Bill Kinley moderated a mayoral debate at University Commons on Monday between incumbent John Hieftje and challenger Patricia Lesko.

Kinley, a University Commons resident and local developer, moderated Monday’s event, which drew about 50 people to listen as incumbent mayor John Hieftje and challenger Patricia Lesko answered questions for an hour on a range of topics, from Argo Dam and Fuller Road Station to the city budget and possible income tax.

It’s the latest in a series of exchanges between the two candidates, as the Democrats head into next week’s Aug. 3 primary election. [See Chronicle coverage: "Ann Arbor Forums: The More, The Mayor-ier" and "Ann Arbor Dems Primary: Mayoral Race."]

After introducing the candidates, Kinley cautioned that the residents there are “a group of wordy people.” They know that “platform” and “platitude” derive from the French word “plat,” he said, “so if you can keep platitudes to a minimum, you’ll find the reception here is much more responsive.”

Each candidate was given two minutes to answer the question. The first person who answered was also given the option of an additional one minute response. Questions had been developed by Kinley and the program committee for University Commons.

Selling Parkland

Question: Ann Arbor is known for its parks, but lacks adequate funds to maintain them. What is your position on selling the Huron Hills golf course or other designated parkland, in order to raise funds for park maintenance?

Lesko on Selling Parkland

The question contains a fallacious assumption, she said – that the city doesn’t have enough money to support its parks. Lesko said she used the word “support” deliberately, because that’s what the city should do. The current administration, however, is under the impression that some parks are “bloodsuckers,” she said, sucking the life blood out of the city’s $300 million budget. There’s a belief that the parks need to support themselves, that they’re “deadbeats.” That’s not the case.

There is a millage for parks and a greenbelt millage, she noted – a double commitment to supporting parks. If she were mayor, selling Huron Hills would not be an option. It’s being made unprofitable by an accounting sleight of hand, she said, and that’s not acceptable. It’s an historic golf course.

Lesko said that she doesn’t golf, but she swims, bikes, kayaks and does a variety of recreational activity. This community should have a wide variety of sporting and recreational facilities available, that are supported by taxpayers. The city shouldn’t have to raise revenues to do that – residents pay property taxes that are already relatively high, she said.

Hieftje on Selling Parkland

Hieftje said he would never advocate selling the golf course, and that the city is managing the parks pretty well. The mowing schedule has been changed from 14 days to 19 days, he noted, and unfortunately there’s been more rain so the grass has been growing faster and people can see the difference.

He pointed out that councilmember Stephen Rapundalo, who attended Monday’s forum, has been working with a golf task force to turn Huron Hills around, and it’s becoming more profitable. Hopefully, he said, it will get to the point where it’s standing alone, the way it’s supposed to be. Otherwise, he said, parks continue to do well. He noted that the city and the state are in the midst of the worst financial crisis since the Great Depression.

His advocacy for parks has been well recognized, Hieftje said, noting that he won the Local Elected Official of the Year award from the Michigan Parks & Recreation Association. The city’s park system and open space around the city has expanded more since he’s been mayor than perhaps it has under any previous mayor, he said. They’ve done a great deal to grow the park system and take care of it. Much of the parkland that’s been added has been natural areas, like Bluffs Nature Area – areas that need less maintenance, he said. Ann Arbor is a city that loves its parks, he concluded, and it will stay that way for a very long time.

Lesko Rebuttal on Selling Parkland

Right now, the city is entertaining a notion to issue a request for proposals (RFP) to privatize Huron Hills, Lesko said. Councilmember Rapundalo sits on that committee, she noted, adding that she attended one meeting at which the RFP was discussed. Lesko said she couldn’t support issuing an RPF to privatize Huron Hills or any golf course or other recreational facility. Again, in Ann Arbor, residents support the parks with their tax dollars, she said. The current rhetoric is that the parks are subsidized, she said. “Again, that’s fallacious.”

Staffing Levels

Question: Will the city be able to retain staff levels, including essential workers like police and firefighters, and stay within budget for the coming year? What is your solution for adequate staffing within the present budget constraints. [Kinley noted that the city is in active negotiations with police and firefighter unions, which are operating under a temporary reduction agreement.]

Hieftje on Staffing Levels

Hieftje said he doesn’t think there’s a city budget in Michigan that has as many police officers and firefighters as it used to. Cities across the state have needed to make changes. Ann Arbor has the correct number of police, he said, and the correct number of firefighters. Hieftje reported that Ann Arbor’s police chief [Barnett Jones] told him the force could remain a pro-active one, given the current staffing levels. No police officers were laid off, Hieftje said, though a few positions were cut.

Crime is down 15% since 2002-03, which is quite remarkable, Hieftje said, given that we’re in the middle of a very tough economy. The city has moved in a good direction, he said.

Regarding firefighters, the council asked the fire chief to address three criteria, Hieftje said: 1) keep all the fire stations open, 2) ensure that an adequate number of firefighters will be available to perform rescue, which is to get four firefighters on the scene without affecting the current response time, and 3) ensure that 18 firefighters can get to the scene quickly enough to maintain the city’s insurance rating. Hieftje also noted that they’ve been enhancing mutual aid agreements with other communities, like Ypsilanti and Ypslianti Township, that factor into these scenarios.

It’s important to realize that there are 70% fewer fires now than there were in 1970, he said, due to things like improved building codes and sprinkler systems. In fact, the city’s fire department hooks up to a fire hydrant on average only 10-12 times per year, he said. Large fires do occur, but they’re quite rare. The fire department is like an insurance policy, Hieftje said – you need to have it in case you need it. The city also has an excellent ambulance service, he said.

Lesko on Staffing Levels

Lesko said she did a shift at the fire station. What she learned is that the fire department can provide 18 men within 8 minutes to exactly 24% of the city. “That is a circle around the main fire station,” she said. “You are out of that circle,” she told the audience. She and her children also live out of that circle, she said, and it’s not acceptable.

Patricia Lesko, Democratic candidate for mayor, at the July 26, 2010 mayoral forum at University Commons.

Yes, it is insurance, Lesko said, and at the moment the city is carrying major medical, knowing that at any moment they could get a very serious disease. How does the city fund core services like police and fire? she asked. They need to realize that services are being cut to fund other kinds of projects, she said, such as the Fuller Road “parking garage.” She contended that $900,000 for that project is coming out of the general fund – that could pay for several firefighter positions.

Lesko also referenced Hieftje’s statement that crime is down 15%. What does that mean? she asked. There are various categories of crime, like arson and larceny. To say that crime is down 15% is like cotton candy and rainbows, she said – you have to look at the various kinds of crime to understand what it really means. The president of the police officers union told her that crime is down because there are fewer police officers to report crime to, she said.

Officials never compare Ann Arbor to other cities its own size, Lesko said. If they did, they’d find that crime in those cities is down more. She said she’s not sure if it’s because they have more police, but they need to have an honest discussion about it.

Hieftje Rebuttal on Staffing Levels

“I tend to listen to the police chief and the fire chief more than I do the union chief,” Hieftje said. That’s a better way to go, as the city forms its policies for the long term, he said, noting that in the fire department, the fire chief is the only member of the department who’s not in the union.

He said that they have compared Ann Arbor to other cities – Lansing, for example, is almost the same size, and Ann Arbor’s crime rate is considerably lower than Lansing, he said. Crime in Ann Arbor has been low for a long time, and it continues to go down, he said.

Hieftje noted that at one time, the city used to cover the University of Michigan campus. Now, UM has a police force of 50-55 officers. Hieftje said that when he became mayor, the city had the same number of officers as they did when they were responsible for UM. Changes have been made that bring the number of officers more in line with current responsibilities, he said.

Fuller Road Station

Question for Lesko: The city and UM are developing a transit station on Fuller Road on the site of a parking lot that the university leases from the city. The lot is on land that’s designated as parkland. The university will continue to pay the city for use of the parking structure on the site, and is sharing costs of construction. The structure is geared toward ultimately being the site of a train station. You’ve been critical of this project, based on the leasing of parkland. The Sierra Club, one of your supporters, has also been critical of that agreement. Please expound on what you find unappealing about that project.

Lesko on Fuller Road Station

Lesko began by noting that the city’s park advisory commission (PAC) has also been critical of the project – some PAC members have asked very pointed questions about it, she said. Lesko said she’s not critical of transportation. She lived in Rome for three years, and she often takes the bus and rides her bike – her family has just one car. She’s a proponent of non-motorized and alternative transportation.

Rather, she said she’s critical of putting a parking structure on parkland, because in 2008 Ann Arbor voters approved a charter amendment that gave voters control of the disposition of city parkland. The long-term lease of the Fuller Road site is a defacto sale, she said, and it’s been called that by members of PAC. It “circumnavigates our right to vote,” she said. The Sierra Club came out against it before she did, and she agrees with them and with PAC.

The university has space on its own property nearby, she said – on the helipad, for example. If the university needs more parking, they have 600 acres on north campus, she said. They built the Arthur Miller Theatre on what used to be a parking lot. Now, they want to build a parking deck next to the river, on parkland. If the citizens of Ann Arbor would vote in favor of that, she said, then it would be clear: “I’m always in favor of referenda.”

Hieftje on Fuller Road Station

Fuller Road presents the city with an amazing opportunity, Hieftje said. He noted that PAC members aren’t against the proposal, but they’d like to ensure that they see more revenue coming from the user fee that UM would pay. That hasn’t been decided and he said the city is willing to take up that discussion. [Selected Chronicle coverage: "Hieftje Urges Unity on Fuller Road Station," and "Park Commission Asks for Transparency."]

It’s perhaps the most unique location in the state for a transit center, he said. They’ve been working very hard with state and federal officials on bringing east/west rail to Ann Arbor. The federal government has already dedicated $40 million to a high-speed rail project to fix the tracks in the Chicago area. Rail is coming this way, he said – Ann Arbor has been working with SEMCOG and the Michigan Dept. of Transportation (MDOT) to bring commuter rail to the city. The Fuller Road site is near the UM medical complex, where 18,000 people go to work every day, plus another 6,000 visitors. It’s probably the most concentrated employment center in the state,he said, and no other site in Washtenaw County fits the bill for a rail and transit center.

The university does need parking, Hieftje acknowledged. They just added a new women’s and children’s hospital, and they plan to hire 500 new workers every year. It’s the city’s largest employment center, he noted, and the fastest growing. It will be essential for the future of the community to have rail. We’re facing a carbon-challenged future, he said, one in which gas prices will go up. The site has been a parking lot since 1993, Hieftje said, but it’s not being sold or leased. It’s going to be used by several other entities, he said. Amtrak hopes to be there, he said, Greyhound would like to be there, and the AATA is working as a partner with the city. It will put the city on the track to anywhere, Hieftje concluded, including the airport.

Lesko Rebuttal on Fuller Road Station

Lesko said the mayor must have missed the PAC meeting where Eli Cooper, the city’s transportation program manager, told commissioners that Greyhound has backed away from participation. There are no trains, she said. SEMCOG has said that the cost per rider and the projected number of riders doesn’t work out for Ann Arbor to be able to qualify for funding that it needs, she said.

The city is building a parking garage for the university, and some of the money for it has already been paid from the general fund, Lesko said. In the meantime, the city has lost firefighters and services have been reduced. If the university needs a parking garage – and she’s sure they do – as mayor, Lesko said she’d partner with UM and see if they can reduce the number of commuters to the university and Ann Arbor. That’s the crux of the problem, she said. It’s important to reduce the number of people commuting into the city, which has 1,700 empty houses.

Downtown Density

Question for Hieftje: You’ve been very supportive of “densification,” after the successful adoption of the greenbelt millage. The idea was that the greenbelt would form a donut of preserved land around the city, while the city would have more development and go vertical. However, you and council have been less than supportive of some specific projects downtown, such as the hotel proposed at the corner of Washington and Division [Metro 202], and more recently, of The Moravian and Heritage Row projects, which have caused a great deal of turmoil. Explain your feeling about downtown density and how the city can move forward in reaching that goal.

Hieftje on Downtown Density (plus  Fuller Road Station Detour)

Hieftje said he has been supportive of downtown density, noting that the city recently completed a complete rezoning of the city. For the first time, there’s a height limitation of 16 stories, he said. The whole process took about six years and had incredible public input, he said.

The Washington and Division project is going back a few years, he said. [“I have a long memory,” Kinley quipped.] Council approved it, he said, but he wasn’t in favor of it because it didn’t fit the site. The Moravian actually isn’t in the downtown, he said. It was a large, boxy apartment building in an area that will eventually be redeveloped. But if they’re going to accept a building in that area, it should be more attractive, he said.

Hieftje then circled back to the question about Fuller Road Station, saying that the federal government just awarded $30 million to Dearborn for a new train station, because they’re convinced that rail will be a reality in the future. Battle Creek received about $10 million for its station. Cars for the new commuter rail are being refurbished, he said. The exact same track improvements in the Detroit and Chicago areas will clear the way for commuter rail. That means the Ann Arbor area might be looking at a future similar to a European city, he said, where you have high-speed rail that takes you far distances, plus commuter rail. That’s what will open up possibilities for transit-oriented development, he said, especially for areas of town like Broadway Village.

Lesko on Downtown Density

Sometimes, Lesko said, there’s a myopic obsession with downtown. She asked how many in the audience go downtown regularly, then said that she bikes and takes the bus downtown regularly. However, she said she’s knocked on about 5,000 doors and she’s met thousands of people who don’t go downtown.

Lesko said says she lives near the blight on Broadway, and she’s been knocking on doors near the blight of Georgetown Mall, too. The south side of Ann Arbor is looking more and more like Flint, she said, while people obsess about downtown. We need to take care of downtown, but the city is more than that. The city does need economic development and investment in the downtown – that’s crucial to the growth and sustainability of the community, Lesko said. But in terms of allowing denser development in the buffer neighborhoods – where The Moravian would have been located – we must be careful to protect the downtown, the buffer areas and the city as a whole. She said her administration would focus on the big picture.

Hieftje Rebuttal on Downtown Density

There certainly is an effort to look at the whole city outside of the downtown, Hieftje said. He pointed to the Washtenaw corridor study as an example of that – the city is working with the county and other municipalities on that. There are other areas that he’d like to see redeveloped, and they’ll see that when the economy comes back.

Hieftje said it’s important to remember that the city is just coming out of the worst time financially in several years. Lenders are very reluctant to lend for new construction, although there might be a couple of projects coming along soon. Zaragon Place 2 is one development that’s already been approved by planning commission.

He again mentioned the city’s effort to put in place design guidelines. A task force is working on that, he said, aiming to set some parameters on design. There shouldn’t be any more ugly buildings in the city, he said, adding that he understands it’s sometimes in the eye of the beholder. Still, they were coming up with guidelines to make sure buildings are attractive and withstand the test of time. It should be coming to city council later this year or early next year, he said.

Argo Dam

Question: Argo Pond is formed by a dam, and within the past few years, the state has said that parts of the dam should be repaired or that the dam should be removed. That’s caused a lot of controversy. Crew teams actively use it for practice, and others use it for recreation – these groups advocate repairing the dam. But the Huron River Watershed Council, one of the mayor’s supporters, has strongly recommended that the dam be removed. Now, the city has asked for an estimate for repairing the dam, and HRWC has asked that an estimate be made for removing the dam. What’s your position on the Argo Dam issue? [Background Chronicle coverage: "Two Dam Options for Argo."]

Hieftje on Argo Dam

For quite a while, the city’s position has been that there isn’t really anything wrong with the dam, Hieftje said. The state has been pursuing a different tact, he said, and had some problems with the raceway [headrace] and earthen embankment. From an environmental standpoint, there’s a limited amount to be gained by the removal of the dam, he said, adding that he’d be very happy to take a comprehensive look at all the dams on the river.

The dams at Gallup and Argo don’t produce electricity now. But the city’s energy commission, on which he also serves, has recommended keeping Argo Dam – they see a time when the way that we use energy and what we pay for it will change, he said. In the future, it might be profitable again to install turbines at Argo and generate electricity there.

But the rowing community and others who use the pond are also important constituencies, Hieftje said. If you look at high school sports, rowing is the most popular one, he said, and local teams have won regional and even national competitions. He said he’s in favor of keeping the dam, and of working up a comprehensive plan for the Huron River because it’s a great asset, it’s water is getting cleaner and it’s looking better all the time.

Lesko on Argo Dam

The question contains some fallacies and myths that have been circulated, Lesko said. One is that Argo Dam was ever in danger of failing. She said that Laura Rubin, the head of the Huron River Watershed Council, wrote an op/ed in the Ann Arbor News – the first sentence stated “Argo Dam is failing.” That wasn’t true, Lesko said. Then we were told the embankment was failing, she said, but that wasn’t true either.

Lesko said she was told by a park advisory commission (PAC) member that city staff pushed very hard to convince PAC that Argo Dam needed to be removed. “This is city government at its worst,” she said. We were told the pond wasn’t adequately oxygenated – that wasn’t true. There were members on PAC who became so frustrated with the faulty research being presented that they did their own research, Lesko said, and “decimated these notions.”

The state has been trying for years to get the city to do one thing, she said: maintain the toe drains. She likened it to the Larcom building [city hall] and its leaky roof that wasn’t fixed, or the Stadium bridges, which the city has known to be in dire straits for years, she said. The toe drains reflect a pattern of the city government not tending to its capital assets. Without the right people at the helm, she said, the city won’t take care of its assets.

Lesko said she kayaks almost every day between Bandemer and Argo. She said she’s not in favor of removing the dam, and part of the reason is that it would expose parkland [as the pond is reduced in width]. Based on the precedent of the Fuller Road parking garage, that newly-created parkland could be leased, she said. So she didn’t want to do that until the city closes the loophole on the charter amendment regarding the sale of parkland.

Hieftje Rebuttal on Argo Dam

Referring to Lesko’s responses, Hieftje said the question apparently has ranged far and wide, to include capital improvements, so he’d go that route too. A study recently came out that shows Ann Arbor has some of the lowest water and sewer rates in the state. At the same time, the city’s water wins awards almost every year as the best water in the state. The city is increasing its water rates about 3-4% per year, he said, while other cities are making often double-digit increases. At the same time, Ann Arbor has been saving money for a $140 million improvement on the sewage treatment plant, and some of the lines leading to it. This system was built in the 1930s with money from the Roosevelt administration during the Depression, Hieftje noted, when they were putting people to work on project, much like the federal government is doing today.

Water pipes were quite neglected in the 1980s and 1990s, Hieftje said, but the city has been replacing pipes at a pretty regular rate over the past few years – that’s another capital asset, he noted. They’ve also replaced two of the city’s aging maintenance facilities [on North Main and 415 W. Washington] with a brand new maintenance facility. “So there is a lot of work going on in taking care of the city’s infrastructure,” he said.

The county ended the city’s lease at the county courthouse, he added – because the county wanted to move their juvenile court into that location. So the city had to build a new police station and courthouse, he said, which should be finished on time by the end of the year.

Why Ann Arbor Is Lovable

Question: Recently, once again, the city has received a “best of” award. Ann Arbor has received many awards through the years. What makes this city so doggone lovable?

Lesko on Why Ann Arbor Is Lovable

Lesko described how she’s lived here for 26 years, first coming to attend UM as an undergrad. She lived in Rome, Italy but came home again. Her family has lived in Michigan about 170 years. The quality of life here is indescribable, she said. Her family lives near Bandemer Park – they can load up their kayaks and be in the water in five minutes. She said she rides her bike downtown, though the bike lanes are in a “sorry state.” She takes the bus, just like she did when she lived in a European capital and took the bus everywhere. Having a top-notch bus service is a great goal. She said she had a wonderful discussion with the CEO of the Ann Arbor Transportation Authority [Michael Ford] about her vision for Ann Arbor’s bus system.

But above all, she said, the quality of life is tied to where she lives. It’s a neighborhood they chose because it’s racially and socio-economically diverse, she said. Unfortunately, there aren’t many sections like that. The city needs to maintain its racially diverse and socio-economically diverse housing stock. As a native Michigander, she said she can’t think of living anyplace else. “The bumper sticker says it all: I’d rather be in Ann Arbor.”

[Editor's note: Hieftje was not asked to respond to this question.]

City Income Tax

Question: Like most cities in the state and nation, Ann Arbor is fiscally challenged. We have declining revenues and increasing expenses. One option for stabilizing the city’s long-term revenues is to change to a city income tax, balanced by a reduction in property taxes for residents. Is a city income tax the proper solution for helping to maintain the fiscal stability of the city?

Hieftje on a City Income Tax

Hieftje said he’s been thinking about this for a long time, and every once in a while a very robust conversation will pop up about this issue. The income tax would be different than the other cities in Michigan that have it, he said, in that it’s in Ann Arbor’s city charter that if a city income tax is passed, there would be a 6 mill decrease in property taxes.

John Hieftje, incumbent and Democratic candidate for mayor, talks with a resident of University Commons before the July 26, 2010 mayoral forum.

Right now, 28% of a resident’s property taxes go to the city, he said. Property owners would get a break, and for many people, that might offset the income tax. But the income tax doesn’t have an even impact, he said. Renters, for example, likely wouldn’t see any benefit, because landlords wouldn’t necessarily pass on the property tax savings to them. It also shifts taxation from businesses to a greater burden on individuals – that’s something to consider.

He said he’s also worried about encountering a situation like one faced by Grand Rapids, which has had an income tax for many years. It’s a thriving city, he noted, often held up as the best on the west side of the state – it’s just about twice as big as Ann Arbor. Yet in January they cut 140 jobs, including some police and firefighters. They passed an increase in the income tax, to bring in another $8 million, yet they’re still struggling. The problem is that revenues from the income tax are falling at the same time as their property taxes are falling. When you implement an income tax, you introduce a new variable, he said.

Lesko on a City Income Tax

Pointing to a magazine she had in front of her, Lesko said that it reports the population of Grand Rapids is 778,000, which she noted was not slightly more than twice the size of Ann Arbor, as Hieftje had stated. [Based on the 2000 census, the city of Grand Rapids has a population of 197,800 – the Grand Rapids metropolitan area, to which Lesko was likely referring, has a population of 778,009.]

Lesko then read an excerpt from an article in the magazine, which described Grand Rapids as a thriving city. Ann Arbor should be thriving equal to Grand Rapids, she said, because we pay property taxes that are some of the highest in the state.

She said she agreed with many things that Hieftje cited as reasons why a city income tax isn’t a great idea, including the fact that it pushes the tax burden from businesses onto individuals. She said that as an individual, she would never vote for a city income tax. But as the city’s next mayor, she said, if there’s consensus on council to put it on the ballot, “I will bring it to you, and you will decide.”

Lesko noted that councilmember Stephen Rapundalo [who represents Ward 2 and who attended Monday's forum] has supported an income tax, and that there are reasons for it. But the question again contains some myths, she said. The city is not fiscally challenged. Pfizer left the city with 4.68% less revenue – that’s the glass half empty view, she said. The glass-half-full view is that they have 95% of their property tax revenue left. The city has increased fees for water and sewer – those increases are among the smallest because the city started with higher fees, she said. It’s important to tell the whole story, she said.

Hieftje Rebuttal on a City Income Tax

The water rates are still some of the lowest in the state, Hieftje countered. And regarding population size, there’s a difference between the metro area and the city itself.

Returning to the income tax question, it’s a discussion that comes up occasionally, and he’s concerned about the “double hit” of getting into a recession and seeing both falling income tax and property tax revenues. The other thing that’s happening is that the state revenue-sharing cuts have been deep, he said. The city is getting close to $4 million less than they used to in 2002. He said they were hopeful that state revenue-sharing would stay flat over the next two years, and not decrease.

If an income tax were to be accepted by the voters, there would need to be a considerable education program, he said, because most people don’t understand that they’d get a 6 mill property tax break. He said he’s certainly not recommending that the city needs more revenue at this time. The city has been doing an admirable job of keeping all the balls in the air while moving forward on a number of initiatives, he concluded.

City Income Tax (Redux)

[Later in the meeting, the candidates were asked a follow-up question by Don Kaul, a University Commons resident and columnist.] Question: In your responses to the city income tax question, neither of you mentioned the people who live outside the city but who earn their living here. Is it possible to single out those people for a tax?

Lesko on a City Income Tax (Redux)

In going door to door, Lesko said she ran into two professors who teach at Wayne State, and they made the same kind of argument. It’s a valid argument. As an individual, she said disagrees with that vehemently. The city has adequate revenue right now to fund superior services, excellent recreational facilities, and superior infrastructure, she said. At their last mayoral debate, state Rep. Alma Wheeler Smith talked about this, and Lesko said she agree with her – that’s how you build a city. Do we need another tax? As an individual, Lesko said she’d say no. But as an elected official, if there’s a will within the citizenry and council to examine it more closely, she would support that and bring it to the ballot for a vote. But from her perspective, the city doesn’t have a revenue problem, she said. The city has a spending problem.

Hieftje on a City Income Tax (Redux)

In Michigan, local governments can impose a property tax and an income tax, Hieftje said. The income tax would need to be 1% for residents and .5% for non-residents. “You don’t get to choose – it’s a package deal,” he said. What’s more, Ann Arbor is the only city that would require a 6-mill cut in property taxes, if an income tax is levied. Even without that, the city does well, Hieftje said. He noted that he wouldn’t trade places with any mayor – and that he makes that statement often. Ann Arbor’s services are better than most places in Michigan, he said, and Ann Arbor’s millage is slightly lower than it was in 2000. There was a failed millage in Troy recently, and now that city is eliminating a third of its workforce, he said. Royal Oak is struggling too. So far, throughout this long economic malaise, Ann Arbor continues to hold up well, he concluded, and they are not proposing a tax increase.

Lesko Rebuttal on a City Income Tax (Redux)

Lesko noted that this is something Hieftje says all the time – that Ann Arbor is doing better than Troy, Royal Oak and Grand Rapids. We should be, she said, because we pay more. They’re paying less and getting fewer services. We’re paying more, and getting fewer services, she said, and that’s a fundamental difference.

Payment In Lieu of Taxes (PILOT)

Question for Lesko: On your blog, you’ve suggested that the city use your ideas for increasing revenues and decreasing expenses. One of those suggestions is to ask the largest nonprofits to make voluntary payments in lieu of taxes – what’s known as a PILOT. Which nonprofits should be approached?

Lesko on PILOT

Boston and Providence, Rhode Island – cities which host multiple universities, she noted – have voluntary PILOT programs. Right now, UM pays the city about $8.8 million for water, sewer and other services, which works out to be about $2,200 per acre of land it owns, she said: “That’s a low charge for the university.”

Cities that go about implementing PILOT programs generally hire consultants who have done it elsewhere, Lesko said. She described the process like this: The mayor goes to the university and asks for a voluntary payment. When that overture is rejected, then the mayor goes to the state legislators and suggests putting a tax on tuition. Then, the consultant comes in and crafts a program. Lesko said that Providence gets “millions and millions and millions of dollars” in PILOT payments, as does Boston.

Lesko said that Hieftje often states that 40% of the city’s land is off the tax rolls – that’s a little misleading, she said. The figure includes parkland, which was never intended to be on the tax rolls. The city wouldn’t approach religious groups or small nonprofits for PILOT, she said, but could approach large nonprofits – a consultant would come in and design a program to identify those. But it won’t be done unless there’s the political will to do it, she added. “You can’t win the lottery without buying a ticket. We will have a PILOT program if there are people in place who support a PILOT program.” There hasn’t been a PILOT program because there aren’t people who are willing to go forward and design one, she said.

Hieftje on PILOT

“I have yet to hear of a city that has a state university that makes such a payment,” Hieftje said. Certainly, UM wouldn’t be happy about that. It’s a question that’s been studied by city attorneys probably for 130 years, he said, trying to figure out a way for the university to make a PILOT payment. City attorneys have said there’s no way to force the university to do that.

State legislators are also against it, he said. Hieftje asked the audience to picture themselves as a legislator from Traverse City. UM is, in reality, a university for the state of Michigan, and the state is giving hundreds of millions of dollars to UM. Under a PILOT program, UM would in turn give some of that money to Ann Arbor. If you’re from Traverse City, you might say, “If they’re going to give money to Ann Arbor, why not give it to Traverse City too?” Hieftje noted that there are state universities throughout Michigan, and this could set a precedent for giving money back to their local communities. It wouldn’t be long before the rest of the legislature asked “What’s going on here?”

Cities where universities are located have a certain benefit, he said, such as a stable employment base. Does the city want to pursue something that every legal authority he’s talked to, and every state legislator he’s talked to, continue to say isn’t going to happen? It makes for a really good talking point, he concluded, and there are private universities that are doing it – but not in Michigan.

Lesko Rebuttal on PILOT

Lesko pointed out that Hieftje was quoted in the newspaper saying he’s been trying to get a PILOT program going and trying to negotiate payments with the University of Michigan for a long time. “So which is it?” she asked. This isn’t supposed to be a “gotcha,” she said. It’s looking at what they’re planning to do at a particular time.

She described her plan as a can-do plan, with a can-do attitude. If the city attorney says they can’t do a PILOT program, do they stop there? “Is that what you do with your children? Is that what you taught them?” No, she said – you tell them not to give up. This is the lifeblood of the city, she said. Do you want a mayor who will stop the second somebody says you can’t do it? “I’m not that kind of manager in my own company, I’m not that kind of a CEO, I’m not that kind of a parent and I surely won’t be that kind of elected leader. A can-do attitude is what we need, and I have it.”

Downtown Development

Question: Recently there have been projects that have been denied by city council after a process. A developer submits a plan to the city for review. The city planning staff reviews it and recommends it to the planning commission, which is appointed by council. It reviews the project and passes along a recommendation to city council. These are for real estate developments. In the city code, there is a requirement that if a certain percentage of residents within a certain radius of a project ask for it, they can demand that the project get approval by a super-majority of city council – or 8 out of 11 votes, instead of the standard 6-vote majority. This process happened recently on two projects [The Moravian and Heritage Row], which were both recommended by staff and planning commission, but which were rejected by council because they didn’t reach the 8-vote majority. Is this a fair process? If not, how would you modify the super-majority rule to be more representative of a fair process to encourage development and not discourage good development?

Hieftje on Downtown Development

Hieftje clarified that The Moravian failed on a 6-5 vote, and Heritage Row vote was 7-3, with one councilmember absent. [Heritage Row initially failed on a 7-4 vote at council's June 21, 2010 meeting. It was brought back for reconsideration at a subsequent council meeting, where it failed by a 7-3 vote, with Mike Anglin absent. The Moravian was voted on at council's April 5, 2010 meeting.]

It’s important to distinguish between “by-right” developments and “planned unit developments” (PUDs), Hieftje said. By-right means that the developer, as a matter of law, meets the zoning requirements and has the right to build. A recent example of that is Zaragon Place 2, a 14-story building proposed for the corner of William and Thompson. He said he expects city council will vote for it because as a by-right project, they really don’t have much choice. City council doesn’t have a legal way to say no to a building – that’s why they need design guidelines, he said.

In contrast, a PUD requires special zoning for the site. Developers should all understand that when they bring a PUD, there’s no guarantee that it will be approved, he said. It ultimately comes down to a subjective opinion, and everyone on council can form their own opinion about whether the project meets the criteria needed to pass as a PUD, he said: Does it meet environmental standards? Does it have affordable housing? Is it a good fit for the neighborhood?

Lesko on Downtown Development

Lesko pointed out that the question was very specific: Is requiring an 8-vote super-majority fair to the developer? In terms of the current rules, it is totally fair, she said. If you want to change the rules, then there needs to be a discussion on that.

The city does need development, Lesko said. There needs to be an open and honest discussion about projects that come to council. The Moravian is a classic example, she said, “of a French farce without the wigs.” Ninety people lined up to speak at the council meeting on the night of the vote, then several councilmembers read their prepared remarks, she said. “What does that tell you? That they’d decided how to vote before they came in the room, right?” It was unbelievable to see the enthusiasm of people during public commentary, she said, and to see their commitment to participate in city government.

Lesko said the crux of the question is: How do we make neighborhoods and the developers that have projects in those neighborhoods have less antagonistic relationships? Because ultimately, the city does want development, she said. But letting planned unit developments into neighborhoods is an economic subsidy, she argued, because buying land in a neighborhood is less expensive than it is downtown. Zaragon Place 2 is a great development for that area, and they paid a premium for the location. The Moravian acquired several smaller parcels, then asked for a favor from city council, she said. When you ask for a favor, she added, sometimes you’re told no – that’s the problem. There needs to be a more honest discussion at council between citizens and councilmembers, she said, or council needs to say to developers that the city won’t give them exceptions. But antagonism is bad, and it’s something that needs to change, she concluded.

Hieftje Rebuttal on Downtown Development

The 8-vote super-majority is a very strong tool the neighbors can use to protect themselves, he said. Everyone can imagine living in a neighborhood and then having a large project come along that they might not want or that’s completely out of character with the neighborhood. If enough property owners agree that they want to protest it, that triggers the 8-vote requirement, he said. That’s the way it’s been set up for a very long time, Hieftje added, and he thinks it’s served the city well overall. The developer who brings a PUD before council should understand that it needs to meet the standards that councilmembers will hold it to.

Funding for Ann Arbor SPARK

Question for Lesko: An alphabet soup – DDA, LDFA, TIF, MEDC, SPARK. You know the question.

Lesko on Funding for Ann Arbor SPARK

Lesko said that she understood the question. The DDA is the Downtown Development Authority, she said, which was established to fight off blight in the downtown area. Some folks have questioned whether it’s outlived its mission. One of those folks was the city administrator, she said, who she contended in April put forth the idea of dissolving the DDA and taking the revenue in house.

The LDFA is the financing authority that provides money from local school districts to SPARK, as a contractor. [Ann Arbor SPARK is a nonprofit economic development agency.] At their last debate, she said, Hieftje stated that the state reimburses schools for that money. Then people “higher up the food chain,” she said – Alma Wheeler Smith, Jeff Irwin and Rebekah Warren – stood up and said the state’s not reimbursing schools for the money that the LDFA takes.

Lesko said that the Detroit Free Press did an exposé recently and said that in exchange for about $127 million in tax money, SPARK had created a “whopping” 900 jobs since 2006. “That’s not good enough,” she said. Going door to door, Lesko said she met a man who had an idea for a start-up and that he’d talked about it with Hieftje, who had told him to go to SPARK. SPARK said they’d help him write a business plan for $2,000. That’s a bad deal, Lesko said.

The city needs to encourage existing businesses. These are the people who have jobs now, she said. Fifty percent of start-ups fail after five years. She asked the audience whether they would invest their money knowing that they had a 50% chance of losing it all – she said she wouldn’t. The city needs to make Ann Arbor a magnet for existing businesses.

Hieftje on Funding for Ann Arbor SPARK

Hieftje said he’s a big believer in organizations like SPARK. When he’s in Lansing, other mayors are constantly saying they wished they had an organization like SPARK, he said. It’s renowned across the state for bringing jobs to the community, and they have a strong record of success.

Looking Ahead

[For the last question, Kinley flipped a coin to see who would choose the order of answering. As sitting mayor, Hieftje was allowed to make the call. He won the toss, and chose to answer the question first.] Question: How would you suggest that the city and its council and citizenry move forward in the two years following the November election?

Hieftje on Looking Ahead

The city needs to continue to do what they’ve been doing – it’s worked very well, he said. The city has made some dramatic reductions in its workforce, but has also added a lot of technology to bring efficiencies. One example is water meter reading. In the past, someone physically went to each meter, Hieftje explained. Now, the meters send out signals that can be read via computer.

He noted that the city used to have 21 department heads, and now has just five “bubbleheads” – a term derived from the city’s organizational chart. There’s been a large middle-management reduction. Conservatively, the city is saving about $15 million annually from these changes, he said. They’ll have to continue to “sharpen our pencils,” he said – everyone is working harder and being more frugal. That’s why the millage is slightly lower than it was in 2000.

Taxes are certainly not low in Ann Arbor, Hieftje said, but the city has managed to get this far without a millage increase. Just 28% of local taxes go to the city, he said. They could make some considerable cuts in the city’s 28% and taxpayers still might not notice that they were paying that much less. The city will continue to enforce the efficiencies they’ve put in place, he said, and continue to make that better.

Lesko on Looking Ahead

It sounds great, Lesko said, but it’s not the whole story. She noted that Hieftje stated that the city saved $15 million. But there are 200 fewer employees, and the city is paying about the same for personnel. Where are the savings? she asked. Folks who retire go into the city’s retirement system – there’s a $190 million unfunded pension liability, she said: “That scares me.” Pension payments are not optional.

The city needs to go forward by realizing real economy, she said, by tackling real non-essential spending, and by realizing that over the last decade, they’ve had leadership that’s been concerned with re-election. Lesko said that she’d have to take a leave of absence from her job to be mayor. She noted that she has small children, but this is important to her. She was raised by someone who believed that democracy should be participatory. Citizens need elected officials who aren’t going to tell people what they want to hear. They need people in office who are willing to talk about the hard issues, she said, like the $190 million unfunded pension liability.

The city is hiring consultants and full-time temporary laborers, Lesko said, and paying them peanuts. Single moms are being hired as full-time temps time after time, and being denied membership in the union, and being paid peanuts. That’s how the city is realizing these economies, she said. She added that she is not willing to head a city that takes advantage of people, and creates and perpetuates poverty. They have to talk about the hard issues, she said, and they can do it, as long as they have open, honest and transparent discussion.

Hieftje Rebuttal on Looking Ahead

Hieftje said he doesn’t know any single moms who are being paid peanuts – he hasn’t heard about that. And the city has a plan to deal with the pension liability, he said. Fortunately, it’s not due next week, he noted – not for a long time. He likened it to having a mortgage, with time to pay it. The city has a plan that its CFO has confidence in, he said. He acknowledged that financial markets have been down, and that certainly affects pensions.

He thanked the audience and organizers of the forum, and noted that he didn’t answer the earlier question about why Ann Arbor is a great city. A lot of that has to do with the people who live here, he said, who are willing to give their time and talent to move things forward. Many people in the room have served in that capacity, he noted, and he appreciates that. He pointed out that Kinley had served on the city’s residential task force.

Ann Arbor is in a very good position, Hieftje said, as the economy improves and they move out of this recession. The city is ready to spring forward, perhaps more than any other in the state, he said. A program on PBS last year reported on some great things about Ann Arbor, Hieftje noted. He said the title of the program was “Ann Arbor: Michigan’s Life Preserver,” adding that the rest of the state looks at Ann Arbor to be that for the economy. He thanked everyone for their contributions to that as well.

Residents of University Commons gathered for a mayoral forum held at their condo complex on July 26, 2010.

Candidates for mayor in the Aug. 3 Democratic primary: (top) incumbent John Hieftje and (bottom) Patricia Lesko. (Photos by the writer.)

On Thursday evening, the North Central Property Owners Association (NCPOA) hosted a forum for candidates in two Democratic primary races:  Ward 1 city council representative and mayor.

Coverage of Ward 1 candidate responses to audience questions is provided in a separate article: “Ann Arbor Dems Primary: Ward 1 Council.”

Before the forum began, as candidates worked the room – which would eventually be packed with around 60 people – they greeted their known supporters and detractors alike. Patricia Lesko was cheerily blunt with Ward 1 councilmember Sabra Briere, telling Briere:  “Hated what you had to say in The Observer about Lesko!” She was alluding to an article in The Ann Arbor Observer’s July edition, with the headline “Satan for Mayor?!”

Briere was seated in the back row next to John Hilton, editor of The Ann Arbor Observer and a member of the NCPOA. The location of the forum at the Ann Arbor Community Center on North Main Street and its sponsorship by the NCPOA was significant – the site is across the street from Near North, a controversial affordable housing development approved by council in September 2009. The NCPOA had opposed the project most of the way through, but in the end wound up supporting a compromise version of the design.

Development and the definition of downtown was one of several topics raised by questions put to the candidates.

Incumbent mayor John Hieftje’s basic theme was that Ann Arbor was doing fine financially during tough economic times – especially when compared to other Michigan cities. For her part, Patricia Lesko questioned the ability of the city’s current leaders to make tough choices and described her own toughness with flourishes like: “You want a flower girl? Don’t vote for me!”

There is no Republican running for mayor – the winner of the Aug. 3 Democratic primary will not face a GOP challenger in November. Steve Bean and William Bostic Jr. plan to run as independents.

The moderator for the event was David Santacroce – a University of Michigan law professor who specializes in civil rights and health care issues. He laid out the ground rules: (i) five minutes per candidate for opening statements; (ii) roughly 30 minutes total for responses to audience questions – one minute per response per candidate; and (iii) two minutes per candidate closing statement. His only job, he said, was to pronounce names correctly and to read the questions, which audience members submitted on cards.

Margaret Schankler organized the event for the North Central Property Owners Association (NCPOA). Candidates all opened by thanking the organizers and those in attendance.

Opening Statements

Each candidate had five minutes for an opening statement.

Lesko’s Opening Statement

Lesko read from a prepared statement. She began by thanking the NCPOA for organizing the event. She also said she wanted to thank Hieftje for his years of service. She said it was important for those who are running for office to realize that serving on the city council is a “heckuva lot of work.” She contended that she was not running because she disliked Hieftje, saying that she’d voted for him three times. She said she wanted to be the next mayor of Ann Arbor because she wants to see the city government refocus on the basics: responsible spending, services, and infrastructure.

Patricia Lesko, candidate for mayor of Ann Arbor.

Lesko then moved into a biographical description of herself. She’s lived in Ann Arbor for 26 years, she said, and earned her degrees from the University of Michigan. She spent a decade teaching college, and for the last few decades has served as CEO and publisher of a national higher-education publishing group, headquartered in Ann Arbor.

A question she’s heard going door-to-door, she said, was: “Why on earth are you running for mayor?”

Who would want to lead a city where the roads are a mess, where the police and fire departments had been decimated, where the Stadium Boulevard bridges have been allowed to deteriorate for years? she asked. Who would want to lead a city where residents pay some of the highest property taxes in the state, but which still “nickels and dimes” to death residents and visitors alike? She compared the idea that extending the parking meter enforcement hours was good for downtown to a great-grandmother’s recommendation for castor oil, as good for whatever ails you.

The reduced frequency in parks mowing, she contended, suggested to some people that here in Ann Arbor we are trying to recreate the Great Plains.

Summarizing the set of examples she’d given, Lesko described them as resulting from policies and decisions made by Hieftje.

She noted that the city had floated bonds to fund the police-courts facility now under construction at the corner of Fifth and Huron, which she described as “luxury office space.” But the city had not floated bonds to fix the Stadium bridges, she said.

She questioned whether a good leader tolerates unethical behavior on the part of their colleagues. And she called the underground parking garage currently under construction on the city-owned Library Lot “non-essential.” Instead, she suggested that the city should mend the roads that have been allowed to crumble.

She criticized the new $3 entry fee charged at the recycling drop-off station. She characterized the city’s current approach to police and fire staffing as “gambling” with public safety. Lesko said she had the support of the police and firefighter unions because they know that as mayor she would focus the city government on the basics.

She said she wanted to promote environmentalism not just through the implementation of programs, but through the regular evaluation of how well we’re meeting our environmental goals. She cited Susan Collins, who’s executive director of the Container Recycling Institute, as calling single-stream recycling a “poor choice.” [This month, starting July 5, the city of Ann Arbor is switching to a single-stream recycling program.]

She called green energy challenges “great” but evaluating results and meeting goals is the kind of management that is necessary, she said. [Hieftje's green energy challenge calls for the use of 20% green energy by 2010 for municipal operations and by 2015 for the whole city]. Launching initiatives, Lesko said, is something that politicians are good at doing, but evaluating their success is something she’d do as the next mayor of Ann Arbor, she said.

She concluded her remarks by saying that she wanted to form a city government that treats its workers fairly and equitably. She gave an example of a city worker she’d met, a single mother who earns $10 an hour as a full-time temporary employee without benefits, who for the past several years had supervised other staff without the possibility of regular raises. [For background on city temporary employees, see Chronicle coverage: "Living Wage: In-Sourcing City Temps"]

While the city hires people like that single mother by the dozens, Lesko said, Hieftje had more than doubled his own pay.

[In 2003, the Local Officers Compensation Commission recommended that city council pay be raised from $9,800 to $15,000 over two years, and recommended raising the mayor's salary from $18,800 to $40,000. Recommendations of the LOCC take effect by default unless the city council acts to reject the recommendation. A Chronicle search of council minutes did not produce a resolution considered by the council in 2003 to reject the LOCC recommendation. In 2005, the council voted to reject the LOCC recommendation for slight increases in pay, and in 2007 voted against rejecting a recommended increase – thus confirming the LOCC recommendation for a raise. In 2009, the LOCC recommended no change in council and mayor compensation. The LOCC makes its recommendations every two years.]

Lesko concluded that she was running for mayor because she believed that the Democratic Party could talk the Democratic talk and walk the progressive walk.

City services would take center stage with her as mayor, Lesko said.

Hieftje’s Opening Statement

Hieftje also began with thanks all around. He then said that he would tell the audience a little bit about “what he’d been up to.” He’d begun the week on Monday with the Urban Core Mayors. [The Urban Core Mayors is a forum developed in 1992 and includes the mayors of the following cities: Ann Arbor, Battle Creek, Bay City, Dearborn, Detroit, Flint, Grand Rapids, Jackson, Kalamazoo, Lansing, Muskegon, Pontiac, and Saginaw.]

John Hieftje, Ann Arbor's incumbent mayor who's seeking another term.

He said that the mayors of the cities sat around and talked about what’s going on in their cities, and he left that meeting thinking the same way he’d thought for some time – he would not trade places with any other city, he said.

The group had discussed what’s going on around the state in cities like Troy, Royal Oak, and Grand Rapids. He’d spoken with the mayor of Grand Rapids, where they’d cut 140 jobs back in January and then had passed a tax increase this spring, which meant that they were able to rehire many of the police and firefighters they’d laid off back in January. But they were only able to open two of 16 swimming pools this year and had cut parks programs dramatically.

The economic situation, Hieftje said, was the worst since the 1930s. Hieftje said that Ann Arbor was doing well to survive the loss of 4.86% of tax revenues, caused by the former Pfizer property being sold to the University of Michigan. Ann Arbor is continuing to move forward, he said, in one of the toughest fiscal environments it would ever find itself. Ann Arbor has not increased taxes, he pointed out. Ann Arbor continues to win awards for quality of life, he said, citing one given by Forbes magazine designating Ann Arbor as the 4th most livable city in the nation.

He asked rhetorically, “Can we make money in the downstairs basement of city hall with a big machine? No, we don’t do that.” Instead, the city used prudent management he said. The word “prudent” could be found in the bond rating reports when the city’s bond rating is made, he said.

On the topic of the Stadium Boulevard bridges, he said it would have been foolish to repair those bridges this fall as they could have done, without waiting for one more opportunity to get federal money that they think is coming the city’s way. He said they’d just heard that $450,000 – it’s only a little bit, he allowed – was coming Ann Arbor’s way and that more was on its way.

He questioned the wisdom of selling bonds to fund the bridge repair. There needs to be an income stream to sell bonds, he said, adding that the income stream for the underground parking garage would be paid for by parking revenues, not property tax dollars.

One of the largest projects in the history of Ann Arbor was still going forward, Hieftje said – the replacement of an entire wing of the sewage treatment plant, which had been built back in the 1930s. That’s a $140 million project, for which about half had already been saved, by implementing modest increases in fees, he said. The increases in fees, he contended, were well below the increases in peer communities.

Hieftje said he felt that people could put up with less frequent mowing, while the city gets through the worst financial crisis in modern history.

Looking at the numbers for police and fire protection, he said, he noted that there’d been a long-term decline in crime rates. If there were an increase, then that would need to be looked at. He then said he wanted to ask a central question: If Ann Arbor is mismanaged and it’s sheer incompetence that has put us where we are, is it sheer incompetence that has driven the state of Michigan’s budget down? Is it sheer incompetence that is driving Troy, Grand Rapids, and Royal Oak to do what they’ve had to do?

Hieftje said he believed that compared to any other city in Michigan, Ann Arbor is doing far better.

City Income Tax

Question: Should Ann Arbor have an income tax? Why or why not?

Hieftje on City Income Tax

Hieftje confirmed the report of Ward 1 councilmember Sandi Smith, who’d spoken just prior to him, that they’d heard more and more people speaking in favor of an income tax. He said he’d never been in favor of an income tax – he has his problems with it, he said. He said he doesn’t think an income tax spread the burden fairly, as it was particularly hard on people who rent.

An income tax would also introduce a new variable into budgeting – in Grand Rapids, their income tax revenues were down about 14%. So a property tax decrease was exacerbated by the additional lost of income tax revenues as jobs were lost during the recession.

Lesko on City Income Tax

Lesko said she agreed with the mayor and with Smith when they said that Ann Arbor is doing well economically. She said, however, that she didn’t know who they were talking to when they said they’d been hearing a lot of pro-income tax voices. The people she’d been talking to, she said, were vehemently opposed to a city income tax. In fact, she said, as she’d gone door-to-door, one woman had grabbed her literature, looked it over and said, “Thank god, no city income tax!”

But what she had told the woman was that as an individual she is opposed to a city income tax. But as an elected official, Lesko said, she will never oppose putting something on the ballot and bringing it to the voters.

A voter referendum should have happened with the bonds that had been sold to build the police-courts facility, she said, as well as the new underground parking garage. [Lesko helped head up an ultimately unsuccessful petition drive to enact a city charter amendment that would have made such a referendum required for all general obligation bonds. Chronicle coverage: "Bid Launched to Amend City Charter"]

She challenged what she said was a contention by Hieftje made during his opening statement that the new underground parking garage is being funded with parking dollars, saying that the parking garage is being funded with municipal bonds backed by the full faith and credit of the city of Ann Arbor. She called the sign that read “Your Parking Dollars at Work” at the construction site “misleading.”

[In his comments, Hieftje had seemed to indicate a contrast between floating bonds without a revenue stream to make bond payments, versus floating bonds where there is a revenue stream – as with the parking revenues that will help make the underground parking garage bond payments.]

Lesko concluded that she did not think a city income tax was necessary, but that she would put it on the ballot.

Downtown Boundaries

Question: The Chamber of Commerce has been talking about expanding the boundaries of downtown. How far out does the “buffer zone” go?

Hieftje on Downtown Boundaries

He noted that there’d been a long process [A2D2] – about six years – of finding a community consensus on rezoning downtown. And recently there had been work to preserve a neighborhood near downtown along the Fourth/Fifth Avenue corridor south of William Street. [At its July 6 meeting, city council is expected to vote on a recommendation to create a historic district in that area.] He said he was a big believer that density should be in the downtown area, the D1 and D2 areas.

Hieftje described a “bargain” that had been made with residents where they’d accepted density in the downtown in exchange for leaving the near-downtown neighborhoods alone. He cited the current support for Zaragon Place 2, a high-rise residential project proposed inside the downtown, as evidence of that bargain. [See Chronicle coverage: "Moving Ahead on Zaragon Place 2"]

Lesko on Downtown Boundaries

Lesko said it was a great question because the city was currently allowing “development by exception” through the use of planned unit developments (PUDs). Buffer zones are called that, she said, because they are supposed to protect neighborhoods where people live. She indicated that the city must grow, but that growth must be sustainable. The city must grow in a way that includes open, honest, forthright dialogue, she said.

She noted that the mayor had said he favored density in the downtown, yet had voted for PUDs. She contended that she was not criticizing Hieftje for that, but simply pointing out that it’s difficult to be consistent, given the way that zoning is currently handled in the city. As far as expanding boundaries, she said, she thought the discussion should happen. It was past time, she said, that the community came together to discuss exactly that topic.

The 35% Question

Question: On your [Lesko's] website, you make the statement that the cost of city government has gone up by 35% since 2006. Where do the numbers come from and what would you do to change that?

Lesko on the 35% Increase

The city of Ann Arbor, Lesko said, had provided the numbers through audited financial statements.

She then briskly moved to the rhetorical question: “What do you do to rein in spending?” The city can’t clip coupons, she said, but what the city could do, for example, was tell the IT department no, when they came and asked for unnecessary purchases. When the police department wants new vehicles, she said, the city council has to say no. Just say no to non-essential staff requests for funding, she suggested. Single-stream recycling was a non-essential request for funding, she said. It doesn’t take a rocket scientist to rein in spending, she said, but rather political will.

Hieftje on the 35% Increase

Hieftje began by noting that his understanding was that a press release issued by the whole slate of candidates [Jack Eaton in Ward 4, Sumi Kailasapathy in Ward 1, and Lesko] had indicated that city overhead had been going up by 35% per year. He said that the city’s CFO, Tom Crawford, had said he doesn’t know where those numbers come from. Hieftje said he would have to side with Crawford and was curious as to how anyone could come to that conclusion.

Hieftje said he didn’t think that there was any city in the state of Michigan that had overhead going up by 35% a year. It was not possible, he said, for any city to have $10, $20, $30 or $40 million hidden away in some account somewhere – that’s just not possible. He said he’d refer folks back to the statements of the city’s CFO, and was very curious as to how someone could come up with that number.

Chronicle Analysis: A Theory on the Claimed 35% Increase

What is claimed on Lesko’s website is not a 35% increase each year, but rather a 35% increase since 2006:

REIN IN OVERHEAD: According to the city’s own audited financial statements, since 2006 the cost of running city government has risen 35 percent ($34 million dollars). I have the financial skills and real-world business experience to devise equitable and sustainable solutions to rein in overhead and increase government efficiency.

Among the documents available under the link are the Comprehensive Annual Financial Reports for each fiscal year. [2006 CAFR] [2009 CAFR]

Comparing 2006 figures for “governmental activities” expenses to 2009 figures in that category gives the following contrast:

2009  $130,177,876 (2009 CAFR page 14)
2006   $96,870,412 (2006 CAFR page 14)

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The difference in those numbers is $33.3 million, and the increase is 34.38% – truncating at the millions place before doing the computation would give the $34 million difference and 35% increase Lesko has specified.

The Chronicle asked CFO Tom Crawford how to interpret expenses for governmental activities in the CAFR – is it reasonable to think of that category as “overhead”? The short answer he gave was no. In somewhat more detail, what are governmental activities? Crawford’s discussion paralleled the CAFR boilerplate definitional language:

Governmental activities – All of the City’s basic services such as police, fire, public works, and general administration are included in governmental activities. Property taxes, fees and charges, state shared revenues, and state and federal grants finance most of these activities.

Governmental activities contrast with business-type activities. From the CAFR:

Business-type activities - Business-type activity areas include water, sewer and stormwater systems, parking facilities, market, golf courses, solid waste and an airport. The City assesses fees, taxes and charges to cover the cost of services provided in these business-type activities.

So governmental activities, Crawford said, aren’t “overhead” in any reasonable sense for financial professionals. What does count as overhead, then, if not the governmental activities in the CAFR? Crawford pointed The Chronicle towards categories of expenses like human resources, the finance department and the city attorney’s office.

The municipal service charge, said Crawford is a reflection of “overhead.” Based on The Chronicle’s previous reporting on the municipal service charge, the total amount of cost allocation is in the range of $12 million [From "City of Ann Arbor's Municipal Service Charge Explained"]:

At Monday’s council meeting on the budget, Karen Lancaster stressed that the idea behind the MSC was about cost recovery to the general fund. In FY 2008, the total amount of administrative and overhead costs identified in the general fund budget for FY 2010 and FY 2011 – the current two-year cycle – was about $12 million.

Out of that $12 million, around 75% of it goes to support general fund activities. So it’s only a little over $3 million that is recovered to the general fund from outside the general fund.

So MSC amounts do not appear be on the same scale as the $34 million increase cited by Lesko.

Even if governmental activity expenses aren’t “overhead,” does Crawford monitor performance on that statistic – total governmental expenses – to check how well the city is doing? The key things to look at, he said, are each fund – the general fund, the water fund, the solid waste fund, for example.

So what accounts for the increase since 2006 in governmental activity expenses? Crawford pointed The Chronicle to the fact that the CAFR provides explanatory notes. A roughly $18.5 million chunk of the $34 million difference happened between 2008 and 2009. The explanation in the 2009 CAFR:

• Expenses for General Government increased by approximately $9.9 million primarily due to an increase in construction costs for the new Court & Police addition and for the Police early retirement payouts.

• Expenses for Public Safety increased by approximately $9.4 million due to increased wages and benefits, and increased fleet costs.

• Expenses for Public Works decreased by approximately $1.8 million due to decreased expenses on major and local streets due to the decline in revenue sharing funds.

Affordable Housing

Question: What do we do about affordable housing?

Hieftje on Affordable Housing

Hieftje said that affordable housing was something that Ann Arbor needs, and it is needed across several income levels. Responding the Lesko’s observation that he had voted for some PUDs, he noted that one of them had been for the Near North project, located across the street from the Ann Arbor Community Center, where the evening’s forum was taking place.

As far as replacing the 100 units of affordable housing offered by the old YMCA building at William and Fifth, he noted that they had been very substandard units. He said that their replacement had proven to be difficult. One thing that’s happened in recent years is that the tax credit program that had previously funded affordable housing had dried up in the state of Michigan. There had been a proposal [William Street Station] that would have supported affordable housing with other market-rate units in the same project, he said, but when the financial markets began to take a downturn, that project had not materialized.

One telling number, Hieftje said, is that Ann Arbor and Lansing are the only two cities left in the state that still contribute general fund money to human services.

Building affordable housing on a massive scale, he cautioned, would probably have to wait until the tax credit program came back. There had been proposals made to the county, he said, to do something with county-owned land, and those discussions were still happening. [Chronicle coverage: "The 100 Units of Affordable Housing"]

In the meantime, he said, the city would need to continue to “chip away” at the problem with 10 units here and 20 units there.

Lesko on Affordable Housing

She said that if Ann Arbor could build affordable housing the same way that it had been building “cash box apartments” we wouldn’t be having the discussion. She pointed to Ashley Terrace, at the corner of Ashley and Huron, as such a “cash box” that was in the middle of “going belly up.”

She called for an affordable housing trust fund. She said that an affordable housing trust fund that was funded through construction would provide a base of revenue that could be used to address this issue. [During her turn at the question, Sandi Smith pointed out that the city already has such a fund.]

Based on a study by the city, there were 500 additional units of affordable housing required, but the city had built something like 60 – that was not a commitment, Lesko said. There had to be political will, she said. We need development, she said, but we need the political will to make the commitment, instead of waiting for someone to come help us with funding.

She pointed to other instances where the city was waiting for funding – Stadium bridges and Fuller Road Station. She said she was not content to wait, concluding, “We need affordable housing now.”

Argo Dam

Question: What is your position on Argo Dam? If it stays, is there a need to shift the funding source out of the drinking water fund into the parks and recreation fund?

Lesko on Argo Dam

Lesko began by saying that she lives near Argo Dam, and kayaks regularly between Bandemer Park and Argo Dam. She stated that Argo Dam should stay, but not for the reason that people might think. She observed that the proposed Fuller Road Station was to be located on city parkland. The intention, she continued, is to lease the land, which took advantage of a loophole in the city charter that requires a voter referendum on the sale of parkland. [The city draws a distinction between lease agreements and the use agreements that are planned for Fuller Road Station.]

Fuller Road Station, Lesko cautioned, created a precedent for leasing of parkland. That is relevant to the Argo Dam question, she said, because removing the dam would reveal 10s of acres of new parkland, which could then be leased. So she would not vote to remove the dam, she stated, until that loophole is closed.

We’d been told the dam was failing, when it wasn’t, she said. She called for an open and honest discussion. “You want to take out the dam? Let’s talk.”

Hieftje on Argo Dam

Hieftje said the reason for the study was that the Michigan Department of Natural Resources and Environment had pushed the city to repair the toe drains, then the city did not think the situation was as serious as the MDNRE had said. The city had conducted studies to show its position was correct, he said, and the MDNRE had backed off considerably.

He said the city should keep Argo Dam. If we’re going to talk about dams, he said, they should talk about the other dams on the Huron River, including Geddes Dam, which creates Gallup Pond. Argo is much healthier than Gallup as a body of water, he said.

As far as the funding issue, Hieftje said they were going to have to look at that. Argo and Geddes required maintenance, he said, and did not currently generate power. He mentioned that he serves on the city’s energy commission and said that another reason for keeping Argo Dam was for the energy it could generate if it were retrofitted to generate hydropower.

He called for a comprehensive look at all the dams along the river, before looking at removing one.

Just for Hieftje

Hieftje on Hieftje

Question: Why do you feel you’ve earned another two years as mayor? What, if anything, will you do different?

He said that what he thought the campaign of the slate of candidates who were headed up by Lesko was really about was “screaming that there’s something wrong.” He said he was happy to sit down and show people what was going on in other cities and what is going right in Ann Arbor. Ann Arbor is going through the same ups and downs as other cities, having just lost its largest employer and taxpayer [Pfizer, which pulled out of Ann Arbor in 2008]. In that context, he contended, Ann Arbor is actually thriving.

With respect to bridges, he said, it was worth considering that there were currently three bridges closed in Washtenaw County – 50 in the state of Michigan. We’re going to fix the Stadium bridges, he said. The city could have done that this fall, and in the spring they’d go ahead whether they had federal money or not. Hieftje noted that the safety rating had improved recently, when the beams were removed.

As far as the contention that the city would spend $11 million for its contribution to Fuller Road Station, he said that the city would not be spending anything like that amount of money. The University of Michigan investment is providing the entire local match that’s required, he said. He called it a “bargain” for the city of Ann Arbor, which would be an asset that the city owns. The city will not be leasing the facility, but rather having entities like Amtrak, Greyhound and others use the facility through use agreements.

Just for Lesko

Question: Could you elaborate on the unethical behavior and the mayor’s acceptance of it, which you alluded to in your opening remarks?

Lesko on Unethical Behavior

Lesko indicated that it stemmed from a scandal that everyone read about who opened their Sunday papers on “a fine June day [in 2009],” to find out that while people were addressing the city council, city councilmembers were talking to each other by email. They’d been making fun of each other, giving some councilmembers Golden Vomit Awards, calling a councilmember “the moron.”

“That’s unethical,” she declared.

If you’re a leader and you know those things are going on, she said, you have to face the situation. She quoted J.K. Rowling in one of the Harry Potter books: “It takes a great deal of courage to stand up to your enemies; but a great deal more to stand up to your friends.” [Albus Dumbledore in "Harry Potter and the Philosopher's Stone"]

You have to make hard decisions as a leader, she said, and one of the most difficult decisions to make is when you’re faced with unethical behavior by those around you. As far as she is concerned, she said, the episode is in the past, and people would have to learn to work together. It would take someone who is willing, she said, to lead the way.

She noted that Hieftje had called her and Eaton and Kailasapathy “the slate,” but she contended that Kailasapathy had said several things with which Lesko disagreed. She also pointed out that the “council majority” is called that because they vote together usually. There was a slate of candidates who ran in 2008 who were all endorsed by Hieftje, she noted.

Closing statements

Each candidate had two minutes for a closing statement.

Hieftje’s Closing

He began his closing statement by responding to a critique by Kailasapathy, of his frequently repeated assertion that Ann Arbor was doing better than other Michigan cities. She had contended that it was expected that Ann Arbor would do better than Flint and Detroit. Hieftje stated that her critique was interesting because he’d not once mentioned Flint or Detroit, but had instead cited Grand Rapids and Royal Oak, award-winning cities. He agreed that Flint and Detroit were in a different category.

Hieftje reviewed the budget situation. The property taxes from Pfizer had disappeared, he said, yet for the budget that the city council had passed, the police chief had told them it was a workable budget. The budget that the council had passed would allow the police force to be proactive, Hieftje said. The fire chief had told the city council that he could, under the budget passed by council, meet the three criteria that the council had set: (i) keep all the stations open, (ii) maintain response times, and (iii) maintain the ability to get 18 firefighters to the scene to protect the city’s insurance ratings.

Hieftje stated that there are on average only about 12 fires per year where firefighters hook up to a fire hydrant, and the number of fires in Ann Arbor is down about 70% since 1970. He said it was really a shame and his heart went out to the firefighters who are losing their jobs. That could have been prevented if the firefighters had come to the table and sat down with the city as firefighters had done in other cities, he said.

We can’t be standing up for one particular union, he cautioned. He concluded by saying that Ann Arbor would continue to build on the quality of life that we have in Ann Arbor and that he’d compare it with anywhere. We’d continue to win awards, he said.

Lesko’s Closing

Lesko began by alluding to a remark that Sandi Smith had made in her closing statement about stones being thrown: “Boy, Sandi is feeling like somebody from the Old Testament!” She said she found Hieftje and Smith to be very competent and likable people, but it’s not about personality, she said, but rather policy.

In the June Ann Arbor Observer, she said, Hieftje is quoted as saying that she is against everything he is for [The Observer quote came in the context of an article on single-stream recycling.] She said she’d thought about that and concluded he was actually right – she is against cronyism, she said.

She said she is uncompromising when it comes to unethical or illegal behavior. She’s against scripting votes by email, she said. She said she takes very seriously the legal and fiduciary responsibilities that come with elected office.

She said that as the next mayor of Ann Arbor, she’d lead a city where city services take center stage. She stated that she would lead – “I’m not a go-along kind of gal.”

“You want a flower girl? Don’t vote for me. I’m tough,” she told the audience.

These are tough times, she said, and anti-union rhetoric “doesn’t fly with me.” And it is also not acceptable, she said, to allow unions to negotiate the “pants, shirts, and socks” off the mayor, the council and the city administrator.

She’d told the unions that if elected, she’d reopen their contracts, and that they’d said they’d cooperate.