductions in transportation by the Ann Arbor Public Schools have highlighted where some of the sidewalk gaps are. Stephen Kunselman (Ward 3) noted that some neighborhoods have no sidewalks at all. How does that fit in? Hupy indicated that’s the reason the prioritization study is needed. Kunselman wanted to know if the study will be done in-house. Hupy thought it would require a fair amount of community engagement. So outside assistance would be tapped for that.

Jane Lumm (Ward 2) said she’s inclined not to support it, but probably will.

Mike Anglin (Ward 5) told Hupy that he’s glad conversations are happening between the city and AAPS.

Outcome: The council unanimously approved the sidewalk gap prioritization study.

Miller Manor Senior Meals

This amendment would replace $4,500 in funding lost due to federal sequestration for a senior meals program. Miller Manor is an Ann Arbor housing commission property.

Outcome: Without debate, the council unanimously approved the $4,500 for Miller Manor senior meals

Human Services

This item increased by $46,899 the amount of funding available for human services nonprofit entities. The city allocates this money through a coordinated funding process with the Ann Arbor Area Community Foundation, the United Way of Washtenaw County, Washtenaw County and the Washtenaw Urban County. The city has participated in this coordinated funding approach for three years now. Initially the agreement was for two years, and the partners extended for a year.

In introducing the amendment, Sabra Briere (Ward 1) noted that the total amount of funding allocated in the budget for human services nonprofits could change after this year. The additional $46,899 brings the amount to $1,244,629, which is the same as the last two years.

Outcome: Without discussion beyond Briere’s introductory remarks, the council unanimously approved the $46,899 increase in funding to nonprofits that provide human services.

Parks Fairness

Under Ann Arbor city policy policy, the general fund allocations to parks and recreation must not suffer any decrease beyond what other areas in the general fund do. So in the course of making amendments to the other parts of the budget, that can have implications for adherence to this policy.

At the end of all the amendments, financial services staff provided the council with the adjustment that needed to be made to the parks budget, in order to comply with the policy. This year, that amount is an increase of $22,977.

Outcome: The council approved the “parks fairness” adjustment without debate.

FY 2014 Budget Deliberations

Jane Lumm (Ward 2) explained why she’d be opposing the budget again this year, like she did last year. She contended that this year’s budget makes no progress toward making public safety a priority.

Stephen Kunselman (Ward 3) understood Lumm’s position, but said that politics is the art of compromise. He’d seen a lot of compromise that night. He pointed to the small increases in the number of firefighters. [This was an increase by four firefighter positions compared to FY 2013, but the positions had been added after the FY 2013 budget was adopted.] He pointed out that there’s no longer a plan to close fire stations, which he counted as progress. Kunselman said he believes in patience and putting his shoulder to the pile, as in rugby, and pushing toward a score.

Marcia Higgins (Ward 4) as well as other councilmembers thanked staff for their hard work in preparing the budget. Sabra Briere (Ward 1) said she wouldn’t vote against the budget because she has to “own it” even if she doesn’t like every item in it.

Outcome: The council voted 10-1 to approve the FY 2014 budget. Dissenting was Jane Lumm (Ward 2).

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

Next council meeting: Monday, June 3, 2013 at 7 p.m. in the council chambers at 301 E. Huron. [Check Chronicle event listings to confirm date]

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