Most notably, the meeting featured remarks from city attorney Stephen Postema indicating that he believes medical marijuana dispensaries should not be in business now because they lack licenses: “… [dispensaries] can’t operate right now, they’re not allowed to operate at all – without a license.”

That contradicts the city’s ordinance, which allows dispensaries to operate while their license applications are still pending. (The city is still in the process of issuing its first licenses for dispensaries.) From the ordinance: “The medical marijuana dispensary may continue to operate pending final action on the application unless the Building Official determines that it must be closed for safety reasons.” When The Chronicle sent Postema an emailed query questioning the accuracy of his statement, he responded by insisting his statement was accurate. However, Postema declined to provide any foundation for his feeling that dispensaries lacking a license – even those with applications pending – are not allowed to operate by dint of having no license.

If dispensaries are assumed to be operating in violation of the Michigan Medical Marijuana Act, then they would not be allowed to operate – whether they had a license or not. However, at the April 2 meeting Postema did not identify a basis for such an assumption. He stopped short of describing an interpretation of a recent Michigan court of appeals ruling (the McQueen case) as banning all dispensaries, but said the ruling presented “severe difficulties” for dispensaries.

The council’s deliberations on Monday night can be understood in the context of a struggle between the city attorney’s office on the one hand, and some members of council and the medical marijuana licensing board. The struggle relates to who has the decision-making authority for awarding licenses, and when those licensing awards should be decided. From a formal, procedural point of view, it’s not an open question: The licensing board makes recommendations to the city council, which has the ultimate decision-making authority. The board has already recommended that licenses be awarded to 10 different dispensaries.

However, from a practical point of view, the council will act only under the advice of the city attorney’s office. Since the licensing and zoning ordinances were enacted by the city council last year, Postema has proceeded in a way that reserves a role for city staff in the licensing process that has an uncertain basis in the actual ordinances approved by the council. Revisions to those ordinances, meant in part to address some of those uncertainties, were part of the council’s April 2 agenda.

Here’s a summary of the outcome on medical marijuana issues at the April 2 meeting: (1) the council unanimously postponed consideration of licensing ordinance revisions until June 18 – the council’s second meeting that month; (2) on a 9-1 vote, the council approved giving direction to the city planning commission to review the zoning ordinance; and (3) on a 6-4 vote, the council tabled a resolution directing the city attorney to delay enforcement activities against dispensaries. A tabled resolution will demise if it’s not brought back off the table in six months.

Deliberations suggested in sum that the current arrangement in Ann Arbor, under which patients are still able to get medical marijuana from dispensaries, will persist at least until the city council votes on licenses. But the timing of that vote appears fairly uncertain, given the mixed signals currently being sent by the city attorney.

Provided in this article is analysis of some of the local issues related to medical marijuana licensing and zoning. The analysis culminates by showing how the interpretation of a single requirement in the city’s zoning ordinance – that dispensaries adhere to the Michigan Medical Marijuana Act – makes a significant difference in who makes the practical decision on whether dispensaries receive a license and can legally operate, and where the burden of proof lies for MMMA conformance.

Local Ordinances

The city council passed two pieces of legislation on medical marijuana at its June 20, 2011 meeting – a licensing ordinance and a zoning ordinance. The final approval of the legislation came after more than a year of legislative work, which began in closed sessions by the council held with its city attorney. The council’s first public discussion and action, however, did not come until the council’s Aug. 5, 2010 meeting, when the council imposed a moratorium on the “initiation or expansion” of medical marijuana business uses within the city. So the moratorium, which was extended several times from its initial 120-day period, did not apply to existing businesses.

Local Licensing: Pending Applications

Existing medical marijuana businesses with ongoing operations before Aug. 5, 2010 were recognized in Ann Arbor’s local licensing ordinance in at least two ways. [.pdf of Ann Arbor medical marijuana licensing ordinance] First, they were able to submit applications for a license before businesses that were not in operation before the moratorium. Second, the licensing ordinance explicitly provides for a dispensary’s continued operation while its application is pending [Emphasis added]:

7:504. Application requirements for new annual license or renewal of existing license; license requirements for new license and for renewed license.
(1) Application Submission.
A medical marijuana dispensary that commenced operation prior to passage of the moratorium by City Council on August 5, 2010, shall have until 60 days after the effective date of this chapter to submit an application for a new annual license. If the medical marijuana dispensary commenced operation prior to passage of the moratorium in a zoning district where its operation is not permitted under the zoning ordinance, the application shall be for a location in a zoning district where operation of a medical marijuana dispensary is permitted under the zoning ordinance. No other applications will be accepted by the City until 75 days after the effective date of this chapter. The medical marijuana dispensary may continue to operate pending final action on the application unless the Building Official determines that it must be closed for safety reasons. Within 60 days after an application is denied, the medical marijuana dispensary shall discontinue all operation.

Postema’s characterization of the situation at the April 2, 2012 council meeting is at odds with the content of the ordinance. His remarks came in the context of an argument he was making that the council should be thinking about voting on the license awards for the 10 dispensaries that had been recommended for licenses. Final action on their applications is still pending, because the city council has not yet voted on them. From Postema’s remarks to council [inaccurate statement emphasized with italics]:

… frankly I don’t know why, under the ordinance, the business licenses aren’t before the council. Ordinarily they’d come there. So again, this is all sort of backwards in one sense, because what they’re trying to do is get a license. They can’t operate right now, they’re not allowed to operate at all – without a license. And that is what they should be wanting to be in front of you, so you can rule on it. So if they do comply with state law, they can get a license. So asking them for basic information is part of what needs to be there. And that’s nothing surprising. The fact that the licensing board somehow took offense to this, that’s because they’re operating in a different realm in some ways than what I’m being asked to do. So there’s nothing surprising there.

An emailed query from The Chronicle to Postema pointing out the contradiction between the actual ordinance language and Postema’s inaccurate statement at the meeting was met with this reply: “There is no inaccuracy in the statement as a careful review of the entire zoning and licensing ordinances demonstrate.”

Unanswered by Postema was a follow-up invitation to explain how he reasoned that a dispensary with a pending license application is illegal (by dint of lacking a license), in light of the specific language of the ordinance.

Beyond the part of Postema’s statement that is contradicted by the licensing ordinance, his remarks raise some interesting issues, most notably whether a detailed demonstration of a dispensary’s compliance with the Michigan Medical Marijuana Act (MMMA) could be a pre-requisite to receiving a license under Ann Arbor’s local ordinance.

Local Licensing: Role of State Law (MMMA)

The city’s licensing ordinance includes two provisions that allow the city to revoke a license, after has been granted, if a state law is violated:

7:508. License revocation.
…
(4) Marijuana is dispensed on the business premises in violation of this chapter or any other applicable state or local law, rule or regulation;
(5) The medical marijuana dispensary is operated or is operating in violation of the specifications of the license application, any conditions of approval by the City or any other applicable state or local law, rule or regulation.
…

The licensing ordinance also includes violations of state law under its prohibited acts:

7:507. Prohibited acts.
…
(b) Produce, distribute or possess more marijuana than allowed by any applicable state or local law.
(c) Produce, distribute or possess marijuana in violation of this chapter or any other applicable state or local law.
…

And the licensing ordinance requires that the conduct of business at a dispensary conform to a specific quantity requirement of the MMMA:

7:506. Conduct of business at a medical marijuana dispensary.
…
(3) No more marijuana than is permitted under the MMMA shall be kept on the premises of a medical marijuana dispensary.
…

However, the licensing ordinance does not establish as a pre-condition for licensing a demonstration that a dispensary has a business model that conforms with the MMMA.

The licensing ordinance does, however, establish a requirement that a license application include a zoning compliance permit:

7:504. Application requirements for new annual license or renewal of existing license; license requirements for new license and for renewed license.
…
(2) Application requirement for new licensee
…
(h) A zoning compliance permit that shows the proposed medical marijuana dispensary is located in a zoning district that would permit its operation.

Based just on Chapter 95, which contains the medical marijuana licensing code, it appears that a “zoning compliance permit” is simply a certification that a dispensary is in the correct zoning district. Otherwise put, as described in Chapter 95, a zoning compliance permit is simply a formal mechanism for ensuring that an applicant for a medical marijuana license intends to operate in a district that has been explicitly zoned for medical marijuana dispensaries.

By way of background, in Ann Arbor, medical marijuana dispensaries can be located only in those districts zoned as D (downtown), C (commercial), or M (industrial), or in PUD (planned unit development) districts where a retail use is permitted in the supplemental regulations.

Local Licensing: Chapter 95 Zoning Compliance Permit

But a zoning compliance permit is a notion that’s not unique to Chapter 95. The fact that there are other uses for a “zoning compliance permit” within the city bureaucracy – besides certifying that a business is in a district zoned for medical marijuana dispensaries – is made explicit in Chapter 95. In describing how the fee for a zoning compliance permit is assessed, Chapter 95 states [emphasis added]:

Fees for zoning compliance permits and certificates of occupancy shall be separate from the application fee, but shall be the same amount and shall be paid pursuant to the same procedures as applied to applications for zoning compliance permits and certificates of occupancy for other uses.

So Chapter 95 acknowledges that a zoning compliance permit as described in Chapter 95 serves a different purpose from zoning compliance permits mentioned elsewhere in the code. The purpose of a Chapter 95 zoning compliance permit, then, is none other than to establish that the dispensary is located in the correct zone. Nothing in Chapter 95 connects the granting of a zoning compliance permit to any type of compliance with the MMMA.

Local Zoning: Chapter 55 Zoning Compliance Permit

In evaluating license applications, however, the city attorney’s office and planning staff have applied an additional condition on granting zoning compliance permits – beyond a requirement that a dispensary is correctly zoned. That additional condition is for a dispensary to demonstrate compliance with the MMMA, which the city attorney’s office ascribes to the Chapter 55 zoning.

Local Zoning: Chapter 55 ZCP Conditions

The basis that staff is using for this additional requirement is not in Chapter 95, the medical marijuana licensing ordinance, but rather in Chapter 55, the general city ordinance on zoning. Chapter 55 includes the zoning regulations for medical marijuana dispensaries. [.pdf of medical marijuana zoning ordinance]

The Chapter 55 zoning compliance permit for medical marijuana dispensaries is described as follows:

(4) Medical Marijuana Dispensary and Medical Marijuana Cultivation Facility Regulations
…
(h) A zoning compliance permit shall be required consistent with Section 5:92

What is Section 5:92 of Chapter 55? It includes the following:

5:92. Zoning compliance permit required.
(1) It shall be unlawful to begin the excavation for the construction, the moving, alteration, or repair, except ordinary repairs as defined in Chapter 98 of the Ann Arbor City Code, of any building or other structure, including an accessory structure, costing more than $100.00 or exceeding 100 square feet in area until the Planning and Development Services Manager has issued for such work a Zoning Compliance Permit which includes a certification of his determination that plans, specifications, and the intended use for such structure do, in all respects, conform to the provisions of this Chapter.

Hypothetically, a dispensary that did not need to undertake any construction or alteration of a premises costing more than $100 or exceeding 100 square feet could meet the (4)(h) requirement without having a zoning compliance permit. That is, even though it did not have a Chapter 55 permit, it would still be consistent with 5:92. Such a hypothetical dispensary could then reasonably expect to be issued a Chapter 95 zoning compliance permit, if it simply demonstrates it is located in the correct zone.

So what is the basis of the city attorney’s contention that it’s his obligation to verify compliance with the MMMA? Consider a dispensary that undertakes enough work on the premises to trigger the 5:92 requirement that it obtain a Chapter 55 zoning compliance permit. In that case, the planning manager would need to determine that the “intended use” – as a medical marijuana dispensary – conforms to all the provisions of Chapter 55.

And one provision of Chapter 55 is this:

(4) Medical Marijuana Dispensary and Medical Marijuana Cultivation Facility Regulations
…
(k) Medical marijuana dispensaries and medical marijuana cultivation facilities shall be operated in compliance with the MMMA.

Local Zoning: State Law in Chapter 55 ZCP Conditions

Some licensing board members had this understanding of the city’s ordinance: If a dispensary owner states that the dispensary will or does conform with the MMMA, then the city planning manager could determine that the intended use as a medical marijuana facility conforms with (4)(k). Some board members felt that such an assurance would meet the conditions of a Chapter 55 zoning compliance permit.

It’s also possible to analyze the licensing requirements in a way that would result in the granting of a license, based on a Chapter 95 zoning compliance permit, but that could be followed by an immediate revocation of the license if the dispensary tried to operate, for failure to have a Chapter 55 zoning compliance permit.

The city attorney’s office sees the issue differently from the licensing board. The city attorney has interpreted the (4)(k) requirement to mean that a dispensary must demonstrate MMMA compliance to the city attorney’s office before it will be issued a zoning compliance permit. So the zoning compliance permits of the dispensaries that have been recommended for licenses are still pending. To evaluate compliance with the MMMA, the city attorney’s office required that dispensaries submit with their license applications a clear statement of exactly how their business models would conform with the MMMA.

For example, Cannabis Counsel, the attorney for MedMarx at Arborside, included a statement explaining its MMMA conformance in the wake of Michigan v. McQueen (Compassionate Apothecary). An Aug. 23, 2011 court of appeals ruling on the case has been interpreted by many authorities to mean that no medical marijuana dispensaries are legal. [.pdf of letter from Cannabis Counsel regarding Arborside's business model] The McQueen case has been accepted for review by the Michigan Supreme Court, which means that it’s not yet settled case law. And the broadest interpretation of the McQueen case – that it bans all dispensaries – is itself controversial.

The Cannabis Counsel letter lays out why the court of appeals in the McQueen case found that the Compassionate Apothecary business model was not in compliance with the MMMA: The problem was that Compassionate Apothecary did nothing to “assist” patients in administering or using marijuana, beyond exchanging marijuana for money. In contrast to Compassionate Apothecary, argues Cannabis Counsel, Arborside does assist patients in the manner described by the court – by assisting the patient “in preparing the marihuana to be consumed in any of the various ways that marihuana is commonly consumed.” Those ways include providing patients with “cleaned prepared de-stemmed cannabis including pre-rolled joints, medibles which have been inspected, tested, cleaned, grinded and rolled, or cooked in combination with foodstuff.”

The Ann Arbor dispensaries met the city’s request to submit with their applications an explanation of their compliance with the MMMA. And on Jan. 31, 2012, the city’s licensing board voted to recommend licenses to 10 dispensaries. Yet after that, when dispensary owners felt like they’d completed the application process with the final step to be a vote by the city council, the city attorney’s office sent out letters demanding additional data.

Among the questions posed to all dispensaries in the letters are the following: “Does any person or entity deliver marijuana to [Dispensary Name]? If so, does [Dispensary Name] ever pay, donate, or in any way give money to the person or entity who delivers the marijuana or to anyone else? If so, to whom is the money paid, donated, or given and how much?” [.pdf of set of letters]

Dispensaries have balked at the additional data request – the information is sensitive and the collection of such data by the city was explicitly removed by the city council during the legislative process that resulted in approval of the licensing and zoning ordinances. But the city is currently not granting Chapter 55 zoning compliance permits to license applicants – on the grounds that compliance with the MMAA cannot yet be verified.

Significance of (4)(k)

The interpretation of the seemingly innocuous requirement in (4)(k) of the zoning ordinance – that a dispensary operate in compliance with the MMMA – has a significant impact on two things: (1) Who makes the practical decision on dispensary license awards? and (2) Who bears the burden of proof with respect to the MMMA?

Significance of (4)(k): Applicability of the MMMA?

Absent the (4)(k) requirement, the city would need some other basis to deny a Chapter 55 zoning compliance permit to a dispensary. And that is one reason that the licensing board has recommended that (4)(k) be struck from the ordinance. At the council’s April 2 meeting, the idea of striking the (4)(k) was met with professed puzzlement by some councilmembers as well as the city attorney. Their rhetorical position trades on the idea that striking the provision would somehow mean that dispensaries do not have to operate in accordance with the MMMA. In fact, of course, removing the requirement would have no effect on the applicability of the MMMA. It’s not possible to render a state law inapplicable by failing to mention it in a local ordinance.

Significance of (4)(k): Decision Point

But it’s not entirely true – as city attorney Stephen Postema claimed at the April 2 meeting – that “… the [proposed] changes in the zoning or the other ordinance aren’t going to change the issue of whether they are compliant with state law.”

Under Postema’s understanding of the (4)(k) requirement, there’s a decision point before a city council vote on license awards. That decision point is effectively made by the city attorney – about granting a Chapter 55 zoning compliance permit. The decision has a material effect on a dispensary’s ability to operate. If a Chapter 55 zoning compliance permit is denied, or still pending, then it’s not clear why a councilmember would vote yes on the award of such a license.

From a practical point of view, operating without a zoning compliance permit would be a violation of the zoning ordinance (even if the zoning compliance permit were still pending), and that would be grounds for revocation of the license, even if one were awarded. So even if a license were awarded by the council, it would not give the dispensary the ability to operate in the absence of a Chapter 55 zoning compliance permit. On that scenario, a dispensary would have a meaningless license and could not operate until the city attorney decided to issue a zoning compliance permit.

Postema’s office has still not made decisions on the issuance of Chapter 55 zoning compliance permits for the dispensaries that have been recommended for licenses by the licensing board. The permits are still pending. So it’s not clear why Postema would say at the council’s April 2 meeting: “… frankly I don’t know why, under the ordinance, the business licenses aren’t before the council. Ordinarily they’d come there.” It’s especially not clear why Postema would say that, when he has told at least one city councilmember that his office would not be prepared for licenses to come before the council until June.

Postema’s feeling – that a zoning compliance permit can be issued only if he is satisfied that the dispensary is MMMA compliant – has a consequence for the practical decision point on awarding licenses. In order for the council to take a vote on awarding licenses with any practical consequence, a dispensary will need to have a zoning compliance permit. And if a dispensary has a zoning compliance permit, that means the city attorney has been satisfied that a dispensary is MMMA compliant.

So for any meaningful council vote on a dispensary license award, Postema will have publicly indicated that the dispensary is MMMA compliant – through granting a zoning compliance permit. If Postema were to present the opposite view confidentially to the city council in advising against the award of a license, that would be inconsistent with his public decision to grant a zoning compliance permit. So from a practical point of view, Postema’s interpretation of the criteria for granting a zoning compliance permit – the (4)(k) provision – moves the decision-making step on licenses from the city council to his office.

In contrast, on the licensing board’s interpretation of the (4)(k) requirement, dispensaries would simply need to do what they’ve already done – provide an assurance that their intent is to comply with the MMMA and a rationale for why their business model is MMMA compliant. On that interpretation, a dispensary would qualify for a zoning compliance permit if it’s located in the correct zone.

At that point, a license award could be voted up or down by the city council, with the city attorney free to provide the council whatever legal advice he felt was appropriate. For example, Postema’s advice could run along the following lines: Even while the dispensary owner has given an assurance of intent to operate in compliance with the MMMA, thus earning a zoning compliance permit, the opinion of the city attorney is that this dispensary will not or does not achieve actual compliance with the MMMA, based on a stated set of reasons.

Significance of (4)(k): Burden of Proof

The licensing board’s interpretation of (4)(k) would also have a practical effect on the issue of state law compliance – with respect to who has the burden of proof. The city attorney’s office contends that under the current zoning and licensing legislation, a dispensary has the burden of proof to demonstrate to the city attorney that it’s in compliance with the MMMA before it can be issued a zoning compliance permit. In any case, the zoning compliance permit is required under the zoning ordinance in order for a dispensary to operate – whether it has a license or not.

On the licensing board’s interpretation of (4)(k) – or if (4)(k) were deleted, as the board recommends – dispensaries would be issued zoning compliance permits. That issuance would be based on their appropriately-zoned location and their intention and rationale for compliance with the MMMA.  The city council could then weigh the city attorney’s advice in making its decision on a license award. And it’s possible that the city attorney’s advice would be that a particular dispensary already did not conform to the MMMA, or did not have a business model that would conform.

But suppose the council made a decision to award a license, against the city attorney’s advice. Then, if Postema believed the dispensary were operating in violation of the MMMA, the burden of proof would be on him to demonstrate that’s the case, in the context of starting a license revocation process.

Conclusion

The interpretation of the (4)(k) requirement thus has a significant impact on: (1) who makes the practical decision on license awards and the ability of dispensaries to operate; and (2) who has the burden of proof for determining MMMA compliance. On the city attorney’s interpretation, a practical decision on license awards can be made by his office, and the burden of proof for compliance rests with the dispensaries. On the licensing board’s interpretation, the practical decision about a license award is made by the city council, and the burden of proof on MMMA compliance rests with the city attorney.

So by suggesting that (4)(k) be struck from the zoning ordinance, the licensing board is not suggesting that dispensaries be allowed to operate in violation of the MMMA. Rather, the licensing board is suggesting that the question of interpreting (4)(k) – and its impact on the granting of zoning compliance permits and license awards – be removed from the discussion. With no (4)(k) left to interpret, the practical decisions on license awards would be made by the city council, and the burden of proof for violation of the MMMA would rest with the city attorney.

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Ann Arbor medical marijuana licensing board at its Jan. 31, 2012 meeting. Left to right: Sabra Briere, Jim Kenyon, Patricia O’Rorke, John Rosevear and Gene Ragland. (Photos by the writer.)

Both issues – the award of the licenses and the changes to the ordinance – will be up to the city council to decide. The licensing board’s recommendation and report had been due to the city council by Jan. 31, according to the council resolution passed in conjunction with last year’s enactment of the licensing ordinance. But at the city council’s Jan. 23, 2012 meeting, Ward 1 representative Sabra Briere gave her colleagues a heads up that the medical marijuana licensing board would be submitting its recommendations in early February instead.

The legislation enacted by the council on June 20, 2011 included provisions for licenses and zoning requirements. The zoning requirements played a role in the recommendation to award one of the 10 licenses conditionally. Treecity is located in a district zoned for office use, which does not permit medical marijuana dispensaries.

On Jan. 25, 2012, the city’s zoning board of appeals (ZBA) turned down Treecity’s appeal of the city’s decision to deny Treecity’s application for a zoning compliance permit – a necessary component of a license application. At the same meeting, the ZBA granted the same kind of appeal to another dispensary – Green Planet (700 Tappan St.).

The tension between the board’s work and the city attorney’s office is reflected in the fact that even as the board recommended the conditional award of a license to Treecity, the city attorney has served a lawsuit against the dispensary.

The tension was also reflected during the meeting itself, as assistant city attorney Kristen Larcom reminded the board that their purview, according to the city’s ordinance, is [emphasis Larcom's] to “send to City Council a proposed resolution recommending either approval or rejection of each complete license application.”

In the city’s view, Treecity’s application is not complete, because the city has denied a zoning compliance permit to the dispensary. However the board appeared to rely on the subsequent sentence of the ordinance: “A recommended resolution may set conditions for approval.”

Also at its Jan. 31 meeting, the licensing board recommended that the initial licensing fee be established at $1,100 with the annual renewal fee set at $350.

Licenses Recommended

Businesses recommended to be awarded a license under Ann Arbor’s local ordinance were: (1) Green Planet, 700 Tappan St.; (2) TreeCity Treecity Health Collective, 1712 S. State St.; (3) Ann Arbor Health Collective, 2350 E. Stadium Blvd.; (4) OM of Medicine, 112 S. Main St.; (5) People’s Choice, 2245 W. Liberty St.; (6) Greenbee Collective, 401 S. Maple St.; (7) Ann Arbor Wellness Collective, 321 E. Liberty St.; (8) MedMarx at Arborside, 1818 Packard St.; (9) Medical Grass Station, 325 W. Liberty St.; and (10) PR Center, 3820 Varsity Dr.

The city of Ann Arbor received 10 applications from businesses seeking to be licensed as medical marijuana dispensaries. Their locations are indicated with the green pushpins. On Jan. 31, 2012 the medical marijuana licensing board recommended granting licenses to all 10 – two of them conditionally. (Image links to dynamic Google Map)

The licensing board required little time at its Jan. 31, 2012 meeting to review and deliberate on each application – most of the review had been completed at previous meetings. [See previous Chronicle coverage: "Medical Marijuana: Local Board Eyes 2012" and "Medical Marijuana Board Straw Poll: Yes"]

Recommendations for Treecity and Greenbee were made conditionally – Greenbee must secure adequate parking, and Treecity must move to a location allowed under the city’s medical marijuana zoning rules.

At the board’s December 2011 meeting, it was discussed that Greenbee has only 8 of the needed 14 parking spaces for its intended use of the space as a medical marijuana dispensary. At the Jan. 31, 2012 meeting, the board’s discussion suggested that perhaps only five additional spaces were needed.

Treecity is currently located on a parcel zoned office (O), which is not one of the zones designated for medical marijuana dispensaries. In Ann Arbor, medical marijuana dispensaries can be located only in those districts zoned as D (downtown), C (commercial), or M (industrial), or in PUD (planned unit development) districts where a retail use is permitted in the supplemental regulations.

Of the licenses recommended, nine were made for businesses considered to be operating before the Ann Arbor city council imposed a moratorium on Aug. 5, 2010 for 120 days. The moratorium prohibited any additional uses of property inside the city for cultivation facilities or dispensaries. The moratorium was extended several times in the course of the council’s consideration of the medical marijuana issue.

The timing of the application process for pre-moratorium businesses for the first year’s applications was slightly earlier than for businesses established after the moratorium. And the maximum number of licenses available in the first year is a function of the number of applications received from pre-moratorium businesses – which the city determined to be nine. Those nine plus 10% (rounded up) yielded the total number of licenses available – 10. The one post-moratorium business recommended for a license is Grass Station.

The owner of the Grass Station had previously argued for inclusion for consideration as a pre-moratorium business. And previously, it appeared that possibly two dispensaries would be considered as post-moratorium applicants – Grass Station and PR Center. That would have set up a situation where the board needed to choose between dispensaries for which it would recommend a license.

However, PR Center was ultimately considered as a pre-moratorium business. The initial analysis as a pre-moratorium business had resulted from the fact that PR Center has more than one location – one of which is in a township island.

Zoning Board of Appeals

The licensing board’s report on recommended licenses and changes to the licensing ordinance was due to be submitted to the city council on Jan. 31. One reason the board did not meet until that day to take a final vote on its recommendations was to allow time for a decision by the city’s zoning board of appeals (ZBA) on two cases involving dispensaries: Treecity and Green Planet. The ZBA met to hear those two appeals on Jan. 25.

At issue in both cases was a decision by the city to deny a zoning compliance permit to the dispensaries, on the grounds that the businesses are not located in one of the zones enumerated in the city’s zoning code: D (downtown), C (commercial), or M (industrial), or in PUD (planned unit development) districts where a retail use is permitted in the supplemental regulations. Such a permit is a requirement for a medical marijuana dispensary license application.

On a unanimous vote, the ZBA overturned a decision by the city to deny a zoning compliance permit to Green Planet. And on a 5-1 vote, the ZBA upheld the decision by the city to deny Treecity’s zoning compliance permit.

Zoning Board of Appeals: Green Planet

Green Planet is located in a PUD (planned unit development ) zoning district. The PUD includes supplemental regulations that lay out types of uses allowed in the district:

a. Restaurants and Catering Businesses.
b. Grocery, prepared food and beverage sales, including retail sales of non-food items typically associated with groceries and food preparation. Examples include cookware, glassware, linens, books, kitchen utensils and implements, and small kitchen appliances.
c. Classrooms and educational instruction.
d. Tanning, massage and beauty salon.
e. Business offices, medical or dental offices, professional and non-profit organization offices. Examples include real estate and insurance agencies, attorneys and law firms, accountants, architects, engineers, travel agencies, consultants, and property management firms.

The language of the medical marijuana zoning ordinance states:

Medical marijuana dispensaries shall only be located in a district classified pursuant to this chapter as D, C, or M, or in PUD districts where retail is permitted in the supplemental regulations.

Green Planet had argued, in part, that because specific kinds of retail uses are permitted in the PUD’s supplemental regulations, they meet the ordinance description of a “PUD district where retail is permitted in the supplemental regulations.” In rejecting Green Planet’s application for a zoning compliance permit, the city argued that the kind of retail uses described in the supplemental regulation do not include marijuana dispensaries, because marijuana for medical use is not an item “typically associated with groceries and food preparation.”

Green Planet's Michael McLeod distributes handouts at the Jan. 25 meeting of the zoning board of appeals. Seated at left are Ben Carlisle and Sabra Briere.

The ZBA’s decision relied on the intent of the planning commission as reflected in that body’s deliberations on the zoning ordinance at its Oct. 5, 2010 meeting. Green Planet noted that the language on PUDs had been added as an amendment at that meeting and adduced the minutes of the meeting, the video, as well as The Chronicle’s reporting ["Medical Marijuana Zoning Heads to Council"] to argue its case. Green Planet argued that it had not been the intent of the planning commission to ask property owners to revise the supplemental regulations of a PUD in order to specifically allow dispensaries.

The vote by the ZBA to overturn the city’s decision on Green Planet was unanimous among the six members attending the meeting of the nine-member board. Absent were Carol Kuhnke and Wendy Carman. Jason Boggs recently resigned, leaving a current vacancy. [An application form for appointments to city boards and commissions is available on the city's website.] Attending his first meeting as a member of the ZBA was Ben Carlisle, who replaced long-time member David Gregorka.

Chairing the ZBA meeting in Kuhnke’s absence was Erica Briggs, who also serves on the city’s planning commission. As a planning commissioner, she’d actually voted on Oct. 5, 2010 against the inclusion of PUDs among those districts that are allowable zones for medical marijuana dispensaries. But given that the majority of her colleagues on the planning commission disagreed with her and the city council eventually enacted the zoning code to include PUDs, she told The Chronicle after the hearing that she was compelled to vote in favor of Green Planet’s appeal.

Zoning Board of Appeals: Treecity

Treecity is located in a district zoned as office (O), which is not one of the zoning districts allowed for use as a medical marijuana dispensary. Treecity’s appeal was based in part on its contention that a legal, non-conforming use of the property as a medical marijuana dispensary had been established before the zoning laws were passed.

The city’s position relied in part on the general principle of Ann Arbor’s zoning ordinance that: “Uses not expressly permitted are prohibited.” So the city of Ann Arbor argued that there was no legal use of a parcel within the city as a medical marijuana dispensary before the enactment of the zoning ordinance on June 20, 2011. Although several ZBA members expressed sympathy for Treecity’s situation, only one member – Sabra Briere – voted to overturn the city’s denial of the zoning compliance permit.

Treecity’s ZBA denial marked the third key disappointment for Treecity in its effort to keep its business at the 1712 S. State St. address. At the Oct. 5, 2010 meeting of the planning commission, Treecity’s attorney Dennis Hayes had unsuccessfully advocated for the inclusion of office districts as a possible zone for dispensaries. Then the planning commission (on Aug. 16, 2011), followed by the city council (on Oct. 3, 2011) both rejected Treecity’s request to be rezoned from office to C1 (local business).

At the licensing board’s Jan. 31 meeting, assistant city attorney Kristen Larcom reported that the city of Ann Arbor had actually filed a lawsuit a few months ago against Treecity, but had not served it until after the ZBA hearing. Dori Edwards, an employee who does public relations work for the dispensary, said that Treecity had been served on Friday, Jan. 27, 2012. The lawsuit, filed in the 22nd circuit court and assigned to judge Donald Shelton, alleges three counts of nuisance.

Other Recommendations

The city council resolution enacting the licensing ordinance, approved by the city council on June 20, 2010, directed the licensing board to make recommendations to the city council for any changes to the ordinance by Jan. 31, 2012. The ordinance itself also provides for regular communication from the board to the council – beyond an annual recommendation for approval or rejection of license applications. The board is also charged with reviewing and recommending licensing criteria, the number of licenses and the fee structure.

Other Recommendations: Completeness, Conditions

The issue of completeness of applications is one that has been a chaffing point between the board and the city staff. City staff have been reluctant to present the board with license applications that it does not consider complete. For example, one of the elements of an license application is a zoning compliance permit, for which the city has a separate application.

Assistant city attorney Kristen Larcom.

A zoning compliance permit has long been a standard part of the city’s review process, and is not peculiar to medical marijuana dispensaries. For two dispensaries (Treecity and Green Planet), the city denied had the permit because the city determined they were located in the wrong zone. So the license applications were considered to be incomplete.

Until Green Planet’s denial was overturned by the ZBA on Jan. 25, the licensing board had not reviewed and evaluated that dispensary’s application for a license. At the board’s Jan. 31 meeting, Green Planet’s Michael McCleod described how the city planning staff had subsequently been very helpful in assisting him in identifying any other gaps in his license application materials. The application requires, for example, evidence of operation before the moratorium was imposed on Aug. 5, 2010, and statements about any felony convictions for dispensary owners and operators.

So at the Jan. 31 meeting, board members reviewed the Green Planet application and came to a quick consensus that the dispensary should be recommended for a license.

At the same meeting, Dori Edwards of Treecity indicated that she’d not known she should contact city staff for help in reviewing any missing materials. But Treecity’s ZBA appeal had been turned down, so from the city staff’s perspective, the application was fundamentally not complete and Treecity had exhausted all possible avenues for making it complete. And as the board mulled the question of how to deal with Treecity’s application, assistant city attorney Kristen Larcom said she wanted to remind the board that its purview was to evaluate and make a recommendation on each complete application.

Larcom allowed that the ordinance does provide for conditional approvals, but indicated that a possible condition would not extend to the issuance of a zoning compliance permit – having that permit was a matter of completeness of the application.

Medical marijuana licensing board members Sabra Briere and Jim Kenyon.

Sabra Briere told Larcom point blank: “I disagree with you.” Briere is the city council representative to the medical marijuana licensing board. And Briere said that during deliberations on council, the council didn’t talk about why there’d be conditional approvals or limits on those conditions.

So the board forged ahead and included Treecity as a recommended license – with the condition that it obtain a zoning compliance permit. That would mean the business would need to move from its current location.

The attorney for Treecity, Dennis Hayes, wrote in an email to The Chronicle that he hoped the lawsuit the city has filed against Treecity would be resolved by Treecity finding a new location.

Edwards indicated at the Jan. 31 board meeting that she’s actively seeking an alternate location and hoped to sign a lease within a week or two. After that it would take perhaps a month to complete a move, she said.

Larcom stressed that for now, the dispensary use that Treecity wants to make of its current location is not legal – other aspects of the business could possibly persist, but the dispensary use violates zoning. And the city is required to uphold the zoning law – that’s why a lawsuit has been filed, Larcom said.

Related to the issue of completeness, the licensing board agreed at its Jan. 31 meeting to recommend that the explicit role of city staff in determining completeness of applications be struck from two places in the ordinance [added language in italics; deleted language with strike-through]:

7:504 (4) Following official confirmation by staff that the applicant has submitted a complete application City Council approval of the issuance of a license, a new license shall not be issued to a medical marijuana dispensary until the applicant for the license complies with all of the following requirements…

7:505. If the applicant has successfully demonstrated compliance with all requirements for issuance of a license within 10 weeks (70 calendar days) after the date of City staff’s official confirmation that the application for a license was complete City Council’s approval of a license, the city administrator or designee shall grant renewal of an existing or issue a new license…

At the board’s Jan. 18 meeting, the idea was entertained to remove staff from part of the process, by requiring that all the application materials be forwarded directly to the board, instead of to the city planning staff. Jill Thacher is the city planner who’s shouldered that task for the first year’s round of applications. Ultimately, the board weighed the volume of actual work it would take for board members to handle application materials, concluding it was more than a clerical task.

But related to the issue of what can constitute a condition on granting a license, the board agreed to a recommendation making explicit that there is flexibility in the kind of conditions that can be set.

7:502 (7) … The Board shall annually send to City Council a proposed resolution recommending either approval or rejection of each complete license application. A recommended resolution may set conditions for approval. The conditions may include a waiver by City Council of any provision or provisions of the licensing ordinance, and/or the imposition of a new provision or new provisions, if the public interest so requires.

Other Recommendations: Entry for Inspection

Licensing board member Patricia O’Rorke was particularly concerned about a provision in the ordinance that requires dispensaries to consent to inspection. The board agreed to recommend a change that makes explicit that requests from the city to inspect a dispensary would be complaint-driven:

Pursuant to a complaint, an authorized person shall consent to the entry into a medical marijuana dispensary by the Building Official and zoning inspectors for the purpose of inspection to determine compliance with this chapter pursuant to a notice posted in a conspicuous place on the premises two (2) or more days before the date of the inspection or sent and by first class mail to the address of the premises four (4) or more calendar business days before the date of the inspection.

When asked if she saw any problem with the “pursuant to complaint” language, city planner Jill Thacher said, no – that’s the way city staff handles issues like that anyway.

In weighing whether the notice given should be done by posting and mail, a brief discussion unfolded about the merits of certified mail versus first class mail and the future of the U.S. Postal Service.

Other Recommendations: Number of Licenses, Frequency of Recommendation

At its Jan. 31 meeting, the licensing board grappled with the tension between having a single annual recommendation on licenses (as the ordinance now specifies) versus a rolling recommendation as applications are submitted. Board member Jim Kenyon said he liked the idea of being responsive and meeting regularly. However, he noted that if there are a limited number of licenses available, a rolling recommendation process would result in giving privilege to those applying first.

Kenyon gave the example of the University of Michigan, which he said had wound up admitting nearly its entire freshman class through the early admission this year. “The music stopped and there were no chairs,” he said. That does not necessarily result in the most qualified applicants being admitted. On the other hand, he said, he did not want to make people wait a calendar year to have their application for a dispensary license processed.

During the board’s discussion, Sabra Briere noted that as far as evaluating one dispensary against another, the board had not faced that situation this year, and had not applied qualitative criteria to the evaluation. The board had essentially made its criteria for recommendation a matter of whether a dispensary had “jumped through all the right hoops.”

The board mulled what the number of licenses should be. With respect to potential demand, city planner Jill Thacher reported that before the city council passed its licensing and zoning ordinances, she’d fielded numerous phone calls from out-of-state people interested in setting up shop. After the Ann Arbor legislation was passed, she said, the phone calls had fallen off precipitously.

Board member Gene Ragland suggested that it should be possible to work out the math of the demographics of patients and calculate the potential consumer demand. Local attorney Dennis Hayes, who attended the meeting, ventured that there were perhaps 50,000-60,000 registered patients who did not have caregivers – that might be a way to gauge potential consumer demand. Kenyon said that he himself would not use a caregiver to obtain medical marijuana, if a dispensary were an option.

Ultimately, the board settled on capping the number of licenses at 20, which is the maximum number specified in the ordinance for the first year.

… but not more than 20 medical marijuana dispensary licenses shall be issued in the first year and shall be capped at that number.

The board also agreed not to suggest changing from the process described in the ordinance as an annual recommendation for the award of licenses. Also recommended was a standardization of the timing requirements for applications – in some places there’s a 70-day condition but in others it’s a 90-day condition. The board agreed to recommend making that timing requirement uniformly 90 days.

Other Recommendations: Operation in Compliance with MMMA

The board also recommended striking a clause in the zoning ordinance as superfluous:

5:50.1.4(k) Medical marijuana dispensaries and medical marijuana cultivation facilities shall be operated in compliance with the MMMA.

The discussion at the board’s Jan. 18, 2012 meeting on this issue included concern expressed by dispensary owner Chuck Ream, that deleting the phrase could cause alarm and attract unwanted attention to Ann Arbor if it were incorrectly perceived as sending a message that Ann Arbor’s dispensaries would not be following Michigan’s medical marijuana law.

Other Recommendations: Licensing Fee

The final issue on which the licensing board needed to weigh in was setting the licensing fee for medical marijuana dispensaries – which is separate from the application fee of $600. One point of comparison for the board was neighboring Ypsilanti’s $2,500 initial license fee, with a $1,100 renewal each year. Patricia O’Rorke was inclined to set them much lower. Sabra Briere joked that perhaps Ann Arbor’s fees should be higher because Ann Arbor was “more prestigious.”

Medical marijuana licensing board member Gene Ragland.

Jim Kenyon said he felt the goal of the fee should be to make it high enough to prevent someone from applying “casually.” He continued by saying that the $600 application fee, plus a $1,100 initial licensing fee would do that.

Gene Ragland, who fills the physician’s slot on the licensing board, noted that his narcotics license cost him only $350. But Briere wondered how much Ragland’s medical education had cost. Ragland offered that when he’d finished medical school, he’d owed $8,000 in loans – and he’d paid those off in two years. But that was long ago, he allowed.

Based on Ragland’s narcotics license, the board agreed to recommend the annual license renewal fee be set at $350, to go along with a $1,100 initial license fee.

Next Step: City Council

Even if granted a local Ann Arbor license, dispensaries in Ann Arbor would still need to operate in conformance with the Michigan Medical Marijuana Act, which was enacted by statewide voter referendum in 2008. The city has explicitly required applicants for dispensary licenses to explain how their business conforms with the law, including an Aug. 23, 2011 court of appeals ruling that has been interpreted by many authorities to mean that no medical marijuana dispensaries are legal. [.pdf of the McQueen case ruling].

Ann Arbor’s city attorney, Stephen Postema, is open to the possibility that dispensary business models may exist that do conform to the McQueen case ruling, but Postema has not issued a written opinion describing business models that he believes conform. The city council will receive advice from the city attorney before it votes on awarding the licenses that the board has now recommended. Any vote by the council would come at the earliest on Feb. 21.

At the Jan. 31 meeting, dispensary owners felt it was important for Ann Arbor to demonstrate a working model for local licensing – it would provide a basis for state legislation, which may be introduced soon, that would explicitly enable local options for regulation of dispensaries.

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Both businesses were  seeking such a permit in order to apply for a medical marijuana dispensary license. The licensing board is scheduled to meet on Jan. 31 to make recommendations on the award of dispensary licenses. The denial of the one appeal means that nine of 10 total applications will be considered by the licensing board.

The Ann Arbor city council enacted zoning and licensing requirements for medical marijuana businesses on June 20, 2011. Among the zoning regulations is a requirement that medical marijuana dispensaries can be located only in those districts zoned as D (downtown), C (commercial), or M (industrial), or in PUD districts where a retail use is permitted in the supplemental regulations.

Treecity (1712 S. State Street) is in a district zoned as O (office), while Green Planet (700 Tappan St.) is in the Casa Dominick PUD (planned unit development) district. Treecity argued that it had established a legal use of the property as a medical marijuana dispensary before the enactment of the city’s zoning ordinance, and should be allowed to continue that non-conforming use within the district zoned for office use.

However the nine-member ZBA ruled against Treecity. The ZBA did not find that Treecity had previously established a legal use of the property as a medical marijuana dispensary. Of the six members of the board who were present at the meeting, Treecity’s appeal garnered support only from Sabra Briere, who also serves on the medical marijuana license board and the Ann Arbor city council. [.pdf of Treecity staff report including appeal]

For the other appeal, Green Planet noted that the supplemental regulations in the existing PUD allow for “grocery, prepared food and beverage sales, including retail sales of non-food items typically associated with groceries and food preparation.” On that basis, Green Planet argued that the PUD meets the zoning condition that says dispensaries are allowed in “PUD districts where retail is permitted in the supplemental regulations.”

The city had denied the zoning compliance permit based on the idea that medical marijuana preparations were not “typically associated with groceries and food preparation.” But the ZBA’s vote to overturn the city staff decision was unanimous among the six board members present. [.pdf of Green Planet staff report including appeal] More coverage: [link]

The city of Ann Arbor has received 10 applications from businesses seeking to be licensed as medical marijuana dispensaries. Their locations are indicated with the green pushpins. In January, the licensing board will decide whether to made recommendations to the city council to award licenses. (Image links to dynamic Google Map)

At its Dec. 14 meeting, the board continued to review materials that had been submitted to determine completeness of other applications, and heard an argument from a business owner that his application should be considered as a pre-moratorium business.

The moratorium had been imposed by the Ann Arbor city council on Aug. 5, 2010 for 120 days – it prohibited the future use of property inside the city for cultivation facilities or dispensaries, and was extended several times in the course of the council’s consideration of the medical marijuana issue. That consideration culminated on June 20, 2011 in the enactment of zoning and licensing requirements for medical marijuana businesses.

Ann Arbor’s local laws require that businesses operate in conformance with the Michigan Medical Marijuana Act, which was enacted by statewide voter referendum in 2008. The city has explicitly required of applicants for dispensary licenses that they explain how their business conforms with the law, including an Aug. 23, 2011 court of appeals ruling that has been interpreted by many authorities to mean that no medical marijuana dispensaries are legal. [.pdf of the McQueen case ruling]. Based on remarks made at the Dec. 14 meeting, it appears that Ann Arbor’s city attorney is open to the possibility that dispensary business models may exist that do conform to the McQueen case ruling.

Recommendations by the board on the award of licenses, along with recommendations for any revisions to the ordinance, are due to be submitted to the city council by the end of January 2012.

The licensing board’s work comes even as some marijuana advocates have begun to recruit volunteers for an eventual petition drive that would seek an amendment to Michigan’s constitution to repeal the state’s general marijuana prohibition. If successful, such a constitutional amendment would appear to remove state-level legal hurdles to obtaining medical marijuana or operating a medical marijuana dispensary. However, the legal ability of federal agents to enforce federal drug laws would be unaffected by a change to Michigan’s constitution.

A sign-up sheet for people to indicate willingness to help with the petition campaign was passed around by audience members at the Dec. 14 licensing board meeting. To place the constitutional amendment on the Nov. 6, 2012 ballot, the beginning and end dates for the signature collection period (based on typical strategies used by petition initiatives and Michigan’s election law) translate to Jan. 12 and July 9, respectively. To qualify, 322,609 valid signatures would need to be collected.

The Jan. 12 petition start date comes a day after Michigan’s Supreme Court is scheduled to begin hearing arguments in two medical marijuana cases. One involves the growing of medical marijuana in an “enclosed, locked facility” (People v. King) and the other involves the timing of a physician’s recommendation that is needed to support a defense against prosecution (People v. Kolanek).

Summary of the Status of 10 Applications

By the time of the Dec. 14 medical marijuana licensing review board’s meeting, the city had received 10 applications. Three have foundered on zoning compliance issues, but two of those businesses have filed appeals with the city’s zoning board of appeals (ZBA). Of the other seven, five have been determined by the board to have been in business before the Aug. 5, 2010 moratorium was imposed, but the other two were not.

• Green Planet, 700 Tappan St. Status: ZBA appeal
• Treecity Health Collective, 1712 S. State St. Status: ZBA appeal
• Ann Arbor Health Collective, 2350 E. Stadium Blvd. Status: zoning issue, no appeal filed as of Dec. 31, 2011
• OM of Medicine, 112 S. Main St. Status: pending licensing board decision on recommendation
• People’s Choice, 2245 W. Liberty St. Status: pending licensing board decision on recommendation
• Greenbee Collective, 401 S. Maple St. Status: pending licensing board decision on recommendation (parking space requirements are problematic)
• Ann Arbor Wellness Collective, 321 E. Liberty St. Status: pending licensing board decision on recommendation
• MedMarx at Arborside, 1818 Packard St. Status: pending licensing board decision on recommendation
• Medical Grass Station, 325 W. Liberty St. Status: pending licensing board decision on recommendation as post-moratorium business
• PR Center, 3820 Varsity Dr. Status: pending licensing board decision on recommendation as post-moratorium business

The board discussed various pieces of additional information that had been submitted since their Nov. 30 meeting. That information included items ranging from contact information to statements about any felony convictions that people associated with a business might have. Not all the information has yet been submitted, but city planner Jill Thacher concluded that there were essentially five applications for which she’d been able to put together full staff reports.

The two dispensaries generating the most discussion were Greenbee Collective and the Medical Grass Station. For Greenbee, the issue related to adequacy of parking. For the Medical Grass Station, the issue related to its status as a pre- or post-moratorium business.

Parking Requirements

Greenbee Collective, located at 401 S. Maple, drew a question from city councilmember Sabra Briere (Ward 1) about parking space requirements. City planner Jill Thacher indicated that Greenbee wanted to work with two of the adjoining parcel owners to get the additional six spaces the business would need. Wendy Rampson, head of planning for the city, noted that what’s required to make that solution work would be to get a permanent easement – it would need to come from either Kroger or Top of the Lamp.

From the audience, local attorney Dennis Hayes ventured that Greenbee was only one of two units in the building. However, Rampson explained that parking requirements are a function of the entire building. Greenbee has 8 and needs 14, said Thacher. Briere noted that the requirement is for one off-street parking space for every 310 square feet of retail space.

Briere questioned whether the existing building currently has enough parking to comply with zoning. Thacher explained that parking is based on use, not zoning. Dispensaries are treated as retail space. Briere ventured that Greenbee’s application is not “ready for prime time.” Asked if Greenbee had an option to ask for a variance, Rampson and Thacher expressed skepticism: any such variance would be granted in perpetuity and no exceptions are supposed to be granted for existing non-conforming parking. Rampson indicated that Kroger does have excess parking, but board members expressed doubt that Kroger would grant a permanent easement. Rampson clarified that the relevant parking requirements are found in Chapter 59 of the city code.

Pre- or Post-Moratorium Applications

The status of a business in operation before the city council imposed a moratorium on Aug. 5, 2010, is important – because the application process timing is different for the two kinds of businesses (pre- and post-moratorium).

The board spent much of its Nov. 30 meeting discussing the merits of the documentation provided by different businesses to indicate that they were in operation before the moratorium. At the Dec. 14 meeting, that discussion focused mostly on the Medical Grass Station.

Pre- or Post-Moratorium: Medical Grass Station

The name of the Medical Grass Station, owned by Garth Bolgos, is a play on the former use of the building – a gas station at the corner of Second and Liberty streets. The city’s concern about the location as a possible marijuana dispensary was reflected during the city council’s deliberations in the spring and summer of 2011. At one point, the idea was floated to bump the size of the buffer around schools from 1,000 feet to 1,010 feet. The tweak would have ruled out the Grass Station’s location, because the corner of its parcel would have been nipped by the buffer around Bach Elementary School.

Images are extracted from the city of Ann Arbor's maps showing the buffer zones around schools, which are depicted as salmon-colored cross-hatching. The top image shows a 1,010-foot buffer. The bottom image shows the 1,000 buffer. The yellow-highlighting, added by The Chronicle, shows the parcel where a former gas station was located – and the current site of the Medical Grass Station. The salmon-colored cross-hatching is the buffer zone, originating at Bach Elementary School on Jefferson. (Image links to higher resolution file.)

At the licensing board’s Nov. 30 meeting, board members had concluded that the Medical Grass Station had not been in operation before the council imposed its Aug. 5, 2010 moratorium. But Bolgos, the property’s owner, addressed the licensing board during public commentary on Dec. 14, saying he wanted to rectify misconceptions about when the Grass Station went into business. He contended that he was in business at the location before the moratorium was imposed, and described the documentation to that effect, which he’d provided to the city.

It included a tax bill for the property and a letter from a patient who’d received marijuana from Bolgos at the location as early as January 2009, as well as a letter Bolgos had written to the mayor. Bolgos also pointed to an article that had appeared in the Ann Arbor Observer, which described his plans to open a medical marijuana dispensary business there. The article, “Medical Marijuana Center,” was written by John Rosevear, who is also a member of Ann Arbor’s medical marijuana licensing board.

Bolgos described to the board how he’d struck a deal to sell the old gas station, but it had fallen through. [The arrangement was contingent on the developer of the neighboring Liberty Lofts getting approval from Ann Arbor's historic district commission (HDC) to demolish two houses next to the gas station. The outcome of the HDC's decision was to grant permission to demolish the gas station but not the two houses, so the deal was not completed. For Chronicle coverage of HDC deliberations from early 2009, see "Demolition in Historic District" and "Historic Commission: No Approval for Demolition"]

During the board members’ deliberations on the Grass Station, they reviewed how they’d concluded at their Nov. 30 meeting that the Grass Station needed to be considered as a post-moratorium business. Board member Patricia O’Rorke noted that both the PR Center and the Grass Station had been determined to be post-moratorium applications.

Board member Sabra Briere noted that during public commentary, some uncertainty had been raised about the Grass Station. Board member Jim Kenyon indicated that the board’s previous conclusion about the Grass Station had been based on a lapse in continuity. O’Rorke, too, noted that the board had decided it was a new business.

Briere then responded to the arguments that Bolgos had brought forth during public commentary. The documentation provided addressed the desire of Bolgos to open a dispensary, not the fact that he’d opened one, she said. From the audience, Bolgos said he had treated patients at the location since 2009 – it doesn’t matter how big or small the business is, he said.

Garth Bolgos, owner of the Medical Grass Station at Second and Liberty.

Briere asked assistant city attorney Kristen Larcom if a park bench would become a dispensary if patient met their caregiver there to receive medical marijuana. Larcom stated that those were not the facts before the board – she asked if Briere’s question related to the Grass Station.

Board member Gene Ragland asked Bolgos: Did you have an interruption in the business? Bolgos told him, no – they had to move from a different Fourth and Washington location. But he met most of his patients at the gas station, he said.

The kind of documentation Bolgos had submitted was again recited: a copy of his caregiver card; a copy of a letter to the mayor saying he wanted to open a dispensary; The Ann Arbor Observer article describing how he wanted to open a dispensary; a delinquent tax notice saying he owns the property; and a letter from a patient stating she received care there.

Briere stated that the board had heard at the Nov. 30 meeting that there was a gap in service provided by the business – that the Fourth and Washington location had ceased operation. Larcom indicated that the location had been raided by LAWNET and shut down. It was not operating and there were convictions that came out of that raid, said Larcom.

Briere concluded that the board had heard evidence that there’d been a desire to open a dispensary, not evidence that one had opened at that location. Briere assured Bolgos that if the board considered his business as a post-moratorium business, it was just as fair. Ragland clarified that pre-moratorium businesses are in the queue first, but post-moratorium businesses are “still in the queue.”

Ordinance Revision Recommendations

Ragland’s assurance notwithstanding, being in the application queue as a post-moratorium business is not as advantageous as being in the queue as a pre-moratorium businesses. That’s because the number of licenses to be granted in the first year – which is the current review cycle – is tied to the number of applications received for pre-moratorium businesses.

Board members discussed the fact that they had the ability to make a recommendation to the city council on adjusting the number of licenses, as well as a number of other points.

Ordinance Revision Recommendations: Number of Licenses

The fact that a post-moratorium application likely stands a smaller chance of being recommended for a license is not explicitly stated in the city’s ordinance. But that conclusion results from the interplay between two parts of the law. First, pre-moratorium businesses had 60 days to apply after the effective date, while post-moratorium businesses had to wait until at least 75 days after the ordinance’s effective date, which was Aug. 22, 2011.

7:504(1)
Application Submission. A medical marijuana dispensary that commenced operation prior to passage of the moratorium by City Council on August 5, 2010, shall have until 60 days after the effective date of this chapter [Aug. 22, 2011] to submit an application for a new annual license. If the medical marijuana dispensary commenced operation prior to passage of the moratorium in a zoning district where its operation is not permitted under the zoning ordinance, the application shall be for a location in a zoning district where operation of a medical marijuana dispensary is permitted under the zoning ordinance. No other applications will be accepted by the City until 75 days after the effective date of this chapter.

But the number of licenses available is capped, based on the number of applications received in the first 60 days – i.e., from pre-moratorium businesses.

7:502(4)
The first year’s licenses shall be capped at a number 10% higher than the number of complete applications for licenses submitted to the City in the first 60 days after the effective date of this chapter, but not more than 20 medical marijuana dispensary licenses shall be issued in the first year. Any license terminated during the license year returns to the City for possible reissuance.

Assuming all the applications from pre-moratorium businesses result in a recommendation for a license, the number of post-moratorium applications that could receive license recommendations would be no more than 10% of the number of pre-moratorium applications. It appears the city has received seven applications from pre-moratorium businesses. So, at the Dec. 14 meeting of the board, Sabra Briere pointed out that if the board has accepted seven applications from pre-moratorium businesses, the additional 10% would allow the board to add up to one for a total of eight recommendations to be made to the council in January 2012.

Ann Arbor medical marijuana licensing board member Gene Ragland. In the background is board member John Rosevear.

What if there are five applicants for that one additional recommendation? asked Wendy Rampson, head of city planning. Briere indicated that the board would have to make a choice. There’s no guarantee that you get a license, even if you’ve jumped through all the hoops.

Briere went on to note that the board could also recommend in January that the number of licenses be changed. Responding to questions from board members about why the number of licenses had been capped at 20, Briere told them there’d been a lot of dickering about the exact number when the council deliberated on the issue.

City planner Jill Thacher raised the question of new dispensaries that wanted to apply for a license. Briere indicated that anyone who wants to apply for this first year’s application cycle should get their application submitted. Briere didn’t feel the board wanted to see new applications in January. Thacher indicated that she’d been putting people off. She said there were two dispensaries she’d told to hold off. Briere indicated that Thacher should tell those dispensaries that they need to get all their materials in. Briere noted those dispensaries didn’t need to address Section 7:504(2)(a) – proof of operation before the council established the moratorium on Aug. 5, 2010.

Gene Ragland wondered why receiving applications would not trigger the board to convene, instead of meeting to make recommendations once a year. Patricia O’Rorke echoed the sentiment, asking why someone would need to wait a year. Briere indicated that the city council [on which she serves, representing Ward 1] did not want to be confronted with the issue more than once a year. John Rosevear said he felt that once a year was appropriate, given the complexity of the situation.

Ordinance Revision Recommendations: Timing Issues

In the course of working its way through the applications for dispensary licenses, the board has identified some aspects of Ann Arbor’s ordinance that it’s found problematic. Identified at the Dec. 14 meeting were two passages that express different timing requirements for reapplication:

7:502(8) A license issued under this chapter shall expire 1 year after the date of issuance. To renew an existing license, the licensee shall submit an application in the same manner as is required to apply for a new license no sooner than 90 days before the expiration date an [sic] no later than 60 days before the expiration date.

Elsewhere, the timing requirement is given as 70 days, not 90 days:

7:504(3b) An application for renewal of an existing license shall be submitted no sooner than 10 weeks (70 days) before the existing license expires.

Board member Jim Kenyon indicated he preferred the 90-day condition.

Ordinance Revision Recommendations: Licensing Fee

Briere noted that the board would also need to recommend the amount of the licensing fee. Board members discussed the fact that the fee would need to cover the costs of administering the license. Assistant city attorney Kristen Larcom explained that building inspections would be separate from the license fee and the license application fee – the fee for licenses per se is a separate issue, she explained. While the application fee has to be limited to administrative costs, that’s not the case for license fees, she explained.

The cost of Ypsilanti’s medical marijuana dispensary license fee was briefly discussed. It’s $2,500 for the initial license and $1,100 for renewal.

Larcom indicated she was not sure what the city’s legal advice would be. Kenyon asked why there is a license fee at all. O’Rorke ventured that it’s because you pay for the privilege. Briere noted that one key difference between the medical marijuana dispensary licenses and liquor licenses is that dispensary licenses are not transferable. Kenyon indicated he would vote for a nominal amount.

Ordinance Revision Recommendations: Entry of Premises

O’Rorke questioned why a building inspector needed to be allowed to enter the premises:

7:506(7)
An authorized person shall consent to the entry into a medical marijuana dispensary by the Building Official and Zoning Inspectors for the purpose of inspection to determine compliance with this chapter pursuant to a notice posted in a conspicuous place on the premises 2 or more days before the date of the inspection or sent by first class mail to the address of the premises 4 or more calendar days before the date of the inspection.

Larcom pointed out that the city must provide notice to the facility. O’Rorke countered that the law says that building inspectors can come in. Larcom clarified that the law did not enable the city to break in to the facility. The dispensary can refuse. If the city wants to insist on entering the premises, the city would need to go to court to determine if there’s sufficient cause, Larcom explained.

Larcom felt it’s better to keep the language in there. O’Rorke wanted to avoid having a statement in the ordinance that allows consent to entry to determine compliance with the ordinance. Larcom responded to O’Rorke by indicating that it’s up to the board to make that recommendation. Briere noted that when the city council debated the ordinance, some councilmembers didn’t like the passage at all, and some wanted to make it even stronger.

Compliance with McQueen

On Aug. 23, 2011, two months after the enactment of Ann Arbor’s local legislation, a Michigan court of appeals ruled on the McQueen case in a way that has been interpreted by many authorities to mean that medical marijuana dispensaries are not legal. [.pdf of the McQueen case ruling]

By Sept. 30, the Ann Arbor city staff’s position had evolved to include a requirement that license applicants would need to provide a statement explaining how their business conformed with the Michigan Medical Marijuana Act, including the McQueen case, as part of an application for a zoning compliance permit. A zoning compliance permit is a requirement for a license. [.pdf of Sept. 30 letter]

The McQueen ruling found that one particular business model for dispensaries, that of Compassionate Apothecary, does not conform to the Michigan Medical Marijuana Act. And at the Dec. 14 meeting of the licensing board, Gene Ragland alluded to a representation made by the city attorney to the board about a particular vision of what would be a compliant business model, and the city attorney had described what he would consider legal. Sabra Briere agreed with Ragland’s characterization, but said the board could not assume that the city attorney’s view today would be the same.

Assistant city attorney Kristen Larcom noted that additional court opinions could be issued between now and the time the city attorney gives advice to the city council about whether to accept board recommendations to award licenses. In a subsequent phone interview, Wendy Rampson, head of planning for the city, indicated to The Chronicle that her understanding was that the city attorney’s office was open to the possibility that a dispensary business model can exist that complies with the McQueen ruling. However, no written set of criteria defining such a business model has been provided.

The advice provided to the city council by the city attorney will likely depend on the nature of the business model that applicants describe in the statements they’ve provided at the city’s request.

The statement provided by Cannabis Counsel, the attorney for MedMarx at Arborside, could be typical of the kind of argument that dispensaries will make. [.pdf of letter from Cannabis Counsel regarding Arborside's business model]

The Cannabis Counsel letter lays out why the court of appeals in the McQueen case found that the Compassionate Apothecary business model was not in compliance with the MMMA:  The problem was that Compassionate Apothecary did nothing to “assist” patients in administering or using marijuana, beyond exchanging marijuana for money. In contrast to Compassionate Apothecary, argues Cannabis Counsel, Arborside does assist patients in the manner described by the court – by assisting the patient “in preparing the marihuana to be consumed in any of the various ways that marihuana is commonly consumed.” Those ways include providing patients with “cleaned prepared de-stemmed cannabis including pre-rolled joints, medibles which have been inspected, tested, cleaned, grinded and rolled, or cooked in combination with foodstuff.”

The Cannabis Counsel letter also explicates how compliance with other aspects of the MMMA are met, including maintaining a sufficient number of caregivers on site to possess all the marijuana present there. Another point of emphasis of the letter is that no “sale” of marijuana takes place, and that money is given to a caregiver to compensate for costs associated with assisting a patient in the medical use of marijuana, which does not constitute a sale of a controlled substance under the MMMA.

Next Steps

The licensing board discussed its next meeting times in the context of its Jan. 31, 2012 deadline to make recommendations to the city council on license applications and ordinance revisions. The outcome of that discussion was to establish that they’d plan to meet again on Jan. 18, 2012. The zoning board of appeals will hear appeals on zoning issues from two of the businesses on Jan. 25. And the medical marijuana licensing board could possibly meet on Jan. 30 as well, if necessary.

Present: Patricia O’Rorke, James Kenyon, John Rosevear, Gene Ragland, Sabra Briere. Also: city planning manager Wendy Rampson, city planner Jill Thacher and assistant city attorney Kristen Larcom.

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The form of the poll strongly resembled a vote by the board to recommend the dispensary for a license, leading some observers to conclude that the recommendation had been made. But a subsequent email from board member Sabra Briere indicated the board had voted that it “would have recommended MedMarx for a license, if they were making recommendations at that meeting.” Once the board takes a formal vote on the recommendations that it wants to make to the city council, the city council will still need to vote as well, in order for the license to be awarded.

Ann Arbor medical marijuana licensing board members (left to right): John Rosevear, Gene Ragland and James Kenyon. They're perusing a letter from MedMarx at Arborside Compassion to the city of Ann Arbor, stating the dispensary's position on its compliance with the Michigan Medical Marijuana Act. (Photos by the writer.)

Ann Arbor’s medical marijuana licensing board was established as part of an ordinance regulating licenses for medical marijuana dispensaries, enacted by the city council on June 20, 2011.

The licensing ordinance was enacted at the same time as a zoning ordinance, which regulates where such businesses can be located in the city. The two pieces of legislation were enacted after more than a year of consideration and deliberations by members of the city council.

On Wednesday, the board considered seven out of a total of 10 license applications that had been submitted to the city. The remaining three are for businesses located in areas not zoned for medical marijuana businesses. However, at least two of those intend to ask for a review of the city’s decision to deny a zoning compliance permit (required as part of the license application) by the city’s zoning board of appeals (ZBA).

Besides the one application on which the board voted, four of the other six applications were determined to have met the requirement demonstrating that they were in operation before the council enacted a moratorium. That moratorium was established on Aug. 5, 2010 and prohibited establishment of any additional medical marijuana businesses in the city.

The board’s work on Nov. 30 came as attitudes on medical marijuana nationally, at the state level and locally are in flux. Nov. 30 was the same day that governors from the states of Washington and Rhode Island signed a petition appealing to the federal Drug Enforcement Administration to reclassify marijuana has a drug having medical uses.

And the licensing board meeting came at the conclusion of a series of day-long seminars in different Michigan cities given on Nov. 16, 17, 29, and 30 by staff of Michigan State Attorney General Bill Schuette on how to enforce the Michigan Medical Marijuana Act. The seminars included the case law that has evolved – including the McQueen case, in which a Michigan court of appeals found that at least one business model for operating a dispensary is not consistent with the MMMA.

According to a report from The Saginaw News, Schuette’s “Clearing the Air” seminars were closed to the press. The materials provided at the seminars include a range of legal tools the attorney general believes can be used to prevent medical marijuana dispensaries from doing business. One of those tools is to apply laws on public nuisances to such businesses.

The city of Ann Arbor has sent cease-and-desist letters to medical marijuana dispensaries in the city threatening to take action against them as public nuisances. Cease-and-desist letters were received by a business as recently as Nov. 8. [.pdf of letter to zoning-non-conformant business][.pdf of letter to zoning-conformant business]

During public commentary at the licensing board meeting, local attorney Dennis Hayes noted a disconnect between (1) letters sent by Ann Arbor city attorney Stephen Postema to businesses threatening to shut them down, and (2) a licensing board that is implementing the new city ordinance on allocating licenses to medical marijuana businesses. Hayes described the situation as the “right hand doing something very different from the left hand.” Hayes encouraged the licensing board to move its “right foot to drag the left foot along.”

The board’s next scheduled meeting is Dec. 14 at 4 p.m.

Brief Background

The Michigan Medical Marijuana Act was enacted by statewide voter referendum in 2008.

The Ann Arbor city council enacted zoning and licensing requirements for medical marijuana businesses on June 20, 2011. That came after more than a year’s consideration of the issue by city councilmembers. That consideration included a moratorium on the future use of property inside the city for cultivation facilities or dispensaries, which was imposed on Aug. 5, 2010, for a period of 120 days. The moratorium was extended several times in the course of the council’s work.

On Aug. 23, 2011, two months after the enactment of Ann Arbor’s local legislation, a Michigan court of appeals ruled on the McQueen case in a way that has been interpreted by many authorities to mean that medical marijuana dispensaries are not legal. [.pdf of the McQueen case ruling]

Undeterred by the court ruling, at its Sept. 6, 2011 meeting, the Ann Arbor city council confirmed appointments to the city’s medical marijuana licensing board.

But the McQueen case still had an impact in Ann Arbor. Wendy Rampson – head of the city’s planning staff – told city planning commissioners at their Sept. 8, 2011 meeting that applicants for licenses were welcome to submit information to the city in connection with license applications, but that staff had ceased their review activity pending further direction.

Already on July 1, the city had sent a letter to known dispensaries demanding that they provide proof of operation before the Aug. 5, 2010 moratorium. [.pdf of July 1 letter] The issue is important because the licensing ordinance distinguishes between businesses in operation before the moratorium (and allowed to continue operations during the moratorium) and those not in operation before the moratorium. The ordinance gives priority to those dispensaries that had pre-moratorium operations. The number of licenses to be issued by the city is also contingent on the number of applications submitted to the city by pre-moratorium businesses.

An affidavit was not considered adequate proof of pre-moratorium operations, and the city sent follow-up letters asking for “specific proof” of operation before the moratorium. [.pdf of follow-up to July 1 letter]

By Sept. 30, the city staff’s position had evolved to include a requirement that license applicants would need to provide a statement explaining how their business conformed with the Michigan Medical Marijuana Act, including the McQueen case, as part of an application for a zoning compliance permit. A zoning compliance permit is a requirement for a license. [.pdf of Sept. 30 letter]

By Oct. 18, the city had made explicit on its webpage on medical marijuana that an application for a medical marijuana dispensary license needed only to include an application for a zoning compliance permit and an application for a re-occupation permit, not the permits themselves.

Dating from mid-August 2011, an apparent point of tension between the city staff and the licensing board concerned whose purview it was to determine the completeness of an application with respect to specific pieces of information. Based on the Nov. 30 meeting of the licensing board, weighing the evidence of pre-moratorium operations became an issue determined by the board, not city staff. But applications from dispensaries in areas of the city not zoned for medical marijuana dispensaries were not put before the board for its review.

Much of the board’s Nov. 30 discussion was framed by the specific points of application requirements as listed out in the ordinance:

7:504. Application requirements for new annual license or renewal of existing license; license requirements for new license and for renewed license.
…
2. Application Requirements for New Licensee. An application for a new annual license for a medical marijuana dispensary shall be submitted to the City Clerk on a form provided by the City for preliminary review by City staff to confirm that the applicant has submitted a complete application, which shall fulfill all of the requirements indicated on the form, including but not limited to:
(a) If the medical marijuana dispensary commenced operation prior to passage of the moratorium by City Council on August 5, 2010, then proof of the date on which the medical marijuana dispensary commenced operation shall be provided.
(b) The name and address of the medical marijuana dispensary and any other contact information requested on the application form.
(c) The name and address of all owners of the real property where the medical marijuana dispensary is located.
(d) Name, street address, and other contact information of all owners of the medical marijuana dispensary and, if the owner is a corporation, limited liability company, partnership, or sole proprietor with an assumed name, of all directors, officers, members, partners, and individuals, all of whom are considered collectively to be the applicant for the license.
(e) Name and address of all business managers.
(f) A statement with respect to each person named on the application whether the person has:
(i) Ever been convicted of a felony involving controlled substances as defined under the Michigan Public Health Code, MCL 333.1101, et seq., the federal law, or the law of any other state and, if so, the date of the conviction and the law under which the person was convicted;
(ii) Ever been convicted of any other type of felony under the law of Michigan, the United States, or another state, and, if so, the date of the conviction and the law under which the person was convicted.
(g) Proof of applicant’s ownership or legal possession of the premises.
(h) A zoning compliance permit that shows the proposed medical marijuana dispensary is located in a zoning district that would permit its operation.
(i) A temporary certificate of occupancy that shows the structure for the proposed medical marijuana dispensary meets the requirements of the applicable use group under the Michigan Building Code.
(j) Payment of a non-refundable application fee, which shall be determined by resolution of the City Council. Fees for zoning compliance permits and certificates of occupancy shall be separate from the application fee, but shall be the same amount and shall be paid pursuant to the same procedures as applied to applications for zoning compliance permits and certificates of occupancy for other uses. [.pdf of complete Ann Arbor medical marijuana licensing ordinance]

Public Commentary

The Nov. 30 meeting began with an opportunity for public participation.

Local attorney Dennis Hayes indicated that a number of dispensaries have applications on file with the city’s zoning board of appeals (ZBA) because they’ve been turned down by the planning department for a zoning compliance permit. Part of the procedures for filing an appeal with the ZBA is a meeting with city staff, he said.

Left to right: Dennis Hayes (standing), Mark Passerini, and Chuck Ream.

So far, Hayes contended, the city has been reluctant to set up meetings.

Later during the licensing board meeting, in response to a question from board member Gene Ragland, city planning manager Wendy Rampson said that of the three excluded applications, two were located in office (O) zoning districts, one was in a planned unit development (PUD) zoning district – in a building where retail was not allowed, according to the PUD. She said that of the seven applications being reviewed by the board, all meet the zoning requirements. One doesn’t have adequate parking. The standard is one off-street parking space per 310 square feet, Rampson said, noting that parking requirements are not a function of zoning, but of a property’s use. If the business is in the Ann Arbor Downtown Development Authority district, it’s exempt from parking requirements, she said.

During his public commentary, Hayes said all the people whose businesses are in areas not zoned for medical marijuana dispensaries believe they have claims to a non-conforming use. The procedure to appeal the city’s decision not to grant a zoning compliance permit is through the ZBA. Hayes said he feared substantial additional delays, because the ZBA meets only once a month.

Hayes asked the licensing board to move its “right foot to drag the left foot along.” People currently serving patients are in “ZBA limbo” for the time being, he said. If the ZBA were to accept the non-conforming use, then those dispensaries would be “back in the licensing line.”

Hayes noted that there have been a number of letters sent to cease and desist from doing business – on the assumption that those businesses are in violation of the McQueen decision, even to businesses that are appropriately zoned. A lot of effort on the city’s part has been put into preventing people from applying for licensing, Hayes said. He characterized it as the right hand doing something very different from the left hand.

Rhory Gould reported that the city staff member responsible for issuing certificates of occupancy (COO) said he’s not allowed to issue a certificate to any dispensary. Yet Gould observed that having a COO is a requirement for applying for a license. Licensing board member Patricia O’Rorke assured him: “We get it.” [The city's position is that an application for the COO, not the COO itself, is what's required for the dispensary license application.]

Preliminary Board Discussion

Sabra Briere is the city councilmember representative to the five-member licensing board. She acknowledged the difficulty of the task for evaluating the applications by saying, “I’d like to drag us into what we’re going to try to accomplish today.” There are problems in trying to move forward smoothly, she allowed, but said, “We’re going to move forward.”

Briere noted that there were seven applications present in the room, but board members had before them just a staff summary of each application. [Three city staff attended the meeting: City planning manager Wendy Rampson, city planner Jill Thacher, and assistant city attorney Kristen Larcom.] That was an effort to honor the confidentiality of information included in the applications, Briere said. She noted that board members could ask questions and get clarification from staff.

Asked if city staff could tell the board if staff would have recommended approval of an application, Rampson answered no. To create the staff report, she said, staff went through the applications and indicated whether the applications met the requirements for completeness. Thacher put together the staff summary – but here’s no recommendation on approval, Rampson said.

Assistant city attorney Kristen Larcom and medical marijuana licensing board member John Rosevear share a light moment before the Nov. 30 meeting started.

Thacher clarified that there were a total of 10 applications – seven are summarized and evaluated with respect to zoning. The other three were turned down, because the zoning compliance certification was turned down. Thacher said she’d talked to representatives for two of the three rejected applications, and they’d indicated they were going to appeal through the ZBA.

Briere drew out the fact that the cost to appeal is $500. Board member John Rosevear asked what the basis is for the $500 fee. Briere noted that this is the standard ZBA filing fee. Rampson explained that the fee covers the city’s costs in processing the appeal, which includes a mailing to nearby property owners notifying them of the appeal.

Licensing board member James Kenyon clarified with Thacher that just because the staff report indicates the requested information has been provided in an application doesn’t mean it’s passed muster, just that there’s enough information to decide.

Briere asked why staff didn’t evaluate whether an application passed muster on a particular point, if everything was complete? Thacher told Briere that Thacher’s understanding was that planning staff members were not doing that evaluation on their own and that staff would not express their opinion. Briere ventured that it was a matter of fact, not opinion. Thacher indicated it was not as straightforward as that. For example, on the issue of determining whether a dispensary was in operation before the Aug. 5, 2010 moratorium, Thacher said, a variety of different kinds of proof were presented by applicants that they were in business before Aug. 5.

MedMarx at Arborside Compassion

The board considered MedMarx at Arborside Compassion first, because licensing board member James Kenyon asked if there might be one application that would give the board a “smooth first look.” Thacher indicated that two applications were more complete than others. First up was MedMarx at Arborside Compassion – known as Arborside, and located at 1818 Packard just south of Stadium Boulevard. The site is zoned commercial (C1) and the business is not proposed to be a cultivation facility, Thacher noted. Cultivation facilities are not a part of the licensing program – that’s a zoning issue, provided only as background, Thacher said.

MedMarx at Arborside Compassion: Pre-Moratorium Status

The board first considered the ordinance requirement under Section 7:504(2)(a): proof of operation before the council established the moratorium on Aug. 5, 2010.

Thacher said it’s the one item that applicants in general had submitted the most information on, and that of those applications, Arborside was one of the most voluminous, she said.

City planner Jill Thacher shows licensing board members what some of the supporting application materials looked like.

Licensing board member Patricia O’Rorke asked if each piece of evidence submitted was to be considered adequate on its own. Thacher indicated that, no, they’re all “pieces of puzzle.” Asked if there were guidelines, Thacher said there were not. She told licensing board members that they would see that some pieces of documentation offered as evidence of being in business before the moratorium date were supportive, but others were not.

Kenyon ventured that the board was not faced with a situation as straightforward as the criteria for the I-9 Employment Eligibility Form. [That form includes three lists of specific kinds of supporting documents (A, B, and C) and a complete form must include a document from list A, or else two documents – one from list B and one from list C. ]

Thacher agreed with Kenyon’s assessment, saying the board would see a range of different documents, from the minimal – affidavits – to more robust information. Thacher indicated she’d asked for additional clarification from four dispensaries over the last two weeks about information they’d submitted.

Arborside had submitted an affidavit from its president and director, Thacher said. She drew the distinction between an affidavit – a signed sworn statement that’s notarized – and a written statement. Also included were statements from four Arborside employees indicating pre-moratorium dates of employment. Some payroll records had also been submitted.

Sabra Briere focused on the affidavits. Is that not considered sufficient by itself? Thacher told Briere the city had asked for more proof than that. Thacher said the city had asked for an affidavit and had sent out a sample affidavit for people to use.

Thacher then reviewed a timeline of city communications to dispensaries, dating from the approval of the medical marijuana licensing ordinance on June 20, 2011. The first step, she said, was to try to figure out who was in operation before the Aug. 5, 2010 moratorium. The city sent letters to those it knew were in operation, and asked for evidence they were in operation before Aug. 5. That’s because there are two application processes – one for pre-moratorium businesses, and one for post-moratorium businesses. Later, on Sept. 30, an additional letter was sent saying that in light of the McQueen case, the city requested a statement from dispensaries explaining how the dispensary complied with the Michigan Medical Marijuana Act. Letters were sent to seven dispensaries, but the city received a response only from one, she said.

The statements from employees of Arborside on Packard, Thacher said, were on letterhead and stated that they were employees before the moratorium.

Assistant city attorney Kristen Larcom and Chuck Ream talk after the licensing board meeting.

The payroll records, Thacher said, were hard to evaluate – yes, they looked like payroll records. O’Rorke asked what would constitute proof. Briere noted that after this first year, it won’t even matter – the issue of pre- and post-moratorium is relevant only to the first year’s licensing cycle.

Kenyon wondered what any other businesses would use to demonstrate they were in operation – quarterly tax filings? Briere observed that taxes could be filed without having a payroll. From the audience, Chuck Ream ventured that a lease would be evidence. Briere told Ream that a lease just shows access to a building – it doesn’t show you’re in business.

Continuing with information submitted by Arborside, Thacher ticked through other documentation meant to establish that Arborside was in operation before Aug. 5, 2010: a waiver from a contractor; a Chase checking account statement from July 13, 2010; an undated application for workers compensation insurance; an email from a commercial broker about a lease term; an April 22, 2010 lease agreement; a building inspection notice and building permit for work on the building; articles of incorporation dated June 18, 2010; and an IRS tax ID number.

Kenyon asked if there were more applicants than fit the slots for pre-moratorium businesses. Briere said that if there were only seven applications, then no. Kenyon ventured that the issue of pre-moratorium operation was moot. Thacher told Kenyon she felt he wouldn’t think it’s moot, when the board considered some of the other applications.

Weighing the documentation Arborside had provided, Kenyon said it might not establish beyond a reasonable doubt in a court of law that it was in operation as a medical marijuana dispensary before the moratorium – the business could have been selling matchbox cars versus dispensing. But he concluded that “it sure looks like it was in business.” Thacher then indicated that Arborside had also submitted a handwritten ledger of dispensing.

Briere noted that Kenyon’s question about the pre- versus post-moratorium status of businesses relates to the total number of licenses that would be granted by the city. The number of license applications from pre-moratorium businesses sets the number of total licenses available.

About Arborside, Kenyon asked: “So does this one look reasonable?” Thacher indicated yes, and it was somewhat easier to evaluate, because the city staff had known about this dispensary before the moratorium.

Briere indicated that she would accept the following as proof: the affidavits, the dispensing records, and at least one other piece of information. She said the board might discuss whether that third piece of information could be the payroll records. “Does that seem like a reasonable threshold?” she asked her board colleagues.

Gene Ragland wondered what the consequence is of signing a false affidavit. Assistant city attorney Kristen Larcom told Ragland: “Not much.” She allowed that the city could revoke the license. But the penalty for a false affidavit per se is not like making a false statement under oath in court. Larcom went on to state that it’s hard to say what proves anything – the city had created an affidavit template as a suggestion, but was not necessarily saying that’s enough. Larcom said that staff did not assume people are going to be dishonest, but staff would like to see more evidence beyond the affidavit. It’s up to the licensing board to decide whether the documentation is sufficient to make the recommendation for granting a license, Larcom said.

Kenyon ventured that if city staff knew about Arborside before the moratorium, that seemed reasonable. Briere noted that the goal was to find objective criteria.

O’Rorke wondered if the way they were discussing Arborside was an example of how the board would eventually discuss applications. Briere clarified: “We’re doing it now.”

Kenyon agreed with the three-point assertion Briere had made about why she felt Arborside had adequately documented it was in operation before the moratorium.

MedMarx at Arborside Compassion: Other Application Requirements

Thacher continued with other points of the application: Section 7:504(2)(b) name and address of dispensary and contact information – yes; Section 7:504(2)(c) name address of property owners – yes.

For Section 7:504(2)(d) – the names of all owners of the business including all directors and officers of an LLC, Thacher said, “This tripped up quite a few people.”

Based on board and staff discussion, the ownership of Arborside had apparently changed. Kenyon wanted to know if the pre-moratorium status of a business could be transfered to the new owners of a business? He also wanted to know if the sale was an administrative sale – with the same principals – or if there were new parties involved.

Briere asked Rampson to put it in the context of a proposed development: If someone were applying for a zoning or building permit, would the transfer of ownership matter? Rampson ventured that a rough analogy might relate to the legal authority of someone to sign a development agreement being contingent on ownership or control of land. But Rampson brought the focus to the rationale for wanting names of all business owners. She noted that the reason for the requirement is to find out if someone who is associated with the business has a felony conviction.

Continuing through the list of items that Arborside had submitted, Thacher arrived at Section 7:504(2)(f), the statements from everyone named on the application – business owners and managers – that they did not have a disqualifying felony conviction. Ragland wanted to know if a background check had been run on each person. Larcom told him the best they could do is send a request to the Michigan State Police, because LEIN (the Law Enforcement Information Network) couldn’t be used.

Briere noted that licensing eligibility requirements are silent with respect to non-drug-related felonies like robbing a bank or committing a murder. Information on all felonies is required to be submitted as a part of the application, but it’s a discretionary decision by the board and the council as a whole for those felonies not involving drugs.

Later during the meeting, John Rosevear initiated a discussion on the merits of the drug-related felony exclusion – did it matter if a conviction had taken place in the early 1970s?

Speaking to the set of applications as a whole, Thacher said that some were missing a person or two for the set of statements about felonies. One had a record that would be forwarded, but had not yet been provided.

The set of application materials required in the licensing ordinance calls for a zoning compliance permit: Section 7:504(2)(h). Ragland ventured that the city had added a requirement that compliance with the Michigan Medical Marijuana Act be demonstrated, including the McQueen decision.

Rampson observed that compliance with the MMMA was in the ordinance language, and after the McQueen case, the city sent out letters requesting that dispensaries explain how they were in compliance with the MMMA, including the McQueen case. Briere asked if the decision had been made at the staff level not to grant a zoning compliance permit? Thacher responded by indicating that Arborside had sent a letter on that topic to the city and that it’s in the city attorney’s office. Thacher said that compliance with zoning is noted as staff comments. She noted that Arborside has a certificate of occupancy.

Briere then asked her board colleagues: “What would you like to know that you don’t see here?” She herself said she found the application compelling, but said she’d like to see the letter that’s in the city attorney’s office explaining how the business complies with the MMMA.

The letter from Arborside to the city stating how its business conformed to the MMMA, including the McQueen decision, was examined in turn by members of the licensing board.

After the letter was passed around from board member to board member, Briere ventured that maybe it would be good to have a shredder next time. Multiple copies could be created and then shredded at the conclusion of the meeting. It’d be a waste of paper, she allowed, but would be more convenient. Rampson noted that no copies had been made of the applications themselves but that Thacher had drafted the staff reports so as not to use any names. Rampson suggested that if multiple copies were created, they need not be shredded – staff could collect and store them.

Kenyon indicated that he wanted to get through at least one application that day. Given Briere’s comments about Section 7:504(2)(a), the application from Arborside looks complete, he said. Arborside would not go to this trouble to be dishonest, he said. Ticking through all the requirements in the application, Kenyon moved to recommend a license for Arborside. After getting a seconding motion from Rosevear, the board voted.

Outcome: The board voted unanimously that it would recommend that the city council award a medical marijuana dispensary license to MedMarx at Arborside Compassion. Once a year, the board is supposed to make its license recommendations and suggestions for ordinance changes – that will occur in January 2012.

OM of Medicine

The board began its deliberation on OM of Medicine with the issue of the pre-moratorium status of the business – Section 7:504(2)(a) of the ordinance.

OM of Medicine: Pre-Moratorium Status

Briere said she would consider the affidavits of the business owner, property owner and the receipts of membership applications as evidence of pre-moratorium operation.

Ragland said he felt there were a lot of parts of the elephant in the materials and if you put them all together, there’s an elephant. Briere responded by saying the board was trying to establish minimum standards for the requirement. Kenyon agreed with Briere’s set of evidence, but added the bank statements. Asked for clarification of the bank statements, Thacher indicated that the statements were records of deposits and debit card withdrawals. Kenyon said that receipts from purchases would be compelling – you don’t buy vaporizers if you’re not going into business, he said. Briere said that “inventory” would be an item she felt the board should count.

OM of Medicine: Other Application Requirements

Considering other elements of the application in more detail, Briere said it looked like there are essentially three partners who consider themselves the business owners. Thacher noted that some additional information – indicated as still requested on the staff report – now has been provided. The entity is a nonprofit, which in turn is managed by the LLC. The required information has been provided for the nonprofit entity, but not the LLC, Thacher said. Briere ventured that what the city now needed is a list of LLC members.

Thacher responded by saying that the additional information had just been received that day. Turning to Larcom, Thacher said she didn’t want to put Larcom on the spot, but she was not sure if the LLC members needed to be named in the application, given the arrangement between the nonprofit and the LLC. Larcom indicated that the city could not get all the owners’ names associated with the LLC from the state – that needed to come from the applicant.

In the board’s discussion of the application, it emerged that another missing piece in the application was under requirement Section 7:504(2)(h) for a zoning compliance permit. The city now expects an explanation of the conformance of the business with the Michigan Medical Marijuana Act, including the McQueen case, as part of an application for a zoning compliance permit.

In the audience, Mark Passarini Passerini of OM of Medicine indicated he wanted to address the board for clarification. He was told he was not required to do so, but volunteered to step forward. He told the board it appeared to him that in the board’s view, his application was missing two things: (1) a membership list in the LLC; and (2) a letter describing the dispensary’s conformance with the McQueen case.

He told the board that by Thursday morning the letter would have arrived in the mail to the city. As for the LLC, he said the LLC manages the nonprofit. In response to a question from Kenyon, Passerini stated that the nonprofit pays rent to the LLC. He felt that the names for the nonprofit owners was all that’s necessary, but that he didn’t have a problem providing the ownership information for the LLC as well.

Briere asked Larcom if receiving rent from the nonprofit counts as being involved in the dispensary operation. Passerini clarified further that the LLC doesn’t own the real property. Larcom ventured that if the LLC has some other role than being the real property owner, then as long as Passerini didn’t have a problem with it, she felt it was “better safe than sorry.”

Rosevear sought to summarize: “What does he have to do?” Passerini assured the board: “We can get you what you need.” Briere indicated that they needed the names of the LLC owners, plus a statement from each owner with respect to felony convictions. Larcom asked Passerini if that made sense to him – yes, he replied.

Outcome: The board did not vote on OM of Medicine’s application.

General Consideration of Pre-Moratorium Status

For the remaining five of the seven applications, the board then settled on a strategy of looking just at the requirement in Section 7:504(2)(a) – pre-moratorium status.

Ann Arbor Wellness Collective had submitted affidavits and articles of incorporation for a nonprofit dated May 11, 2010. It also submitted evidence of web hosting set up before the moratorium. Following the three-item guideline that Briere had floated earlier in the meeting, Rampson asked: “Which are the three items?” Briere said she was happy with the two affidavits, but would like to see transactions or receipts. O’Rorke indicated she was content with the two affidavits and the web hosting. Briere felt that establishing the web hosting might be too close to the moratorium date.

Ragland felt the two affidavits were fine. O’Rorke suggested that Rampson “throw in” web hosting as well.

For the Medical Grass Station at 325 W. Liberty, there were apparently no affidavits filed as a part of the application. Briere indicated she did not believe there was a business at that location before the moratorium.

From the audience, Dennis Hayes ventured that the Grass Station’s application had been stalled by the city’s historic district commission – the business is located in the Old West Side historic district. Briere stressed that the question the board was looking at was whether the business was open before the moratorium. Back and forth among Hayes, staff and Briere indicated that the Grass Station was meant to be a successor to a business at Fourth and Washington. Rampson confirmed that there were no affidavits included in the application and there were different names on the two businesses. Briere said she felt the Grass Station’s application could not be considered except as a post-moratorium applicant.

Kenyon wanted to know what the acceptable business transitions were. As an example, Kenyon gave Amazing Beans, which was previously roasting coffee beans in Ann Arbor. Mighty Good Coffee bought that business, Kenyon said. It was not the same business, he said. The consensus on the board was that the Grass Station application would need to be considered as a new business established after the moratorium.

For the Greenbee Collective, Keynon felt that having patient records is good, but not having them is not bad. Briere indicated that she would accept patient records and affidavits.

For People’s Choice, Rampson said the location for the application was new – it had started out originally on Main Street. Briere wanted to know if any of the ownership had changed. Rampson said that People’s Choice had not yet provided all information about its directors. It had provided articles of incorporation dated July 12, 2010 and patient sign-in sheets signed on Aug. 3, 2010.

For PR Center LLC, affidavits had been submitted, along with a client code of conduct and patient sign-in sheets. Kenyon asked what the significance of the affidavit of a former property owner was. Briere noted that the business had also moved.

The consensus of the board was that PR Center and Grass Station’s applications would be considered as applications from businesses that were not in operation before the moratorium.

Summary of Application Status on Nov. 30

Summarizing the board’s discussion, Briere said that of the seven applications, five were eligible to move forward and one of the five had received the board’s consensus for eventual recommendation for approval.

For the other four, the city is in the process of getting a complete application for elements other than requirement in Section 7:504(2)(a), which the board had concluded the four applicants had satisfied – being in business before the moratorium.

Rampson would continue to work with applicants to get information, and Rampson confirmed that the board would receive revised staff reports for its next meeting.

Next Steps

The medical marijuana licensing board meets next on Dec. 14 at 4 p.m., when it will continue its review of the license applications. Board members discussed the fact that by the city’s ordinance, it will need to report to the council in January 2012 with its recommendations for licenses and recommendations on any revisions to the licensing ordinance.

Based on the cease-and-desist letters sent by the city and the city’s requirement that dispensaries explain – as part of their zoning compliance permit applications – how they comply with the Michigan Medical Marijuana Act, including the McQueen decision, the city’s implicit legal position may be that it’s not technically possible for a medical marijuana dispensary to conform with the state law.

That position would inform any legal advice that’s provided to the city council before it votes on any recommendations it receives formally from the medical marijuana licensing board.

Present: Patricia O’Rorke, James Kenyon, John Rosevear, Gene Ragland, Sabra Briere. Also: city planning manager Wendy Rampson, city planner Jill Thacher and assistant city attorney Kristen Larcom.

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Stephen Kunselman (Ward 3) peruses a marked up copy of medical marijuana legislation. (Photos by the writer.)

On Monday, before the postponements, the council amended both medical marijuana laws, making changes to the versions to which they’d already given initial approval – all city ordinances must receive two affirmative votes at different meetings of the council. Based on the amendments approved Monday night, the votes taken on June 6 will likely count only as the first reading. If the council makes a substantive change to an ordinance after its initial approval, then the ordinance must receive an additional first reading.

Public commentary during the evening included remarks from several medical marijuana advocates, who have become a familiar cast of characters over the past year. One highlight of that commentary included corroboration of a 2004 sidewalk encounter – between a medical marijuana petition circulator and the city attorney – which had been described during public commentary at the council’s previous meeting.

Other public comment at Monday’s meeting focused on the upcoming fiscal year 2012 budget approval, with many of the remarks centered on human services funding. The council had a specific resolution on its agenda that would have allocated funding to local nonprofits that provide human services support – but the council decided to postpone the item. The funding level in the resolution would have been about 9% less than fiscal 2011 funding.

Remarks during the budget public hearing by the president of the local firefighters union focused on the number of deaths due to fire over time. During council communications, Stephen Rapundalo (Ward 2), the chair of the council’s labor committee, reiterated a point he’s made before – that if unions make concessions on their contribution to the city’s health care plan, they can mitigate some (but not all) of the currently planned layoffs.

Public commentary at Monday’s meeting also featured remarks from county clerk Larry Kestenbaum on the following day’s single-issue election, along with an update on possible changes to state election law.

The council unanimously approved the site plan, development agreement, and brownfield plan for Packard Square, a residential development planned for the former Georgetown Mall property. Two days later, the county board of commissioners postponed their approval of items related to the Packard Square brownfield plan.

In other business, the council set a public hearing on a tax abatement for Sakti3; approved several interagency technology agreements that allow for partnership between the city, Washtenaw County and the Ann Arbor Transportation Authority; and postponed consideration of some large vehicle purchases. The council was also introduced to Paul Krutko, new CEO of Ann Arbor SPARK, the local economic development agency.

Also at Monday’s meeting, Washtenaw County commissioner Yousef Rabhi explained how his interest in public service originated in connection with the Buhr Park Wet Meadow project, led by Jeannine Palms. Palms and others involved with the project, which began in 1996, were honored with a mayoral proclamation. 

Medical Marijuana

Before the council were two local laws on medical marijuana, one on zoning and another on licensing. Both laws had previously received initial approval, but after approving several additional amendments to both proposed laws on Monday, the council decided to postpone them to its June 6 meeting.

• Clean .pdf of zoning regulations as amended May 2, 2011
• .pdf showing how zoning was amended on May 2, 2011
• Clean .pdf of licensing regulations as amended May 2, 2011
• .pdf showing how licensing was amended May 2, 2011

The medical marijuana zoning ordinance received its initial approval by the council at its Oct. 18, 2010 meeting. The delay since the initial Oct. 18, 2010 zoning vote stems from the city of Ann Arbor’s strategy for legislating zoning and licensing of medical marijuana businesses. That strategy has been to bring both licensing and zoning before the city council at the same time for a final vote.

Assistant city attorney Kristin Larcom (left), councilmember Sabra Briere (Ward 1) and city attorney Stephen Postema before the start of the May 2 meeting.

The context for development of zoning regulations was set at the council’s Aug. 5, 2010 meeting, when councilmembers voted to impose a moratorium on the use of property in the city for medical marijuana dispensaries or cultivation facilities. The council also directed the city’s planning commission to develop zoning regulations for medical marijuana businesses.

Subsequently, the city attorney’s office also began working on a licensing system. The council undertook several amendments to the licensing proposal at four of its meetings over the last three months: on Jan. 3, Feb. 7, March 7 and March 21. The council finally gave its first initial approval to the licensing proposal at its March 21 meeting. [.pdf of Michigan Medical Marijuana Act]

Medical Marijuana: Public Comment

Chuck Ream thanked the council for their work. In terms of growing medicine, council should drop all that language on cultivation facilities, he said. Such facilities are already regulated under state law. He also asked the council to drop record-keeping requirements – such requirements would create a list of “juicy targets” for prosecution. He told the council that they held the lives of good people in their hands.

He asked the council not to keep city attorney Stephen Postema in charge of the medical marijuana legislation or it would never get finished. He reminded the council of the remarks made at the April 19, 2011 council meeting by Trena Moss, who reported a 2004 sidewalk encounter with Postema, when she was gathering signatures for the petition to place a local charter amendment on the ballot – it eventually passed. According to Moss, Postema had told her that he had a strategy to block it, even if voters approved it. Ream has conveyed to the council the statement written by Moss on April 23, 2004 and the photo “line up” out of which she identified Postema as the man she’d encountered. Ream asked councilmembers to protect caregivers like they would protect a woman’s right to choose.

Rhory Gould began by saying Ream is hard to follow – Ream had said everything so well. Gould said he is a longtime Ann Arbor resident and a registered voter. He thanked the council for their thoughtfulness and hard work, and for considering the needs of patients and caregivers. He called the ordinances well-written, but issues remain that still need to be addressed, he said.

Keeping records for caregivers and cultivation facilities is a bad idea, Gould said. Landlord records are also a bad idea, he said. There should be no dollar amount on labels. That requirement is motivated by the best of intentions but is not necessary. He asked the council to move forward by passing a medical marijuana ordinance that addresses the needs of caregivers, patients and residents of Ann Arbor.

Kirk Reid thanked the council for listening. He identified himself as a patient who suffers from multiple sclerosis. He told the council he would never sign up under the proposed Ann Arbor ordinance, citing the vagueness and uncertainty of words such as “deem appropriate,” “deem to prohibit” and “justification.” Whose justification? he asked. He invited the council to sit down with patients and caregivers and work with them.

John Henry Kaiser had signed up in advance to speak to the council, but when his name was called, Ream told the council that Kaiser is a cancer patient, and could not attend.

During his turn at public commentary reserved time, Thomas Partridge touched on a range of topics, but also included his view that “we do not need Ann Arbor to be known as the Marijuana Headquarters of the United States.”

Dennis Hayes thanked the council for giving advocates the right to speak. He allowed that he and Partridge didn’t agree about much, but would agree on the importance of the special education millage that was on the ballot the next day – everyone should pay attention to that. He said he’d previously made remarks about proposed amendments. He said he would welcome an opportunity to take a look at the amendments before the council voted. It’s important to pay attention to problems of regulating caregivers. He encouraged the council to take a lighter hand rather than a heavier hand. Ream reminds him frequently, Hayes said, that there are rights in the state statute, which shouldn’t be nullified by the local ordinance. The council should pay attention to what voters have said, as well as patient and caregiver needs.

Medical Marijuana Zoning: Council Deliberations

In broad strokes, the zoning regulations stipulate where medical marijuana businesses can be located geographically. From the regulations as amended on May 2, 2011:

(3) Locations of medical marijuana dispensaries and medical marijuana cultivation facilities.
A medical marijuana dispensary or medical marijuana cultivation facility may be located in the City only in accordance with the following restrictions:
a) Medical marijuana dispensaries shall only be located in a district classified pursuant to this chapter as D, C, or M, or in PUD districts where retail is permitted in the supplemental regulations.
b) Medical marijuana cultivation facilities shall only be located in a district classified pursuant to this chapter as C, M, RE, or ORL.
c) In C districts, buildings used for medical marijuana dispensaries or medical marijuana cultivation facilities shall meet the minimum parking requirements of Chapter 59 for retail uses, with no exceptions for existing nonconforming parking.
d) No medical marijuana dispensary or medical marijuana cultivation facility shall be located within 1000 feet of a parcel on which a public or private elementary or secondary school is located.

The deliberations by the council dealt first with the challenge of handling the vast array of changes to the text of the zoning regulations, which were last before the council for consideration at its Oct. 18, 2010 meeting. On that occasion, the council had given the zoning regulations its initial approval.

The sheer number of changes to the text led to discussion at the outset on how to proceed – line by line, or all in one go. Very early on in the deliberations, the council suspended its rules on the number of speaking turns allowed by councilmembers on each motion – they’re ordinarily limited to two turns.

Medical Marijuana Zoning: Amendment – Omnibus Staff Recs

Sabra Briere (Ward 1) began by moving all of the amendments recommended by city staff at once.

She asked city attorney Stephen Postema to summarize the changes. He explained that many of them were motivated by a desire to coordinate the language in the zoning regulation with that of the licensing scheme.

For example, the legislative intent section for the zoning is now just what the licensing says. Five definitions are now taken straight from the Michigan Medical Marijuana Act, Postema said. Other words and phrases have specific definitions – for cultivation facilities, dispensaries and home occupations. They’re unique to the zoning ordinance, and aren’t included in the state statute, so they’re defined.

Postema said the recommendations for amendments were sent to council on April 26, so he felt the council had had time to look them over.

By way of example of the kind of changes that were included in the staff-recommended amendments, the new definitions included one for “medical marijuana cultivation facility”:

ii. “Medical marijuana cultivation facility” means building [sic] where marijuana plants are being grown in compliance with the MMMA, other than as a medical marijuana home occupation.

New in that definition was the inclusion of “medical marijuana” as part of the term to be defined. That entailed inserting “medical marijuana” before instances of “cultivation facility.”

Marcia Higgins (Ward 4) asked about a revision that struck “medical” from the phrase “medical marijuana plants”:

In a single family dwelling in any zoning district, no more than 72 medical marijuana plants shall be grown on the premises, regardless of the number of registered primary caregivers and/or registered qualifying patients residing in the dwelling.

Postema said that when it’s just the plants themselves, it’s just “marijuana” – because the state statute doesn’t call the plants “medical marijuana.”

Councilmembers then expressed uncertainty as to the process for approving the entire set of amendments recommended by the city attorney’s staff. One approach would have been first to vote on the set of amendments, then consider additional amendments, voting on them as well. A second approach would have been to amend the proposed amendments.

The consensus appeared to be that they’d take the first approach. But mayor John Hieftje indicated there would not be a vote on all the staff-recommended amendments. That statement was met with surprise from some councilmembers. Higgins sought confirmation: “We’re voting, right?” Christopher Taylor (Ward 3) indicated that he did not understand the process. Carsten Hohnke (Ward 5) noted that after voting, additional amendments could be brought forward.

Briere stated that it’s the council’s choice how to proceed. She’d earlier begun to go through her own proposed amendments, but appeared now ready to vote on the staff-recommended amendments, then consider additional amendments.

The council opted to vote on the staff-recommended amendments, then consider other amendments.

Outcome on Omnibus Amendment: The council unanimously approved the set of staff-recommended amendments.

Medical Marijuana Zoning: Amendment – Code Reference

Sabra Briere (Ward 1) proposed the following amendment [deleted material is struck through; added material in italics]:

h) An annual zoning compliance permit signed by the owner shall be required, and must be renewed prior to the anniversary date of the issuance of the original permit shall be required consistent with Section 5:92.

She noted that zoning compliance permits are not unique to medical marijuana facilities – they have very broad requirements. She apologized to Marcia Higgins (Ward 4) for referencing another section of the code. Briere was alluding to Higgins’ historical objections to referring to other sections of code, which forces the reader to look up some other section. [.pdf of Section 5:92 of the city code]

It’s “simple business compliance,” no more or less than any other business, said Briere. The rationale behind the amendment was that the ordinance should not convey the idea that any group is being singled out or that records are being kept on a group of people.

Higgins confirmed that in the licensing scheme, the zoning compliance permit is not handled by the licensing board.

Tony Derezinski (Ward 2) asked city attorney Stephen Postema what his opinion was. Postema said the reason the language had originally been included was to let people know what the requirements are without having to go back and look at another part of the city code. Referencing the other section is also acceptable, he said.

Outcome on Amendment: The council unanimously approved replacing specific requirements with a reference to Section 5:92.

Medical Marijuana Zoning: Amendment – Plant Limit

The zoning regulations already included a limit of 72 marijuana plants in connection with a business operated as a home occupation.

Sabra Briere (Ward 1) proposed an amendment that added a limit of 72 plants on the premises of any medical marijuana cultivation facility. That’s a maximum of 72 plants per address, she said.

City attorney Stephen Postema focused the council’s attention on the fact that a “medical marijuana cultivation facility” is defined as a building where plants are being grown.

Marcia Higgins (Ward 4) wondered what the difference is between a cultivation facility and a home occupation, if both are limited to 72. Briere explained that essentially it’s expected that it will be caregivers who grow the plants – either in their own home, or not in their own home. If they did not grow in their own home, that would make it a cultivation facility.

Outcome on Amendment: The amendment limiting the number of plants in a medical marijuana cultivation facility to 72 passed, with dissent from Higgins.

Medical Marijuana Zoning: Amendment – Home Occupation

Sabra Briere (Ward 1) offered another amendment very much in the spirit of a previous one that removed a description of specific requirements and instead referenced another part of the city code – Section 5:92.

A list of (a)-(j) items were reduced to just four with Briere’s amendment.

Tony Derezinski (Ward 2) again wanted city attorney Stephen Postema’s opinion, who characterized it as the same issue they’d looked at before. Briere reiterated the rationale – if people are not familiar with the entire code, they may read the zoning regulations on medical marijuana as if the city is establishing special rules for a special category of people. That’s avoided by reference to other code sections.

Mayor John Hieftje agreed with that strategy. Sandi Smith (Ward 1) wondered why one of the items had been left in the section: “No transfer of marijuana to registered qualifying patients other than those residing in the dwelling shall occur.” Smith said it did not involve any vehicle trips, because there are no home visits. She wanted to know why the clause was still in there.

Postema said this was consistent with the language approved a long time ago. Smith said she understand that, but it’s one of three surviving clauses in the section – it mystified her. It’s irrelevant if you say the transfer can’t occur, she said. Postema told Smith that the council had talked about the fact that it didn’t want transfers to take place except at patients’ homes. If that’s not what the council wishes, then it can be changed.

Christopher Taylor (Ward 3) also supported deletion of the clause. He said it struck him as interference – an unnecessary burden. If other restrictions are consistent with Section 5:92, then he felt it was a reasonable balance.

Carsten Hohnke (Ward 5) said that looking through all the changes, it makes perfect sense. The clause in question is highlighted as one exception, so he supported Smith’s additional amendment. He said he was not sure why they would call out transfers specifically.

Hieftje noted that with a 72-plant limit, that amounted to a limit on the number of clients.

Stephen Kunselman (Ward 3) asked Wendy Rampson, head of the city’s planning department, to explain zoning compliance permits. He wanted to know how Section 5:92(1) would be applied, which reads in part:

It shall be unlawful to begin the excavation for the construction, the moving, alteration, or repair, except ordinary repairs as defined in Chapter 98 of the Ann Arbor City Code, of any building or other structure, including an accessory structure, costing more than $100.00 or exceeding 100 square feet in area …

He wanted to know if it’s possible that a zoning compliance permit wouldn’t be required if the $100 limit were not exceeded. Rampson said it’s hard to say, but she thought Kunselman’s conclusion was right – with the exception of a day-care facility. She suggested that people obtain a compliance permit in case someone calls to complain, but the city would not necessarily require one.

Outcome on Amendment: The amendment replacing specific language on home occupations with a code reference was unanimously approved.

Medical Marijuana Zoning: Amendment – 1000-foot Buffer

Carsten Hohnke (Ward 5) proposed amending the required buffer between dispensaries and cultivation facilities and schools from 1000 feet to 1010 feet. He said that round numbers are not necessarily any better. The 1% difference does a better job of accomplishing what they’re trying to accomplish, he contended. The intent is not to impact existing dispensaries – it’s to make sure they’re not cutting off parts of blocks.

At the request of Tony Derezinski (Ward 2), Hohnke asked Wendy Rampson, head of planning for the city, to explain. Hohnke confirmed with her that the extension of the buffer by 1% would in certain locations help to bring a complete block into the buffer zone. Rampson said there’s no magic number. Sabra Briere (Ward 1) asked Rampson if she’d drafted some maps depicting the 1010 buffer. No, Rampson said, the question came up after they’d looked at the issue. The city has a map showing the 1000-foot buffer. Briere asked by the next meeting to have maps with 1000, 1100 and 1250-foot buffers shown. She said she’s uncomfortable with a 10-foot change – she found that odd. She noted that Sandi Smith (Ward 1) had actually wanted to decrease the buffer.

At that point mayor John Hieftje asked city attorney Stephen Postema if the changes they’d undertaken to that point were substantive enough to require an additional reading before the council, if the council voted to approve the main motion. Postema said that many of the amendments are small enough, but the deletion of the prohibition on transfer, and tinkering with the 1000-foot buffer, could amount to substantive changes. The wiser course would be to have an additional reading, he advised.

Hieftje said he needed clearer advice. Postema suggested postponing to the council’s first meeting in June.

Weighing in on the buffer question, Smith said it doesn’t make sense to add 10 feet – there is already a limit on the number of dispensaries. She said she thought 500 feet is adequate, and 1000 feet is more than cautionary – so 1010 makes no sense.

Outcome: The council voted down the amendment changing the buffer to 1010 feet. Voting for it were Tony Derezinski, Stephen Rapundalo, Christopher Taylor, Carsten Hohnke, and Mike Anglin, which was one short of the six votes it needed.

Medical Marijuana Zoning: Motion to Postpone

A motion was made to postpone the zoning ordinance.

Christopher Taylor (Ward 3) elicited from city attorney Stephen Postema the view that it was a “close call” as to whether the council would need to give the zoning ordinance an additional approval, if council voted to approve the ordinance that night.

In light of the fact that possibly another reading before the council would be required, even after voting that night, Taylor said, “I’m all for voting.”

Alluding to the revised legislation that is marked up with color-coded revisions, mayor John Hieftje said he’s wanted for a long time to have something to read without colored print. He suggested trying to get a clean page before voting.

Final Outcome on Zoning: The council voted to postpone the zoning ordinance until June 6. Sandi Smith and Christopher Taylor dissented.

Medical Marijuana Licensing: Council Deliberations

Over the course of the council’s months-long consideration of medical marijuana licensing requirements, among the more significant revisions has been to exclude home occupations from licensing requirements. On Monday, several amendments were passed, but the most significant one excluded another major category from licensing requirements: cultivation facilities.

Medical Marijuana Licensing: Amendment – Insertions

Sabra Briere (Ward 1) led off with a set of changes that involved wholesale insertions of language. The amendment added “medical marijuana” before instances of “dispensary” or “cultivation facilities.” The amendment also inserted “registered qualifying” before instances of “patient” and inserted “registered primary” before instances of “caregiver.”

Outcome on Amendment: The council unanimously approved the insertion of the various phrases.

Medical Marijuana Licensing: Amendment – Completeness

The second amendment proposed by Sabra Briere (Ward 1) made clear that the link between the cap on licenses and applications is for complete applications. In amended form, that section of the ordinance reads:

The first year’s licenses shall be capped at a number 10% higher than the number of complete applications for licenses submitted to the City in the first 60 days, after the effective date of this chapter, but not more than 20 medical marijuana dispensary licenses shall be issued in the first year. Any license terminated during the license year returns to the City for possible reissuance.

Outcome on Amendment: The amendment specifying the completeness of applications was unanimously approved.

Medical Marijuana Licensing: Amendment – Cultivation Facilities

Sabra Briere (Ward 1) then proposed that references to “cultivation facilities” be removed. In arguing for the exclusion of cultivation facilities from licensing requirements, she said that according to the Michigan Medical Marijuana Act (MMLA), they are supposed to be cautious. She cited the relevant passage from the MMLA:

Possession of, or application for, a registry identification card shall not constitute probable cause or reasonable suspicion, nor shall it be used to support the search of the person or property of the person possessing or applying for the registry identification card, or otherwise subject the person or property of the person to inspection by any local, county or state governmental agency.

Briere said that passage tells her the city is not supposed to be looking at or keeping records or inspecting property of applicants for the state registry identification card. While dispensaries have decided to go public, she said, caregivers have not. She said she could not understand why the city sought to license caregivers.

Sandi Smith (Ward 1) said she wholeheartedly supported removal of cultivation facilities from licensing requirements. She felt it was inviting people to aggregate a large number of mature plants and register with the city, and it was an invitation for the DEA to come in.

Stephen Rapundalo (Ward 2) asked the city attorney Stephen Postema to weigh in. Postema said that in some ways, this is a policy decision for the council. He said he disagreed with Briere that there’s anything in the state law that prevents the city from having reasonable regulation.

Christopher Taylor (Ward 3) asked Wendy Rampson, head of planning for the city, how she saw the role and utility of having cultivation facilities in the licensing scheme. For the zoning regulations, cultivation facilities are included. Rampson said that cultivation facilities are different from home occupations. Home occupations are in someone’s own home, whereas cultivation facilities are a commercial operation. That’s why the city planning commission recommended specific zoning districts where it would be appropriate to have a cultivation facility, she said.

Taylor asked if the limit of 72 plants for cultivation facilities – now amended into the zoning regulations – would address the planning commission’s concern. Rampson allowed that the 72-plant limit would address some concerns. Based on the information staff had received, they were talking about quite large operations and they were concerned about that.

Rampson said there could still be an agglomeration of facilities in multiple tenant spaces. But mayor John Hieftje said that possibility had been eliminated. Taylor suggested that the concern of scale should disappear with the 72-plant limit.

Postema interjected concerns about not having a license on something that is a commercial facility. He contended that security concerns are the same, whether it’s large scale or small scale. Safety and security concerns are theoretically there whether the operation is large or small, he said. Safety and security is a hallmark of all licensing, he said.

Smith asked if a change in use for any building would set off an inspection process for city that would take care of risks associated with health and safety. Smith said security measures would be inherent in the product being grown.

Marcia Higgins (Ward 4) made the same observation she’d made in connection with the zoning deliberations: The only difference between a home occupation growing operation and a “cultivation facility” is that a cultivation facility is offsite from a residence. If the limit is 72 plants, she wondered, how can you have the medical marijuana co-ops, which already operate in the city? She asked if the passage of the 72-plant requirement and their exclusion from the licensing requirement would shut down the co-ops? Briere replied that she hoped so.

Taylor said he was confident in the strength of the 72-plant limit in the zoning regulations.

Without a licensing requirement, Stephen Kunselman (Ward 3) asked if there is a limit somewhere on number of cultivation facilities. [If cultivation facilities were required to be licensed, the cap on the number of licenses would provide that limit.] He noted there are a lot of property vacancies, and having grow operations could be a good way to pay the rent. He expressed concern that the community could be overrun with a lot of grow operations.

Briere said a problem with restricting the number of cultivation facilities is that there may be more than the city can see today. The city doesn’t want them to be large cultivation facilities, she said. The number of 10 as a limit was a number that was suitable, she said, when the council believed the city might have to deal with large grow facilities.

Kunselman replied that if the city doesn’t license cultivation facilities, they won’t know the facilities are there, and the grow operations will show up without signs. Briere responded by saying that if the city licenses cultivation facilities, it starts collecting information on caregivers, and that becomes available to the federal government. The state can protect its information, but it’s harder for local governments to protect it, she said. Smith said it would be excellent to charge the licensing board with examining the issue and bringing that as a recommendation after a year.

Stephen Rapundalo (Ward 2) asked Postema to weigh in. Postema said that initially when the council addressed the issue, aggregation was the concern. He suggested that another tool available to the council, separate from licensing, is another zoning tool: restrictions on how near to another facility a cultivation facility can be.

Kunselman pressed Briere to explain how gathering information on cultivation facilities was different from gathering information on dispensaries. Why don’t we treat them the same? Briere explained that deciding to grow away from your home doesn’t mean you want to grow it for the public. Maybe you want to do it because of children, or whatever personal reasons, or maybe there’s no space, she said. So by growing away from your home, you become a “cultivation facility” – even though you’re just an individual patient or caregiver. A cultivation facility is not a commercial activity only, even though it’s logical to assume that, she said.

On another level, Briere continued, they should think about whether the city is pushing people to grow marijuana as a home occupation. The more restrictions the city places on people growing marijuana away from their homes, she said, the more the city encourages growing in homes, thus in neighborhoods.

Some people are growing marijuana to make money, Briere said, and some are growing for a patient whom they love – and they’ll do that in a basement, closet, attic or warehouse. It’s difficult to decide if they should be paying a fee for a license. She said she didn’t have an answer and that’s why she had proposed the amendment.

Tony Derezinski (Ward 2) said the discussion was coming at a late date. He wanted a comprehensive ordinance, and part of that includes facilities for growing marijuana, he said. His reading of the statute is that you can have authority as a city to regulate – it’s a question of whether Ann Arbor wants to regulate in that way. His own sense is that it’s easier to be more restrictive, then if the regulation is not needed, it can be relaxed, he said.

Hieftje inquired of Briere if the motivation is to eliminate a layer of documentation – yes, said Briere, and to simplify the law. Carsten Hohnke (Ward 5) saw it also as also a matter of fairness to those who choose to grow not in their own home.

Outcome on Amendment: The council approved the amendment eliminating cultivation facilities from licensing requirements, with dissent from Tony Derezinski, Stephen Rapundalo and Marcia Higgins.

Medical Marijuana Licensing: Amendment – Strike “Federal”

The next amendment suggested by Briere was to strike the word “federal” as follows:

(5) The license requirement set forth in this chapter shall be in addition to, and not in lieu of, any other licensing and permitting requirements imposed by any other federal state or local law.

Outcome on Amendment: The amendment to strike “federal” was approved, with dissent from Stephen Rapundalo.

Medical Marijuana Licensing: Amendment – Council Approvals

The final amendment handled on Monday was again introduced by Sabra Briere (Ward 1) and included a motion to change the title of the licensing board to “Medical Marijuana Licensing Board” and to establish a procedure for approval or rejection of each license application by the city council.

Stephen Rapundalo (Ward 2) asked city attorney Stephen Postema for his thoughts. Postema said he had no issue with that.

Christopher Taylor (Ward 3) wondered if the instruction should be that the council had to act on each application, or if it should simply allow the council to act. Postema said the language means that a recommendation from the board must be given an up or down action. Mayor John Hieftje said he had a concern there, because the issue has already taken over large chunks of the council’s time. He wondered if there was any way they can limit it. Marcia Higgins (Ward 4) said she didn’t think she’d ever seen a recommendation coming from a board that says the council must act.

Briere offered to change the recommendations from the licensing board to the council to make them an annual event instead of an ongoing process. The council settled on an annual process, though Sandi Smith (Ward 1) expressed a preference for a quarterly process.

Outcome on Amendment: The council unanimously approved the amendment specifying how the council approves each license.

Medical Marijuana Licensing: Motion to Postpone

Sabra Briere (Ward 1) said she’d be happy to end the deliberations, but said she was nearly done with the major part. Mayor John Hieftje asked how much time she figured remaining amendments would take. Briere estimated 30 minutes. A motion was made to postpone the licensing ordinance in its form as amended.

Outcome on Licensing: The council voted unanimously to postpone consideration of the medical marijuana licensing ordinance until its June 6, 2011 meeting.

Human Services Allocations

Before the council was a resolution to allocate funding for nonprofits that provide human services in the city for fiscal year 2012, which begins July 1, 2011. The $1,159,029 in the resolution reflected a 9% reduction from FY 2011.

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

Human Services Allocations: Budget Public Hearing

On Monday, the council held its public hearing on the fiscal year 2012 budget, which will be considered formally on May 16. Several of the speakers directly or indirectly addressed human services spending in that budget.

Thomas Partridge said the budget shouldn’t be passed without reviewing it for progressively-scaled fees. People have suffered too long under regressive taxes, he said, which had culminated in an effort to recall Gov. Rick Snyder. He reminded the council that the right to recall elected officers can be applied to local officials, as well. He called on the mayor and the council to live up to their responsibility to come up with a budget, tax and fee structure that is progressively-scaled to give consideration to the most vulnerable in society.

Susan McGarry introduced herself as the minister at St. Aidan’s Episcopal Church – she also serves on the Interfaith Council for Peace and Justice (ICPJ) working group on racial and economic justice. She urged the council not to make cuts to the community’s safety net. She said she’s been a professional minister for over 30 years. The church had started sheltering by letting people sleep in their basement. Since then so much has improved, she said. We have a community where we can be proud, she said. She argued against those who would say that “we make it too easy for poor people.” It’s a hard budget, but it’s difficult for the most vulnerable among us, she said. In a difficult time, we need to keep that good work going forward.

Lucia Heinold also introduced herself as a member of ICPJ. She said that Ann Arbor is a caring community. We need good fire protection, but we need to keep the poorest among us in our minds, she said. It does us no good to have a great park system if we have people who are too poor and sick to get to the parks. She thanked the council for all the work they had done. As treasurer of some organizations, she knows how hard it is to keep things running in the current economic climate.

Michael Appel with Avalon Housing supporters, who are holding more than 4,000 paper cranes to represent the number of people who have used Avalon's services.

Michael Appel, associate director of Avalon Housing, was joined at the podium with a supporting cast of people holding 4,738 paper cranes – one crane for every person that Avalon Housing had served in 2010 through its homelessness programs. The beauty of that many colors, he said, contrasted with the sheer number of people who had lost their housing. For over a year volunteers had been making the cranes to help visualize the scale of the problem. He reminded the council that they would be acting that night only on the human services part of the budget, but said that it was connected to the rest of the budget. People are not using public safety services, if they’re using Avalon’s services.

Ellen Schulmeister, director of the Shelter Association of Washtenaw County, described a client who had been helped through the association’s programs – a man named Charlie who, among other challenges, suffered from migraine headaches. He was falling through cracks in the system, and in late 2010 came to the Delonis Center, out of ideas. He entered the center’s residential program, she said, where a case manager helped him design a plan. The first step was to get his medical needs addressed. His case manager helped him apply for Social Security, which gave him a monthly income, and he was able to take the step of finding stable housing. He moved into that housing on Feb. 1.

Diana Neering, who is also with the Shelter Association, gave the council a second sketch of one of the association’s client success stories. It was the story of Matthew, who appeared at the shelter wearing boots and dark sunglasses. He had a mental disorder and would talk of owning 40 Internet businesses and being a friend of the University of Michigan president. Staff finally convinced him to give the shelter a try. He received mental health treatment through a prescription. His case manager had helped him apply for Social Security benefits and he was quickly approved. He now has income, health insurance, housing and treatment. “We didn’t give up on him,” she said. So she asked the council not to give up on the shelter.

Nicole Adelman, executive director of the Interfaith Hospitality Network of Washtenaw County at Alpha House, told the council that the city had supported human services funding for many years, and they should be proud of that. She asked the council to please not cut the budget this year. Ultimately, that money keeps people out of emergency rooms – it saves the community money, she said.

Joanne Motino Bailey, director of nurse midwifery service at the University of Michigan Health System, said she also worked with Planned Parenthood and has watched the funding be used to change women’s lives and provide the integrated care they need. She strongly encouraged the council to continue the funding.

Barbara Niess May, executive director of SafeHouse Center, noted that SafeHouse receives human services funding from the city. The long-term support that the city council has given to human services funding is part of what makes Ann Arbor a safe and pleasant place to live. She pointed out that the majority of funding that’s invested stays in the community and often leverages other resources. She said she’d be remiss not to thank the council for this gift, but said it’s also a necessary investment.

Pam Smith introduced the council to Child Care Network as a 33-year-old nonprofit that helps families find childcare. It had enjoyed 30 years of support from city of Ann Arbor. The nonprofit helps the most economically vulnerable, but they pay a portion of the child care – that helps keep parents involved. Clients have gone on to hold jobs as bank mangers and customer services representatives in the community, she said.

Also addressing the council for the Child Care Network was Lori Bush, director of family support programs. She told the council it’s difficult to get parents to come represent the nonprofit’s programs because they have time commitments, so she read a letter from one of their parents who is a client, who described how the nonprofit had helped her.

Julie Steiner, executive director of the Washtenaw Housing Alliance, encouraged the council to continue funding. She told the council that nonprofits don’t just stand before the city and ask it for money. She described starting a program for a “single point of entry” to save people’s energy. She described how the money allocated to WHA helps the organization bring additional money – leveraging the money it receives – $1.5 million had been obtained through the federal stimulus (AARA) for rapid rehousing.

Former councilmember Jean Carlberg said it was very nice to be in front of the council. When she’d left the city council, she went to the Washtenaw Housing Alliance, because she appreciated the fact that the alliance included 25 partners to work on homelessness. But she said her interest is more than homelessness. She noted that those who benefit from human services are not just clients, but also friends and neighbors.

Referring to the 4,000 paper cranes presented by Michael Appel and his group, Carlberg said that number would need to be multiplied by 5 to include people who are in crisis and near crisis. The issue concerns more than just people who receive services directly. She also pointed out that the money stays here and multiplies in the community. It’s a relatively small amount, she said. It’s a difficult choice, but she compared it to choosing between temporary inconveniences versus taking away a basic human need. There’s not a temporary consequence to that, she said. The city’s money would be well spent in the community.

Human Services Allocations: Council Deliberations

Mary Jo Callan, head of the joint city/county office of community development, described the human services funding levels this year compared to last year as a $116,000 reduction. The office as a whole had made a 7% reduction, even though the target was 2.5%. As Callan explained during a February 2011 working session, the previous year’s budget had assumed federal funds that did not, if fact, materialize. So they were “starting in a hole,” she said.

Mayor John Hieftje asked whether the 2.5% target was met, leaving the federal funds out of the equation. Callan confirmed that the federal funding is essentially the difference between the 7% reduction compared to the 2.5% target.

Referring to the coordinated funding approach to support nonprofits that provide human services, Sandi Smith (Ward 1) said that in Washtenaw County, we are doing something unique in aggregating funds. That approach really maximizes and leverages the available funding. She commended the work that had gotten the community this far. She asked Callan to comment on the coordinated funding model.

Foreground to background: Councilmembers Sandi Smith (Ward 1), Margie Teall (Ward 4), Marcia Higgins (Ward 4), and city attorney Stephen Postema.

Callan confirmed that her office uses a coordinated funding model that includes public entities – the city of Ann Arbor, Washtenaw County and Urban County – and the Washtenaw United Way. The idea is for these entities to examine how best to invest and amplify the effect of their funding. A review team representatives from each governing board helped evaluate the criteria set out for applicants beforehand. They’re funding a total of 63 nonprofit programs. The city of Ann Arbor funds aren’t directly supporting all of those 63, Callan said, but the availability of city funds allows decisions to be made about all of the nonprofits.

Smith asked Callan to illustrate how city dollars are leveraged by giving the ratio of dollars invested to dollars brought in. Callan told Smith that two years ago, a local dollar brought in $10 in additional support. That figure has now grown to $13, she said. The growth, she said, is due to a couple of factors. First, nonprofits are relying on being entrepreneurial and going after funds to support their core mission. Second, as the city allocates funding, it is now demanding “capacity” from those nonprofits, so the city is investing in nonprofits who know how to generate dollars.

Stephen Rapundalo (Ward 2), who was one of the architects of the scoring metric used to evaluate nonprofits that apply for city funds, asked Callan about Meals on Wheels. He said he fully supported its mission and they do great work. But the fact of the matter is that it’s a University of Michigan program. “Yet they come to us?” he asked. Surely UM can find that amount of money, he ventured. So he asked Callan why Meals on Wheels comes seeking city dollars.

Callan told Rapundalo that other people have asked that too. Callan said she did not have an answer that would be good enough for some folks – but Meals on Wheels uses local dollars to leverage money, too. Part of it is also a policy issue – the city has always funded some programs.  They’re a part of the portfolio. Callan told Rapundalo that she appreciated his acknowledgment that Meals on Wheels does really good work. Rapundalo replied to Callan’s remark – she told him it’s a legitimate question – by saying that’s why he brought it up.

Sabra Briere (Ward 1) said she’d like to postpone the resolution, because she was not prepared to vote that night. She held out hope that between now and the council’s next meeting, the city can find “an additional dime.”

Outcome: The council voted unanimously to postpone consideration of human services funding.

Packard Square

Before the council were resolutions to approve the site plan and development agreement, as well as the brownfield redevelopment plan, for the Packard Square project, which is located at the site of the former Georgetown Mall. The development would include 230 apartment units, 23,790 square feet of retail space, 454 parking spaces and stormwater detention facilities.

At its March 15 meeting, the Ann Arbor city planning commission had unanimously recommended approval of the Packard Square site plan. [Chronicle coverage: "Packard Square, Fraternity Site Plan OK'd"]

The total investment by the developer for this project is about $48.2 million. The amount of that which falls under the brownfield plan’s eligible activities is $2.82 million – for site preparation, demolition, footing drain disconnects and sanitary sewer upgrades, and remediation of contaminants from the former dry cleaning business on that site.

Packard Square: Public Hearing

Mary Krasan thanked Margie Teall (Ward 4)and city planner Jeff Kahan for their time and effort in expediting a solution to the Georgetown Mall situation. The Packard Square project is not perfect, she said, but she hopes it will be a beneficial one to the neighborhood’s quality of life. The neighborhood has been lucky – it’s looking at an end to that particular blight, when other neighborhoods have no certain end in sight. Neighborhoods need protection against the impact of blight on property values and on morale, she said.

Jeanne Horvath told the council that her property abuts the old Georgetown Mall site. She described the proposed project as not the best, but better than what they have now.

Thomas Partridge introduced himself as a Democratic Party leader calling on council to pass amendments to the development agreement, saying the council needed to table it for this agenda. The amendments should ensure access for the most vulnerable – students, adults and families. There needs to be adequate access to the development, he said.

Packard Square: Council Deliberations

Marcia Higgins (Ward 4) reported that the city’s brownfield committee had met several times looking at the request. [The project is located in Ward 4.] She explained that the soil contaminants [tetrachloroethylene] will be removed to a concentration meeting a 10(-5) standard instead the more stringent 10(-6) standard. The reason for that, she said, is that a vapor barrier would be installed, at the request of the Michigan Dept. of Environmental Quality. The brownfield committee will be bringing a resolution before the council to ask the city’s environmental commission to review brownfield plan policies and to update them to add precautionary measures that were not available 10 years ago.

Margie Teall (Ward 4) said she’s delighted the site plan was in front of the council. She said the residents are excited about it. Higgins echoed Teall’s comments – it’s not often that near neighbors say they really want the council to move forward on a project. It’s become a real community dialogue, she said. Teall added that it’s been a dialogue between developer and residents.

Outcomes: On separate votes, the council unanimously approved the site plan, development agreement and brownfield plan for Packard Square.

Sakti3 Abatement

Before the council was a resolution to set a public hearing on the granting of a tax abatement to Sakti3, a University of Michigan battery technology spinoff from the University of Michigan. Sakti3 is led by UM professor Ann Marie Sastry. The public hearing will be held as part of the city council’s June 6, 2011 meeting, which starts at 7 p.m.

Sakti3 is requesting an abatement on $200,000 of real property improvements (electrical construction work) and $2.2 million of personal property (battery cycling equipment, thermal chambers, machine shop equipment, server system).

If granted, the abatement would reduce the annual tax bill on the new improvements by about $17,000 for each year of the abatement. According to city staff, the new real and personal property investments would generate about $22,500 in property taxes each year.

At their March 21 meeting, the council voted to set a public hearing on the establishment of the industrial development district under which Sakti3 is applying for an abatement. And on April 4, the city council approved the establishment of the district.

Outcome: The council voted unanimously without comment to set the public hearing date for the Sakti3 tax abatement.

Municipal Center Construction

The city’s new municipal center, located on the west side of city hall (the Larcom Building) has its main entrance off Huron Street. The street address for city hall is now 301 E. Huron.

Municipal Center Construction: City Administrator Update

During his communications time, interim city administrator Tom Crawford gave the council an update on renovations that are being done on the Larcom building.

In the basement, the area that had flooded due to a burst pipe dried well and there’s no mold, he said. Radon levels are below the action level for residential construction, he said. On the first floor the sprinkler piping is finished – drywall installation and asbestos abatement continue. Two elevators in the west tower are complete and have passed inspection. The old elevators are permanently out of service.

Municipal Center Construction: Wheeler Contract Extension

Before the council was a contract extension with William Wheeler for oversight of the municipal center construction project. In March 2010, the council had voted to continue Wheeler’s services as the municipal center project manager – Wheeler is a former city of Ann Arbor employee.

The contract language stipulated that it would expire when Wheeler hit a maximum compensation of $126,000 or by April 30, 2011. The council approved a contract extension of 60 days, with no increase in the cap on total compensation.

Outcome: The council voted unanimously without comment to approve the contract extension for William Wheeler.

Interagency Technology Agreements

The council was asked to consider the approval of several interagency agreements on the use of technology with: (1) Washtenaw County and the Ann Arbor Transportation Authority; (2) Washtenaw County for data storage services; and (3) Washtenaw County for backup services.

The AATA board had discussed the collaboration at its April 21 meeting. The data storage services to be provided by the county will cost $73,632 for four years. The backup services to be provided by the county will entail an annual service cost of $102,607 for four years.

Marcia Higgins (Ward 4) is not getting a tutorial on how to pack a snowball. As interim city administrator Tom Crawford noted during his communications – it's spring.

Tom Crawford, the city’s CFO and interim city administrator, noted that the state looks at this kind of collaboration favorably. Marcia Higgins (Ward 4) asked whether the city’s recent arrangement to provide the city of Chelsea with IT services would count as collaboration from the state’s point of view – yes, said Crawford, if Ann Arbor gets to count things it’s already started.

Dan Rainey, head of IT for the city, explained the nature of the shared storage and shared backup – there will be one machine at city hall and one at the city’s Wheeler Center. Mayor John Hieftje said some people might question the cost. What would happen if the city didn’t spend the money, he asked. Rainey said the city would be at significant risk of not being able to recover data. That might mean the loss of critical data like maps, financial data, data on the wastewater plant, and day-to-day operations. It’s really important to have a means to back up and recover it, Rainey said.

Sabra Briere (Ward 1) noted there are some people who think the city spends way too much money on IT. She asked Rainey to describe how much of the city’s IT operations are handled by his department. He explained that his department operates across the entire organization – 98% of all the city’s IT costs are in the IT department’s budget. Briere concluded that this reflects a change in the way the city government does business.

In response to a question from Hieftje, Rainey said that IT costs have remained relatively flat over the last three years. Sandi Smith (Ward 1) asked if the city would eventually move to cloud-based technology. Rainey explained that several of the applications used by the city are already cloud-based: including HR, payroll, and law enforcement and courts system software. He also said the city is shrinking its physical footprint by converting paper documents to digital form.

Outcome: The council unanimously approved the three interagency IT agreements on its agenda.

Street Closings

On its agenda were approvals of several street closings. Christopher Taylor (Ward 3) asked his colleagues to excuse him from voting on one of them. Grizzly Peak, which was requesting a closing of Washington Street in connection with a Sept. 16-17, 2011 Oktoberfest celebration, is a client of  the law firm Butzel Long, where Taylor works.

Other street closing requests were for: 1) the Ready Set Fly 5K on Saturday, May 21 from 8:45 A.M. to 11:00 A.M., and 2) The Event on Main, a fundraiser for the University of Michigan C.S. Mott Children’s and Women’s Hospital, on South Main Street between William and Liberty, from 6 a.m. on Thursday, June 23 to 2 a.m. on Friday, June 24.

Outcome: The council voted unanimously to approve all the street closing requests.

DTE Power Line Relocation

On the council’s agenda was the finalization of an agreement with DTE to relocate power lines in connection with the East Stadium Bridges reconstruction project. Sabra Briere (Ward 1) asked Sue McCormick, public services area administrator, if the lines would be buried. The answer – yes – was provided by Homayoon Pirooz, head of project management for the city, who stayed until the end of the meeting, along with city engineer Michael Nearing.

Outcome: The council voted unanimously to approve the agreement with DTE.

Large Vehicle Purchases

The council was also asked for authorizations to purchase two large vehicles – an Elgin street sweeper and a combination sewer truck – and a large piece of truck-mounted equipment (a rodder for clearing out sewer lines).

Higgins said she felt like the ghost of Chris Easthope was sitting in her seat – she had questions about whether the purchases were necessary. [After the meeting, she told the Chronicle that former councilmember Easthope had on occasion questioned the purchase of some large vehicles when staff had recommended acquiring them – if a truck had limited miles on it, then the age of the vehicle wouldn't necessarily justify its replacement.]

After confirming with Sue McCormick, public services area administrator, that the staff did not need the council to act urgently, Higgins moved to postpone the sewer truck purchase. Sandi Smith (Ward 1) later moved postponement of the street sweeper.

Outcome: Votes on the two vehicles were unanimously postponed, but the rodder was approved at a cost of $87,500.

AATA Appointments

Before the council were two nominations that had been made at the council’s previous meeting to reappoint Charles Griffith and Rich Robben to the board of the Ann Arbor Transportation Authority.

Outcome: Griffith and Robben were unanimously confirmed as members of the AATA board.

Work Session Minutes

Before the council voted on approval of various sets of minutes from prior meetings, Stephen Kunselman (Ward 3) inquired why the March 14, 2011 work session did not include councilmember attendance. He was assured that the record of attendance would be added.

Outcome: The council voted unanimously to approve minutes from previous meetings.

Communications and Comment

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

Comm/Comm: Taxicab Rate Increase – Public Hearing

As a part of his interim city administrator’s report, Tom Crawford noted that the city’s taxicab board is recommending a rate increase. At the council’s May 16 meeting, a public hearing will be held and the recommendation will be considered. The rate increase would affect only the mileage component of fares, which were last approved on May 19, 2008. The mileage increase from $2.25/mile to $2.50/mile had been requested by several taxicab companies in light of rising fuel prices. The taxicab board has indicated with this increase, it does not anticipate considering another rate change until the gas prices were over $5/gallon for at least two consecutive months.

Comm/Comm: Downtown Development Authority

Christopher Taylor (Ward 3) reported that there was some “confusion” but then rejected that as “too strong a word” and settled on “a couple of different interpretations” of the city ordinance governing TIF (tax increment finance) capture for the Ann Arbor Downtown Development Authority district, which will be need to be worked out. That’s why a resolution had been struck from the council’s agenda – it would have allowed the council to ratify a new contract under which the DDA would continue to manage the parking system.

Taylor said that Tom Crawford, the city’s CFO and interim city administrator, was involved in working out the issue along with city attorney Stephen Postema. There may be a larger explanation at the council’s working session on May 9, he said. [Without ratifying a new contract, the city would receive about $2 million less in parking revenues than it has planned as part of its 2012 fiscal year budget. Chronicle coverage: "DDA Delays Parking Vote Amid TIF Questions"]

Comm/Comm: Park Advisory Commission – Budget

Christopher Taylor (Ward 3) reported on a conversation held at the most recent meeting of the parks advisory commission (PAC). Taylor is one of two ex-officio representatives of the city council to that body – the other is Mike Anglin (Ward 5). Taylor said that PAC had reviewed the FY 2012 budget and new fee schedule. PAC members had discussed cuts in the parks department, which are divided across two units – community services and public services. [Chronicle coverage: "Council to Get Reminder of Parks Promise"]

The cuts on the public services side are, as currently proposed, in excess of the cuts compared to other units. He said PAC had been told by Matt Warba, field services supervisor with the city, that the services to be provided will not be cut, but rather that the costs have gone down, because of greater efficiencies. The services will be consistent year over year, said Taylor. In addition to increased efficiencies, the proposed parks budget involves the shifting of cost burdens, for example, to money provided by the METRO Act. PAC passed a resolution exhorting city council to re-fund the public services budget.

Anglin added that PAC had discussed the gradual funding reduction to parks over the years. As the parks maintenance and capital improvements millage will again be before the voters for renewal in 2012, it’s important to have the policies for administration of that millage in place, he said.

Anglin said he doesn’t like to use the word “asset” in reference to parks, because it leads to treating the parks like a business. He reported that he’d talked to young people in their 30s, about how they’d taken advantage of some nice recent weather – they’d taken long bike rides and hung out in the parks. This is what we want to protect, Anglin said. He wants to look at policies for administration of the millage before it’s placed on the ballot next year and he wants to keep the parks whole, if possible.

During the budget public hearing, Julie Grand – chair of the city’s park advisory commission – told the council that she and Sam Offen, chair of PAC’s budget and finance committee, were there to talk about the two resolutions passed at PAC’s last meeting. The first one recommends that the council adopt the proposed budget, she said. The second one raises a couple of considerable concerns. The first concern is the cuts themselves and the second relates to the timing. The cuts would require change to the city’s administrative policy on parks funding allocations, she said. Given the fact that the millage will be up for renewal next year, the perception is that the millage will simply substitute for general fund support of parks.

Offen reiterated and supported the points made by Grand about park operations. The finance committee had talked with Colin Smith, the city’s parks and recreation manager, about parks and recreation. The conversation had been well-planned, with plenty of notice and information. Offen commended Smith and Sumedh Bahhl, who heads all of community services, for their hard work, communication skills, and ability to provide a clear message to PAC. Offen said that the community is lucky to have people like that working for the city.

But Offen expressed concerned about the park operations side of the budget. PAC had had very little time to digest it. Offen said that PAC had significant questions about the lasting ability of state funds [like the METRO fund] to support it, and the fact that the proposed FY 2012 budget doesn’t adhere to the 2006 administrative policy on general fund support for parks. That policy had been a controversial issue at that time, Offen pointed out.

No one spoke during a public hearing on fee adjustments in the community services area, which included rate increases and new fees for new activities in the city park system. [.pdf of recommended fee increases]

Comm/Comm: Labor Negotiations – Fire-Related Deaths

Stephen Rapundalo (Ward 2), noting the budget-related theme of some of the council communications, said it’s useful to remind people that the budget that former city administrator Roger Fraser had proposed before leaving the city ties a labor strategy to the budget: A certain number of planned layoffs in police and fire protection could be mitigated through union concessions.

If police officers adopted the same health care plan as non-union employees, then at least four full-time police officers would not need to be laid off. And if firefighters adopted the same health care plan as non-union workers, that would be sufficient to pay for more than two full-time firefighters, Rapundalo said. There is still time before deliberations at the council’s next meeting on May 16 to make those concessions. He said there’d been speculation that the council won’t follow though on plans to cut public safety workers. But Rapundalo said the budget is very challenging and there’s no place else to get those savings.

Mayor John Hieftje supported Rapundalo’s contention that the council was prepared to follow through on the cuts. A year ago, he said, Margie Teall (Ward 4) was able to make a statement that they had been able to find some additional funding, but there would not be that kind of comment this year. No year has been as tough as this one, Hieftje said – cities across the state have run out of strategies.

Matt Schroeder, president of Ann Arbor's Local 693 of the International Association of Firefighters, waits with others for his turn to speak during the budget public hearing.

During the public hearing on the budget, Matt Schroeder, president of Ann Arbor Local 693 of the International Association of Firefighters, addressed the council. He told the council that top city administrators had contended recently that the fire department’s initial response times probably won’t be affected by more cuts. In the last decade, he said, the city has eliminated 37 firefighter positions, closed one station and eliminated two trucks – average response time has risen, he said. The situation continues to worsen with rotating closures of stations, he warned. Fires are 2-3 times faster and hotter today, he said.

Schroeder said it’d been suggested that Huron Valley Ambulance (HVA) could handle the medical runs, and that the only reason the fire department responds is due to union protocols. In fact, Schroeder said, firefighters respond to medical runs because they’re trained for that and licensed by the state of Michigan. Citizens are not benefited by police officers going to those calls, he said, who are not licensed. The city and HVA determine together which calls firefighters go on – lives can be saved with firefighters responding to EMS runs. In just the last week, there were two occasions when firefighters had arrived well before HVA, and they were able to use basic life support skills to render assistance to two citizens, he said.

Schroeder then turned to statistics on deaths due to fire in Ann Arbor. From 1991-2005, he said, three people were killed in fires – that’s an average of 0.2 lives per year. Since 2006, 12 people have been killed in fires – 2 lives per year. That’s a 1,000% increase in lives lost during a period where there was a 29% staff reduction.

It’s been stated that the city is “comfortable” with more cuts, Schroeder said. He wondered if the city was comfortable with the fact that citizens needed to jump from balconies and roofs while they waited for enough firefighters [4] to arrive on the scene to enter a building to extract victims.

The International City/County Management Association (ICMA) study currently commissioned by the city targets first-arriving fire department companies only, Schroeder said. It does not look at second, third, and fourth arriving companies. He said that firefighters are being vilified – they’re doing more with less. The local union does believe it can work together with the city, he said. Schroeder drew a round of applause from the audience when he concluded his remarks.

Susan McGarry, who addressed the council in support of human services funding during the same public hearing, noted that she was in a car accident and had been very well served by the fire department on that occasion.

Comm/Comm: Elections

Larry Kestenbaum told the council he was pleased to see them. He introduced himself as the Washtenaw County clerk, noting that he is also co-chair of the Michigan Association of County Clerk’s legislative committee. He noted that the next day was election day. In Ann Arbor, there was just one issue on the ballot: the WISD special education millage renewal.

Washtenaw County clerk Larry Kestenbaum glances through his notes before addressing the council on the subject of elections.

Because it’s a single-issue stand-alone election with one item on the ballot and the city no longer has a daily paper, it’s pretty much a given that there’ll be low turnout, Kestenbaum said. Back in 2005 the number of elections started to be consolidated with a limit of four elections per year – in February, May, August and November. Since then, a lot of elections have been pushed to November, Kestenbaum said. [For example, the Ann Arbor Public Schools board of trustees election shifted from May to November, and the Ann Arbor District Library had to follow suit. Chronicle coverage: "School Election Change Would Affect Library" and "Ann Arbor Library Board Moves Elections"].

The state legislature is now considering a bill to force all school board elections to take place in November, Kestenbaum said. [.pdf of legislative analysis of House Bills 4005 and 4006 introduced by Kurt Heise, District 20]

He said there is also a proposal to change to just two elections per year – in May and November. That means that primarie would be in May, when more people have the opportunity to participate, not in the middle of the summer, in August. For most cities, the primary is the election, Kestenbaum said, so the increased opportunity for participation in the primary is important.

Thomas Partridge announced that he was there to speak on very important issues in the history of America. It was the eve of an important special education millage renewal. It’s vitally important that people show up at the polls, he said. He encouraged people to find their polling places – sometimes they’re assigned alternate locations.

Partridge also said it was important for everyone to take cognizance of the effort to recall Gov. Rick Snyder. He noted that the petition language had been the subject of a clarity hearing on April 29, and the election board had voted to find that the language was clear. The recall effort criticizes Gov. Snyder for turning his back on the most vulnerable residents like seniors and disabled people, public employees including school teachers, he said.

Comm/Comm: Economic Development

Stephen Rapundalo (Ward 2), as chair of the local development finance authority (LDFA), introduced Paul Krutko as the new CEO of Ann Arbor SPARK. He’d been selected after a national search. Krutko told councilmembers that he will give them a report on SPARK at their work session on May 9. Standing before the council, he said, is like being at home. Having spent 30 years working in economic development in cities like Cleveland, Jacksonville and San Jose, he is familiar with the city-manager form of government, he said.

Paul Krutko, CEO of Ann Arbor SPARK, approaches the podium to address the city council.

Krutko characterized Ann Arbor as a great community with great potential on the national and world stage. He said he can attest that companies can start in an incubator and become a major player on the world stage.

He said there is an excellent team at SPARK, which is a blessing and curse. When Michael Finney was tapped to lead the Michigan Economic Development Corp. by newly-elected Gov. Rick Snyder, he had taken key staffers with him to the state, Krutko said. So there are a number of key positions to fill at SPARK. That day was his 11th day on the job, he said. He concluded by thanking the councilmembers for the opportunity to appear before them.

Comm/Comm: Planning Commission Retreat

Tony Derezinski (Ward 2) is the city council’s representative to the city planning commission. He reported on the commission’s retreat on April 26, which had a theme of a regional approach to planning. The idea is to coordinate with other communities. At the retreat, the commission had focused on Washtenaw Avenue, the area’s busiest corridor. Commissioners had done a “community crawl” using an Ann Arbor Transportation Authority bus for the afternoon.

The bus stopped along the way at various points: across from Whole Foods; Arborland; and Glencoe Hills. At Glencoe Hills, the commission visited with Albert Berriz, CEO of McKinley, which owns that property. They also heard from Mandy Grewal, supervisor of Pittsfield Township, and Ypsilanti Township supervisor Brenda Stumbo, and a city of Ypsilanti planner. Derezinski called the corridor a good possibility for urban collaboration. The planning commission took a positive step in hearing what other communities thought, he concluded.

Comm/Comm: Wet Meadow – Buhr Park

Jeannine Palms was on hand to receive a mayoral proclamation honoring her work and those of several other volunteers in connection with the Buhr Park Wet Meadow Project. In her remarks, Palms traced the effort to establish the three wet meadows back to 1996. The plantings help protect Mallets Creek. She noted the educational aspect of the project.

Tony Derezinski (Ward 2) and county commissioner Yousef Rabhi chat before the start of the meeting.

Andy Brush, the webmaster for Washtenaw County, said he’d been volunteering with the project since he met Jeannine when a bulldozer was out working to sculpt the wet meadow. He thanked several people, including Amy Kuras (city parks planner), Jeff Dehring (former city parks planner who’s now with the county), Jason Frenzel (former Ann Arbor natural areas preservation volunteer coordinator, who’s now with the Huron River Watershed Council); Janis Bobrin (the county water resources commissioner), and all the members of the community who volunteered for the project.

Brush’s daughter Clare also addressed the council, telling them that she’d started volunteering with the wet meadow when she was three years old, still in preschool. Sophia Werthmann also dated her involvement to the age of three.

Also tracing his history with the project to his youth was current Washtenaw County commissioner Yousef Rabhi. The project meant a lot to him on a personal level, he said – it had shaped his University of Michigan degree. It had inspired him to run for public office. He took the opportunity to make a “shameless plug” for people to show up to the May 15 planting day – it goes from 10 a.m. to 4 p.m. at Buhr Park.

Comm/Comm: Wet Sanitary Sewer

Interim city administrator Tom Crawford, who is the city’s chief financial officer, spoke about the city’s sanitary sewer system. Due to the wet spring, local soils are now saturated, so any additional rain that falls becomes runoff. During the last week of April, from 7 a.m. Wednesday to 7 a.m. Thursday, he said, two inches of rain fell, and that runoff flowed into the Huron River.

During a three-hour period on April 28, the river peaked above flood stage, he said. [USGS flow rates for Huron River]. That morning, many trunk sewers were surcharged, running “more than full.” The system stands a risk of overflowing with additional rain. A few weeks of little or no rain will be required to dry the system out.

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

Next council meeting: May 16, 2011 at 7 p.m. in the second-floor council chambers at 301 E. Huron. [confirm date]

Seated is Roger Fraser, who attended his last Ann Arbor city council meeting on April 19 as city administrator – he gave a formal presentation to the council of the FY 2012 budget. He’s chatting before the meeting with the city’s chief financial officer, Tom Crawford, who was appointed interim administrator later in the evening. He’s not telling Crawford: “Whatever you do, don’t let the council tie your hands, see?” (Photos by the writer.)

After public hearings on the two medical marijuana laws, the council did not deliberate long in deciding to postpone both votes until its next meeting, on May 2. Substantive amendments that had been presented to councilmembers late that day for consideration made them reluctant to attempt grappling with the amendments in detail. The May 2 vote on the two laws will likely count only as their initial approval, assuming the amendments are adopted at that meeting. The laws would then need an additional final reading after May 2 before they are enacted.

A tweak to the city’s panhandling ordinance was given its second and final approval at the April 19 meeting. That change to the existing ordinance had come as a recommendation from a task force that worked for six months on the issue, following up on a longer effort in the early 2000s that had led to adopting the language in the existing ordinance.

The longest deliberations of the night involved a resolution of instruction to the council’s “mutually beneficial” committee, which is currently negotiating a new contract under which the Ann Arbor Downtown Development Authority would continue to manage the city’s public parking system. The direction given to the committee was not to stay firm with its previous bargaining position, but rather to escalate the city’s expectations for revenues from the public parking system.

Previously, the city’s committee had taken the position that the city should receive 16% of gross parking revenues in the first two years of a 10-year contract, and 17.5% in remaining years. That compared with the DDA’s position that the city should receive a flat 16% across all years. But at the meeting, the council voted to direct its committee to take the position that the city should receive a flat 18%. The council’s deliberations included comments directed towards the DDA that could fairly be described as inflammatory.

Called to the podium to comment on the parking revenue figures and the DDA’s overall financial health was the city’s chief financial officer, Tom Crawford. Later in the meeting, Crawford was appointed interim city administrator, effective April 28. Current administrator Roger Fraser is leaving the post to take a job as a deputy treasurer for the state of Michigan.

Although councilmembers did not comment on it, Fraser was attending his last meeting of the council as city administrator. And in his final major act, he gave a formal presentation to the council of his proposed fiscal year 2012 budget, as required by the city charter. The charter stipulates that the council will need to amend and approve the budget by May 16, its second meeting that month.

Parking Revenue

The longest deliberations of the night took place on the issue of how much revenue from the public parking system the city should take for use at its discretion. Those deliberations took place against the backdrop of the formal budget presentation by the city administrator for fiscal year 2012, which begins July 1, 2011.

Parking Revenue: Background – City-DDA Relations

In front of the council for consideration was a resolution giving instruction to its “mutually beneficial” committee, which is currently renegotiating a new contract under which the Ann Arbor Downtown Development Authority would continue to operate the city’s public parking system.

The city’s negotiating team – councilmembers Carsten Hohnke (Ward 5), Christopher Taylor (Ward 3) and Margie Teall (Ward 4) – had previously insisted that in the first two years of a 10-year contract, 16% of gross revenues to the public parking system would be allocated for use by the city at its discretion, with that amount rising to 17.5% of gross revenues in remaining years.

The DDA’s position had been consistent with the city’s previous request for the first two years of the contract, which would have the city withdraw 16% of gross revenues from the public parking system in each of those years. But the DDA’s current position is that for remaining years of the contract, the city’s share of gross parking revenues should remain at 16% instead of rising to 17.5%.

After the meeting, Christopher Taylor (Ward 3) gives an interview to Andrew Cluley, a reporter with WEMU, about the outcome of the mutually beneficial resolution of instruction.

The decision to bring a resolution of instruction to the council had come at a meeting between the respective mutually beneficial committees of the city council and the DDA on Monday morning, April 11. The resolution was meant to get a reading of the council’s support for either the DDA’s  position or the city committee’s position. [For detailed previous coverage: "City, DDA Continue to Talk Parking, Taxes"]

The existing contract under which the DDA manages the parking system is not based on a percentage of gross transfer. Instead, it’s composed of a transfer to the city’s street repair fund and “meter rent” of $1 million per year. Renewed in 2005 for a 10-year term, the contract allows for the city to transfer up to $2 million in a given year, provided the total amount transferred as “meter rent” does not exceed $10 million for the term of the contract. In each of the first five years of the contract, the city elected to transfer $2 million. Last year, the DDA transferred another $2 million as meter rent to the city, though it was not required under the current contract. [Chronicle coverage: "DDA OKs $2 Million Over Strong Dissent"]

Parking Revenue: Background – City FY 2012 Budget

Fraser’s formal budget presentation – which he previewed at a city council work session on April 11 and at a town hall meeting on April 13 – does not appear to depart in significant ways from the department-by-department budget impacts that department managers have presented to the council at a series of work sessions since the beginning of the year.

Highlights for 2012 include the layoff of five police officers, three other non-officer positions in the police department, and five firefighters. In other, non-safety services departments, Fraser is proposing – through retirements or already vacant positions or layoffs – to eliminate two positions in forestry, a partial position in facilities, one position in trash collection, a fleet mechanic, a management assistant, a Teamster supervisor, an accountant, two IT positions, and a court clerical position.

With additional reductions in FY 2013, the total employee count for the city would decrease to 688 down from a high of 1,005 in 2001 and from 848 in 1987.

Fraser’s proposed FY 2012 budget also includes a reduction of $116,000 in support for human services nonprofits. Other significant savings – roughly $475,000 – are realized through allocation of some forestry operations to the storm water fund. The FY 2012 also assumes that the street repair millage will be renewed by voters in the fall of 2011, and that the millage will subsume the city’s sidewalk repair program, freeing the Metro Act fund to absorb roughly $212,000 in general fund expenses like snow/ice removal and traffic island maintenance/mowing.

Parking Revenue: Background – “Shortfall” in FY 2012 Budget

At the city council work session on April 11, Fraser had responded to scripted questions from Hohnke and Taylor about the impact on the city’s ability to provide services, assuming the flat-16% scenario as compared to the 16-16-17.5% scenario. They were giving Fraser a chance to respond to the observation that had been raised during discussions by DDA board members: If there’s a perceived “shortfall” in the amount of parking revenues withdrawn from the parking system compared to previous years, then that “shortfall” amount is the same in the first two years of the contract, under either the city’s or the DDA’s scenario. That is, on their face, the two different scenarios would not appear to require different budget decisions this year or next (FY 12 and FY 13) – the two years for which the city is currently planning its budget. [Although the city adopts budgets one year at a time, it plans in two-year cycles.]

But Fraser contended at the April 11 work session that the two scenarios would require different choices this year. He explained that under the city’s 16-16-17.5% scenario, in the third year, the city’s public parking revenues would essentially be restored to their previous baseline revenue levels ($10,000 more, actually) – a baseline established over the course of the last six years at a bit less than $3 million total (when the “meter rent” of $2 million, a transfer to the city’s street fund, and two additional parking lots are all factored in). And starting in the fourth year of the contract, the extra revenue would start to compensate for the “shortfall” experienced in the first two years, erasing the cumulative effect of that shortfall between the sixth and seventh years of the contract, generating a total cumulative excess against the baseline of $1.15 million after the ninth year of the contract.

In contrast, the flat-16% scenario would leave a “shortfall” against the city’s baseline until sometime between year six and seven of the contract, at which point the city would start to recover some of the shortfall in previous years, but still with a cumulative deficit of $1.07 million against the baseline over the first nine years of the contract.

That amounts to the difference between a short-term issue and a structural deficit, said Fraser. So on the city’s 16-16-17.5% scenario it would be appropriate to make up the “shortfall” from the undesignated fund reserve. But on the flat-16% scenario, he said he would recommend taking action to deal with the structural issue in the first year it appeared – by eliminating four police or firefighters in FY 2012 to cover the roughly $400,000 “shortfall,” and two police or firefighters in FY 2013.

Parking Revenue: Background – What Is a Shortfall?

It’s worth noting that the city considers its baseline parking revenue (against which it measures a “shortfall” of revenues from the public parking system) to include all transfers made in the last year. Those transfers include two kinds of transfer that date back at least to 2005 – “meter rent” of up to $2 million per year, and a transfer to the city’s street repair fund, which has an escalator, but stands currently around $840,000. The rationale for the street fund transfer is that the city maintains the streets where on-street metered parking is located. The streets are analogous to a linear, roof-less parking structure/lot, so the logic is that the city should receive at least some portion of the meter revenues to maintain the “parking structure.”

Before the meeting, Joan Lowenstein (left), who is current chair of the Ann Arbor Downtown Development Authority board, chats with councilmembers Margie Teall (Ward 4) and Stephen Rapundalo (Ward 2).

During the April 19 council deliberations, Sabra Briere (Ward 1) said that when she heard that the city would be “held harmless” financially in the renegotiation of the new contract, she assumed that the baseline would include the $1 million annual meter rent figure in the old contract, not the maximum $2 million per year allowable. However, Carsten Hohnke (Ward 5) indicated to Briere that there had been a consensus by both the city and the DDA that it was the $2 million figure for meter rent that was the basis of the “hold harmless” assumption.

Another part of the baseline used by the city, but not necessarily by the DDA, is more recent in its history – revenues from the 415 W. Washington Lot and the Fifth & William Lot. In 2009, revenues from those two lots began to be transferred to the city outside the context of the city-DDA contract, and it’s not clear whether it was really considered as part of the “hold harmless” principle in the term sheet that guided the two “mutually beneficial” discussions. [Chronicle coverage for a timeline on those two lots: "City-DDA Parking Deal Possible"]

Revenues from those lots were part of an agreement between the city and the DDA to forestall the installation of parking meters in residential areas near the downtown, which the DDA opposed for a variety of reasons, among them a skepticism they would actually generate the levels of revenue the city was hoping for. [Chronicle coverage: "City to DDA on Meters: We're Skeptical"]

Although she did not try to argue the point at great length during the April 19 deliberations, Sandi Smith (Ward 1), who has also served on the DDA board since 2004, noted that if the $170,000 combined annual revenues from those two lots were left out of the calculation, the city would be held harmless over the life of a 10-year contract. In any case, the expectation was that those revenues were temporary, she said, with the idea that both parcels had a future that was different from a parking lot.

But based on the sentiments eventually expressed around the city council table on April 19, whether revenues from those two lots were part of the “hold harmless” calculation was of little interest to the council. Councilmembers were interested in the percentage of gross that would correspond to the total amount of parking revenue transferred last year – they wanted at least that amount this year, too. And when Marcia Higgins (Ward 4) heard the city’s CFO, Tom Crawford, say that the hold harmless amount would be roughly 19%, she proposed that number for all 10 years of the contract.

Parking Revenue: Council Deliberations – Intro

Higgins’ amendment to the resolution of instruction to the city’s mutual beneficial committee came after lengthy introductory remarks from Christopher Taylor (Ward 3). He set the context of the conversation about the resolution of instruction on the financial side of the contract by describing the progress made in other areas of the contract, contrasting the “narrative” part from the “numerical” part.

As part of that context, he also pointed to the resolution that the council had passed at its previous meeting, which tasked the DDA to lead a process to explore alternate uses for four city-owned downtown surface parking lots. [Chronicle coverage: "Ann Arbor Council Focuses on Downtown"]

Some key non-numerical areas of the contract include:

• Parking rates/hours to be set by DDA. The city council would not have a veto. [Currently the city council holds a veto on rate changes.] The contract stipulates that rates won’t be changed permanently without first: (1) announcing and providing written communication regarding details of the increase at a DDA board meeting; (2) at a subsequent board meeting, providing all members of the public a chance to speak before the DDA board on the matter – a public hearing; and (3) delaying any vote on the rate change until the board meeting following the public hearing.
• DDA to assist with directing parking enforcement. The contract calls for a Standing Committee to be formed that will meet for regular consultation about parking enforcement. The committee will consist of the executive director of the DDA, the parking manager, deputy police chief, community standards supervisor, and the city’s public services area administrator. This addresses the concern expressed by the DDA that while it already had the authority to set hours of enforcement (for example, for later in the evening), it could not actually schedule community standards officers to do the enforcement. [Currently, many downtown parkers pay for meters past 6 p.m. even though the meters aren't currently enforced that late.]
• City to report information to the DDA. The contract would call for the city to provide regular reports on its enforcement activity – data like how many citations have been issued and in which zones. The contract would also call for the city to provide reports to the DDA on its street maintenance activity in the downtown.
• Parking area defined. The contract provides a map designating exactly which areas the DDA has authority to decide placement of parking meters. Not included in the DDA parking area are any of the residential parking permit areas – a program over which the city will maintain its current control.

Later in deliberations, Sabra Briere (Ward 1) drew out for emphasis the fact that it was only the financial terms of the contract that the council was being asked to consider that evening, not the other aspects of the contract. Still, some of those non-financial terms drew criticism from Stephen Kunselman (Ward 3) during his comments, when he indicated that he would not support giving rate-setting authority to the DDA or allowing the DDA to decide to enforce meters in the evening. He also objected to defining a geographic area where the DDA would determine parking policy.

But Taylor began by portraying the DDA as a generous and cooperative party to the discussions on the contract. He said it was not a “commercial negotiation” – if it were, then the city would have been told to “pound sand” long ago, he said. However, the DDA had not behaved that way, said Taylor. He highlighted the fact that last year, the DDA had decided to make a $2 million transfer to the city that it was not required to make under the existing contract. It was a clear example of the DDA’s good faith, he said.

Parking Revenue: Council Deliberations – Interrogatories on Police

Taylor then called the city’s chief financial officer Tom Crawford to the podium, and the two then performed a dialogue that was virtually identical to the one that he and Hohnke had played out with city administrator Roger Fraser a week earlier at the council’s working session. To re-establish the city’s position that its 16-16-17.5% scenario was tenable without service cuts, but that the DDA’s flat-16% would require service cuts, Taylor and Crawford offered the following kind of back-and-forth:

Taylor: So under Ann Arbor’s [the city's] proposal, the revenue shortfall in the first two years is a “one time” occurrence, then it is reasonably anticipated that it would occur and there are no service cuts associated. Under the DDA proposal of a flat 16%, the administrator at our last work session stated that there would be permanent service cuts associated with that. Is that correct?
Crawford: Yes, that would be the recommendation. Because under a 16% flat scenario, even on the 16-16-17.5, in the out years it is a long time before that deficit is actually made up, and that is beyond, it’s assumption upon assumption to actually get that far. So to have a responsible balanced budget, I think you’ve gone too far. You really need to make the cuts if you’re going to be that low and don’t anticipate it being recovered in the near future.
Taylor: Okay, so under the, for colleagues, so under the flat 16[%] that would result in service cuts and the administrator stated his view that it was approximately four [public safety officers] in the first year, because of the $490,000 drop, and then at least two, he said two, I added the “at least,” thereafter going forward?
Crawford: Two to three.

Parking Revenue: Council Deliberations – Fund Balance (Bonds)

The DDA’s board had generally stated, Taylor reported, that its reluctance to adopt the city’s position in the negotiations over the financial terms of the contract was related to their concern about the undesignated fund balance of the DDA. So he then posed a series of questions to Crawford apparently intended to establish: (1) the DDA’s undesignated fund balance is not as important relative to the city’s fund balance; and (2) the reserve fund balances for the DDA on the city’s proposal of 16-16-17.5 would be reasonable, even in the lowest year in the 10-year projections.

Taylor: Okay. The DDA has articulated, the DDA’s description of their lack of comfort with this proposal is based upon what it does to its fund balance. We have stated in the course of our conversations that the city serves as a guarantor of the DDA. And although it’s useful and important for the DDA to maintain some fund balance, that the city serves as its guarantor, so that diminishes the risk of harm to the DDA in the event of a lower fund balance. Is that accurate?
Crawford: That is accurate. In fact the city owns the parking system. And where there has been debt issued on the parking system, the city has issued the debt. And so while the fees from the operation of the decks are the primary source of retiring the debt, the bonds that were issued are capital improvement bonds most recently, and those are in fact guaranteed by the city.
Taylor: Does the DDA fund balance play any role in the determination of Ann Arbor’s bond rating?
Crawford: Not really. The city itself, the DDA is small enough that it really doesn’t, it’s not a material factor, I wouldn’t say.
Taylor: Does the, is the city’s fund balance a material consideration in its bond rating?
Crawford: Yeah. There are many factors. But particularly the general fund balance is something they definitely look at.
Taylor: So if, and this is just for the purposes of fund bal- bond rating, well, why is a bond rating something important to consider?
Crawford: The bond rating, the largest impact of the bond rating financially to the city is in borrowing costs. Your borrowing costs will go up if your bond rating goes down.
Taylor: So if I understand it correctly, then, if we were to privilege the DDA’s fund balance over the city’s fund balance, you know, hold the DDA’s fund balance harmless, or preferred in deference to or over the city’s fund balance, that that at some point, we are not the rating agency, so we don’t know, but at some point that could reasonably be expected to have a negative impact on Ann Arbor’s fund balance [sic]? [Note: Taylor likely meant "bond rating."]
Crawford: Yeah, so to the extent that there is a priority that needs to be given to where fund balance is held, in my view, the city is where the fund balance would need to be maintained. The general fund is a fund that has the ability to transfer monies when it has them available to other funds. It’s not always the case that that can happen in reverse. So it is important to the city have, be healthy.

A few minutes later, mayor John Hieftje and Crawford reprised the same scene about how bond rating agencies evaluate the city:

Hieftje: The other point I wanted to go to, when the bond agencies take a look at who’s qualified and at what interest rate, is their view at the fund balance of the Downtown Development Authority or is their look at the fund balance of the city?
Crawford: The city. They’re evaluating the city.

Parking Revenue: Council Deliberations – Fund Balance (%)

As for the DDA’s fund balance under the city’s desired scenario, Taylor and Crawford seemed interested either in portraying the DDA’s reserves as: (1) adequate on the city’s desired scenario; or else (2) somewhat excessive on the DDA’s desired scenario.

It’s not clear which of those rhetorical points was intended, because Taylor asked for Crawford’s comment on the projected low point of 10.9% fund balance reserve under the DDA’s proposed flat-16% scenario – and the answer seemed to be that what the DDA was proposing wasn’t unreasonable. [When a fund balance is expressed as a percentage, it refers to the balance as a percentage of annual expenses.]

Taylor: … this gets us down from the DDA’s view in the critical year of [FY]15-16 to 10.9%. Is 10.9% a pretty health fund balance, do you think generally for the DDA in these economic times?
Crawford: Fund balance is a gray area, obviously something that people talk about. It’s important, you know each fund has its own characteristics of risk. And so it’s hard to say this is a healthy number or this is not a healthy number. But in my opinion, 10.9 for the risk profile is not unreasonable for that fund. And I say that because when you look at the city’s fund balance policy, which is a range from 8-12[%] and you look at the characteristics of the risk that we have, tax revenues, and then all the fee revenues, state shared revenues, we’re actually in an environment where almost everything is going down. It’s unusual, but it is occurring. In the DDA’s situation, you’re looking at the parking system. The parking system has appeared to be, history would tell us, it’s a fairly stable, more stable revenue source. So certainly expect it to be in that 8-12 range and maybe a little lower.

From later in the exchange between Taylor and Crawford, it appears that 10.9% – from the DDA’s preferred, flat-16% scenario – is still the one they were focused on:

Taylor: Would you have any concerns about the DDA’s fund balance in that critical dip year in the event that we moved to a 16-16-17.5 version?
Crawford: I would want to talk to the DDA more about it. If their plan is 10.9[%] and they’re going to be better than that, then I would not have an issue with that, because as you indicated, it’s my opinion that the TIF [tax increment finance] revenue is conservative in its projection. So no, I don’t have a problem with the 10.9 as it’s projected.

Later in the deliberations, Sandi Smith (Ward 1) focused the conversation on the figure associated with the projected low point for the DDA’s fund balance percentage under the city’s desired contract – the 16-16-17.5 scenario. That number is 7.4%, not the 10.9% that Taylor and Crawford had discussed earlier. She asked Crawford if he really was comfortable with that number. He confirmed that he was, although he allowed that he’d like it to be more – but that the city’s fund balance takes precedence over the DDA’s fund balance.

Smith also asked Crawford to reconcile his statements made around the time the city council was authorizing bonds for the DDA to build the South Fifth Avenue underground parking garage (now under construction) – statements to the effect that a fund balance of 12-15% or perhaps 15-18% would be appropriate. She asked him point blank what the difference was between then and now: What has changed?

Crawford began by saying that he didn’t recall giving the DDA a minimum fund balance that they needed to have. He described it as natural for an organization to save up fund balance reserves for a capital expenditure, then to spend down those reserves for a capital project and possibly dip into the fund balance to a point where it’s not comfortable. He said he didn’t see his comments in 2009 as inconsistent with what he is saying now.

The Chronicle reported Crawford’s comments at the Feb. 17, 2009 city council meeting:

Crawford reported that on looking at the DDA’s financial picture, he noticed that they don’t have a minimum reserve policy. He said he generally used 15-20% as a minimum reserve. In light of the need to maintain adequate reserves, he said that in his view the project is “not affordable with the plans they have.”

A followup email dated March 7, 2009 from then-councilmember Leigh Greden to DDA board members shed additional light on the minimum reserve figure:

I understand there has been some discussion at the DDA that the City does not have a minimum reserve policy similar to the one Tom Crawford has been recommending for the DDA. In fact, the City DOES have a minimum reserve policy, and has had such a policy — in writing – for years. The policy has been printed in the City’s Budget for years, and reads as follows: The City shall “maintain an undesignated General Fund balance with a minimum range of 8% to 12%; provided that when necessary use of these funds occurs, subsequent budgets will be planned for additions to fund balance to maintain this standard over a rolling five-year average.” Tom Crawford has repeatedly urged the City to exceed this policy by maintaining an undesignated General Fund reserve of 15%. Consistent with Tom’s recommendations, the City has exceeded our policy by maintaining an undesignated General Fund reserve of 15-20%.

The on-demand online video archive of CTN recordings no longer includes the Feb. 17, 2009 city council meeting – it existed previously here: [link to Feb. 17, 2009 meeting archive]. According to CTN, some meetings were deleted because of storage-space issues. The Chronicle requested to view a copy of the DVD of the meeting, but according to CTN, as of April 22, staff had not been able to locate the DVD of that meeting – it’s missing from the binder where it was stored. CTN staff continue their efforts to locate it.

Parking Revenue: Council Deliberations – Fund Balance (TIF)

The conversation about the DDA’s fund balance included a focus on the issue of anticipated TIF revenues to the DDA. The TIF (tax increment finance) district of the DDA, in broad strokes, works by capturing property taxes that would otherwise be collected by entities like the city of Ann Arbor, Washtenaw County, the Ann Arbor Transportation Authority, the Ann Arbor District Library, and Washtenaw Community College. The DDA’s capture is only from the value of improvements to properties (hence, the word “increment”) and does not apply to future appreciation on the increased value.

In its 10-year planning, the DDA has typically projected 2% growth in its TIF revenues. It’s also typically added TIF revenues to its 10-year projections only when the taxes are on the books. The Zaragon II and 601 S. Forest projects – primarily residential developments – are under construction in the DDA district:

Taylor: Do the TIF figures for the DDA’s 10-year plan include any monies associated with 601 S. Forest or Zaragon II?
Crawford: Not that I can tell.
Taylor: Do you have any notion as to, well, do you have any notion as to what those properties would gain the DDA in terms of TIF revenue?

Crawford’s recollection given to Taylor was in the ballpark of the exact numbers provided subsequently to The Chronicle by the city treasurer’s office: Zaragon II and 601 S. Forest projects are expected annually to generate $206,391 and $286,645, respectively.

The DDA has also not included TIF revenues in its 10-year projections that the city reports have already been filed with the state of Michigan for FY 2011. Specifically, the DDA’s 10-year plan indicates TIF revenue of $3,796,929 for FY 2011, but according to the city treasurer’s office, $3,908,576 is actually on the books for this year.

And looking ahead to future years, when construction on Zaragon II and 601 S. Forest is completed, that difference will be even greater. The city’s point, essentially, is that the DDA is under-representing in its 10-year plan what it could reasonably anticipate for TIF revenues. In response to Taylor’s prompt, Crawford responded:

Crawford: Off the top of my head, because I did not bring that with me, I believe, you know, I don’t know what year they pulled those, but we are seeing substantially more than that in [FY12]. … So the tax numbers have been close to finalized now, and we are in the neighborhood of $450,000 more, I would say, in this category.
Taylor: Would you believe it if I, well, I , I I, I didn’t remind you to bring this email, but for 411 [Lofts], we’re bringing in $408,000 in FY12, and for Zaragon I there was $271,000 brought in, is that about right? So that’s several hundred thousand dollars that are already in the bank for FY12 that are going to be going forward …

Mayor John Hieftje also stressed that TIF revenue has continued to climb – at double-digit pace in the last three years, while the city’s general fund tax revenue has shown decreases of 1-4% each year. Hieftje had stressed this point at a March 30 meeting of the DDA operations committee (known officially as the bricks and money committee).

Parking Revenue: Council Deliberations – Economic Development

Contrasted with comments y Taylor and Hieftje on increased TIF revenue, remarks by Sandi Smith (Ward 1) focused more on the parking fund within the DDA, as opposed to the overall fund balance of the DDA. The overall fund balance is shored up by TIF-capture revenues from a range of other taxing jurisdictions, not just the city of Ann Arbor’s. [Previous Chronicle coverage on that issue: "City, DDA Continue to Talk Parking, Taxes: It's about parking fund balances, not TIF revenues"]

Sandi Smith (Ward 1) arrives to the April 19 council meeting.

Smith was consistent at the April 19 meeting with a theme she’s highlighted in recent weeks on the use of the parking fund as an economic development tool. She pointed to the Village Green project planned for the First and Washington parcel, saying that if another opportunity like that came along, the DDA would not currently be in a position to take advantage of it. [The DDA has committed to paying back $9 million of bonds for the construction of a 244-space parking deck on the lower two stories of a 9-story, 156 unit residential development. According to Village Green, the purchase option is still on course to be completed this spring. That would result in a $3 million payment to the city of Ann Arbor, which will go into the construction fund for the new municipal center.]

Smith characterized the issue as a difference in philosophy: Is the parking system and its revenue stream an economic development tool, or is it a way to prop up the city’s general fund? She noted that it was particularly important to consider the city’s efforts in support of economic development, in light of the fact that the city’s economic development fund is being eliminated as part of the proposed FY 2012 budget. The remaining money in that fund – established originally in the amount of $2 million to provide monies as an incentive for Google to locate its offices in downtown Ann Arbor – was folded into the general fund reserve.

In responding to Smith’s talk of economic development, Stephen Kunselman (Ward 3) was not saying anything he has not said before: The city is not in the business of economic development – that is Ann Arbor SPARK‘s job, he said. He, as an elected official, is responsible for health, safety and welfare, not economic development, Kunselman said. He thinks of his role as providing good roads, clean water and good public safety.

Stephen Rapundalo (Ward 2) also challenged the notion that the DDA’s mission was economic development, citing the mission statement of the DDA, which refers to supporting public buildings. He remarked that if the mission of the DDA included economic development, then he’d like to see some kind of economic development plan, adding that he’d also like to see some kind of plan from Ann Arbor SPARK.

Smith responded to Rapundalo by pointing out that the second part of the DDA’s mission statement actually includes encouraging private investments:

The mission of the Ann Arbor Downtown Development Authority (DDA) is to undertake public improvements that have the greatest impact in strengthening the downtown area and attracting new private investments.

On the relationship of parking revenues to the city’s general fund, Mike Anglin (Ward 5) was willing to say it out loud: To fund the city’s request for additional parking revenue money, the council was basically asking the DDA to raise parking rates.

Along those lines, during the course of the mutually beneficial committee negotiations, an exasperated Roger Hewitt on the DDA board suggested at one point that the arrangement should simply be year-to-year, and should work on a two-step process each year: (1) The city tells the DDA how much money it would like to take out of the parking system; and (2) the DDA sets rates to generate that amount of revenue. Hewitt also raised the specter of signage on parking meters and parking structures indicating what percentage of a downtown public parking dollar goes to the city’s general fund as a “tax.”

The idea received little traction. At that committee meeting, the DDA’s executive director, Susan Pollay, cautioned that demand for parking was at least somewhat elastic. At some price point, people would begin to seek alternatives to paying for public parking or opt out of visiting downtown Ann Arbor.

During the April 19 council deliberations, Hewitt was invited to the podium to report on the level of parking demand. He told councilmembers that revenues continued to increase, but that the increased revenue over the last two years did not match the increase in parking rates. That could indicate a slight softening of demand.

Parking Revenue: Council Deliberations – Committee’s Role

The city’s mutually beneficial committee had essentially brought two choices on a percentage-of-gross figure to their council colleagues for consideration: (1) a 16-16-17.5% scenario; or (2) a flat-16% scenario. Early in deliberations, it became clear that there was considerable support for a third option, which was for the city’s negotiating committee to return to their DDA counterparts with an escalated offer. Marcia Higgins (Ward 4) began discussion on that figure at 19%.

Met with resistance from members of the city’s committee, Higgins noted at more than one point during deliberations that the purpose of the resolution was for the council to give the committee direction. The committee had come to ask the council for direction, she observed, but the committee responded by saying it was uncomfortable going back with the higher request – she asked if they would really negotiate based on the council’s direction.

Left to right: Ann Arbor Downtown Development Authority board members John Splitt and Roger Hewitt, and the city’s CFO, Tom Crawford.

Higgins’ remarks along these lines were consistent with the theme she’d highlighted at the council’s previous meeting, when it had authorized the DDA to lead a process to explore alternate uses of city-owned downtown surface parking lots. On that occasion, the city’s negotiating committee had resisted other councilmembers’ desire to limit the scope of the DDA’s work to just four of the downtown city-owned properties. Higgins had said the last time she checked, a city council meeting was an opportunity for councilmembers to give their opinions, which was what she was doing.

At the April 19 council meeting, Carsten Hohnke – a member of the committee – responded to Higgins by saying he would debate the percentage figure at that meeting, but once the number was decided, he would negotiate that number.

Taylor’s take on the issue was that he would accept the council’s direction on the matter, but that did not mean he felt it was calculated for wisdom or success.

On the issue of the relationship of the council to its negotiating committee, Sabra Briere (Ward 1) noted that the DDA’s committee had consulted with the entire DDA board multiple times to get explicit direction, but this was the first time the city council had been asked for direction. She said she was sorry that this left the committee with little time to resolve the issue.

By way of logistical background, the respective committees of the city and the DDA are scheduled to meet again on April 25. The full DDA board will meet at noon on May 2 and the council will meet the same day at 7 p.m. The time is the usual one for the council, but the DDA’s meeting was shifted from the following Wednesday, to allow more board members to attend.

The May 2 DDA board meeting will be the last opportunity for the DDA board to alter its already-approved budget, before the city council must approve the city’s budget – at the second meeting of the month, on May 16. The DDA’s approved budget at this point includes a transfer of parking revenues to the city of around $1 million, covering the street repair fund money, and money from two specific parking lots – at 415 W. Washington and Fifth & William.

When the city votes on May 16, it will be giving final approval to the DDA’s budget, which is part of the city’s budget.

Parking Revenue: Council Deliberations – DDA as Arm of the City

The fact that the city council must ultimately approve the DDA’s budget was a point Stephen Kunselman (Ward 3) made during deliberations.

By way of historical background, that approval is not simply a formality – on at least one occasion previously, the council has reached an arm into the DDA’s already approved budget and changed an item on the same night it approved the city’s budget as a whole. From the May 21, 2007 city council minutes [Fund 0003 is the TIF fund]:

[FY 2008 budget] Amendment 11

Resolved, that the Downtown Development Authority fund (0003) expenditure budget be decreased by $1,600,000 to reduce the appropriated reserves for future capital construction projects.

On a voice vote, the Mayor [John Hieftje] declared the motion carried with one dissenting vote made by Councilmember [Joan] Lowenstein.

The possibility that the city council could change the DDA’s budget is affecting how the DDA is currently proceeding with its energy saving grant program. The budget approved by the DDA board includes $100,000 in FY 2012 for that program. But Dave Konkle – former energy manager for the city and now consulting for the DDA on its energy saving grant program – has stressed at recent meetings of the DDA’s partnerships committee that he cannot give assurances to potential grant recipients that the money will be there – until the city council approves the budget.

During deliberations at the April 19 council meeting, mayor John Hieftje reiterated his view, expressed often in various contexts, that the DDA is not an independent body, but rather an arm of the city. At a recent DDA board meeting – the mayor sits on that board – Hieftje compared the DDA to a child, whose parent must co-sign for a loan.

Christopher Taylor (Ward 3) looks on as his ward colleague Stephen Kunselman (Ward 3) weighs in against Taylor’s view that the city should accept a 16-16-17.5% arrangement for a new contract with the DDA.

Kunselman echoed that sentiment, saying that the DDA is like a teenager that needs some tough love. He asserted the primacy of the city council, as elected officials, over the members of the DDA board, which has members who are nominated for appointment by the mayor and confirmed by the council. Kunselman allowed that everyone needed to come together as a team, but he was careful to single out the city councilmembers as the “star players of the team.”

In his assessment of the situation, city administrator Roger Fraser said he was surprised that the council was even still considering “subsidizing” the DDA. The rest of the city’s departments had been skinnied down, he said, yet no one was asking the question of whether we should have “less DDA.”

At one point Taylor noted that the conversation around the table seemed to suggest an assumption that city council could act without the DDA’s assent, which prompted the mayor to interject his disagreement – a breach of parliamentary protocol that appeared to startle Taylor briefly:

Taylor: We are having this conversation as if it is entirely our choice …
Hieftje: … no we’re not!
Taylor: [4-second pause] I understand, uh, I, I, well, it is my perception that that is the nature of this conversation, and I would just recollect to my colleagues that that is not the case …

Parking Revenue: Council Deliberations – 19% Tactic

The opening gambit of a request for 19% of gross parking revenues was based on Crawford’s answer to the question of what the “hold harmless” percentage would be if it were applied to just FY 2012. Marcia Higgins (Ward 4) proposed that as an amendment to the resolution before the council.

She tipped the fact that it was a negotiating tactic, when mayor John Hieftje eventually invited her to reduce the number to 18% in order to achieve a greater consensus. Her reply was that she was “not yet” ready. Only just before the vote on her amendment did she change the figure to 18%, with agreement from Kunselman, who was the seconder on the amendment to 19%.

Other councilmembers, including members of the negotiating committee, expressed concern that 19% was over the top – too far in the other direction. Sabra Briere (Ward 1) noted, however, that if the city’s need is great this year, and if the DDA’s burden to the parking fund is somewhat less this year [because it's using some TIF dollars to shoulder the burden of down payment and bond payments on the underground parking garage], then perhaps the city should be asking for 20% in the initial year, with less in subsequent years.

Parking Revenue: Council Deliberations – 18% Vote

The vote on the amendment of the resolution of instruction to set the percentage-of-gross parking revenue figure at 18% was 8-3. Hohnke – a member of the negotiating committee that had argued for the 16-16-17.5% scenario – joined the majority as the last person to weigh in on the roll call vote.

Dissenting were the other two members of the committee, Teall and Taylor, and Smith, who serves on the DDA board.

Outcome on amendment: The council voted 8-3 to amend the resolution of instruction to negotiate based on an 18% figure across all 10 years of a 10-year contract.

The vote tally on the resolution as amended changed by one from the outcome on the amendment. Teall said that the consensus of the council was clear and that she would thus support the resolution.

Outcome: The council voted to direct the committee to ask the DDA for 18% of gross parking revenues in each year of a 10-year contract. The vote was 9-2, with dissent from Christopher Taylor (Ward 3) and Sandi Smith (Ward 1).

Medical Marijuana

In front of the council for consideration were votes on both the zoning and licensing ordinances that were being considered for their final votes.

The medical marijuana zoning ordinance received its initial approval by the council at its Oct. 18, 2010 meeting. The delay since the initial Oct. 18, 2010 zoning vote stems from the city of Ann Arbor’s strategy in legislating zoning and licensing of medical marijuana businesses – that strategy has been to bring both licensing and zoning before the city council at the same time for a final vote.

The context for development of zoning regulations was set at the council’s Aug. 5, 2010 meeting, when councilmembers voted to impose a moratorium on the use of property in the city for medical marijuana dispensaries or cultivation facilities. The council also directed the city’s planning commission to develop zoning regulations for medical marijuana businesses.

Subsequently, the city attorney’s office also began working on a licensing system. The council undertook several amendments to the licensing proposal at four of its meetings over the last three months: on Jan. 3, Feb. 7, March 7 and March 21. The council finally gave initial approval to the licensing proposal at its March 21 meeting. [.pdf of Michigan Medical Marijuana Act]

Medical Marijuana: Public Hearings

Two separate public hearings were held – one for the licensing and one of the zoning regulations. Many of the same people spoke at both, and many had spoken previously to the council. Here’s a sampling from both April 19 hearings:

Weighing in against the idea of ordinances that provide a locally legal way for people to gain access to medical marijuana was Thomas Partridge. He called on the council to freeze progress of the ordinances. He pointed to national and state news reports of illegal shipments of drugs and cautioned against the violence that is associated with illegal drugs. He said he was committed to not using illegal drugs. He said that marijuana use is intertwined with other addictive drug uses.

After the public hearing, Dennis Hayes (right) and Thomas Partridge (left) discuss their differing views on medical marijuana.

Countering Partridge was Tim Beck, of the Detroit Coalition for Compassionate Care, who said that in the two years the Michigan Marijuana Law has been in effect, Ann Arbor has not fallen into a wave of crime. On the issue of regulating caregivers, he encouraged the council to “let it ride.” He pointed out that in Grand Rapids, when a similar law was enacted, no one ever applied for a license.

Gersh Avery introduced himself as a resident of Dexter, and founder of the Cannabis Cancer Project – which aims to develop cancer-killing agents from essential oils extracted from the cannabis plant. He claimed some success already, and stressed that the goal is not merely symptom relief, but rather to kill cancer and cure other diseases. He pointed to Crohn’s disease as an example of a category of illnesses that may be responsive to treatment with essential oils. Countering Partridge’s point about addictive behavior, he said that a recent study showed that prescription drugs are five-times more likely to be a gateway drug than marijuana is.

Rhory Gould introduced himself as representing Arborside Health and Wellness. He said the proposed number of 15-20 licenses would not be enough to serve Ann Arbor. He suggested that adding 5-10 more would mean 5-10 more businesses and 30-60 more jobs. He criticized the idea of requiring dispensaries to maintain a permanent list of suppliers, saying it would do more harm than good. He also complained about the length of the proposed moratorium, noting that businesses that began operation before it was imposed and are grandfathered in are happy with it.

Along with several other demonstrators outside city hall before the meeting, Chuck Ream told the council that the regulation of cultivation facilities and the requirement of list-keeping included in the ordinances needs to be removed. He also criticized city attorney Stephen Postema for his handling of the medical marijuana issue.

Postema was also sharply criticized by Trena Moss, who described an encounter with Postema on Liberty Street when she was collecting petition signatures for the medical marijuana referendum. [Postema sometimes walks to work downtown along Liberty Street from his home in the Eberwhite neighborhood.] She asked him if he remembered the encounter, which he apparently did not. She told him that she remembered him well, and reported that he’d told her she was wasting his time – that he and his friends wouldn’t let it pass, even if they collected enough signatures to get the measure placed on the ballot. She asked him if perhaps he had something personal against medical marijuana patients, and that if he did, then he should perhaps step aside.

During council deliberations, Carsten Hohnke (Ward 5) said that Postema had accepted the guidance of the council in working on Ann Arbor’s medical marijuana ordinances.

Dennis Hayes addressed the 1,000-foot setbacks required in the zoning regulations by suggesting either 500 or 200 foot setbacks. He also encouraged the council to consider office districts as allowable locations for dispensaries under the zoning code.

Several speakers, including Matthew Abel, noted that the federal government is interested in getting information about caregivers and patients. Abel also noted that caregivers should be able to grow the amount of marijuana allowable under the state law without restrictions. The only real concern that the council should be addressing in legislation on growing, he said, was the possibility that people could buy houses for the sole purpose of setting them up as “grows.”

Medical Marijuana: Council Deliberations

The number of amendments that had been proposed by councilmembers and the city attorney’s office as late as the afternoon of April 19 led Sandi Smith (Ward 1) to start deliberations with the suggestion that the council delay the votes on both measures until May 2. Smith noted that councilmembers had received the most recent updates in proposed amendments at 3:38 p.m. and 6:29 p.m. that same day – the council meeting’s scheduled start was 7 p.m.

Sabra Briere (Ward 1) said that it was difficult to provide the public with the material that the council would be considering in advance of the meeting, because she’d been told by the city attorney’s office that it had to be vetted by the whole council before it could be shared publicly. Seated next to Briere, city attorney Stephen Postema told her that proposed changes suggested by councilmembers or by others could be shared with the public. She replied: “I was not told that.”

Subsequent back-and-forth among councilmembers, the mayor and the city attorney confirmed that if proposed amendments are passed on May 2, it would likely reset both ordinances to their first readings, which would require that they receive an additional second reading.

In discussing postponement, some councilmembers pointed to specific issues that they wanted to focus on in the postponed deliberations. Christopher Taylor (Ward 3) indicated he was not certain that the proposed legislation yet achieved the goal of providing a “safe harbor” for caregivers.

Carsten Hohnke (Ward 5) and Tony Derezinski (Ward 2) check over the April 19 agenda.

Taylor said that on further reflection, he felt that patients who are availing themselves of the opportunity to gain access to medical marijuana do so with the full knowledge that the product they’re getting has not been certified with the rigor that the federal Food and Drug Administration would apply. So he alerted his colleagues to the idea that he might be more inclined to support some kind of disclaimer

Carsten Hohnke (Ward 5) and mayor John Hieftje responded to the suggestion raised during public commentary that the city attorney or councilmembers had personal issues against marijuana. Hieftje said he would support legalization of marijuana, if a way could be found around the risks posed to young people. Hohnke said his background in neuroscience led him to conclude that the medical benefit of marijuana is well documented.

To prepare for future deliberations, Briere asked her colleagues to reflect on the appropriateness of licensing cultivation facilities. She pointed out that home occupation businesses are not required to be licensed under the proposed ordinances, but cultivation facilities are. The difference, she said, boils down to whether growing by a caregiver takes place in one’s own home or in some other location (making it a “cultivation facility”). She also pointed to a newly proposed amendment, which requires a zoning compliance permit, as potentially posing problems by creating records about caregivers, which the city might be forced to produce, even if the city were to fight a request to produce those records.

Following up on Briere’s remarks, Stephen Kunsleman (Ward 3) gave notice to his colleagues that he would not be supporting the text that refers to zoning compliance permits.

Outcome: The council voted unanimously to postpone deliberations on the zoning and licensing of medical marijuana businesses until May 2.

Interim Administrator

Added to the council’s agenda at the start of the meeting was a closed session to discuss applications that had been solicited internal to the city for the interim city administrator’s job. The section of Michigan’s Open Meetings Act allowing for a closed session under those circumstances reads:

15.268 Closed sessions; permissible purposes. Sec. 8. A public body may meet in a closed session only for the following purposes: …
(f) To review and consider the contents of an application for employment or appointment to a public office if the candidate requests that the application remain confidential. However, except as otherwise provided in this subdivision, all interviews by a public body for employment or appointment to a public office shall be held in an open meeting pursuant to this act.

After the closed session, two items were added to the agenda – one to establish a process for hiring the permanent administrator, and another to appoint an interim. The city’s current administrator, Roger Fraser, announced at the end of February that he would be resigning to take a job with the state of Michigan as a deputy treasurer.

Marcia Higgins (Ward 4) is chair of the search committee, which brought both recommendations to the council. Other members of that committee were: Sabra Briere (Ward 1), Tony Derezinski (Ward 2), Christopher Taylor (Ward 3) and mayor John Hieftje.

Higgins reviewed the search committee’s work over the last few weeks, which included a total of four meetings. The committee’s recommendation was to appoint Tom Crawford as interim city administrator. Crawford currently serves as the city’s chief financial officer.

The job for permanent city administrator will now be posted and advertised. Affion Public will be contracted to assist the city’s human resources department with the search – for a flat fee of $18,000 plus additional travel expenses expected to total less than $25,000. The targeted salary range for recruitment will be $145,000-$150,000.

Affion’s work will begin with a visit to Ann Arbor in the first week of May to meet with councilmembers, city employees, and members of the public to get a clearer idea of the intangible qualities that are desired in an applicant. An ideal timeline would include closing the application window after 30 days, using late May and June to winnow the field and interview candidates, with an offer to be made by July 1. On the ideal timeline, the new administrator would start work on Aug. 1.

Although the city’s public services area administrator Sue McCormick had been widely assumed to be a natural choice for interim, a condition on the interim appointment was that the person would not be a candidate for the permanent job. [Previous Chronicle coverage: "Ann Arbor Fills City Administrator Job"]

Outcome: The council voted unanimously to adopt the hiring process recommended by the search committee and to appoint Tom Crawford as interim city administrator, effective April 28, 2011.

Panhandling Ordinance

In front of the council for consideration was final approval to a revision to the city’s code on disorderly conduct – the part dealing with solicitation, which is more commonly known as panhandling. All ordinances must be approved on two separate votes before the council, the second of which must be preceded by a public hearing. The panhandling ordinance revision received its initial approval from the council at its April 4 meeting.

The revised ordinance prohibits panhandling in one generally-defined additional location (in or within 12 feet of a public alley) and one specific location (within 12 feet of the downtown location of the Ann Arbor District Library.) [.pdf of revisions to existing ordinance as they were drafted at the start of the April 19, 2011 meeting]

The proposal to revise the law grew out of a street outreach task force, which was appointed at the council’s Sept. 20, 2010 meeting and charged with developing cost-effective recommendations for addressing the issue of downtown panhandling and the needs of those who panhandle. [Previous Chronicle coverage: "Ann Arbor Task Force Consults Panhandlers"]

At the council’s March 21, 2011 meeting, the council received a report from two members of the task force – Maggie Ladd, executive director of the South University Area Association, and Charles Coleman, a project coordinator with Dawn Farm. A recommendation contained in the report included revising the city’s ordinance on solicitation to prohibit panhandling in additional locations. [.pdf of street outreach task force report]

Panhandling: Public Hearing

Four people spoke during the public hearing on the ordinance. Thomas Partridge said it was a very curious time to be considering the ordinance – a time when the city, county and state all have budget concerns. He characterized the change in the law as a measure that would “clamp down” on the most vulnerable members of society. He called for postponing the vote, until the sociological and psychological ramifications could be studied on an academic basis. Partridge noted that politicians also ask for handouts when they ask for contributions to their political campaigns.

Bob Dascola introduced himself as the owner of a two-generation family business since 1939 and a board member of the State Street Area Association. He told the council that he had been a member of the last task force that had addressed the issue of downtown panhandling, in 2001-2003. He told the council that they’d identified three kinds of panhandlers: (1) substance abusers; (2) the mentally ill; and (3) opportunists. He said that most of the panhandlers in the area of his barbershop are opportunists. He described the previous ordinance revision as raising the bar for acceptable behavior in the community, and urged support for the current ordinance revision and the other recommendations of the task force.

Bob Dascola (left) and Peter Ludt (right) seated in the audience before the start of the April 19 council meeting.

Ray Detter introduced himself as the head of the downtown citizens advisory council, saying that he’d participated in the previous effort in 2001-2003. He noted that last summer there had been a noticeably worsening situation. He said that a member of the DCAC had walked from her home on East Liberty to the White Market on William, and had been accosted four times by panhandlers. They’d taken up the issue with chief of police Barnett Jones, deputy chief John Seto and Ward 1 representative Sabra Briere. Of the new task force that had been formed out of those communications, Detter joked, “I was on it, but I still say it did an excellent job.”

Detter stressed that no one needs to panhandle due to hunger, given the various resources in the community. He said that almost universally, panhandlers are not homeless. He noted that the recommendation of the task force was to emphasize education of people who might be inclined to give money to panhandlers – the marketing slogan is “Have a heart, give smart.”

Peter Ludt introduced himself as a board member of the State Street Area Association and a member of the street outreach task force. He said he was a manager of a coffee shop on the 300 block of State Street and had resorted to calling the police department about panhandlers on more than one occasion. He affirmed the First Amendment rights of people to panhandle, but also noted that some people feel uncomfortable when they’re solicited. He recognized that with the city’s budget cuts, the beat cops would not be brought back. Most people, he said, don’t know if the activity they are witnessing is illegal. The number one message, he said, is education.

Panhandling: Council Deliberations

Because Sabra Briere (Ward 1), who chaired the task force, had briefly left the table when the council came to the agenda item, mayor John Hieftje filled the time by noting that he was around when the previous task force had been appointed. He told the council that professionals say that giving panhandlers money is not the correct thing to do. He noted that almost all panhandlers are not homeless and that free meals are available three times a day in Ann Arbor. He said that previously the downtown merchants had tried collection boxes placed at cash registers to provide an alternative way for people to give cash.

Andrew LaBarre, new vice president for government affairs for the Ann Arbor/Ypsilanti Chamber of Commerce, before the meeting. A former staffer for Congressman John Dingell, he apologized when he introduced himself to the council for not wearing a jacket. He had locked it inside his new office and was without a key.

Hieftje said that the city respected the right of people to solicit, and he complimented the task force’s work

When she returned, Briere stressed that the ordinance change is just one of three “legs in the stool,” the others being education and community commitment.

Tony Derezinski (Ward 2) said he’d received a lot of communications from constituents about the ordinance, including a long message from a law school student and comments from merchants at a meeting of the Main Street Area Association. He said it would be important to evaluate how well the ordinance is serving its intended purpose.

That same evening, Andrew LaBarre introduced himself to the council as the new vice president of government affairs for the Ann Arbor/Ypsilanti Regional Chamber of Commerce. The chamber is related to the panhandling ordinance inasmuch as the mayor’s downtown marketing task force was tapped by the panhandling task force as leading the educational component of its recommendations. At recent meetings of the council and the DDA board, Hieftje has pointed to the vacancy at the chamber, left by Kyle Mazurek, as the reason that his marketing task force has been on hiatus.

Outcome: The council voted unanimously to give final approval to the ordinance revision.

Former Bessenberg Bindery Site Plan

In front of the council for consideration was a site plan for 215 N. Fifth Ave. – formerly the site of the Bessenberg Bindery, which has moved to the Thomson-Shore Inc. facility in Dexter. The Fifth Avenue property is now owned by Jon and Lisa Rye. Jon Rye, a University of Michigan alumnus, is president and chairman of Greenfield Partners and Greenfield Commercial Credit, both located in Bloomfield Hills.

The plan calls for tearing down the one-story building and constructing a two-story, single-family, owner-occupied house with an attached two-car garage. The entrance will be oriented to the north, and the garage will be accessed from the public alley on the west side of the site. The site is directly north of the Armory condos and south of a two-story residential rental property.

The project requires a site plan because the single-family house is on property that’s not zoned solely for residential purposes. It’s zoned D2 (downtown interface) and is located in the Old Fourth Ward Historic District. The Ann Arbor historic district commission already reviewed the site plan and issued a certificate of appropriateness at its Feb. 10, 2011 meeting. The Ann Arbor city planning commission had given its recommendation for approval of the site plan at its March 15, 2011 meeting.

During the public hearing at the city council meeting, only one person spoke – the architect on the project, Dick Mitchell, of the Ann Arbor firm Mitchell and Mouat. He stressed that the planned design met the requirements of the zoning ordinance with respect to setbacks and height, and had been approved by the city’s historic district commission. The design was also supported by the downtown citizens advisory council, he said. He indicated that he was available for any questions.

Later in the meeting, when the council’s vote was taken, there were no questions or deliberations by the council. Mayor John Hieftje thanked Mitchell for sitting through the meeting, which had included lengthy deliberations on the contract under which the Ann Arbor Downtown Development Authority manages the city’s parking contract.

Outcome: The council voted unanimously to approve the site plan for 215 N. Fifth Ave.

Near North PUD

The council was asked to consider an authorization for revisions to the elevations of the Near North planned unit development (PUD) affordable housing project on North Main Street. The city council originally approved rezoning for the project – a four-story, 39-unit mixed use residential building on a 1.19-acre site – on Sept. 21, 2009.

The changes include modifying the locations where exterior materials – glazing, panelized exterior cladding materials, plus accent materials – will be used. Roof lines have also been proposed, but the building is still under the maximum height permitted. The changes, which were prompted by alterations to the interior layout of the building, were presented to the surrounding neighbors at a meeting on March 17, 2011.

Developer Bill Godfrey of Three Oaks was present at the meeting, but was not asked to the podium to answer any questions from the council.

Outcome: The council voted unanimously to approve the changes to the Near North PUD.

Loan Forgiveness

In front of the council for consideration was approval of a policy that grants to the city administrator the authority to forgive certain loans made by the city on affordable housing units that have affordable housing covenants. The city administrator would need to determine that loan forgiveness is necessary to protect the long-term affordability of the housing, and that loan forgiveness would facilitate the transfer of ownership to other income-qualified purchasers.

The request to have such a policy came from the office of community development. It arose from two recent foreclosures on properties in Stone School Townhomes, one of three housing developments where the city currently has affordable housing covenants. The other two are Ashley Mews and Northside Glen.

When a property is foreclosed, the affordable housing covenant automatically terminates.

Outcome: The council voted unanimously without comment to approve the loan forgiveness policy.

City Energy, Emissions Goals

On the agenda was a resolution setting a goal of reducing greenhouse gas emissions in Ann Arbor’s municipal operations by 50%. The baseline standard for the percentage reduction would be emission levels in 2000, which measured 46,435 tons of carbon dioxide equivalent (CDE). The city’s goal is to achieve the 50% reduction target by 2015. The city’s most recent figures, from 2010, put CDE emissions for municipal operations at 34,445 tons, which is roughly a 26% reduction from 2000 levels.

As part of the same resolution, the council also set a goal of reducing greenhouse gas emissions by 8% throughout the community for the same time period. In 2000, the city estimates the entire city produced 2,087,463 tons of CDE, which has improved little in the most recent year for which figures are available, 2009: 2,054,221 tons.

The resolution also updated goals on renewable energy use. The city had previously had a goal of 20% renewable energy for municipal operations by 2010, which was subsequently increased to 30%. The 20% target was met – when the figure was rounded upward only slightly. The resolution approved on April 19, 2011 reset the goal of 30% renewable energy in municipal operations and 5% community-wide by 2015.

The resolution also directs city staff to consider options to purchase long-term, fixed-rate renewable electricity from Michigan wind turbines.

Outcome: The council voted unanimously without comment to approve the reset goals.

Police Car Purchase

In front of the council for consideration was approval of the purchase of two police cars totaling $54,625 – a Chevy Caprice for $25,604 and a Chevy Tahoe for $29,021 from Shaheen Chevrolet. At the council’s Feb. 22, 2011 meeting, it had authorized the purchase of five police cars – Crown Victoria Police Interceptors – for $20,730 each, a total of $103,650.

But at that meeting, city administrator Roger Fraser had indicated that the city might opt not to purchase all five. From The Chronicle’s report of that meeting: “The city might decide not to buy all five Crown Victorias, and instead purchase a new model that Chevrolet is making available in late summer or early fall, Fraser said.”

The two purchases authorized on April 19 will replace cars under the police union’s contract that stipulates cars cannot exceed 80,000 miles or a six-year life. Adding the Caprice to the Dodge Charger that the department purchased previously will allow the Ann Arbor Police Department to assess how it wants to stock its fleet in the future, given that the Crown Victoria is going out of production. A third option besides the Caprice and the Charger would be whatever model Ford uses to replace the Crown Victoria.

The Chevys that were authorized by the Ann Arbor city council would be purchased under the cooperative bidding programs of the State of Michigan, Oakland County, and Macomb County. Shaheen Chevrolet in Lansing was the lowest bidder under the State of Michigan’s program.

Outcome: The council voted without comment to approve the purchases of the Chevy police cars.

Communications and Comment

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

Comm/Comm: Parkinson’s Disease Awareness

Kathleen Russell and others were on hand to receive a mayoral proclamation designating April as Parkinson’s Awareness Month.

Comm/Comm: Volunteer of the Month

John Dentler was honored as volunteer of the month for his service to the Ann Arbor police department.

Comm/Comm: Historical Perspective

In her communications time, Sabra Briere (Ward 1) noted that April 19 is the second night of Passover, which is about liberation through sacrifice. She also noted that on the same day 236 years ago, the first shot in the Revolutionary War was fired at Lexington and Concord. She noted that on that evening the council was engaged in politics. She mused that John and Sam Adams would be surprised, perhaps, at the topics they would be discussing. She figured that Abigail Adams would be pleased that there were women at the table [Briere, Sandy Smith, Margie Teall and Marcia Higgins]. She allowed, however, that they have a long way yet to go.

Comm/Comm: Library Lot

Mike Anglin (Ward 5) noted that the Library Lot request for proposals (RFP) had been put aside, but that the community continues to discuss the issue. He wondered who the stakeholders will be. He noted that some city councilmembers had attended a recent meeting of the city’s Democratic Party club where the issue of the Library Lot had been discussed.

Comm/Comm: What Would Christ Say?

As the only speaker who signed up for public commentary reserved time at the start of the meeting, Thomas Partridge introduced himself as a Washtenaw County and Ann Arbor city Democratic Party member. He called the council’s attention to the fact that April is a particularly prayerful month – the month of Palm Sunday, Good Friday and Easter. He posed the same question that he has during recent weeks at public commentary at a range of different public meetings: What would Christ say? Would Christ fund affordable housing, education, and transportation for the most vulnerable? Partridge declared that he is a Christian and an advocate for seniors, disabled people, children, middle class families, teachers and other public employees. He encouraged people to recall Gov. Rick Snyder.

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

Next council meeting: May 2, 2011 at 7 p.m. in the second-floor council chambers at city hall, 301 E. Huron St. [confirm date]

The medical marijuana zoning ordinance received its initial approval by the council at its Oct. 18, 2010 meeting.

The delay since the initial Oct. 18, 2010 zoning vote stems from the city of Ann Arbor’s strategy in legislating zoning and licensing of medical marijuana businesses – that strategy has been to bring both licensing and zoning before the city council at the same time for a final vote.

The context for development of zoning regulations was set at the council’s Aug. 5, 2010 meeting, when councilmembers voted to impose a moratorium on the use of property in the city for medical marijuana dispensaries or cultivation facilities. The council also directed the city’s planning commission to develop zoning regulations for medical marijuana businesses.

Subsequently, the city attorney’s office also began working on a licensing system. The council undertook several amendments to the licensing proposal at four of its meetings over the last three months: on Jan. 3, Feb. 7,  March 7 and March 21. The council finally gave initial approval to the licensing proposal at its March 21 meeting. [.pdf of Michigan Medical Marijuana Act]

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]