The policy would set the funding at the higher of two different figures: (1) the Actuarial Required Contribution (ARC) rate; or (2) the existing level of contributions adjusted for the change in general fund revenues. That would have an impact of establishing a minimum increase in funding of 2% per year.

Action came at the council’s May 19, 2014 meeting.

The operative language in the policy is:

If the General Fund revenues are projected to increase less than 2%, the city’s contribution shall increase 2%; thereby establishing a minimum increase of 2% per year.

The pension plan is currently 80.24% funded. The VEBA plan is 38.5% funded.

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

The leadership of the Washtenaw County board of commissioners, from left: Felicia Brabec (D-District 4 of Pittsfield Township), Andy LaBarre (D-District 7 of Ann Arbor), and Yousef Rabhi (D-District 8 of Ann Arbor). Rabhi is board chair. Brabec serves as chair of the board’s ways & means committee, and LaBarre chairs the board’s working sessions. (Photos by the writer.)

Those priorities, listed in order of importance, are: (1) ensure a community safety net through health and human services; (2) increase economic opportunity and workforce development; (3) ensure mobility and civic infrastructure for Washtenaw County residents; and (4) reduce environmental impact. [.pdf of budget priorities resolution] [.pdf of budget priorities memo and supporting materials]

The vote on the budget priorities resolution was 6-1, with dissent from Dan Smith (R-District 2), who indicated that his No. 1 priority is long-term fiscal stability, followed by public safety and justice. Rolland Sizemore Jr. (D-District 5) had left the meeting before the vote, and Alicia Ping (R-District 3) was absent. Although it was not part of the four priorities, a resolved clause was added during the meeting, stating that “the long-term fiscal stability of the county [will] continue to be of import throughout the budget development process.”

The resolution was brought forward by Felicia Brabec (D-District 4), who’s leading the budget process for the board. It also laid out a framework for developing strategies to measure the effectiveness of county investments in these priorities.

Brabec described this approach as “both a policy and a paradigm shift” that can’t happen overnight, but one that’s critical for the county’s future. The board is forming work groups focused on each of the four priorities, as well as on the topic of human resources. These work groups will be meeting to develop as many as five “community impact” goals in each category, in work that’s expected to continue into next year and beyond.

The July 24 meeting also included an update from county administrator Verna McDaniel about the county’s current financial condition and preliminary projections for 2014. At her last presentation, on May 15, 2013, McDaniel told commissioners that the county needed to identify $6.99 million in structural reductions for the 2014 budget. The approach to addressing this $6.99 million target depended on whether the county moved ahead with a major bond proposal to cover obligations to retirees, she said at the time. That bond proposal was put on hold earlier this month.

Now, the projected general fund shortfall is $3.93 million on a roughly $101 million budget. McDaniel indicated that the shortfall will be addressed primarily with operating cost reductions ($3.83 million) as well as $100,000 in cuts to funding of outside agencies, including support for nonprofits. The lower shortfall resulted from revised actuarial data that significantly lowered the contribution that the county is required to make toward its unfunded retiree obligations. Other factors include: (1) a decision not to make a $1 million contribution to the general fund’s fund balance; and (2) $2.4 million in higher-than-previously-anticipated revenue.

McDaniel noted that if the county had chosen to bond, then operational cuts would not be needed, and the fund balance contribution could be made. She also reported that the general fund budget doesn’t factor in serious state and federal cuts to non-general fund programs. “Revenue is needed,” she said. “We need to figure that out.”

Commissioners Yousef Rabhi (D-District 8) and Conan Smith (D-District 9) both voiced interest in exploring possible new taxes. “I think it’s important that we strongly consider asking the voters of Washtenaw County if they’re willing to support some of the ongoing operations that we have,” said Rabhi, the board’s chair. “We need to pose that question at least to the voters in the form of a millage of some kind.”

Smith cited human services and public safety as areas that might gain voter support for a millage. During public commentary, representatives from SafeHouse Center urged commissioners to continue funding of that nonprofit, as well as for human service organizations in general.

The upcoming budget will be prepared without the major bonding initiative that until earlier this month was anticipated to occur later this year. The bonding was intended to cover unfunded pension and retiree healthcare obligations – for the Washtenaw County Employees’ Retirement System (WCERS) and Voluntary Employees Beneficiary Association (VEBA). The original maximum amount for the bonds had been estimated at up to $345 million, but updated actuarial data resulted in a lower estimate of about $295 million. During the July 24 meeting, commissioner Conan Smith said it’s unlikely that bonding could occur this year, although he’s still supportive in general of taking that approach.

McDaniel plans to present the 2014 budget to the board at its Oct. 2 meeting. Commissioners are required to adopt a balanced budget for 2014 by the end of 2013. At its May 1, 2013 meeting, the board had approved development of a four-year budget. However, commissioners have not yet decided whether to follow through by adopting a budget with that four-year horizon. And some commissioners – notably Ronnie Peterson (D-District 6) – have expressed skepticism about this longer-term approach. For the past few years, budget plans have been developed for a two-year period, though the board must confirm the budget annually.

Budget Priorities

One of the main agenda items at the July 24 meeting was a discussion of priorities that the administration would be asked to use as the staff develops the budget for 2014-2017. [.pdf of budget priorities resolution] [.pdf of budget priorities memo and supporting materials] Commissioner Felicia Brabec (D-District 4), who’s leading the budget process for the board, began by saying that this year, the board would focus on community impacts and creating a vision.

Felicia Brabec (D-District 4 of Pittsfield Township) is leading the board’s budget process as chair of its ways & means committee.

In 2014, that work would shift to developing strategies and metrics related to the community impacts, she said. The board would ask the administration to report back on a more regular basis to talk about how the budget reflects community impacts and investments in the board’s priority areas. It allows for a fuller and more rigorous look at what’s typically been called the budget reaffirmation, Brabec said. [In the two-year budget cycle that the county currently uses, the board votes to "reaffirm" the second year of the budget, usually with only minor changes.]

Brabec noted that the board had held two budget retreats – on March 7, 2013 and May 16, 2013 – and a July 11, 2013 working session focused on the budget. She said she’s had follow-up conversations with commissioners, and these four budget priorities were her best attempt to synthesize that feedback.

“This is both a policy and a paradigm shift for our county,” Brabec said. It can’t happen overnight, she added, and there will be bumps along the way. But this model is an attempt to create a solid process that will help reach the county’s goals, she said. It also sets forth a model for transparency, responsibility and accountability to the community, Brabec noted. Her hope is that, by working with the administration, the board can achieve the community impacts that will be set as part of this process. The framework will allow the board and administration continuously to assess and adjust its investments, she said, assuring that they’re making choices that align with their priorities and vision. She described it as a strategic, longitudinal and dynamic process.

The four priorities stated in the resolution are:

1. Ensure a community safety net through health and human services;
2. Increase economic opportunity and workforce development;
3. Ensure mobility and civic infrastructure for Washtenaw County residents;
4. Reduce environmental impact.

The resolution on budget priorities also “directs the Administrator to lead a structured and transparent process by which the Board, representatives from throughout the organization, and community partners engage collaboratively to develop a balanced budget proposal that (1) aligns the organization’s programs and services with the Board’s four priorities, and (2) includes a summary set of ‘community outcomes’ that declares benchmarks related to the Board’s priority areas.”

The board has named the framework for this budget decision-making process: “Community Impact Investing.” Part of the framework includes six “decision-making principles” that commissioners are asking staff to use in developing the budget. Those principles are:

1. impacts and outcomes drive investment priorities;
2. services are delivered optimally by the right provider, social and financial returns are calculated and articulated;
3. programs are evidence- and performance-based;
4. mandates that support outcomes and impacts are better funded;
5. the excellence of the County’s internal workforce is foundational;
6. programs and services should be encouraged to achieve the triple bottom line of financial returns on investment, contribution to social equity, and reduction of environmental impact.

Ronnie Peterson (D-District 6) wondered when the board would actually discuss dollar amounts for this upcoming budget, especially for funding of organizations like SafeHouse and other human service programs.

Brabec described the priorities as the “big picture,” which will in turn determine allocations in the budget. It’s a huge shift in process, she said. Noting that the priorities are listed in order of importance, Brabec said the board will be able to look at the budget that the administration brings forward and see how the allocations are aligned with the budget priorities.

Rolland Sizemore Jr. (D-District 5) said it looked like the board was duplicating things they’ve already discussed. Why is the board spending time on this, he asked, when they already have a list of guiding principles that they’ve used for years? Is there anything different here?

By way of background, the “guiding principles” of the county are listed on the county administrator’s website:

1. Ensure long term fiscal stability for the County.
2. Reduce the cost of conducting the County’s business.
3. Enhance customer service.
4. Provide the necessary knowledge, skills and resources to County employees to carry out these principles.
5. Ensure adequate provision of mandated services.
6. Focus on the root causes of problems that affect the quality of life of County citizens by aggressively pursuing prevention strategies.
7. Provide leadership on intragovernmental, intergovernmental and intersectoral cooperation and collaboration aimed at improving services to County citizens.

Saying he didn’t understand the purpose of the proposed budget priorities, Sizemore asked Brabec to explain the difference between the current proposal and the existing principles.

Brabec said that in the past, the board would present its budget priorities, then the administration would develop a budget based on those priorities. The current proposal is an attempt to keep the board involved – not just during the budget development, but continuously as the county makes investments.

Sizemore said that as someone who is elected by residents, he already keeps the budget priorities in mind throughout the year. Although he felt it was duplicating a mechanism the board already had, Sizemore said he had no problem with it if the board is going to follow through on it. But if these priorities are just going to be put on the “back shelf,” he said, there are already plenty of reports like that. Brabec said her hope is that it will be a dynamic process.

Yousef Rabhi (D-District 8) noted that Sizemore had spoken about the classic issue between the board and the administrator, who’s been hired by the board to present a balanced budget. Brabec is trying a different approach, Rabhi said – to involve the board in evaluating and benchmarking the priorities that it’s setting. Some of the priorities are carried over from the previous budget cycle, he noted, but a lot of it is new. The hope is that this process will be more dynamic than in the past, he said.

Andy LaBarre (D-District 7) highlighted the working groups that will focus on the budget priorities. This approach hasn’t been taken before, he noted. The working groups will be developing a list of “community impacts” for each priority. LaBarre asked for clarification about the timeline for that work.

Brabec replied that the work groups will be meeting in August and develop up to five community impacts for each budget priority. Those impacts will be delivered to the administrator as the budget is developed.

Ronnie Peterson (D-District 6 of Ypsilanti).

Peterson brought up the issue of long-term legacy obligations to retirees, and stated that it should be one of the priorities. “It’s not going to go away, and it should be something we should be talking about,” he said. The county made a commitment to employees, and has an obligation to meet it, he said. The board has discussed it for the past few months in terms of a potential bonding to cover those obligations, he noted, and the public should continue to be part of that discussion. He pointed out that the state legislation allowing the county to bond for this purpose doesn’t sunset until the end of 2014. The public should know that the board isn’t hiding this issue, he said.

Peterson added that he wasn’t trying to make it a controversial issue, but “money’s always controversial when you lack it.” He said if the topic became part of the budget document, “I will be quiet for the rest of the night.”

Conan Smith (D-District 9) thanked Brabec and Rabhi for their leadership on this budget framework. It’s important to know what your goals are when you’re developing a budget, he said. For a legislative body, the messiest part of doing that is creating the framework. Giving clear, good direction to the administration is the board’s job, he said. It’s essential to know what the board wants to achieve over the long-term with its investments. The document that the board is voting on that night doesn’t make any allocation of funds, Smith noted. However, he said, it builds on the “experiment” that the board has been undertaking to identify goals for the community, and then pursues those goals “very deliberately.”

Smith called Brabec’s proposal a “significant step forward.” The process calls for defining metrics and clearly articulating those metrics for each priority. In the past, the board simply talked about its priorities, he said, and that wasn’t sufficient. He also said he appreciated the “consistent accountability method” that’s being proposed. The board will be checking outcomes, not just funding amounts. Commissioners will be asking if the investments are delivering the change in the community that they really want, Smith observed.

Rabhi in turn thanked Conan Smith for his leadership in identifying the importance of metrics during budget discussions earlier this year. Rabhi also agreed with Peterson about the importance of addressing unfunded liabilities. A lot of other communities have ignored the issue of unfunded liabilities, he said. The fact that the county is evaluating its options is the most fiscally responsible thing to do, Rabhi said. He asked Brabec how that issue could be incorporated into the budget priorities document, perhaps by noting the importance of long-term fiscal responsibility.

Rabhi suggested taking a certain percentage of any increase in revenues above what’s been budgeted, and using that excess to help cover unfunded liabilities – or adding it to the fund balance. In order for that to happen, that goal needs to be built into the budget priorities, he said. Fiscal stability and workforce sustainability are really overlays to the budget priorities, he added – saying you need those things in order achieve the other priorities.

Peterson clarified that he wasn’t necessarily saying that he wanted to continue the conversation about bonding, but it’s more about the obligation to employees. He alluded to Detroit’s bankruptcy, noting that the issue of unfunded obligations are affecting many communities – but it’s especially affecting people who were promised pensions. He’s concerned that if the county borrows money but doesn’t meet its investment goals, the shortfall will be made up on the backs of county employees. The county doesn’t have a strong reserve, he noted. The state constitution is supposed to protect pensions, but the constitution doesn’t mandate that governments have to make payments to cover those pension obligations.

Peterson also expressed concerns about the proposed four-year budget process. He didn’t see how the county could be responsive to possible fluctuations in contributions to WCERS and VEBA, if a four-year budget was in place. Anything can happen in this country, he said, citing specifically the panic after Sept. 11, 2001. If the stock market crashes, the county would have to meet its obligations out of the general fund, he said. Peterson added that he might be the only one to vote against a four-year budget, if the county doesn’t have a plan in place that is fiscally sound. At one point, the retiree obligations were fully funded, but “we got off track,” Peterson said. Time has passed, he said, but now the issue is how to get back on track.

LaBarre echoed Peterson’s comments, saying the county had to meet its retiree obligations – from a moral and reputation perspective. He considered the budget priorities as a guide for the future, with the assumption that the county won’t be bonding. It will be a long, hard process to develop a budget with the current constraints, LaBarre noted. But the intent is to meet the county’s retiree obligations fully, he said, even though that won’t be handled through bonding.

Brabec described the budget framework and priorities document as separate from a discussion about bonding, or about any other strategies the county might pursue to meet its retiree obligations.

Conan Smith (D-District 9 of Ann Arbor).

Conan Smith suggested that one of the measurable objectives for the budget should be that the unfunded liabilities are addressed. He said his personal preference would be to fully fund it. [The allusion was to funding those obligations by borrowing the full amount through bonding, which Smith supports.]

Smith asked Brabec whether a separate budget work group could focus on employee issues. That’s possible, Brabec replied, but she also wanted to make sure that each of the work groups keep in mind the importance of employees.

Smith agreed, but said he still felt there should be a work group that addresses personnel issues. One example he cited is a “blurring” of compensation between supervisors and the employees they supervise. So the compensation of the leadership across the organization should be examined, he said. Smith also mentioned some commissioners want to revisit the “red circle” policy. [That policy authorizes the administrator to increase an employee’s salary above the position's pay range. If an assignment extends past six months, the administrator must provide a report to the board about employees on extended assignment.]

The county has been a place where people crave employment because of the expertise they’re surrounded by, Smith said. “Putting ‘Washtenaw County’ on your resume really meant something out in the world,” he said. It’s important to keep fostering that environment.

Rabhi described the budget as one of the tools to help address the unfunded liabilities, among other issues. He said he respected Peterson’s concerns about a four-year budget, but he felt the unfunded liabilities could be addressed during the budget process – even if the budget is taking a longer-term view. The county could be locking in that commitment to fund those liabilities for a longer period, he said.

Brabec pointed out that long-term fiscal stability is one of the county’s guiding principles. She proposed adding a resolved clause to the resolution that would highlight this point:

Be it further resolved that the long-term fiscal stability of the county continue to be of import throughout the budget development process.

Peterson said he’d be supportive of that.

Outcome: Brabec’s proposed addition was accepted as a friendly amendment.

Discussion continued. Peterson spoke at length about various impacts to county revenues, including cuts in federal and state funding. He didn’t understand how the county could develop a four-year budget with such huge legacy costs, as well as uncertainty related to state and federal grants. In four years, there will be a new president and possibly a new governor, he pointed out. The county also doesn’t know what the actuary will require in terms of contributions to cover unfunded liabilities for retirees. It’s setting the county administrator up to fail, he contended, if her budget projections are off. If her projections are wrong, the only thing that she could do would be to cut from the board’s priority areas, he said.

It might be different if the county were generating revenues that would offset its retiree costs, Peterson said.

Rabhi picked up on that idea, saying that without having “new dollars” on the table, the county will face similar struggles in the future. “I think it’s important that we strongly consider asking the voters of Washtenaw County if they’re willing to support some of the ongoing operations that we have,” he said. “We need to pose that question at least to the voters in the form of a millage of some kind.”

The county can’t rely on state and federal funding that has traditionally supported county-run programs, Rabhi said. Property taxes are constrained by various state laws and constitutional amendments, he noted. The problem of unfunded retiree liabilities was created over time and no single person can be blamed, he added, but it’s important to address it head on. So the voters need to be asked if they’re willing to keep the county’s commitments to employees while keeping the same level of programs and services. He noted that the liabilities are huge and will impact the budget for years to come.

Taxes are a sensitive issue, Rabhi said, but voters need to be asked. Are they content with shrinking county government to the point of maybe only providing the lowest level of mandated services? Given current realities, “we just can’t expect to continue the way we are,” he said, providing the current breadth of services. “I know that’s kind of a doom-and-gloom statement, but I think it’s the reality that we’re facing and it’s the challenge of local government.”

Conan Smith said he fully supported Rabhi’s suggestion to talk about new revenue. Regarding the funding for unfunded liabilities, however, he reminded commissioners of something that their bond counsel, John Axe, had told them: It’s perhaps a riskier proposition politically to fund those liabilities via a voter-approved millage, because that gives the board the unilateral authority to raise taxes if the funds aren’t sufficient to meet those obligations.

Smith also said he’d love to put a human services millage on the ballot, and is eager to have a conversation about that. A millage for police services is another option to discuss, he said.

Smith noted that the bonding scenario had been presented as a “tax neutral” solution. To cover the unfunded liabilities by bonding, the county wouldn’t need to ask for an additional millage, he said, “nor would we have to cut the general fund.” To him, the bonding question is “unresolved.”

Dan Smith (R-District 2 of Whitmore Lake).

Dan Smith (R-District 2) cited several concerns he had with the budget priorities resolution. His first priority above all else is the short-term and long-term financial stability of the county. It’s troubling to see that the county is contemplating putting $1 million less in its fund balance next year than originally contemplated, he said. A healthy fund balance is a critical part of financial stability. His second priority would be public safety and justice, and there are a lot of mandated and non-mandated services that fall under that category. A distant third priority would be roads, Smith said.

Conan Smith responded, saying he thought that public safety was a priority that was interwoven with the four priorities stated in the resolution. He cited sheriff Jerry Clayton’s focus on a “social justice” approach to public safety, and wondered if Brabec had talked to Clayton about his team’s role in the proposed working groups.

Brabec said she had talked to Clayton about the notion of a social justice campus, but hadn’t discussed it in the context of the budget work groups. She saw public safety as integrated into several of the priorities, primarily the priorities on creating a community safety net and ensuring economic opportunity.

Conan Smith also clarified with Brabec that roads would be part of the third priority – on ensuring mobility and civic infrastructure. He said he supported everything that Dan Smith had identified as priorities, adding that the board needs to ensure that the work groups tackle those subjects. “I think the framework allows for that,” he said.

LaBarre reported that the topic of the next working session, on Aug. 8, would focus on the budget. So commissioners can continue hashing out some of these issues then, he said.

As the discussion came to a close, Peterson again voiced his opposition to a four-year budget, saying he was “totally opposed” to that approach. Rabhi responded, noting that although an original draft of the resolution had mentioned a four-year budget, the most recent version had eliminated references to that. Brabec had made those changes in order to address Peterson’s concerns, Rabhi said.

Brabec added that the resolution is meant to provide a budget framework, regardless of the timeframe. The discussion about whether to develop a four-year budget will be addressed separately, she said. Peterson replied that “in front of all of these witnesses, I’ll take your word and hold you to it.” He indicated he’d vote for the resolution based on that assurance.

Outcome: Commissioners approved the budget priorities resolution on a 6-1 vote, with dissent from Dan Smith (R-District 2). Alicia Ping (R-District 3) was absent, and Rolland Sizemore Jr. (D-District 5) had left the meeting prior to the vote.

Financial Update

County administrator Verna McDaniel gave an update on the county’s financial condition, and a look ahead at the upcoming budget. [.pdf of McDaniel's presentation] She had previously given a report to the board on May 15, 2013, when she’d been advocating for a bond proposal. At that time, she had told the board that $6.99 million in structural reductions were needed in 2014, in order to provide a balanced budget for the four-year period of 2014-2017. If the county didn’t bond, she’d said at the time, all of that $6.99 million – including $5.06 million related to covering unfunded retiree obligations – would need to come from operational cost reductions.

County administrator Verna McDaniel.

On July 24, she told the board that revenues would be $2.4 million more than previously projected. [That's based on information from the equalization report that was delivered at the board’s April 17, 2013 meeting.]

She noted that many of the previous assumptions are unchanged. That includes projecting a 1% increase in property tax revenue each year through 2017, and getting $5.3 million per year in state revenue-sharing.

Her current analysis is that $3.93 million in structural reductions are needed, McDaniel said. In explaining the lower shortfall, she said the original estimated amount of $5.06 million in contributions needed to cover unfunded retiree obligations had turned out to be high, and was now estimated at about $2 million.

To address the $3.93 million shortfall, McDaniel said most of the reductions ($3.83 million ) will come from operational cuts. In addition, she’s proposing cuts of $100,000 to “outside agency” funding, which includes the county’s support of nonprofits. She also expects to eliminate a previously planned $1 million contribution to the general fund’s fund balance in 2014.

However, McDaniel also proposed that any additional revenues above the projected 1% increase in property taxes each year should be allocated to the fund balance as unearmarked reserves. Any surpluses at the end of each year would also be moved into unearmarked reserves, she said. The additions to the fund balance will be incremental, “as opposed to being baked in,” she said, “because baking it in will create an undue burden on the organization.”

McDaniel reminded the board that the county had made $30 million in reductions over two years in 2010 and 2011, and another $17.5 million in cuts during 2012 and 2013. With $3.93 million in proposed cuts next year, “we’re close to the finish line,” she said. “We think we can do this.” She plans to make a formal budget recommendation to the board on Oct. 2.

For the non-general fund portion of the budget, programs and services that are funded with federal and state grants face serious challenges, she said. Those issues were not addressed in her budget presentation, she added, but she wanted the board to keep it in mind. “Revenue is needed – we have to figure that out.”

Financial Update: Board Discussion

Conan Smith noted that when the budget had factored in bonding, the structural reductions were originally estimated at $1.83 million. If bonding were to move forward now, he said, there would be no need for operational reductions and the county could make its $1 million contribution to the fund balance. By abandoning the bonding proposal, he added, it is forcing cuts on the organization and reducing the contribution to the fund balance.

Kelly Belknap, Washtenaw County’s finance director.

Smith then asked for an explanation of the relationship between the fund balance and the annual cash flow. Each June for the past couple of years, “we’ve cut it pretty thin,” he said.

Kelly Belknap, the county’s finance director, confirmed that the county had “dipped below zero” in the summer, in terms of its ability to meet payroll with cash flow. Each year, the county in May or June enters into a negative cash balance, she said, because property taxes aren’t collected until July. The county’s policy is to borrow internally from its fund balances that are outside of the general fund, she said. When tax revenues are received later in the year, those other fund balances are repaid.

Conan Smith clarified with Belknap and McDaniel that this is considered an acceptable practice, but not a best practice. He said he wasn’t trying to blame anyone, but wanted to make clear that there are “consequences of walking this particular path.” He noted that the other way to address it would be to make even deeper operational cuts to the general fund, which is not something that the administration is proposing.

Ronnie Peterson confirmed that the county was making actuarial-recommended contributions to both WCERS and VEBA. He noted that some employees are in the Municipal Employees’ Retirement System of Michigan (MERS), a statewide system. McDaniel reported that most employees in the sheriff’s offices are in the MERS plan, though she didn’t have specific figures on hand. She noted that the county also makes required contributions to that system, in addition to WCERS and VEBA.

Peterson wondered if the county could expect large fluctuations in the amount of contributions it would need to make to MERS in the future. That should be part of the board’s discussion, he said. McDaniel replied that the amount fluctuates each year, and it’s been going up. Those figures are included in the budget projections, she said. Peterson wanted to make sure that MERS was included in the discussion about legacy pension costs, saying that it also impacts the budget.

Conan Smith noted that the MERS system is the healthiest fund – saying that it’s about 88% funded. But the challenge is that the county doesn’t control the assumptions for that system in the same way that it can for WCERS and VEBA, he said. So in 2010, there was a $600,000 increase in the contribution that the county was required to make for MERS, for example. He agreed with Peterson that it was important to be aware of the volatility of MERS.

Outcome: This was not a voting item.

Financial Update: Public Commentary

At the beginning of the July 24 meeting, Doug Smith – wearing a Washtenaw Watchdogs T-shirt – told the board that commissioner Conan Smith has repeatedly stated that the county has made its scheduled contributions to the retirement accounts, and that the county is therefore not responsible for underfunding those accounts. “He’s deceiving you – whether he’s deceiving himself is not clear,” Doug Smith said. In 2000, the WCERS account was overfunded by $4 million. Since then, it has been progressively underfunded until it became underfunded by more than $40 million in 2007. That was before the financial crisis of 2008, he noted, and before the pension plan was re-opened for new members. That means the county board watched the fund lose ground by about $6.5 million each year between 2000 and 2007, Smith said, and nothing was done to investigate or correct the situation. The county didn’t pay its annual contribution to VEBA in full until 2010, even though it was severely underfunded, he said.

From left: Conan Smith (D-District 9 of Ann Arbor) and Dan Smith (R-District 2 of Whitmore Lake).

Smith referred to a New York Times article he’d given to the board, which reported that actuaries have been making unrealistic assumptions about returns on investments for many years. That means pension funds are much more underfunded than industry practices would estimate, he said. For Washtenaw County, actuaries are still using an unrealistic net gain on investments of 7.75%, he said. For the WCERS account, the actual return has been 3.4% since 2000. If the actuary used a more realistic number, the current underfunding would be much higher than $300 million, he argued.

In 2007, the board made a decision “so stupid that it must have been on purpose,” Doug Smith said. Even though the county had eliminated the defined benefit pension plan in 1984 in favor of a defined contribution plan – which by 2007 covered about 80% of county employees – the county in 2007 decided to let all employees buy back into the pension plan. It was a “gift to employees, including Verna McDaniel, at taxpayer expense,” Smith contended. McDaniel is employed by taxpayers, he said, and she is not serving them well. The entire problem with underfunding the retirement plan rests with the board, “and I’m tired of hearing Conan Smith say otherwise,” he concluded.

During the final opportunity for public commentary at the end of the meeting, Doug Smith asked for confirmation of his understanding of McDaniel’s presentation: Even if the administration isn’t happy about making budget cuts, the roughly $4 million cut over four years is manageable without the bonding. He also wanted confirmation that the budget was being prepared with the assumption that the county would not be bonding.

Financial Update: Public Commentary – Commissioner Response

Conan Smith acknowledged that Doug Smith was right: “I had missed the shorting of the VEBA in 2006-09. I’d been told differently, and I didn’t validate that information.” He said he’d go back and look at what the rationale was for that decision, but “it almost doesn’t matter. We’ve got to deal with it looking into the future.”

Conan Smith also affirmed that “absolutely the budget is manageable.” There are sufficient general fund revenues to cover the contributions that must be made each year toward unfunded retiree obligations. “The question is always: What are the consequences of doing that?” he said. The county has been making operational cuts ever since he got elected, Smith said, and it would be possible to make more cuts. But “we have cut to the bone already,” he added. Making additional cuts would result in measurable, immediate reductions in services to residents, he said.

As for bonding, it’s almost inevitable that they wouldn’t be able to bond this year, he said, because of the timing needed to move through the bonding process. Given that the board must adopt a balanced budget by Dec. 31, it would be irresponsible of McDaniel not to present a budget on an assumption that no bonding would take place, he said.

Andy LaBarre addressed Doug Smith’s comments that had questioned the motives of commissioners. LaBarre felt those comments were wrong. He said he appreciated the service of Conan Smith, Yousef Rabhi and Verna McDaniel. “I just wanted that said for the record,” LaBarre concluded.

Communications & Commentary

During the evening there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. In addition to the remarks reported earlier in this article, here are some other highlights.

Communications & Commentary: SafeHouse Center, Human Services Funding

Three representatives of SafeHouse Center – a nonprofit that provides support for people affected by domestic violence or sexual assault – addressed the board at the start of the July 24 meeting. Barbara Niess-May, the nonprofit’s executive director, thanked the board for its support of SafeHouse as well as other safety net services in the community. It makes an enormous difference to people who find themselves struggling and needing an extra hand during a difficult time. She noted that the coordinated funding program is critical, and she encouraged commissioners to keep it a priority. Any loss to that funding would impact the quality of life for many people, including survivors of domestic violence and sexual assault.

Molly Resnik, a co-founder of SafeHouse Center, and SafeHouse board president Rob Oliver addressed the county commissioners during public commentary, advocating for continued support of the nonprofit.

About 10 years ago, SafeHouse took on the task for providing sexual assault services on behalf of the county, Niess-May explained. There was an agreement about how much funding it would take to support that work, she said, but those amounts subsequently have been reduced. Like everyone else, SafeHouse is doing its best to do more with less, she said, but the need has not lessened. SafeHouse serves about 5,000 women, children and men each year, with a staff of 24 and 150 volunteers. SafeHouse is “definitely leveraging every last bit that we can,” she said. SafeHouse serves as a support for law enforcement, and works cooperatively with the county prosecutor’s office, “and in the end, we save lives,” Niess-May said. A loss of funds would mean a drastic reduction of services.

Molly Resnik, one of SafeHouse’s co-founders and a long-time volunteer, said she knew there were a couple of people at the board table who had been there in the early 1970s when organizers started putting together services for survivors of domestic violence and sexual assault. It’s heartening to see the continuity, she said, but frightening to see that in many ways, “we’ve gone backwards in response to budget cuts.”

Until recently, she had served on the board of the Ann Arbor Area Community Foundation, a partner in the coordinated funding approach. She’s very aware of the importance of prioritizing and of coordinating an approach to meet community needs. The one problem is that some services – like those offered by SafeHouse – “don’t comfortably fit into categories.” It’s been put into the category of emergency housing and homelessness, she noted, but it’s not exactly a fit. As the U.S Dept. of Housing & Urban Development (HUD) and others have redefined what homelessness means for the purpose of funding, it’s leaving SafeHouse out in the cold. Resnik said that for her, it comes down to saving lives. She has no doubt that there are women and children alive today because SafeHouse was there. She asked the board to remember that SafeHouse stands out, and somehow the community needs to reinvigorate the comprehensive services it offers.

The president of SafeHouse Center’s board, Rob Oliver, noted that the organization is effective despite cuts by the county, federal sequestration and funding cuts from the HUD. That’s why money from the county is so important. SafeHouse has hired a consultant to help with fundraising, so the nonprofit is doing as much as it can to be sustainable, he said. Oliver recalled his own experience with domestic violence years ago, saying that thanks to Resnik, his family had a place to go when they had to flee an abusive stepfather. Now, other families also have a place to turn. He urged commissioners to support SafeHouse and its work.

From left: Commissioner Kent Martinez-Kratz (D-District 1 of Chelsea) and Bob Tetens, director of Washtenaw County parks & recreation.

Several commissioners responded, expressing support for human services funding in general and SafeHouse specifically. Conan Smith noted that there are fiscal pressures on all local governments, and some of the cuts are because of economic conditions. But some cuts are because of decisions that the board chooses to make, he said, so having people come and articulate the critical importance of maintaining certain investments is really important. People need to know that even making small cuts to organizations like SafeHouse can have a direct impact on people’s lives, he said.

Ronnie Peterson said SafeHouse had brought its secret weapon by having Molly Resnik speak to the board. Washtenaw County government was part of the birth of SafeHouse, he said, and it’s important to make sure that this kind of safety net service is always a part of the county’s institutional funding. He joked that some people might think his politics have swung to the right because of his friendship with Dan Smith, a Republican commissioner. But Peterson said he’s always been focused on the delivery of services and outcomes. Every community should have a SafeHouse, he said. If the county can make a major long-term commitment to the humane society, Peterson added, then it should make a commitment to SafeHouse too.

Yousef Rabhi said he supported SafeHouse, and he thanked the representatives for advocating on behalf of the nonprofit. The partnership between SafeHouse and the county goes way back, he said, adding that he plans to continue advocating for human services funding in general, and for SafeHouse specifically. Although SafeHouse has a separate line item in the county’s budget, its funding has been decreased significantly over the years, Rabhi said. That decision needs to be reviewed.

Communications & Commentary: Thomas Partridge

Thomas Partridge called for an FBI investigation of municipalities in Washtenaw County, including the city of Ann Arbor, because of egregious, long-standing violations of civil and human rights of residents. In particular, he cited budget manipulations and priorities that resulted in the loss of substantial amounts of money between 2008 and today. He contended there’d been investment losses at the Ann Arbor Transportation Authority, Ann Arbor Public Schools as well as at the University of Michigan.

At his last turn at public commentary, Partridge told commissioners that priority items are being ignored, including plans for affordable housing, ending homelessness, an affordable countywide transportation system, and affordable, accessible education and health care. County residents are suffering, he said, and Washtenaw County is being left behind compared to other areas in the state. Commissioners should be seeking additional revenue sources, and lobbying the state legislature to allow for a progressive income tax, he concluded.

Present: Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Yousef Rabhi, Rolland Sizemore Jr. (present during the first part of ways & means committee only), Conan Smith, Dan Smith.

Absent: Alicia Ping.

Next regular board meeting: Wednesday, Aug. 7, 2013 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to confirm date.] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public commentary is held at the beginning of each meeting, and no advance sign-up is required.

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Board chair Yousef Rabhi and vice chair Alicia Ping. (Photos by the writer.)

After a lengthy and often heated debate, the board voted 5-4 to give initial approval to the notice, but postponed final action until July 10. Voting in favor of initial approval were Ping, Conan Smith, Dan Smith, Andy LaBarre and Kent Martinez-Kratz. Voting against the proposal were Yousef Rabhi, Ronnie Peterson, Rolland Sizemore Jr. and Felicia Brabec.

Ping noted that her goal isn’t necessarily to cut funding for the courts, but rather to be more transparent about where the money goes. The board could ultimately decide to leave the lump-sum approach in place. Giving a notice to terminate the agreement simply gives the board the option to end it.

Conan Smith, who has wrangled with court officials in the past on this issue, argued that the legislative branch is responsible for budgeting, and the board has abrogated that responsibility by agreeing to lump-sum funding. The board gives up far too much authority over line-item expenditures in exchange for “peace in the valley,” he said. “I want to see something different.” With a line-item approach, the county board could indicate priorities for the courts by allocating more funds to specific areas. Dan Smith also argued in favor of the action, noting that the courts are funded with essentially no oversight.

No court officials attended the June 5 meeting. The proposal had not been on the published agenda.

Ronnie Peterson argued most strongly against Ping’s proposal, fearing it would damage the board’s relationship with the courts. Peterson also felt the board itself hadn’t been very accountable regarding a $345 million bond proposal it’s considering. “So as we blast others, let’s prepare to take a few pellets ourselves,” he said. Rolland Sizemore Jr. warned that the board might be starting a fire that they couldn’t put out. He noted that if court officials decide to sue, the county would be required to pay the attorney fees.

Commissioners initially were set to take a final vote at the board meeting that same night – held immediately after the ways & means committee meeting. However, after a break between the two meetings, corporation counsel Curtis Hedger reported that the memorandum of understanding with the courts actually requires a 12-month notice, not the six months that had been discussed. This turned the opinion of some commissioners, who wanted to take more time to study the issue. Andy LaBarre, who chairs the board’s working session, offered to schedule the topic for a working session as soon as possible.

The motion to postpone final action passed on a 6-3 vote, with dissent from Alicia Ping, Dan Smith and Kent Martinez-Kratz. So the proposal will appear on the board’s July 10 agenda.

That July 10 meeting will also include action related to the county’s major bonding initiative to cover unfunded pension and retiree healthcare obligations, including a public hearing. The first public hearing for the potential $345 million bond proposal was held on June 5. It drew four people who all expressed caution about the possible action, with some suggesting a millage or additional budget cuts to cover the retiree obligations instead of bonding.

On June 5, commissioners also set other public hearings for July 10: (1) for two brownfield redevelopment projects in Ann Arbor – at Packard Square (the former Georgetown Mall), and 544 Detroit St.; and (2) for the annexation of industrial property from Scio Township into the village of Dexter. And the July 10 meeting will include final consideration of a strategic space plan for Washtenaw County government facilities totaling about $5 million. The proposals, which got initial approval on June 5, include creating a plan to redevelop the Platt Road site where the old juvenile center was located. The redevelopment might entail a mix of uses, including affordable housing.

A range of other items addressed on June 5 included: (1) creating an historic district for the Jarvis Stone School in Salem Township; (2) an update on the county’s Head Start program, which will be falling under control of the Washtenaw Intermediate School District; and (3) resolutions of opposition – one against gun violence and one against the long-range transportation plan of the Southeast Michigan Council of Governments (SEMCOG). The SEMCOG plan calls for expansion of I-94 in Detroit and I-75 in Oakland County. Some commissioners think that funding should be used to repair existing roads and bridges instead.

Court Funding

For several weeks during budget deliberations, Alicia Ping (R-District 3) has expressed concerns over the county’s approach to funding the court system.

County commissioners Alicia Ping of Saline (R-District 3) and Dan Smith of Whitmore Lake (R-District 2) at the board’s June 5 meeting.

Unlike other units of county government, which prepare line-item budgets authorized by the county board, the courts operate under a memorandum of understanding with the board of commissioners. The board unanimously approved that MOU on Jan. 19, 2011, replacing one that had been in place since 1990. [.pdf of memorandum of understanding] Ping had been absent at that Jan. 19 meeting.

The agreement states that the county will provide “lump sum” funding to the courts, allocated to: (1) the trial court – an entity that includes the 22nd Circuit Court, court clerk services, juvenile court, Friend of the Court, and probate court; (2) 14A District Court; and (3) a portion of the county’s child care fund. The county does not have line-item budgeting authority, but the courts agreed to submit a bi-annual line-item budget, and to provide quarterly financial projections.

The MOU also covered the community corrections division. However, subsequently oversight of that operation has shifted from the trial court to the sheriff’s office, and is not subject to the lump sum agreement.

The 2011 MOU was signed by Conan Smith, who chaired the board at that time; Donald Shelton, chief judge of the trial court; and Kirk Tabbey, the 14A District Court’s chief judge.

From the general fund, the lump-sum payment to the courts in 2013 totals $19,155,029 – with $13,353,110 for the trial court and $5,801,919 for district court. In addition, state funding for certain trial court operations – the Friend of the Court and child care fund – totals $4,977,047. [.pdf of 2013 budget pages with trial court-related amounts highlighted]

The June 5 proposal by Ping, the board’s vice chair, came in the context of the administration’s goal of identifying $6.99 million in structural reductions for the overall 2014 general fund budget. For several weeks, Ping has raised concerns that the courts are treated differently than other county units in the budgeting process. At the board’s May 15, 2013 meeting, for example, she asked to see the history of funding for the courts, saying she was curious about whether the courts had cut in the same way that other county units had cut. “I’d like to know that we’re all in the game together,” she said at the time. [.pdf of historical funding for public safety & justice operations]

No court officials attended the June 5 meeting. Ping’s proposal had not been on the published agenda.

The process for ending the lump-sum agreement is written into the MOU. The term “the Court” is used to refer to all courts covered in the MOU:

13. Modification and Duration – This Agreement may be modified by mutual consent of the parties. This Agreement shall continue indefinitely and may be terminated only upon one year’s written notification by a party to all other parties. The County agrees to include the Court in the modification process relative to any County policies covered by this Agreement.

However, during the board’s June 5 ways & means committee meeting – when Ping brought forward her proposal – the discussion was based on a faulty assumption that the MOU called for a six-month notification process. That assumption influenced the debate, with some commissioners arguing that it was urgent to end the agreement before voting on the next budget. The administration is preparing a new four-year budget from 2014-2017, which will require board approval before Dec. 31, 2013.

The board’s discussion also focused most frequently on the trial court – the county’s largest court – although the MOU covers the 14A District Court and other court-related operations as well.

Court Funding: Ways & Means Committee – Trial Court Software

A court-related item was first mentioned near the beginning of the June 5 ways & means committee meeting, which immediately precedes the board meeting. Board chair Yousef Rabhi reported on the trial court’s efforts to secure new software. Court officials had approached him with a proposed vendor, Rabhi reported, but he had insisted that the court follow the county’s standard procurement process, including issuing an RFP (request for proposals). “This project, in my mind, should not be above [the RFP process],” Rabhi said. “I got pushback from folks saying that we wouldn’t get any other bidders, and that we’d just make a fool of ourselves and that we shouldn’t do the RFP process. But we stuck with it.”

The result of the RFP, Rabhi said, is that the same proposed vendor and the same service came in at a savings of $500,000. [.pdf of bid responses, which are still under evaluation] “I think that it’s a testament to the procurement process that we have,” he said, and that a good process leads to good outcomes.

Rabhi said he wasn’t arguing that the county should go ahead and approve the funding for the trial court’s new system – as that’s a topic that deserves more discussion. The item would be brought to the board at its August meeting, he said.

Court Funding: Ways & Means Committee – Ping’s Proposal

After other items at the ways & means meeting had been dispatched, Alicia Ping announced her intent to make a motion to give notice to the courts to terminate the lump-sum agreement with the county. No other elected official’s office is given a lump sum for its budget, and Ping felt it’s only proper that the board is able to look at everything as a whole – “and not just have a lump of money go to the court and not have any idea where it goes.” It’s especially important, she noted, as the county grapples to cut nearly $7 million from the 2014 budget.

The purpose isn’t necessarily to reduce the courts’ budget, she said. Rather, the board should know where the money is going, since commissioners are ultimately responsible for the entire county budget – including court operations.

Ronnie Peterson wondered if the relationship with the courts has deteriorated to the point that the board or administration isn’t communicating about what’s expected from the courts. Has any attempt been made to enhance that relationship, especially regarding the budget? He was very interested in engaging the chief judge [of the trial court, Donald Shelton], other judges and court administrators on this issue. Peterson said he respected Ping, but he hadn’t been privileged to know that this resolution would be made that night, or why it was being made.

Ping replied that she wasn’t aware of any deterioration in the relationship between the courts and the board. She said she was only proposing the notice of intent to terminate the agreement, saying that the agreement required a six-month notice before it could be ended. [This later proved to be faulty information; the agreement requires a 12-month notification.]

Lloyd Powell, Washtenaw County public defender.

Ping clarified that she didn’t intend to cut $7 million from the court budget. That $7 million figure is the amount of cuts that the county needs to make in its entire general fund budget. The notice, according to the county’s contract with the courts, lets court officials know that the county would like a line-item budget instead of a lump-sum approach. It’s not necessarily to cut the courts’ budget, she reiterated, but only to see where the money is going. “As a body, we are responsible for that money,” she said. Ping noted that the county’s public defender, Lloyd Powell, has reported that his office is doing triple the work now compared to previous years, with a lower budget.

If the board passes this resolution, Peterson replied, “there will be a big question in the minds of those seated in the House of Justice over what happened to their relationship with the board of commissioners.” If the board has an issue with the lump-sum approach, has anyone approached the courts to talk about it? he wondered.

County administrator Verna McDaniel reported that the administration has met with court officials about the upcoming budget, as part of the existing budget development process. Everything is on course based on the lump-sum approach, she said.

In that case, Peterson said, it seemed like this resolution was just to send a message to the courts about the board’s interest in discussing this issue – and that the court officials shouldn’t take offense.

Rolland Sizemore Jr. observed that regardless of the vote’s outcome, “tomorrow morning everybody in town will know about it.” His concern is that there hasn’t been discussion about this, and he wanted to schedule a working session on it. His understanding is that the courts are on budget. The board might be starting a fire that they couldn’t put out, he warned, and if the courts aren’t happy, they can hire an attorney that the county will have to pay for. He didn’t necessarily disagree with Ping, but he wouldn’t support her motion until the board has discussed the issue in more detail.

Conan Smith called Ping’s proposal “good government,” and he supported it. There are three branches of government, he noted. At the county level, the board of commissioners is the legislative branch. The board’s only check on those other branches of government – the judiciary, and the administrative branch of elected officials, like the water resources commissioner and sheriff – is “the power of the purse,” he said, and the ability to establish a budget. “When we approve a lump-sum budget, we abrogate that responsibility and we surrender that duty to other people. I don’t think that comports with our process of checks and balances.”

C. Smith pointed out that he had proposed pulling out of the lump-sum agreement in the past, when he was chair of the ways & means committee and again when he served as board chair. [Details of that history are included in The Chronicle's Jan. 19, 2011 meeting report.] He said he had struggled with the courts over it, in terms of getting them to understand how their budget impacts the systemic operations of the entire county. It’s appropriate for the board to have line-item authority over all of the county’s units, including the judiciary, he said.

In addition, it’s not a practice that’s out of line with the custom throughout the court system, C. Smith noted. The Michigan legislature approves line-item budgets for the state courts, and appropriates funding for specific programs, like the drug court. The legislature sets its priorities, via those budgets, he said, “and it’s the same thing for us.” If county commissioners believe that a drug court should be a priority, then they should articulate that in the courts’ budget and have the confidence that taxpayer dollars are being spent on that. “For me, it is a good governance question more than anything else.”

Dan Smith responded to the issue of timing, stating that the current agreement requires a six-month notice of intent to terminate. Just because commissioners give notice doesn’t mean they will end up terminating the lump-sum approach, he said. But if they don’t give notice, they have no options. By acting on it that night, they’ll keep their options open.

D. Smith also noted that this funding system has been put in place by the state legislature. The county board is responsible to allocate funding for county services, including the courts. He agreed with C. Smith that a lump-sum agreement abrogates that responsibility. He wasn’t saying that this was the best system. He thought the courts and many boards of commissioners across Michigan would like to handle it differently. A lot of people would be happy if the state legislature would take over funding of the courts, “and this body would not be in the middle of running the courts,” he said. However, “that is not where things are today.”

D. Smith reported that House Bill 4704 of 2013 had recently passed the state House of Representatives. It changes some of the county budget procedures, he noted. He read aloud a relevant portion of the bill, which states that the county budget “is presumed to fund those activities of a county mandated by law at a serviceable level.” The bill addresses ways to appeal those funding decisions, including mediation, and calls for any formal appeal to be handled by the state court of appeals, not the county circuit court. It appears to shift the balance, he said, adding that he isn’t intending to fire a shot across the bow of the courts and judges. But the board needs to keep its options open as they’re looking at a $7 million shortfall, he added, and there’s a huge pot of money that’s given to the courts “with essentially no oversight.”

County board chair Yousef Rabhi of Ann Arbor (D-District 8). In the background is county administrator Verna McDaniel.

Yousef Rabhi spoke next, saying he wasn’t expecting this proposal to come forward that night. It had been discussed in the past, he noted, and he agreed that oversight was important. The lump-sum agreement might not be the best way to accomplish that. But he also believes in process, Rabhi said, and as board chair he felt his duty is to lead the county as a whole. “This action could have significant ramifications on our relationship with the courts, so I want to make sure that we’re understanding the full context of the action that we’re taking today.”

He asked McDaniel to talk about the history of the county’s relationship with the courts, particularly in terms of oversight and consistency. How are the courts treated, compared to other county units? What oversight does the board have?

When McDaniel indicated some uncertainty in responding, Rabhi said that in the absence of that information, he felt the board shouldn’t act on the proposal. He agreed in concept that the board needs more oversight of the courts, but commissioners need more information. They need a process in order to vet the idea and properly discuss it with court officials. The board needs to lead the county in a way that doesn’t alienate its partners, he said. Rabhi hoped commissioners would vote to postpone it so that they could discuss it at a working session. He said he was open to changing his mind, but that was his initial response.

Felicia Brabec noted that the board does have a process for addressing issues like this, and it begins at a working session. Resolutions are then brought forward for an initial vote at a ways & means committee meeting, she said, and then for a final vote at the regular board meeting. That process seems solid to her. She felt like she was being asked to make a decision without that process, having heard about it just that evening.

Pointing out that Rabhi had indicated he might change his mind, Conan Smith raised the issue of a four-year budget, which the board has authorized the administration to develop. Doing a lump sum for four years “makes me highly uncomfortable,” C. Smith said. He’s supportive of the four-year budget process because the board has strong control over the budget’s line items. But that’s not the case with the courts.

C. Smith also reiterated the point that the board wouldn’t be making a decision about the lump-sum budget itself. Commissioners are just making sure they have that option later in the year. This is simply starting the process. “If we don’t do it, then we’re hamstrung.”

Peterson moved to postpone initial action on the item until the board’s July 10 ways & means committee meeting.

Outcome on motion to postpone initial action: The motion failed on a 4-5 vote, with support only from Ronnie Peterson, Yousef Rabhi, Rolland Sizemore Jr. and Felicia Brabec.

Discussion continued.

Dan Smith argued that if commissioners wait until July to notify the courts, they’ll miss their window on this option and won’t have the option to eliminate the lump sum by the end of the year, when the budget must be adopted.

Ping compared her proposal to the board’s proposal to issue a notice of intent to bond. That notice of intent doesn’t mean the board will decide to issue bonds – it just provides that option, she said. The same is true with her proposal to notify the courts. Ping pointed out that she asked for a 10-year funding history of the courts about six weeks ago, and she raised the issue again at the board’s budget retreat in May. “Maybe nobody took it seriously up until I made this resolution,” she said, “but I have been talking about this for six weeks.”

She also was uncomfortable with a four-year lump-sum budget for the courts, given that there’s uncertainty about whether some of the courts will remain open, she noted. “If that budget’s in place, the money goes – whether they need it or not,” she said.

Sizemore noted that several commissioners had referred to a four-year budget, as though the board has decided to adopt a four-year budget. Perhaps they should revert to a two-year budget cycle, he said, which could give the board more control. [At its May 1, 2013 meeting, the board authorized McDaniel to develop a four-year budget process. However, the board is only required by state law to adopt the budget one year at a time. For several years, the county has worked on a two-year budget planning cycle.]

Washtenaw County commissioner Ronnie Peterson of Ypsilanti (D-District 6).

Peterson said he fully understood Ping’s intent. But for him, it’s a matter of respect for the courts. If at any time commissioners felt that they needed to discuss the lump-sum budget with the chief judge and court administrator, “we should have done that.” As he has in the past, Peterson expressed concerns about adopting a four-year budget. He felt that the courts were very accountable and responsive. The board can ask the courts for a line-item report of its expenditures, he noted – so there are already checks and balances in place.

The courts had wanted flexibility in spending their budget, and that request had been mediated years ago, resulting in a lump-sum agreement, Peterson said. And if commissioners had wanted to send a notice to the courts to terminate that agreement, they should have acted in January, he argued. Peterson felt the board itself hadn’t been very accountable regarding the $345 million bond proposal. “So as we blast others, let’s prepare to take a few pellets ourselves.”

Conan Smith agreed that the board has the right to ask the courts for detailed budget information. But in his experience, when he was chair of the ways & means committee and was dealing with a proposed $30 million deficit a few years ago, he said, the courts weren’t very forthcoming with information, including detailed projections. “It was extraordinarily frustrating,” he said.

Also, C. Smith added, “it shouldn’t be about asking – it should be about telling.” It’s the duty of the legislative body to determine how the county’s budget is allocated. He felt the board has an obligation to set the line items, telling the courts – by way of funding – what the board’s priorities are. That’s different from asking the court to inform the board about how a lump-sum budget is being spent, he noted.

Rabhi asked McDaniel to explain the purpose of a lump-sum agreement. She talked generally about the elements in the agreement, not the motivation behind it. She described it as “not a very detailed document” that spells out the powers of the county and the courts. Rabhi asked what actions the courts had taken to demand this kind of agreement. McDaniel said she didn’t think the courts demanded it, but that both the county administration and the court officials felt it was a good document to have a clearer understanding about the role of each entity. [In general, members of the judiciary view their operation as a separate unit of government, and believe that their independence should be reflected in the budget process. This is a tension that's not unique to Washtenaw County.]

Rabhi noted that the courts feel very strongly about the lump-sum agreement, so he was trying to understand their perspective. In addition to the oversight issue, he said, as board chair he has an interest in having “a peaceful, well-functioning organization – so I don’t want to make anybody angry in this process.” He acknowledged that people will likely be mad now that the discussion is already taking place.

He observed that Ping and other supporters of her proposal view it as the start of a process. If it passed, he hoped that commissioners would engage the board in that process and not go into it with the preconceived notion that the lump-sum agreement will be eliminated.

Andy LaBarre called the question, a procedural move meant to force a vote.

Outcome on calling the question: On a voice vote, the board unanimously agreed to call the question.

Outcome on initial vote to send a notice of termination: The item passed on a 5-4 vote, with support from Andy LaBarre, Kent Martinez-Kratz, Alicia Ping, Conan Smith and Dan Smith. Voting in dissent were Felicia Brabec, Ronnie Peterson, Yousef Rabhi and Rolland Sizemore Jr.

Dan Smith then moved to forward the item to the board’s regular meeting that same night.

Curtis Hedger, the county’s corporation counsel, explained that in a procedural motion like this, only five votes are needed to move the item to the board meeting. However, the vote at the board meeting would then need six votes in order to pass – a two-thirds majority.

Responding to a query from Rabhi, Hedger said if the board doesn’t take a final vote that night, the item would be moved to the board’s July 10 agenda. A six-month notice approved on July 10 would push the earliest termination date into January 2014. Hedger noted that the board can act at any time, saying a decision doesn’t need to be tied to the budget process. However, it would mean that negotiations with the courts would begin almost immediately after their 2014 budget had been approved.

In that case, Rabhi said, he’d support moving it to the board meeting that night for a final vote.

From left: Corporation counsel Curtis Hedger and commissioner Rolland Sizemore Jr. of Ypsilanti Township (D-District 5).

Peterson wanted to assure commissioners that the courts wouldn’t “roll over” on this issue. He felt the courts would ask for mediation. “This board may speak,” he said, “but you will not have the last word.”

Peterson argued that because the county pays all the bills, anyone can find out how the courts spend their lump-sum budget. Even with a line-item budget, he said, the only way to know if the courts – or any department – spent the money in the way it was allocated is to contact the finance department. The main issue is whether the budget for the courts is an appropriate amount – whether it’s given as a lump sum, or as a line-item budget. But if commissioners think they’ll be able to “rope in” the courts with a line-item budget, “you’re dreaming,” Peterson said. He couldn’t believe they’d wasted so much time discussing it, when they should have simply dispatched the county administrator to talk with court officials. “It’s not your job to be watchdogs of the court system …” he said.

Kent Martinez-Kratz noted that his constituents are asking about the $345 million bond proposal, and residents want every rock turned over regarding the budget. It might be grandiose to think that the county board can influence the court system, he said. But he didn’t think that creating an open and transparent budget for the courts is asking too much. As he asks his constituents to consider this bond proposal, he’s also asking the courts to produce a transparent budget. He thought his constituents would support that, too.

Brabec said she was struggling, because the board doesn’t know what the implications are. She agreed with the points on oversight and transparency. But they don’t know what unintended consequences this action might cause, because it’s so rushed.

Rabhi called the question.

Outcome on calling the question: It was approved on a unanimous voice vote.

Outcome on vote to move the item forward to the board meeting that same evening: The motion was approved on a 6-3 vote, over dissent from Felicia Brabec, Ronnie Peterson and Rolland Sizemore Jr.

Court Funding: Regular Board Meeting

During the board meeting that immediately followed the ways & means committee meeting, Rolland Sizemore Jr. asked about the notification timeline. Curtis Hedger reported that during a break between the two meetings, he’d looked at the memorandum of understanding. It actually states that a 12-month period of notification is required, not six months. So if the board approves giving notice that night, the agreement couldn’t be terminated until June of 2014. “So it is a bit of a difference than what we discussed at ways & means,” Hedger said.

Sizemore observed that the board spent an hour discussing something that doesn’t matter now, in terms of the budgeting process. “I’m not going to comment on that,” Hedger replied.

Ronnie Peterson asked that the lump-sum item be separated out from the other agenda votes, so that the board could discuss it further. He criticized the fact that the board acted on a resolution when they didn’t know all the facts. He wanted to make sure people knew he hadn’t been part of that, saying he had a different style of communication. He hoped to reach out to court officials in a different way, and to make sure they knew that the $7 million in cuts to the county budget “does not rest with the court.”

Washtenaw County commissioner Conan Smith of Ann Arbor (D-District 9).

Conan Smith noted that the six month difference is significant in terms of timing, but it’s not significant in terms of the philosophical underpinning of whether to have a lump-sum agreement. Technically, the board could adopt a lump-sum budget for the first six months of 2014, then move into a line-item approach for the second six months. “It’s completely doable,” he said. The board gives up far too much authority over line-item expenditures in exchange for “peace in the valley,” he said. “I want to see something different.”

Alicia Ping said she thought of it as being six months early for the 2015 budget, rather than six months late for 2014. She supported C. Smith’s idea of doing a lump sum for the first six months of 2014, followed by a line-item budget.

Ping also pointed out that she in no way insinuated that she wanted to balance the county’s budget cuts on the back of the courts. “I never said that,” she noted, adding that in fact she had suggested the courts’ budget might not change at all, in terms of the amount. The request for a line-item approach isn’t out of line at all, she said. “I answer to the people in my district, the taxpayers. I don’t answer to the courts.”

Peterson noted that nothing mandates the courts to negotiate with the county, as long as there’s a signed agreement [the memorandum of understanding]. The only reason he could imagine that this was being brought up now is to save face, given that the 2014 budget “is $7 million out of whack.” The only thing that the county can do at this point is to ask the courts to cooperate and help address the deficit, he said.

But if the intent is for the board to manage the courts’ budget, that’s a very different discussion, Peterson said. “Those are two separate issues.” When the board can’t even narrow down its budget, he didn’t know how commissioners could presume to control the court system’s budget. The board hasn’t balanced its budget in a long time without using reserves or employee furlough days and other concessions, he said. What’s more, they’re now in a position to need to borrow $345 million to cover their retiree obligations, he noted. Peterson wasn’t interested in managing the judicial system’s budget. “We have our hands full.”

As chair of the board’s working session, Andy LaBarre said he hoped to diffuse some of the tension by rearranging the working session schedule to bump up this topic. Regarding the charge that the board had wasted an hour on this discussion, he quipped, “folks would say that’s not the first time, and sadly they would not be wrong.”

LaBarre observed that everyone is trying to address how to do things differently, given that they face an entirely new set of challenges. They need to understand where every dollar is going so that when they pass the budget, they can make the case to citizens that they’ve had a full discussion and it’s been well considered.

LaBarre also noted that the working session topics have been good, but attendance at those sessions “is not always as good as the volume of ideas that are brought forward for them.” He’s happy to move the topic up in the queue of working session schedules. “All I’d ask is that we come and have a full discussion with a full caucus.”

Yousef Rabhi described himself as conflicted on this issue. Accountability and transparency are very important, so he appreciated that Ping introduced this topic. But from a process and courtesy standpoint, the board is a partner with the court system, he said. The courts have helped balance the county’s budget, and the board needs to be respectful of that. He didn’t want to create a confrontational atmosphere, adding “I know some of that has already been done.”

County commissioner Andy LaBarre of Ann Arbor (D-District 7).

In light of the longer one-year notice requirement, Rabhi said he’d like to postpone the item until the board’s July 10 meeting. Commissioners need to engage in a dialogue with court officials, he said. “Otherwise, it could lead down a very ugly path and one that I don’t want to go down. It’s going to be an interesting summer, one way or another.”

With that, Rabhi moved to postpone the item until July 10.

Dan Smith opposed postponement. He posited that this is exactly how the process is supposed to work. The board is a public body, he noted, and a motion was brought forward at a public meeting for a vote. This is the beginning of a 12- or 13-month conversation. At the end, the board might decide to continue with a lump-sum approach. But they can’t have that discussion unless they give notice to the courts. “I see no value in waiting another month to have a 13-month discussion versus a 12-month discussion,” he said.

Rabhi stressed that he appreciated that Ping had started the discussion. He noted that the board rules call for introducing an item at the ways & means meeting, then waiting until the board meeting two weeks later for a final vote. The board rules allow for a process to handle it in one night, but it’s more common to do it on different nights. That’s why he’s comfortable postponing the item until July, Rabhi said.

D. Smith noted that during the summer months, the board meets only once a month. It’s typical during the summer for the board to handle all agenda items by taking both an initial and final vote on the same evening.

Outcome on postponing until July 10: The board voted 6-3 to postpone, with dissent from Alicia Ping, Kent Martinez-Kratz and Dan Smith.

Bond Proposal

Aside from the unanticipated court budget discussion, the major item on the June 5 agenda concerned the proposed bond issue to cover the county’s retiree obligations. The meeting included the first of two public hearings on the potential $345 million bond proposal. A second hearing is scheduled for July 10, when the board will likely take action on the proposal.

The proposed bond issue of up to $345 million, the largest in the county’s history, is intended to cover unfunded pension and retiree healthcare obligations from the Washtenaw County Employees’ Retirement System (WCERS) and Voluntary Employees Beneficiary Association (VEBA) – the defined benefit pension and retiree healthcare plans. Those plans will be closed to employees hired after Jan. 1, 2014.

The proposal had first been mentioned publicly in mid-April, though the administration has been working on it since November of 2012, and commissioners had discussed it in closed session earlier this year as part of the county’s negotiations for new labor contracts. For background, see Chronicle coverage: “County Board Debates $345M Bond Proposal” and “County Budget, Bonding Decisions Loom.”

The original plan called for taking an initial vote on May 15 authorizing the publication of a “notice of intent” for the bond issue, with final approval on June 5. Responding to concerns about the speed at which the process was moving – without the opportunity for sufficient public input – board chair Yousef Rabhi pushed back the timetable. Now, it’s expected that a resolution to issue the notice of intent will come before the board on July 10 for initial – and possibly final – approval. This is a standard step in the bonding process, letting residents know that they have 45 days during which they can circulate petitions to require a vote of the people before any bonds are issued.

The board scheduled a working session on June 6 focused on the bond proposal. Participating in the session were: Jens Stephan, accounting professor at Eastern Michigan University; John Axe, the county’s bond counsel; and Larry Langer of Buck Consultants LLC.

In addition, other forums for public input are scheduled:

• Saturday, June 15: 4-6 p.m. “Bonding over Coffee” with Yousef Rabhi at Espresso Royale, 214 S. Main St., Ann Arbor.
• Wednesday, June 26: 4-6 p.m. “Bonding over Coffee” with Yousef Rabhi at Caribou Coffee, 1423 E. Stadium Blvd. (corner of Packard and Stadium).
• Thursday, June 27: 4:30 p.m., public forum with county administrator Verna McDaniel at the Learning Resource Center, Room A, 4135 Washtenaw Ave., Ann Arbor.

Bond Proposal: Public Hearing & Public Commentary

Four people spoke at the June 5 public hearing.

Doug Smith spoke in strong opposition to the bonding proposal – both during the public hearing, and during the general public commentary. In addition to paying $239 million in interest, the move would downgrade the county’s bond rating, he argued, which means that every dollar that’s borrowed in the next 25 years will cost more in interest. It’s a very expensive way to kick the can down the road. He noted that the alternative put forward is to cut jobs. He suggested that cutting the overtime of the sheriff’s secretary would equate to more than a full-time employee. The county should find cuts in its budget long before it borrows money, Smith said.

From left: Former county commissioner Wes Prater and current commissioner Kent Martinez-Kratz of Chelsea (D-District 1).

Smith wondered how borrowing money, which the county would have to pay interest on, is somehow going to solve the county’s problems. He said he didn’t quite understand what the county was doing. There’s no revenue associated with the bonding, he noted – it’s not like building something that will generate money to help pay off the bond. At minimum, he suggested, the county should take a variety of approaches, including budget cuts and tax increase. There needs to be a combination to avoid putting the county $600 million worth in debt, he concluded.

Thomas Partridge said it was unjust, unfair and anti-democratic that the county had presented only one plan. He pointed out that the county has additional time to look at this issue, and that there are other options – including the option of putting a millage on the ballot to pay for these retiree obligations. Partridge called that a good alternative. Another option is to tighten the county’s budget even further, and downsize the county services, but that’s too much in line with Mitt Romney, he said.

Kathy Fojtik Stroud recommended that the board investigate the possibility of a new millage. She said the gossip in her neighborhood was that the board would put a millage proposal on the ballot to pay for these retiree obligations. It would give the citizens an opportunity to vote on it.

Wes Prater started by thanking the board and staff for slowing down the process, and for bringing in experts to discuss the issue. It was a wise thing to do, he said. He asked about the timing of the new actuarial reports – when would those be completed? If they don’t have those reports, how can they make an informed decision? He argued that the legislation that enabled this type of bond sale hadn’t been created with sufficient research. Other than this particular exception to bond for retiree obligations, Michigan’s municipal finance act only allows for bonding to fund capital improvements without a vote of the people, he said. More research is needed, he concluded.

Bond Proposal: Communications & Discussion

During the county administrator’s report, Verna McDaniel said she’d been communicating about the bond proposal with township officials, county employees and the public.

Felicia Brabec, chair of the board’s ways & means committee, reviewed activity related to developing a four-year budget for the county, from 2014-2017, including outreach efforts for the bond proposal. She laid out the timeline for items coming before the board that relate to the bond proposal. Action on July 10 will include:

• Vote on a “notice of intent” to issue the bonds. This is a standard initial step in the bonding process, letting residents know that they have 45 days during which they can circulate petitions to require a vote of the people before any bonds are issued.
• Vote the bond resolution and “continuing disclosure” resolution. The board will be asked to set a maximum amount for the bond. The continuing disclosure resolution is standard for all bond issues over $1 million, and indicates that the county will provide updated financial information annually during the term of the bond.
• Vote to create an intermediate trust. The trust will receive the bond proceeds, and trustees will be appointed to oversee the money managers that will be hired to handle the investments.

Brabec said that if these items receive initial approval on July 10, they’ll be forwarded for a final vote at a special board meeting set for July 24. [It's also possible for the board to decide to take a final vote on the items that same night.]

Felicia Brabec of Pittsfield Township (D-District 4) is chair of the county board’s ways & means committee.

Board chair Yousef Rabhi highlighted his “Bonding over Coffee” meetings in Ann Arbor. Rolland Sizemore Jr. wanted someone to hold a similar session on the east side of the county. Rabhi noted that he had scheduled his coffee hours to make it convenient for constituents in his Ann Arbor district – and that’s why the sessions were located in Ann Arbor, not elsewhere in the county. Rabhi wondered if McDaniel’s June 27 public meeting at the Learning Resource Center, just east of Carpenter Road, was far enough east to serve resident on that side of the county. Sizemore indicated that the LRC meeting would suffice.

Alicia Ping also put in a request to hold a public forum on the county’s west side, saying that she and Kent Martinez-Kratz – who represent districts in southwest and west Washtenaw, respectively – would appreciate it. McDaniel agreed to set something up.

Later in the meeting, Sizemore complained that he has asked the administration for alternatives to the $345 million bond proposal, but none have been presented. He suggested that there are other budget items that could be cut, such as overtime or providing less expensive cars to employees.

Sizemore also wanted the administration to provide a summary that would “dummy down” the proposal to make it easier for commissioners and the public to understand.

Ronnie Peterson wondered if the county would be borrowing more than the amount of its pension and retiree health care obligations. Curtis Hedger, the county’s corporation counsel, replied that it isn’t legally possible to bond for more than the amount of those obligations. However, the amount won’t be known until the actuarial reports are completed in late June. Hedger noted that the bond counsel and financial consultant had been very conservative when they estimated that the county would need up to $345 million. The administration is hoping that the actual amount will be lower than that.

Peterson also asked where the money would come from to make the bond payments. County administrator Verna McDaniel answered in a general way, saying the funds would come from monies that the county already collects, as well as from the bond proceeds. Each department will make a contribution to those obligations, she said. Those amounts will be reflected in the budget, starting in 2014. Peterson said he wanted to make sure the county would be able to meet its obligations, without any massive reduction in services or layoffs. He wanted everyone to understand clearly where those bond payments are coming from.

Conan Smith asked for the amount of the county’s current bond payment for those retiree obligations. McDaniel clarified that the county doesn’t currently have a bond for that, but it does make annual contributions to cover those obligations. The most recent payment was $20 million, she said. Without the bonding, the 2014 payment will be higher, she noted.

C. Smith pointed out that the bond is structured so that annual payments over the 25 years will range from between $12 million and $26 million. But the county’s actuarial contributions might be as high as $30 million a year during that time, he said – that’s what the actuarial study will project. If the county bonds, its payment will show up on the books as a line item for bond payments. If the county doesn’t bond, it will show up as an unfunded liability, he said.

Peterson noted that some of the current payments for retiree obligations are made from federal and state grants that support certain county programs. But over the course of the 25-year bond, there will be possibly 5 or 6 new U.S. presidents, he said, and 4 or 5 new governors. These changing administrations could have an effect, because the county relies so much on federal and state dollars, Peterson said. Only about half of the county’s entire budget is tied to the general fund, he noted. The rest is from federal and state funding, and in that regard the county is at the mercy of other governments. Whenever that funding is reduced, it impacts the county’s ability to make retiree contributions.

Peterson said he was concerned about the county’s ability in the future to make bond payments out of the general fund, if federal and state funding is cut. That could result in massive layoffs, he noted, because the county will be obligated to pay the bond. “This bond will supersede anything else we do,” he said. Referring to the county’s possible shift to a four-year budget cycle, Peterson said he didn’t know how that could work, given the uncertainty of federal and state funding. He said he’s not “throwing bricks” at the administrator – it’s the board’s responsibility.

Commissioners Dan Smith of Whitmore Lake (R-District 2) and Andy LaBarre of Ann Arbor (D-District 7).

Conan Smith thanked Peterson for bringing up this point. He noted that part of the revenue stream for paying off the bond would come from current employees who are in the defined benefit plan, and who are contributing to that plan. So the portion of those employees who are in non-general fund programs – supported by state and federal funding – are less under the county’s control. If that funding is cut, the county would likely need to eliminate those jobs, he said, which in turn will eliminate the contributions that those employees make toward retirement obligations. It’s an element of risk that’s outside the county’s “zone of control,” he said. But that risk declines over time, and is predictable, he added. The county knows the number of employees who are in the plan, and how much they contribute.

C. Smith asked McDaniel if she could provide information about the scope of the risk that Peterson had identified, in case the board decides to develop a contingency plan for the loss of state and federal funding. It’s not an actuarial question, he noted. It’s a matter of identifying the number of employees in non-general fund programs, and how much they would contribute to the bond payment strategy. If all of those employees were to disappear, what would that do to the revenue stream for repaying the bond? he asked.

McDaniel replied that if those jobs are eliminated, some of the retiree obligations will be eliminated too – because not all employees would be vested. C. Smith still wanted to get a sense of what the range of risk might be.

Dan Smith noted that if the county issues bonds and jobs are subsequently eliminated because of a cut in federal or state funding, the obligations for those employees don’t go away – because the county would be repaying the bonds, not the retiree obligations. The only opportunity to discharge that obligation is when the bonds are called. “The fact that we have issued bonds makes all these liabilities – these soft liabilities – it turns them into a real hard honest-to-goodness liabilities that we must pay.” Those bond payments must be made on schedule, he said, no matter what.

Outcome: This was not a voting item. The board is expected to take action on the bond proposal – and to hold another public hearing – at its July 10 meeting.

Facilities Plan

A strategic space plan was on the June 5 agenda for initial approval, laying out a range of infrastructure projects for Washtenaw County government facilities totaling about $5 million. The proposals include redeveloping the Platt Road site where the old juvenile center was located.

Projects include:

• Demolish the former juvenile center and explore redeveloping the site at 2260 and 2270 Platt Road in Ann Arbor for affordable housing, alternative energy solutions, and county offices.
• At 200 N. Main in Ann Arbor, consolidate the land records from the building’s lower level to the 1st floor, and remodel the lower level to accommodate administrative offices.
• At 220 N. Main in Ann Arbor, repurpose space in the garden level, including redesigning conference room space.
• At 110 N. Fourth in Ann Arbor (known as the Annex), relocate the Office of Community and Economic Development, Office of Infrastructure Management, and the Public Defender’s office to other leased and county-owned space. For example, the Public Defender’s office will be relocated to the City Center building at the southwest corner of Fifth & Huron.
• At the county’s service center near Washtenaw and Hogback, redesign the Learning Resource Center (LRC) as a full conference center, providing county-owned space for large and small meetings. Also, make parking improvements, including adding 110 new spaces, rebuilding the lot between the LRC and the courthouse, and resurfacing the entry drive off of Hogback.
• At a location to be determined, develop a specialty vehicle storage facility for the sheriff’s office and other departments.

According to Greg Dill, the county’s infrastructure management director, no general fund dollars will be used for the projects, which are estimated to cost about $5 million.

Greg Dill, Washtenaw County’s infrastructure management director.

Funding will come from several sources: (1) $1 million from the 1/8th mill fund balance; (2) $650,000 from the facilities operations & maintenance fund balance; (3) $650,000 from the Office of Community & Economic Development reserves; (4) $500,000 from the tech plan fund balance; and (5) $2.2 million from the county’s capital reserves. Dill had briefed commissioners on the plan at a March 20, 2013 working session.

In addition to the projects listed above, other changes will be made to accommodate the county’s Community Support and Treatment Services (CSTS) unit, which provides contract services to the Washtenaw Community Health Organization (WCHO). The WCHO will pay for that facilities work, including moving the entire Adult MI program staff to the Annex at 110 N. Fourth; repurposing vacated space at 2140 Ellsworth for Youth and Family Services; and relocating all “service delivery” units to the 1st floor of the Towner II building at 555 Towner Street in Ypsilanti.

Facilities Plan: Board Discussion

Felicia Brabec asked about the amount of funding provided by OCED, and confirmed with Greg Dill that it was an estimate for moving costs. If the move doesn’t cost that much, she asked, what happens with the extra funds?

Dill replied that the entire plan is based on initial estimates. The staff will make adjustments as the projects move forward, and if the cost for OCED is less than estimated, the money will return to the OCED reserves.

Most of the remaining board discussion focused on the Platt Road property. Conan Smith asked Dill to talk about the process of developing a plan for that site.

The first phase is to demolish the buildings on the property, Dill explained. The county had issued an RFP (request for proposals) and is now in the process of selecting a firm for that work. The second phase would be developing a plan for the site. Dill said he’s had several conversations with board chair Yousef Rabhi about that, including the likelihood of a steering committee to guide the process. Dill expected that he’d return to the board later this year with an updated proposal for that site.

In response to a query from Ronnie Peterson, Dill described the plan for Platt Road as still very early in the process. The staff first wanted to get the space plan approved and the funding settled, he said. Then there would be discussion about who should serve on the Platt Road steering committee and what their charge should be. Dill planned to work with Rabhi on that, but it would be brought back to the board for action.

Rabhi added that Andy LaBarre would be involved as well, since the site is in District 7, which is represented by LaBarre. Rabhi noted that LaBarre is interested in engaging neighbors and others in that area about the site’s future.

Peterson thanked Rabhi for the information, adding that “I wish I was invited to more things that happen in my district.” A lot of county activity happens in his district and in Rolland Sizemore Jr.’s district, Peterson said, “and I sometimes read it in the newspaper.” [Sizemore and Peterson represent districts 5 and 6, respectively, primarily covering Ypsilanti and Ypsilanti Township.]

Peterson said it seemed the Platt Road property might be put up for sale, because the space plan indicated affordable housing on the site. But “we’re not in the housing business,” he said. Peterson felt that the resolution before the board that night was indicating an intent to sell. Dill replied that a decision to sell hasn’t been determined. The only action that the board would be taking that night was to demolish the two structures on the site.

Before the July 10 final vote, Peterson wanted to know exactly where the funding for the overall plan would be coming from, and how much would remain in the fund balances and reserves.

Sizemore wanted more detail about the specific projects, like how much the demolition of the Platt Road buildings would cost. Dill offered to prepare a supplemental document with that information. Sizemore complimented Dill and his staff for their work on the Platt Road property, saying that he enjoyed seeing community gardens there.

In general, Sizemore expressed his view that the county doesn’t need new buildings, so he wouldn’t support any plan that included building new offices. He noted that there are vacant school buildings that might be available for use in certain parts of the county.

Sizemore also urged Dill to find opportunities to involve youth. Dill replied that his staff looks for opportunities for job shadowing and other youth involvement in every aspect of the county’s operation, not just this space plan. Sizemore acknowledged that Dill has been helpful in that regard. He also noted that the Washtenaw International High School is looking for summer internship opportunities.

Conan Smith recalled the lengthy discussion on the overall space plan that was held at the board’s March 20, 2013 working session, saying that he had the materials from that session. He wondered if there was another document that articulates the strategic infrastructure plan. Dill indicated that the same materials from the working session were the basis for the current plan.

Smith then noted that in the conversations he’s had with Dill, they hadn’t talked about divesting the Platt Road property. “We have not talked about that,” Dill confirmed. “Of course that is a decision that this body will undertake. We made no plans for the disposal of that property, except to get a formal appraisal of the site.”

Smith also confirmed with Dill that the vote being taken that night was to approve a planning process for the site, as well as demolition of the buildings.

Outcome: The board unanimously gave initial approval to the facilities space plan, with a final vote expected on July 10.

Millage Rates

The board had given initial approval on May 15, 2013 to set Washtenaw County’s 2013 general operating millage rate at 4.5493 mills – unchanged from the current rate. The item was on the June 5 agenda for a final vote.

Several other county millages were part of the same resolution and are levied separately: emergency communications (0.2000 mills), the Huron Clinton Metroparks Authority (0.2146 mills), two for county parks and recreation (0.2353 mills and 0.2367 mills) and for the natural areas preservation program (0.2409 mills). That brings the total county millage rate to 5.6768 mills, a rate that’s also unchanged from 2012.

This is an annual procedural action, not a vote to levy new taxes. With a few minor exceptions, the county board does not have authority to levy taxes independently. Millage increases, new millages or an action to reset a millage at its original rate (known as a Headlee override) would require voter approval.

The rates will be included on the July tax bills for property owners in Washtenaw County.

Millage Rates: Public Hearing

The only speaker at a public hearing on the millage rates was Thomas Partridge. He said the millage revenues were insufficient to provide for the needs of county residents. The board has been bereft of ideas to support affordable housing, public transportation, health care and other needs, he said. He suggested proposing a Headlee override.

Outcome: Without discussion, the board gave final approval to set the county’s millage rates.

Gun Violence Awareness

Commissioners were asked to pass a resolution declaring June 2013 as Gun and Societal Violence Awareness Month.

The resolution stated that the board “supports President Barack Obama’s continued efforts to reduce gun violence through enhanced background checks, restricted sales of some types of ammunition and high capacity magazines; and … further supports the reduction of societal violence through the development of proactive programs that will educate citizens on non-violent conflict resolution and allow physicians to prevent firearm and other violence related injuries through health screening, patient counseling, and referral to mental health services for those with behavioral or emotional medical conditions.”

According to county records, applications for concealed pistol licenses in Washtenaw County have increased dramatically so far this year. There were 1,510 applications for the first four months of 2013, compared to 717 applications during the same period in 2012. For the full 12-month period in 2012, the county received 2,153 applications – compared to 546 in 2007. [.pdf of application data from 2004-2013] [.pdf of approved licenses from 2008-2013]

The June 5 resolution was brought forward by board chair Yousef Rabhi and commissioner Conan Smith – both Democrats representing districts in Ann Arbor.

Gun Violence Awareness: Public Commentary

Kathy Fojtik Stroud of Ann Arbor spoke at the beginning of the June 5 meeting, and started by telling commissioners that she had figured out why the boardroom felt smaller – there were only nine commissioners now, compared to previous years when there had been more commissioners. [Redistricting took effect with the 2012 election, reducing the number of Washtenaw County districts from 11 to 9.]

Stroud was speaking on behalf of the Washtenaw County health code appeals board, an appointed body on which she serves. That board had passed a resolution urging county commissioners to pass the resolution in support of reducing gun violence and societal violence. Other groups – including the Interfaith Council on Peace & Justice, a lot of churches and other organizations – are supportive of this action, she said.

Andy LaBarre (D-District 7) noted that Stroud had served on the county board of commissioners in the 1970s, and he appreciated her service.

Gun Violence Awareness: Board Discussion

Yousef Rabhi highlighted the resolution, noting that there have been some very tragic gun-related deaths in the past few months. He thought that Washtenaw County should take a step in recognizing these acts as horrific, and in recognizing the need for the country to move forward with some sort of reform that can bring an end to this type of violence. He hoped commissioners would support it. There was no further comment from commissioners.

Outcome: The board unanimously passed the gun violence resolution.

SEMCOG Long-Range Plan

Yousef Rabhi also brought forward a resolution opposing the 2040 long-range regional transportation plan developed by the Southeast Michigan Council of Governments (SEMCOG). Specifically, he opposes the recommendation to expand I-94 in Detroit and I-75 in Oakland County.

The resolved clauses stated:

NOW THEREFORE BE IT RESOLVED that the Washtenaw County Board of Commissioners opposes the inclusion of these highway capacity expansion projects in the 2040 Long-Range Plan.

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners requests that funding currently programmed for these capacity projects be redirected to preventive maintenance and rehabilitation of existing roads and bridges, addressing critical safety needs, and enhancing quality of life.

BE IT FURTHER RESOLVED that this resolution be transmitted to SEMCOG, the Michigan Department of Transportation, and State Senators Randy Richardville and Rebekah Warren, and State Representatives Gretchen Driskell, Jeff Irwin, David Rutledge, and Adam Zemke in advance of SEMCOG’s June 20, 2013, General Assembly meeting.

Rabhi noted that he had raised this issue at the board’s May 15, 2013 meeting. His concerns are social and environmental. The region shouldn’t be building more roads for cars. Instead more alternative forms of transportation should be built. The highway system has already destroyed neighborhoods and impeded economic development in certain areas, and this expansion would only continue that.

A more conservative mindset, Rabhi said, would argue against investing in new infrastructure at a time when governments can’t maintain the existing infrastructure – including a crumbling bridge and road system. At SEMCOG’s executive committee meeting in May, Rabhi said he voted against the long-range plan, and he intends to vote against it at the entity’s general assembly later in June. He believes that both progressive and conservative minds can find reasons to oppose this plan.

Rolland Sizemore Jr. wondered how this plan related to the southeast Michigan regional transit authority (RTA), of which Washtenaw County is a part. He hoped the board would hold a working session on the RTA soon.

Rabhi explained that since SEMCOG’s funding can’t be used for transit, it doesn’t affect the RTA. It must be used on roads, but it could be used for repair rather than new construction, he said.

Conan Smith said he shared Rabhi’s concerns. The Washtenaw County road commission has a list of unfunded needs totaling $82 million. He criticized the idea that some of those dollars would be used to build new infrastructure at a time when the demand isn’t there, even based on SEMCOG’s own population projections.

Outcome: Commissioners unanimously approved the resolution opposing SEMCOG’s long-range regional transportation plan.

Dexter Annexation

Commissioners were asked to set a public hearing for July 10, 2013 regarding the annexation of land from Scio Township into the village of Dexter. Commissioners are expected to vote on the annexation that same night.

According to the county’s corporation counsel, Curtis Hedger, the annexation of township property into a village is one of the few instances that requires county board approval. Generally, annexation is handled by the individual municipalities where the annexation occurs.

A letter to the county from Dexter village manager Donna Dettling states that the annexation request – for a 16.66-acre property – was made by the property owner, Dexter Fastener Technologies, known as Dextech. The land is adjacent to the Dexter Business & Research Park, where Dextech hopes to expand. The company is one of Dexter’s largest employers.

On May 13, 2013, the Dexter village council unanimously passed a resolution in support of the annexation. The resolution indicates that although the Scio Township board did not take formal action about the request, there was generally support for the action. [.pdf of communications from Dexter regarding the annexation]

Outcome: Without discussion, commissioners set the annexation hearing for July 10.

Jarvis Stone School

The county board was asked to designate Jarvis Stone School in Salem Township as an historic district. The building is a former one-room schoolhouse built in 1857 and located at 7991 North Territorial Road.

Specifically, the board was asked to approve an ordinance that designates the 1.42-acre property as an historic district under the jurisdiction of the Washtenaw County Historic District Commission. [.pdf of proposed ordinance] The property is owned by the Salem Area Historical Society, which uses the school as its headquarters. It would be the second historic district in Salem Township. The first one is Conant Farm on Napier Road.

The Salem Township board had granted a request to consider the property as an historic district in 2011. And at its Oct. 19, 2011 meeting, the county board voted to establish a study committee regarding the request. That report was completed this year. [.pdf of study committee report]

Jarvis Stone School: Public Commentary

Terry Cwik, president of the Salem Area Historical Society, described the process that had been undertaken, calling it a team effort of a volunteer group. Cwik praised two county staff members – Cynthia Christensen and Melissa Milton-Pung – who had provided guidance on developing the final report. About 25-30 people had attended a public meeting in January about this project, giving only positive feedback and input, he said. And the Salem Township board has voted unanimously in support of the ordinance to create the historic district. Cwik hoped that commissioners would make Jarvis Stone School the county’s 13th historic district, and that the county would continue to preserve its past into the future.

Marcia Van Fossen, vice president of the Salem Area Historical Society, also spoke in support of the new district. She noted that a previous member of the county board lives in Salem Township, and she hoped that it would influence the board’s decision to approve the new district. [Van Fossen was alluding to Alma Wheeler Smith, who is also the mother of current county commissioner Conan Smith.]

In responding to Van Fossen’s remarks, Conan Smith quipped: “My mom told me to vote yes.”

Alicia Ping thanked Cwik and Van Fossen for their work, noting that she had served on the Saline Historical District Commission for 11 years. It takes a lot of work to make something like this happen, she said.

Jarvis Stone School: Board Discussion

Conan Smith questioned why this proposal wasn’t first brought forward for initial approval at the board’s ways & means committee meeting, rather than just receiving one final vote at the board meeting that night. Curtis Hedger, the county’s corporation counsel, explained that because the county doesn’t have original jurisdiction over historic districts, this type of resolution has always gone directly to the board meeting. He explained how the process works. First, a local government where the proposed historic district would be located contacts the county, starting the process in motion. The county’s historic district commission studies the proposal, then makes a recommendation to the county board.

Hedger said he’s reviewed all the previous historic districts that the county has created, including Gordon Hall in the Dexter area. The county is simply doing what it’s contractually obligated to do, he said. Although the county is creating a new ordinance, it’s a very specific type of ordinance, outlined in the state enabling legislation for county historical district commissions.

Smith said he was fully supportive of creating the district for Jarvis Stone School, but he was concerned that there hadn’t been sufficient public notice about it. He asked for the opinion of Dan Smith, who represents District 2, where the historic school is located.

Dan Smith replied that he had received emails from Terry Cwik of the Salem Area Historical Society, notifying him that this process was moving forward. D. Smith indicated that others in the community had been contacted as well about the process.

Outcome: The board unanimously approved creating the Jarvis Stone School historic district.

Community Corrections Plan

At their June 5 meeting, commissioners were asked to approve an annual community corrections plan with a $1,042,468 budget for FY 2013-14 – from Oct. 1, 2013 through Sept. 30, 2014. [.pdf of community corrections plan]

The community corrections division is a unit of the Washtenaw County sheriff’s office, with an emphasis on programs and services aimed at keeping people out of jail by providing sentencing options for the Washtenaw County trial court – including pre-trial services, drug testing, electronic monitoring, and social education. The funding comes from several sources: (1) $421,900 in state revenue; (2) $260,890 in program-generated fees; (3) $240,983 in appropriations from the county’s general fund; and (4) $118,703 from fund balance.

According to a staff memo, an estimated 99,365 jail bed days were saved in 2012, for an estimated savings of $8.446 million – based on an estimate of $85 per day for incarceration. [.pdf of staff memo]

Outcome: Without discussion, commissioners gave both initial and final approval to the community correction plan.

Brownfield Public Hearings

On the agenda were resolutions to set public hearings for July 10 regarding two brownfield redevelopment projects in Ann Arbor – at Packard Square (the former Georgetown Mall), and 544 Detroit St.

Since the city of Ann Arbor joined the Washtenaw County Brownfield Redevelopment Authority (WCBRA) in 2002, brownfield projects located in the city must receive approval by the county board. The state’s brownfield program offers incentives for redevelopment of property that’s contaminated, blighted or “functionally obsolete.”

The 544 Detroit St. project is seeking brownfield status so that it will be eligible for brownfield tax increment financing. The site plan calls for a three-story “flatiron-style” building, located at the triangle tip of Detroit and North Division, just southwest of the Broadway bridge – the site of a long-abandoned gas station in the Old Fourth ward Historic District. The new building would include offices on the first floor and residences on the upper two floors. The project’s site plan received a recommendation for approval by the Ann Arbor planning commission on Dec. 18, 2012. Both the site plan and brownfield plan are expected to be on the council’s June 17 agenda, according to city planning manager Wendy Rampson.

For Packard Square, the July 10 hearing relates to a proposed amendment to the project’s original brownfield redevelopment plan, which the county board approved after much debate on May 18, 2011. At that same meeting, the board approved a $1 million grant application to the state Dept. of Environmental Quality for brownfield cleanup at the proposed $50 million development – that grant was later awarded to the project. Demolition is underway, with plans to build more than 200 apartments and 20,000 square feet of commercial space at 2502-2568 Packard Street.

The amendment to Packard Square’s brownfield plan would add eligible activities that qualify for brownfield tax increment financing, including underground parking and urban stormwater management infrastructure. Those activities are now eligible for TIF, following changes by the state legislature to the Brownfield Redevelopment Act 381 in December 2012.

Outcome: The public hearings for both projects were set for July 10, when the county board will likely take action on both brownfield items. The vote on the Packard Square hearing was unanimous. For the 544 Detroit St. hearing, the board’s two Republican commissioners – Alicia Ping and Dan Smith – cast the only votes of dissent. They did not publicly state their reasons for voting against the hearing on that project. In the past, they and other commissioners have expressed concern about the diversion of property tax revenues through TIF districts. While the Packard Square TIF already exists, the TIF for 544 Detroit would be new.

Communications & Commentary

During the evening there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. In addition to issues reported earlier in this article, here are some other highlights.

Communications & Commentary: Head Start

Dan Smith highlighted an item in the claims report related to Head Start. He asked for a brief update on the situation with Head Start. [For the period April 27 through May 17, 2013, a total of $13,014 had been paid in claims related to the Head Start program.]

County administrator Verna McDaniel reported that federal officials have begun negotiating with the Washtenaw Intermediate School District (WISD) about taking over the local Head Start operation. A notice has been issued to grant WISD the funding to support Head Start, she said. The county has been instructed to negotiate a transfer of assets.

In response to a query from Ronnie Peterson, McDaniel said that leasing the county’s Head Start facility to WISD is probably the best option at this point. Peterson said he was concerned about the location of the Head Start program, and wanted to make sure it stayed close to those who need it most.

By way of background, in 2011 the board voted to relinquish the county’s 46-year administration of the program on July 31, 2012. But the transition to a new administrator – a process overseen by the federal Head Start program – hasn’t moved as quickly as expected. So the county agreed to a one-year extension to continue administering the program, through July 31, 2013.

The county-owned Head Start building at 1661 Leforge in Ypsilanti was built in 2003. The 17,500-square-foot building on 10 acres of land is tied to the early childhood program. The county still owes about $2.6 million on the bond for the building, and makes $167,000 in bond payments annually. The bond payment schedule runs through 2022.

Communications & Commentary: County Budget

Felicia Brabec, chair of the board’s ways & means committee, reviewed activity related to developing a four-year budget for the county, from 2014-2017. Most of the update related to the bond proposal, which is reported earlier in this article.

Rolland Sizemore Jr. noted that Dick Fleece, the city’s public health director, plans to retire at the end of 2013. Sizemore felt it might be a good opportunity to review the entire public health department, before filling that position. He suggested scheduling a working session on that topic.

Communications & Commentary: Road Commission

As liaison to the county road commission, Rolland Sizemore Jr. reported that the commission is forming a committee to look at the condition of roads throughout the county. He’ll be serving on that.

Somewhat related, Sizemore – who also serves on the board of the Ypsilanti Area Convention & Visitors Bureau – had copies of a guide that was put out of routes in Washtenaw County for motorcyclists.

Communications & Commentary: Public Commentary

Thomas Partridge spoke at the evening’s two opportunities for public commentary, in addition to the public hearings reported above. He generally criticized the board for not attending to important issues like affordable housing, public transportation, health care and taking care of the needs of the most vulnerable.

Present: Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Alicia Ping, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith.

Next regular board meeting: Wednesday, July 10, 2013 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to confirm date.] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public commentary is held at the beginning of each meeting, and no advance sign-up is required.

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The first was a change in the pension system for members of its police service specialist union. The council had approved the collectively bargained changes at its June 20, 2011 meeting. And the council had given initial approval to the ordinance change at its July 18 meeting.

Under the old ordinance, members of that union made a 5% post-tax contribution to their pension. That will change to a 6% pre-tax contribution made by members of the police service specialist union. The change will be effective starting Aug. 14, 2011.

The council also gave final approval to a revision to the city’s ordinance that covers how a city retiree’s health care is paid for. The council had given initial approval to the ordinance change at its July 18 meeting. The revision to the ordinance distinguishes between “subsidized retirees” and “non-subsidized retirees.” A non-subsidized retiree is someone who is hired or re-employed into a non-union position with the city on or after July 1, 2011. In their retirement, non-subsidized retirees will have access to health care they can pay for themselves, but it will not be subsidized by the city.

At its June 6, 2011 meeting, the city council had directed the city staff to prepare an ordinance change along these lines.

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]

Currently union members make a 5% post-tax contribution to their pension. That will change to a 6% pre-tax contribution made by members of the police service specialist union. The change will be effective starting Aug. 14, 2011.

Because the change to the police service specialist retirement package requires altering a city ordinance, it will require a public hearing and a second, final approval by the council at a subsequent meeting.

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]

Before the June 20 meeting started, Sabra Briere (Ward 1) handed out amendments she'd be proposing to the medical marijuana licensing ordinance. From left: Christopher Taylor (Ward 3) and Carsten Hohnke (Ward 5). (Photos by the writer.)

The first local law stipulates where medical marijuana businesses can be located in the city – it’s an addition to Ann Arbor’s zoning code. The second law establishes a licensing board for medical marijuana dispensaries and sets up an application process for the award of a maximum of 20 licenses to dispensaries in the first year of the program.

On Monday evening, the council undertook amendments to the licensing ordinance that were few compared to massive changes that have taken place at several council meetings dating back to January 2011. On Monday, the labeling requirements for marijuana packaging were changed so that dollar amounts are no longer required.

The council teetered on the edge of postponing the legislation, when city attorney Stephen Postema encouraged councilmembers to delay voting until the Michigan Court of Appeals issued an opinion on a case (Michigan v. McQueen) for which oral arguments were heard on June 7. Despite the support for postponement from mayor John Hieftje, an initial vote to postpone achieved only two other votes. A second vote achieved a total of five votes, leaving the postponement one vote short of the six-vote majority it required.

As some councilmembers observed that the council had invested a disproportionate amount of time on the medical marijuana legislation, Hieftje contended that it had not prevented the council from handling its other work.

On Monday, that other work included a collective bargaining agreement with its police service specialists union, which was an item added just that evening to the agenda. The council also heard public commentary critical of the recent budget approved on May 31 by the council, which includes the layoff of some firefighters and police officers. The meeting was preceded by a demonstration by the city’s public safety employees, at Fifth and Huron streets just outside city hall

The council  also approved two contracts in connection with the East Stadium Bridges replacement project and three purchase orders related to tree care. And the council gave final approval to sewer and water rate increases and a revision to its landscaping ordinance.

The council revised its debt/fund balance policy, and revised its budget to reflect the blending of its economic development fund back into the general fund. Also related to economic development, councilmembers approved the annual $75,000 funding for Ann Arbor SPARK and set a public hearing for a tax abatement for Picometrix.

The council established an affordable housing lien policy and gave initial approval to technical revisions to the city’s pension ordinance. They confirmed appointments to the new design review board, but postponed a vote on setting the design review fee. The council added a work session for July 11, which is likely to include an update on the planned Fuller Road Station.

The council also heard a presentation on a skatepark planned for Veterans Memorial Park.

Medical Marijuana

At Monday’s meeting, the council considered two city ordinances that ensconce medical marijuana businesses with local regulations.

One ordinance concerned zoning – legislation that stipulates where medical marijuana dispensaries and cultivation facilities can set up business. The second ordinance concerned licensing – a law that describes how licenses will be awarded to dispensaries, and how a licensing board will be set up to evaluate applications.

Key features of the zoning ordinance include the requirement that medical marijuana dispensaries must be located in districts zoned as D (downtown), C (commercial), or M (manufacturing), or in PUD (planned unit development) districts where retail is permitted in the supplemental regulations. Medical marijuana cultivation facilities are only allowed in areas zoned as C (commercial), M (manufacturing), RE (research), or ORL (office/research/limited industrial). Medical marijuana businesses are prohibited in a 1000-foot buffer zone around schools.

Key features of the licensing ordinance include a limit of 20 total licenses for dispensaries in the first year – cultivation facilities are not licensed under the ordinance. The license applications will be processed by a five-member medical marijuana licensing board consisting of one member of the city council, one physician, and three other Ann Arbor residents. The license application requires proof of legal possession of the premises for which the license is sought. Licensed dispensaries are required to maintain records on patients for 30 days after marijuana is dispensed, and on cultivation sources for 60 days.

The council’s work on the medical marijuana legislation dates at least as far back as June 7, 2010, when councilmembers convened a closed session on the topic to discuss a city attorney’s memo dated May 28, 2010. The council convened another closed session on July 19, 2010, purportedly to discuss the same May 28, 2010 memo. The council did not publicly discuss the topic until Aug. 5, 2010, when it enacted a moratorium on the use of property in the city for medical marijuana businesses.

Dispensaries that were operating before the moratorium was enacted – and that were allowed under the moratorium to continue to operate – will have a 60-day window within which they can apply for a license after the ordinance takes effect, which is 60 days from publication. Other dispensaries cannot apply until 75 days after the ordinance becomes effective.

Medical Marijuana: Public Commentary

Every council meeting agenda includes 10 3-minute slots at the start of the meeting for which people can sign up to speak. On Monday, some of them addressed the topic of medical marijuana. This public commentary does not count as the public hearing for any issue. Public hearings do not require signing up in advance and are not limited to a specific number of speakers.

Dennis Hayes reiterated a point he’d made at the council’s previous meeting – data from Michigan’s Dept. of Community Health show that over half of registered medical marijuana patients are on Medicaid, Social Security or some other form of support. Ann Arbor should be proud of leading the way to helping them get the medicine they need for relief, he said. About the process of enacting the legislation, he said at the very least, it has been a long slog. He thanked councilmembers Sabra Briere and Sandi Smith, both of Ward 1, for their efforts.

Hayes said that Ann Arbor’s ordinance would be an example for the rest of the state of Michigan. However, he said that the requirement for the dollar amount on labeling needs to be removed. He called the record-keeping that’s been agreed upon appropriate and helpful, but added that he hoped to come back with further suggestions. He allowed that there would be litigation for some time to come, but said it’s now time to move forward.

Chuck Ream noted that if the city could tax medical marijuana, they could hire more police officers. He told the council it’s time to finish the legislation, but it’s important to finish it right. He said he’d previously asked that no monkey wrench from the legal department be thrown into the process, and said the suggestion to delay passage that evening was such a monkey wrench. He allowed that, yes, there would be a ruling that would be handed down, and there’d be another one after that and another one after that. At their last meeting, he told the councilmembers, all the major decisions were done. But he described the zoning ordinance as “still in bad shape.” The zoning ordinance should be made parallel with the licensing ordinance, he said.

A citation for the charter of the city of Ann Arbor should be included, Ream said, saying that it’s not just the Michigan Medical Marijuana Act that enables the local legislation, it’s also the city charter. He said the council should toss out the part about the defenses, exceptions and and immunities. To the phrase “valid registration card,” he asked the council to add “or its equivalent.” He also asked the council to take the dollar amount off the label – that just provides evidence to bust people, he said.

Rhory Gould said he was speaking as a representative of Arborside Health and Wellness. He thanked mayor John Hieftje and the council for developing an ordinance that would serve and protect all. He also thanked all his colleagues – including his attorney, Matt Abel – for diligence in helping to get the ordinance to pass in the right manner. He said he’d previously complained about the length of the moratorium. The current legislation is something that can be used as an example, for other communities in the state, he said. Others will look to Ann Arbor as leaders on how to do things the right way. He stated that he would like one of the available licenses to be awarded to Arborside. He stated that he would “give it his all” to give professional service to everyone. He thanked the council for effort to put the ordinance in place.

Medical Marijuana: Public Hearing

A formal public hearing related to the licensing ordinance. The public hearing on the zoning ordinance had been held previously.

Mayor John Hieftje told the audience before the public hearing started that he thought the medical marijuana ordinances would be postponed. His said his “best guess” would be that the legislation would be postponed. If it were postponed, the public hearing would be continued until it was voted on, but those who spoke that evening would not be able to speak at the continued hearing.

After the vote on medical marijuana, during a recess, Charmie Gholson chats with Stephen Kunselman (Ward 3).

Chuck Ream stated that it was disconcerting to hear that the measure might be postponed. No one knew it was being postponed, he said. He returned to similar comments he’d make during public commentary at the very start of the meeting. He asked the council to include a reference to the Ann Arbor city charter in the legislative intent section. He said that the language in the ordinance that stated the ordinance did not provide for defense against prosecution is “pretty poor language,” when 74% of Ann Arbor residents voted in 2004 to give dispensaries every power that they have. The dollar amount requirement on packaging needs to be removed, he said – that sets up evidence for people to get busted. He hoped that there would be no more foolishness, shenanigans or chicanery.

Charmie Gholson told the council she had not been there for a while, because she’d been ill. Even if someone doesn’t need help to get to the microphone, she said, that doesn’t mean that they’re not struggling with chronic and lethal illness.

She pointed to the renewed federal interest in distribution facilities that the council had expressed at its recent meetings. She said, “We’re in a national battle.” She’s been working on this issue for the last five years, she said. In June, she continued, two reports had been released – one from the Global Commission on Drug Policy and one from Law Enforcement Against Prohibition. The conclusion of those reports was that the drug war has failed with devastating consequences. It’s a U.S. attorney’s job to say, “It’s still working,” she said. She told the council that the reality is, if you start talking to victims of the drug war, you would think that the war is a failure.

Medical Marijuana: Recent Developments – Michigan v. McQueen

City attorney Stephen Postema told the council about a case that’s now before the Michigan Court of Appeals.

By way of background, the case that’s being heard on an appeal by the prosecutor – Michigan v. McQueen (Compassionate Apothecary) – was noted in The Chronicle’s coverage of the council’s Jan. 3, 2011 meeting, when the council deliberated on the licensing legislation. The case was initially heard by chief judge of the Isabella County trial court, Paul Chamberlain, who was asked to consider a request from the Isabella County prosecutor to find that Compassionate Apothecary constituted a public nuisance. In his order filed Dec. 16, 2010, Judge Chamberlain found that “Defendants only operate their business during designated business hours, and as decided above, perform their medical marihuana related conduct pursuant to the MMMA. Therefore, their business does not constitute a nuisance per se.”

In finding that Compassionate Apothecary operated in accordance with the Michigan Medical Marijuana Act, Chamberlain laid out how the Compassionate Apothecary business model, in his view, conformed with the MMMA:

This court is charged with determining whether the patient-to-patient transfers in this case are considered medical use of marihuana, as permitted by the MMMA. Further, the record reveals that only registered qualified patients or registered primary caregivers make such transfers as members of defendants’ business. Members place their marihuana in defendants’ lockers, and the members transfer or deliver the marihuana pursuant to the MMMA. Even when a registered primary caregiver transfers medical marihuana to another member, such caregiver does so under the authorization of the patient to whom he or she is registered. The Legislature did not prohibit such transfers, and such registered primary caregiver conceivably serves as a person who assists a registered qualified patient with using or administering marihuana. MCL 333.26424(i). Therefore, the ultimate issue before this court is whether the presumption listed in MCL 333.26424(d) applies and pertains to the patient-to-patient medical use of marihuana in this case. This court finds that it does.

Postema told the council that a request for an expedited appeal had been made, which had resulted in the hearing of oral arguments two weeks ago [June 7, 2011]. What is significant about the case being heard by the Court of Appeals, said Postema, is that the opinion would be binding if it were published, and it would be the first time that guidance had been provided. He said that based conversations with people who saw the oral arguments, the unanimous opinion of observers was that the ruling would come down quickly, and when it did come down, the business model used in that case would not be found legal. Postema said the sense he got from attorneys who represented dispensaries was they weren’t optimistic. They were predicting a reversal in favor of the prosecutor. He said it’s something the council should consider.

Sabra Briere (Ward 1) asked Postema to explain exactly what the issue was in the Isabella County case. Postema said that the municipality had tried to close down the business, because it was based on patient-to-patient transfer of marijuana, and explained that this is how a number of dispensaries in Ann Arbor operate. Briere followed up by asking Postema to confirm that for both the licensing and the zoning, what the council has proposed is: Everything must be done in accord with MMMA, and that means in accord with any court’s interpretation of it. Postema confirmed that is the case.

Briere asked if the court were to rule that dispensaries can’t exist, what effect would there be on the city’s ordinances? Postema said definitions in the ordinances may need to be altered. He also said that the licensing board set up by the ordinance might need to be given some guidance.

Medical Marijuana Licensing: Deliberations on Postponement

Sabra Briere (Ward 1) said they don’t know a date certain when the Court of Appeals ruling might come down, so the choices on postponement would be to postpone indefinitely or postpone every two weeks. Postema said he felt that in a month, he thought the ruling would come down. At that point, Briere said, she wanted to talk about a few amendments that she wanted to propose, then let the council consider the issue of postponement.

Before considering amendments, mayor John Hieftje wanted more information from Postema. He asked if the pending court ruling could outlaw dispensaries. In responding, Postema contended that if the court struck down the trial court’s ruling, it would end most dispensaries as they exist across the state.

Carsten Hohnke (Ward 5) said there was clearly some benefit in moving forward – the council has been “at this a while.” He wondered what the harm is if the council moves forward and a ruling comes down inconsistent with the city’s ordinance. The language would have to be amended, said Hohnke, either as an existing ordinance or as a pending ordinance – the task would be the same. Postema attempted to respond to Hohnke’s point by saying that the issue for everyone is getting guidance on the state law. It would be useful, however the ruling came down – it’s what everyone has been waiting for, Postema said. The importance that the court was attaching to the ruling was evident from the effort that had been made to expedite consideration of the appeal.

Sandi Smith (Ward 1) said that the council had been working in good faith with voters’ desire, saying the council had hammered it out, and is now ready to cross the finish line. What she was hearing in the city attorney’s remarks is that it’s a matter of how business is done at a dispensary, which is up to them to do. It’s not the council’s job to anticipate when and how the court would rule, and she felt that dispensaries will make their own decisions about their business model.

Marcia Higgins (Ward 4) was not active in the deliberations, but cast one of two votes against the medical marijuana legislation..

Hieftje said he didn’t know why the council wouldn’t take the additional time, if it might be able to make a more informed decision. Right now, he contended, if you want access to medical marijuana you can get it – the moratorium could be extended by one month, which would allow existing dispensaries to continue to operate.

Christopher Taylor (Ward 3) posed a more specific version of Briere’s question to the city attorney. Taylor noted that the pending court decision involves the manner in which marijuana is distributed: Does the pending Ann Arbor ordinance “engage” how dispensaries transfer their marijuana? Postema responded by contending that the court ruling could affect Ann Arbor’s ordinance, depending on how the ruling comes out. A dispensary has to get marijuana from somewhere, he said – a dispensary may get it from “overages” from caregivers, or it might be transferred between patients. Postema went on to say that many dispensaries in Ann Arbor use patient-to-patient transfer in their business model.

Taylor pressed Postema to speak to the issue of whether Ann Arbor’s ordinance engages that question: Does it engage how they get the marijuana? Postema allowed that right now it’s an open question. But he maintained that if the council felt that patient-to-patient transfer is not allowed under the law, then the council would not adopt this kind of ordinance. He went on to say that the attorney general for the state of Michigan, Bill Schuette, had said he felt that patient-to-patient transfer is not allowed, so Postema felt having the court ruling in place would be useful before proceeding.

[Ann Arbor's licensing ordinance defines dispensaries as follows: "'Medical marijuana dispensary' means a building or part of a building where one or more primary caregivers operate with the intent to transfer marijuana between primary caregivers and/or qualifying patients, other than a medical marijuana home occupation or a dwelling unit in which the transfer of marijuana occurs between a primary caregiver and qualifying patient who resides in the dwelling unit as permitted under subsection (7)."]

Stephen Rapundalo (Ward 2), standing, touches base with interim city administrator Tom Crawford.

Stephen Rapundalo (Ward 2) said he agreed with the mayor. He had never understood the rationale of proceeding with this ordinance, when it would be altered by legislation and court decisions. The time invested by the council on the issue of medical marijuana legislation was so disproportionate compared to other priorities. Rapundalo indicated he’d voted for the measure at the polls, but did not see why the council couldn’t wait it out. This is just ridiculous, he said, to keep going forward. So at that point he moved for a postponement, with a second in support of that motion coming from Marcia Higgins (Ward 4).

Briere went back to the question that Taylor had asked Postema – if anything in the ordinance, as written, deals with business practice – because that’s the issue at hand based on his description of the court case. She noted that the proposed licensing board is supposed to set the criteria for licensing and those criteria could reflect any possible court ruling. Postema allowed that was true. But he said that the practice of patient-to-patient transfer is very prevalent, so a ruling could result in the ordinance needing to clarify that. A court ruling could also give guidance to the board, said Postema.

Briere said at the most she was intending to introduce a few amendments, so requested that the council discuss the amendments, and then discuss whether to postpone. So she said she would not support a postponement “at this moment.”

Stephen Kunselman (Ward 3) said he was confused about postponing based on a potential court ruling. He asked what the difference was between a potential for a court ruling on marijuana compared to a recent ruling on the living wage ordinance? Postema said a recent decision on the living wage ordinance was an unpublished opinion, so has no precedential effect. He expected that the opinion in the Michigan v. McQueen case would be published, and thus be used as a precedent.

Taylor said he agreed with Rapundalo that medical marijuana is an important issue, but not the council’s top issue. For Taylor it was a “near call,” but he was in favor of “gutting it out tonight.” And if the council needed to change the ordinance, the council could run that through the ordinary process.

Hohnke agreed with Briere’s desire to consider the amendments first, so he asked if Rapundalo would consider withdrawing the motion to postpone and then reintroduce it. Rapundalo, sitting to Hohnke’s right, shook his head no. Faced then with commenting on the issue of postponement, Hohnke said that while he appreciated the helpful input from the city attorney, he was not convinced of the benefit of postponement, so he would not support it.

Outcome on postponement: The motion to postpone failed 3-7, with Higgins, Rapundalo and Hieftje voting for it.

Medical Marijuana Licensing: Deliberations – Amendments

The council then proceeded to the amendments offered by Briere, which included the following additions [in italics] and deletions [in strikethrough], most notably the elimination of dollar amounts from the labeling requirements:

5:50.1(2)
(a)“Registry identification card” means a document issued by the department that identifies a person as a registered qualifying patient or registered primary care giver

7:506(4)
(e) The date delivery, weight, and type of marijuana and dollar amount or other consideration being exchanged in the transaction;
…
(h) The name of an authorized representative of the medical marijuana dispensary whom a registered qualifying patient can contact with any questions regarding the product and the address, e-mail address, and telephone number of the medical marijuana dispensary of an authorized representative of the medical marijuana dispensary whom a registered qualifying partent can contact with any questions regarding the product.

Outcome on amendments: The council approved all the amendments without significant comment.

Medical Marijuana Licensing: Deliberations (Again) on Postponement

With the main motion to approve the licensing again before the council, mayor John Hieftje said he wouldn’t vote against it, but also said it would be “silly” to pass it. With his frustration apparent, Sabra Briere (Ward 1) asked if he would like another motion to postpone, and the mayor said he would appreciate one. Stephen Rapundalo (Ward 2), however, indicated that he himself wasn’t interested in pursuing a postponement further. So it was Stephen Kunselman (Ward 3) who moved for a postponement, with support from Margie Teall (Ward 4), who seconded the motion.

There was some clarification about the timing of the postponement – it would have been to the council’s second meeting in July. Without further discussion, the council voted and split 5-5, so the motion failed.

Outcome: The postponement failed, because it did not get the required six-vote majority. Voting for the postponement were: Rapundalo, Kunselman, Teall, Higgins, Hieftje. Voting against the postponement were: Taylor, Hohnke, Anglin, Smith and Briere. Derezinski was absent.

Medical Marijuana Licensing: Deliberations on Main Motion

Mayor John Hieftje continued the deliberations on the main motion, expressing his frustration that the postponement had not been achieved. “If this comes back to us and we have to spend any more time on it, I think we’ve done ourselves and the whole city a disservice. We’ve spent a great deal of time on this – a great deal of time.”

Sandi Smith (Ward 1) told the mayor she could respect his concern, but told him, “The work is done. And we’ve gone through this over and over again.” She said that any future revisions could be informed by the licensing board.

Stephen Rapundalo (Ward 2) said it should be no surprise that he would not be supporting the ordinance – he’d hoped there would at least have been a postponement. He said the medical marijuana issues had gotten out ahead of the regulatory environment. He agreed with the remarks of a speaker who had addressed the council at a previous meeting, who had said the council was trying to shove the genie back in the bottle. He didn’t think it was going to work. He said he appreciated the time and effort that Briere and Smith had put into it. But he said the effort – particularly on the part of the city attorney’s office – has been out of proportion with other priorities.

Rapundalo said he thought the current language is still insufficient in terms of regulatory parameters that are needed. Particularly in terms of neighborhoods and health, safety and welfare, he was concerned. He alluded to an example in his own extended neighborhood without specifying the nature of that example.

Dispensaries are not allowed by the Michigan Medical Marijuana Act, and Rapundalo said that allowing them in the ordinance caused him concern. He was also concerned about the city’s exposure and conflict with respect to federal laws. “We’re setting ourselves up for lots of protracted uncertainty and chaos,” he said. The council don’t know what the future will hold in terms of legislation and court decisions, so it’s ridiculous to go ahead with this local ordinance, he said.

The medical issue has become very different from what it was originally envisioned, Rapundalo continued. Many people supported the state ballot measure, but didn’t anticipate dispensaries. He also alluded to a growing illicit trade in obtaining referrals from physicians to get registry cards, which he found quite troubling. Until the state can provide more clarity, he said, there should be no sanctioning beyond what is unambiguously allowed under state law. He said the city should extend the moratorium and take the time to figure out how to put the genie in the bottle.

Sabra Briere (Ward 1) responded to Rapundalo’s remarks by saying there was not a word she would disagree with. Through the entire process it had been eye-opening. She said that many were quite happy not to address medical marijuana with a city ordinance, but the council had two ordinances in front of it. One tells where medical marijuana can be grown and under what circumstances – they’d been told it’s a necessary zoning ordinance. The other sets up a licensing board.

Some communities have been sued because they prohibited dispensaries, Briere said. The council had worked hard to craft something that protects city. There’s a built-in delay. There is a 60-day delay before documents can be filled out by any dispensary. There is another delay before any licenses can be issued, she said. If something happens between now and the time licenses can be issued, then she was happy to pull everything back or part of it back and revise it. The truth is that it’s taken more time than anyone anticipated, and she would like to move on and address other issues.

Hieftje made the point that although the council had spent hours and hours on the issue, it had not kept the council from getting its other work done. He said he was afraid it would soon be back in the council’s lap again. Carsten Hohnke (Ward 5) said he appreciated Rapundalo’s comments, noting that it was a difficult path to navigate between state and federal law. But he said the council had to the best of its ability crafted ordinances to address the ambiguities in the law and he felt that the council had a mandate to do that.

Outcomes: The council voted 8-2 in favor of the medical marijuana licensing ordinance. Dissenting were Rapundalo and Higgins. Derezinski was absent. The vote on the zoning ordinance came out the same way and was taken without significant discussion.

Medical Marijuana: Coda

Towards the end of the meeting, the council came back to the issue of the moratorium by recognizing that the moratorium currently in place extends only through the end of June. The licensing ordinance does not take effect until 60 days after legal publication, which was expected to be Thursday, June 23. After that, existing dispensaries have a 60 window within which they can apply. Others must wait until 75 days after the ordinance takes effect.

Outcome: The council voted to extend the moratorium by 120 days from June 30, 2011.

Collective Bargaining: Police Service Specialist

Added to the agenda on Monday night at the request of Stephen Rapundalo (Ward 2) was a new collective bargaining agreement with its police service specialist union for a contract that goes retroactively from July 1, 2009 through June 30, 2013.

Key features of the contract are no wage increases and participation in the city’s health plan, which requires a contribution by employees to the cost of that plan. There are five members of the police service specialist union. They provide support services to police officers.

Collective Bargaining: Public Commentary

Anne Daws spoke on behalf of Citizens for a Safe Ann Arbor – representatives of the police and fire departments – to urge the mayor and council to reconsider and amend the budget approved at the end of May. [Though the city uses a two-year planning cycle, it adopts budgets just one year at a time. The budget adopted by the council last month for FY 2012, which begins July 1, 2011, is the first year of a two-year cycle.] Current staffing levels for police and fire mean that they are unable to provide the level of service that the community deserves, she said.

Daws said it is unsafe both for emergency responders and for residents to reduce further the number of police officers, 911 dispatchers and firefighters. For emergency responders who live in Ann Arbor, they’re in a unique position, because they work in the city so they understand what’s going on in the community, and they pay taxes so they understand the tax burden, she said. When they go home at night, they rely on emergency responders to keep them safe.

In 2002 there were 196 police officers, Daws continued. Now there are 122 – the administration would eventually like to reduce that to 109. For this year, four police officers have been given pink slips, she said, in addition to two dispatchers and one police service specialist. Officers are now being sent to priority calls – domestic violence, suicidal subjects and fights – without a backup. They’re told a backup will be sent when one can be found. For non-priority calls, like non-injury traffic crashes, the wait can be 30-90 minutes, she said.

For the fire department, Daws continued, in 2002 there were 113 firefighters, and now there are 81. The administration wants to reduce that to 76, she said. The department is using rotating closures of stations – last week, Fire Station 3 was closed. There’s talk of Washtenaw County taking over dispatch operations, she said. That would mean that when citizens of Ann Arbor call 911, she said, their call would go in line with all the people calling from Washtenaw County, including West Willow and Ypsilanti Township.

[During time for communications from the interim city adminstrator, Tom Crawford said earlier this month there had been a press release about possibly transitioning dispatch to the county. Separate from that was the layoff of two dispatchers, Crawford said. Given the closeness in timing, he wanted to point out the distinction.]

Daws concluded by saying that they were honored and proud to serve the community, but at the same time worried to see staffing levels drop to all-time lows.

Stephen Rapundalo (Ward 2), responding a few minutes later to the comments by Daws, said he’s mentioned on numerous occasions that the layoffs could be mitigated in the police and fire departments, if the bargaining units adopted the same health care plan that non-union and some other unions have taken on. It’s within the control of public safety unions, he said, to avert layoffs.

Mayor John Hieftje added that no one is asking the public safety unions to take on diminished health care, just to pay for a portion of it.

Collective Bargaining: Council Deliberations

Introducing the new contract for council approval, Stephen Rapundalo (Ward 2) – chair of the council’s labor committee – said he was glad to bring it forward from the labor committee. The key elements of the contract had been arrived at a number of months ago, he said, before the legislative developments at the state level, which may lead to a requirement that municipalities pay no more than 80% of employee health care costs.

Rapundalo ticked through some highlights of the contract: a retroactive term from 2009 through June 30, 2013; no wage increase; increases in pension contribution by employees in the latter years; and adoption of the city’s health care plan, which includes a contribution from the employees. He expressed the hope that the contract would be a model for the remaining unions, who have not ratified an agreement.

Asked by Sandi Smith (Ward 1), interim city administrator Tom Crawford said the union included five police service specialists who perform a variety of specialized services to support officers. Stephen Kunselman (Ward 3) asked how much money and how many jobs were saved through the contract. Crawford said he did not have those figures handy. When the city does negotiations, it has savings targets, but uses different ways to achieve those savings.

Kunselman said for a four-year agreement, where there is no wage increase, and they pay more for health care, he hoped an estimate could be provided based on just that. Crawford told Kunselman that with respect to evaluating savings, the city has not been paying wage increases. He told Kunselman he could provide an estimate.

Outcome: The council voted unanimously to agree to the contract with the police service specialists. This leaves the contract with the much larger police officers union still unsettled – it expired on June 30, 2009.

Infrastructure: East Stadium Bridges, Barton Dam

Before the council were two contracts related to the East Stadium Boulevard bridges replacement project. The first was a $3,587,456 contract with Parsons Brinckerhoff Michigan Inc. for project management and construction engineering services for the replacement. According to a staff memo, the contract would be paid for out of money from a variety of sources: street repair millage; the water supply fund; sanitary sewer fund; storm water funds; the alternative transportation fund; and the major street fund.

The second was a $609,815 contract with Northwest Consultants Inc. for construction engineering and design engineering services. The staff memo identifies funding sources as the water fund, the sewer fund, the stormwater fund and the street repair millage.

Sabra Briere (Ward 1) noted that she expected the money for the two contracts on the East Stadium bridges project to come from a mix of local street funds and federal funds. Homayoon Pirooz, head of the city’s project management department, indicated that the contract for design and construction engineering is all local money.

Approval for construction of the project would come before the council in September, and that portion would be mostly federal and state funds, Pirooz explained. At the end of the day, he said, the city would be able to capture all the state and federal grants that had been assigned to the bridge replacement project. Briere asked for confirmation that the federal TIGER II grant funds had all been secured. Pirooz said that the TIGER II money had been finalized and the money had been secured. [TIGER is an acronym for the federal program Transportation Investment Generating Economic Recovery.]

Mike Anglin (Ward 5) asked that the public be made aware of which federal funds had been secured. Pirooz told Anglin that $13.9 million had been awarded through the TIGER II federal program and a total of around another $3 million had been awarded by the state of Michigan.

Outcome: The council voted unanimously to approve the two contracts associated with the East Stadium bridges replacement project.

Another construction project on the agenda was a contract with Gerace Construction Co. for $812,500 worth of concrete repairs to Barton Dam. The funding was drawn from the water supply fund, but also required a $366,250 appropriation from the general fund reserve.

Outcome: The council voted unanimously without comment to approve the contract for concrete repairs to Barton Dam.

Tree Care

The council was asked to approve purchase orders with three different companies: Asplundh Tree Expert Co. ($90,000), Advanced Tree Care Services ($40,000) and Owen Tree Service ($30,000) for tree removal, stump removal and tree trimming services. The item resulted in a fairly extended interaction between councilmembers and Craig Hupy, the head of the city’s systems planning unit.

Sabra Briere (Ward 1) wanted to know when the contracts went into effect. Hupy said that the resolution had been drafted in April of this year, with the intention of taking it to the council for its first meeting in May – now it’s the second meeting in June. The city’s fiscal year ends June 30. Obviously, he said, there would be little or no expenditures in FY 2011. Briere confirmed that by authorizing the resolution, the council was not expecting work to be completed in the next nine days.

Briere then brought up the possibility that in the city’s approach to urban forestry, too much emphasis was placed on tree removal, and not enough on maintenance of healthy trees. Hupy responded by saying that tree removal is always a concern. Before a tree is removed, the city has two professionals do an assessment before a decision is made about a removal – removals aren’t taken lightly, Hupy said. It’s clear that with current funding levels, the city doesn’t have a maintenance plan for trimming trees. That’s a desirable long-term goal. He said he hoped that will eventually be a recommendation that comes from the urban forestry management plan.

Carsten Hohnke (Ward 5) returned to the question of when the expenditures would take place – it’s a $160,000 expenditure that will be approved for each of the next three years, including the current fiscal year, which has only nine days left. After some back and forth, the result was that the council voted to amend out the reference to the current fiscal year.

Hohnke asked if there is anything about the approval of the expenditure that locks in a particular approach to tree care. No, answered Hupy.

Stephen Kunselman (Ward 3) said the staff report noted a couple of staff retirements. He asked Hupy what the status is of the city’s forestry department in terms of trucks and people. What are they capable of doing? Hupy told Kunselman that throughout field operations, the city is stretched thin. For example, in water and sewer, he would normally go to a four 10-hour-a-day work week to gain efficiencies. The city can’t do that this summer because there are not enough employees to get coverage. Similarly, forestry is down and park operations is down due to retirements. The city has a number of vacancies posted, but is not being terribly successful in attracting candidates, he reported.

Kunselman wondered how the city council was approving expenditures for the contracts for FY 2013, when it has not yet approved that year’s budget. Interim city administrator Tom Crawford explained that a standard city purchase order contains language to the effect that qualifies the amount, to the extent that funding has been approved by the city.

Outcome: The council unanimously approved the amended resolution.

Water, Sewer, Stormwater Rates

Before the council was final approval for increases in water, sewer and stormwater rates.

In terms of revenue generated to the city, the rate increases are expected to generate 3.36% more for drinking water ($664,993), 4% more for the sanitary sewer ($829,481), and 3.35% more for stormwater ($176,915). [.pdf of complete utility rate changes as proposed]

According to the city, the rate increases are needed to maintain debt service coverage and to maintain funding for required capital improvements.

The city’s drinking water charges are based on a “unit” of 100 cubic feet – 748 gallons. Charges for residential customers are divided into tiers, based on usage. For example, the first seven units of water for residential customers have been charged at a rate of $1.23 per unit. The new residential rate for the first seven units is $1.27.

The city’s stormwater rates are based on the amount of impervious area on a parcel and are billed quarterly. For example, the lowest tier – for impervious area less than 2,187 square feet – has been $12.84 per quarter. Under the new rate structure, that increases to $13.24.

Water usage for Ann Arbor city residents is available online under the My Property tab. [You'll need your account number to access information.]

Water, Sewer, Stormwater Rates: Public Hearing

Vince Caruso introduced himself as a coordinating member of the Allen’s Creek Watershed Group. He told the council that he would support the use of porous pavement – it can handle two inches of rain an hour, has less heat-island effect, and is 70% quieter when vehicles travel across it. He noted that the city has paved Sylvan Avenue with porous pavement. There’s now a proposal to use state revolving funds for four projects, and to use stormwater funds to pay for those projects. He said he does not support paying for the complete road construction cost from stormwater funds – but he would support the incremental cost between using standard pavement compared to porous pavement.

Caruso criticized the fact that there were no funds for watershed studies, but the city wanted to spend stormwater fees on roadwork. He cautioned that the city’s public services area administrator, Sue McCormick, should know something about the issue of using restricted utility funds on purposes for which they are not designated, alluding to a court case, the Bolt decision. The Bolt decision had involved the city of Lansing, where McCormick worked earlier in her career. Some would say it’s appropriate to spend the stormwater money on porous pavement road construction, because it’s a great improvement in stormwater management, Caruso said. But the roads would be built anyway, he said. A watershed study for the Allen’s Creek is needed, he concluded.

Thomas Partridge said he had concerns about raising the water, sewer and stormwater rates given the “flat rate schedule,” without attention to the value of a home or a homeowner’s income. That makes it an anti-democratic tax that harms the most vulnerable members of our society, he said. Partridge called on the council to amend the ordinance to ameliorate the most harmful aspects of flat rate taxing. He also took a shot at the medical marijuana legislation by suggesting that the city charge higher rates and fees to those residents who seek “to turn this great city into one big pot facility.”

Water, Sewer, Stormwater Rates: Council Deliberations

Mayor John Hieftje noted that during the council’s initial deliberations on the rate increases, the question had been raised about whether comparative data supplied by the city staff were relevant to the city of Ann Arbor’s situation. Stephen Kunsleman (Ward 3) had pointed out that most of the communities cited in the rest of southeast Michigan were served by the Detroit Water and Sewerage Department (DWSD).

Hieftje said that other comparative data had been supplied in the meantime, and that it would inform the council’s judgment. Councilmembers did not discuss the additional data, nor was it publicly available at the time of the meeting. [.pdf of rate comparison to Lansing and Grand Rapids] [.pdf of 2009 rate comparison across various communities]

Outcome: The council unanimously approved the new water, sewer and stormwater rates.

Water Laboratory Managment

Connected to the city’s water-related infrastructure was an item that established a $110,026 contract with PerkinElmer Health Sciences for a water laboratory information management system. During council deliberations, Stephen Rapundalo (Ward 2) asked for some clarification, which established that the city’s laboratory is staffed by five people and provides sampling services to the water treatment plant and the wastewater treatment plant, as well as stormwater and special projects. The city provides sampling assistance to the Huron River Watershed Council, and is also running tests for the Pioneer High School stormwater detention project to determine the efficiency of that project, as well as the city’s compost site. In addition, the city provides sampling services to Ann Arbor Township, Scio Township and Barton Hills.

Outcome: The council unanimously approved the contract with PerkinElmer Health Sciences for the water lab information management system.

Landscaping Ordinance

Before the council was final approval to a revision in its landscaping ordinance. The changes are intended to: (1) improve the appearance of vehicular use areas; (2) revise buffer requirements between conflicting land uses; (3) reduce negative impacts of stormwater runoff; (4) improve pedestrian movement within a development site; and (5) preserve existing significant vegetation.

Those benefits are meant to be achieved through several text amendments to the ordinance, which include: adding definitions for “bioretention” and “native or prairie plantings”; allowing the width of landscape buffers to vary; modifying requirements for interior landscape islands; prohibiting use of invasive species for required landscaping; and increasing fines for violation.

The city’s planning commission had given the ordinance change a unanimous recommendation at its March 1, 2011 meeting. The city council gave its initial approval to the landscaping ordinance change at its June 6 meeting. All city ordinances require a first and a second reading in front of the city council, after a public hearing, before final enactment.

During council deliberations, Sandi Smith (Ward 1) noted that as a result of a conversation she’d had with some staff in the field operations area, it was her understanding that sometimes after a landscape island is first built, and a contract expires, it takes a while for someone to adopt it. We tend to see a shabbiness, she said, before it’s brought back up to standard. She wondered if this ordinance would change that. She clarified with Jerry Hancock, the city’s stormwater and floodplain program manager, that the landscape islands to which the ordinance referred were generally in strip mall contexts.

The issue Smith had identified was apparently related to the establishment of rain gardens on city property, where there is initially a contract period for maintenance of the garden – after the contract expires, there’s sometimes a lag time before the city takes it over.

Stephen Kunselman (Ward 3) said Smith raised a good issue. While the private sector does a good job initially, there doesn’t seem to be a lot of teeth for enforcement following up. Trees get proposed for a development and planted, but a few years later, they’re dead. He wanted to know if the ordinance change provided additional teeth for enforcement.

Hancock said the ordinance was not proposing a change to the enforcement activities – it’s complaint-based and there is no inspection program, Hancock explained. If a site plan is proposed to be revised, there is also enforcement at that point, he said. He said the fines are being increased, which may help improve things if enforcement is required.

Kunselman noted that the increase specified is from not more than $500 per violation to not more than $2,500 per violation. He wanted to know if those violations were written by community standards or by code enforcement officers. Hancock said that typically it would be code enforcement inspectors from planning and development services who write up those type of violations.

Outcome: The council voted unanimously to approve the change to its landscaping ordinance.

Fund Balance, Debt Policies

The council was asked to consider adoption of a new fund balance policy to comply with the Governmental Accounting Standards Board (GASB) Statement No. 54, and revision of the city’s debt policy to include two new sections – one on defeasance of debt and another on inter-fund loans.

The new GASB standard requires a finer-grained explication of the components of a fund balance. The breakdown of fund balance categories is: (1) non-spendable – not in spendable form or legally/contractually unable to be spent; (2) restricted – constraints on funds placed by creditors or through enabling legislation; (3) committed – specific constraints placed on the use of funds by the city council (for example, funds set aside by council resolution); (4) assigned – constrained by the intent of the city, but not restricted or committed (for example, those funds to which authority for assignment is given to the chief financial officer); and (5) unassigned – a fund balance that does not fit into any other classification. [.pdf of fund balance policy]

The debt policy as it relates to inter-fund loans includes a provision that addresses the ability of the city to make loans to specific funds from the investment pool. [The city invests its fund balances in a pool, not for each fund.] The policy notes that while such inter-fund loads may be prudent in certain situations, they are ultimately backed by the city’s general fund. So such inter-fund loans should only be approved if the credit worthiness is high for the fund to which a loan is made. [.pdf of debt management policy]

During brief council deliberations, Stephen Kunselman (Ward 3) wanted to know if the council had policies on debt and fund balance prior to this one. The city’s interim city administrator and chief financial officer Tom Crawford explained to Kunselman that these policies have existed previously – they are listed in the budget book every year.

Kunselman asked if debt and fund balance policies are required of other units, like the Ann Arbor Housing Commission and the Ann Arbor Downtown Development Authority. Crawford said that developing such policies is the responsibility of those units. Crawford said he did recall suggesting the DDA adopt a fund balance policy around the time when the underground parking garage was being discussed. Kunselman asked if such a policy would require some amount to be set aside for bond reserve – he noted that the DDA does not have a bond reserve. Crawford explained that it’s the city that issues the bonds, when the DDA bonds for projects, so it’s the city that meets the requirements for any bond issuance.

Outcome: The council unanimously approved the fund balance and debt policy.

Economic Development Fund, General Fund

Before the council for its approval was the authorization to blend the city’s economic development fund – with its fund balance as of June 30, 2010 standing at $967,161 – into its general fund. The move had been planned as part of the fiscal year 2012 budget that the council adopted at its May 31, 2011 session.

The economic development fund was established on June 18, 2007 by a unanimous vote of the city council by transferring $2.18 million from the general fund to the new economic development fund. It was set up to meet the city’s commitment made to Google to pay for up to 400 parking spaces for its employees, for up to four years for an estimated total cost of approximately $2,029,017. Google’s hiring was not as rapid as it had initially projected, and that left a bit under half of the money untapped.

The Government Accounting Standards Board (GASB) No. 54 has also changed the definition of what funds qualify as special revenue funds – the city’s economic development fund was established as such a fund, but no longer qualifies under the new GASB 54 definition, and thus needs to be blended back into the general fund.

The council’s resolution also amended the current fiscal year 2011 budget in some other ways as well, so that expenditures from funds that exceeded budgeted amounts are appropriately covered. Among those expenditures covered were: the International City/County Management Association fire protection study ($54,000); higher maintenance costs for Superior Dam ($35,000); and higher snow removal costs and cleanup from the recent Plymouth Road mudslide and pavement markings ($500,000).

Sabra Briere (Ward 1) asked  how it was that returning the $967,161 balance in the economic development fund to the city’s general fund resulted in an amendment of $1,127,590.  She noted that in the memo, $750,000 is attributed to the transfer from the economic development fund. The city’s CFO and interim city manager, Tom Crawford, said that the city was re-characterizing expenditures coming from the economic development fund “as if it was from the general fund.” So the fund balance and the expenses are being transferred to the general fund. The reason for that is due to the GASB rule, which was anticipated to go into effect for FY 2012. In turns out that the GASB rule is in effect for the end of the current fiscal year.

Briere came back to her original question, which was how the total of $1,127,590 was calculated. Crawford explained that it was the total for all the item adjustments. Only $750,000 was due to the economic development fund, he said.

Stephen Kunselman (Ward 3) concluded that the effect of the resolution was that the city is adding about $1 million to the general fund reserve. Crawford said  it was less than that, but essentially, yes. Mike Anglin (Ward 5) asked for a clarification of non-departmental dollar amounts. Crawford said it was all the economic development fund.

Outcome: The council voted unanimously to blend the economic development fund into the general fund.

Consent Agenda: SPARK, Lobbyist Funding

Among the several items on the Ann Arbor city council’s June 20, 2011 meeting consent agenda were two involving significant city contractors: Ann Arbor SPARK for $75,000, and Governmental Consultant Services Inc. (GCSI) for $48,000.

Items on the consent agenda are considered routine, and include contracts for less than $100,000. They’re voted as a group of items. However, councilmembers may separate out items on the consent agenda for separate consideration. Neither the item for SPARK nor for GCSI were considered separately.

The contact with the economic development agency Ann Arbor SPARK is one that has been renewed annually since the Washtenaw Development Council and Ann Arbor SPARK merged in 2006. Previously, Ann Arbor had contracted with the WDC for the business support services for which it now contracts with SPARK. On June 20, 2005, the city council authorized a one-year contract with WDC for $40,000. This year’s $75,000 contract with SPARK describes the organization’s focus as “building our innovation-focused community through continual proactive support of entrepreneurs, regional businesses, university tech transfer offices, and networking organizations.”

Ann Arbor SPARK is also the contractor hired by the city’s local development finance authority (LDFA), to operate a business accelerator for the city’s SmartZone, one of 11 such districts established in the early 2000s by the Michigan Economic Development Corp. (MEDC). The SmartZone is funded by a tax increment finance (TIF) mechanism, which in the current fiscal year captured around $1.4 million in taxes from a TIF district (the union of the Ann Arbor and Ypsilanti Downtown Development Authority districts, though revenue is generated only in Ann Arbor’s district.) The specific taxes on which the increment since 2002 is captured are the school operating and state education taxes, which would otherwise be sent to the state and then redistributed back to local school districts.

GCSI’s Kirk Profit, a former member of the state House of Representatives, typically makes an annual presentation to the council with an update on state-level legislative issues relevant to the city’s budget situation. Written updates to councilmembers on legislative activity are sent on a weekly or daily basis.

Christopher Tayor (Ward 3), an attorney with Butzel Long, was excused from voting on a consent agenda item involving a $37,000 purchase order for that firm to provide legal services to the 15th District Court. That was achieved by separating out the item from the rest of the consent agenda.

Outcome: The council unanimously approved the consent agenda, including the items on Ann Arbor SPARK and GCSI.

Picometrix Tax Abatement

The council was asked to approve a resolution setting the date for a public hearing on July 18, 2011 for a tax abatement for Picometrix LLC, located at 2925 Boardwalk in Ann Arbor. Picometrix is a supplier of high-speed optical receivers.

The 5-year abatement would apply to $2,434,882 of personal property that Picometrix is acquiring. From the application for abatement: “Due to the projected increase in production volume, the company will need to purchase assets to maximize production and support added staffing.”

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

The industrial development district in which the Picometrix tax abatement is sought was established in 2006.

At its June 6, 2011 meeting, the council held a public hearing on a proposed tax abatement for another company – Sakti3. No one spoke at that hearing, and the council did not take a vote on the abatement that evening. No council vote is currently scheduled for the Sakti3 abatement.

Outcome: The council voted without comment to set the Picometrix tax abatement hearing for July 18, 2011.

Affordable Housing Lien Policy

Before the council for its approval was a policy under which liens can be subordinated and city loans forgiven, in the interest of perserving affordable housing.

Key elements of the policy: at least one city or county lien will be maintained on the property; liens with federal affordability restrictions will be in the highest lien position possible; liens that do not have federal affordability restrictions will be discharged if needed to facilitate reinvestment of outside funding; the city administrator is authorized to approve lien subordinations and lien discharges.

The city council had discussed a specific case related to the forgiveness of loans and subordination of liens at its May 16, 2011 meeting. The context there was the appropriation of funds for the demolition of houses to prepare for construction of the Near North affordable housing project, located on the east side of North Main Street between Kingsley and Summit.

Outcome: Without comment, the council unanimously approved the affordable housing lien policy.

Pension Benefit Change

On the agenda was an item to approve some purely technical changes to its ordinance on retiree benefits for non-union employees. For example, the phrase “three years” was revised to read “36 consecutive months.”

These were not the changes to the pension ordinance that had been described in a resolution passed at the city council’s June 6 meeting. Under those planned ordinance changes for the future, for new hires after July 1, 2011, the final average contribution (FAC) for the pension system would be based on the last five years of service, instead of the last three. Further, employees would be vested after 10 years instead of five, and all new non-union hires would be provided with an access-only style health care plan, with the opportunity to buy into whatever plan active employees enjoy.

The council will need to give a second and final approval of the technical changes to the ordinance change, after a public hearing, at a future meeting.

At its June 6 meeting, the council had passed a resolution directing the preparation of the ordinance change for non-union employees, and expressing an aspiration to eventually extend the same policy to union workers. At that meeting, chief financial officer Tom Crawford stressed that the potential savings to the city would not be realized immediately, but rather five to seven years in the future.

Also at the June 6 meeting, mayor John Hieftje attempted to head off potential criticism that such a policy should have been enacted sooner, by pointing out that the city had reduced the size of its work force over the last several years and had made few new hires in recent years.

In response to a request from The Chronicle, the city provided data on new hires made by the city since July 1, 2006. Of those 121 new hires, 49 are non-union positions; they would have translated into savings had the policy been enacted five years ago.

Outcome: The council voted unanimously to give initial approval to the technical changes in the city’s pension ordinance.

Design Review Board

Before the council for approval was a fee for its new design review process, which is now part of the city’s code. Projects in Ann Arbor’s downtown area, zoned D-1 and D-2, are now subject to a mandatory process of design review, but compliance with the board’s recommendations is voluntary. The proposed application fee was to have been set at $1,000 – to cover estimated mailing costs of $500 and about five hours of city staff time.

A postponement of the vote was moved by Sandi Smith (Ward 1).

Outcome: The council voted unanimously to postpone the vote on the fee until July 5.

Also at its June 20 meeting, the council confirmed the nominations for the initial membership of the design review board: Tamara Burns, Paul Fontaine, Chester B. Hill, Mary Jukari, Bill Kinley, Richard Mitchell, and Geoffrey M. Perkins.

That board met to review its first project two days later, on June 22, 2011, at 3 p.m. The project reviewed was The Varsity at Ann Arbor, a residential project planned for 425 E. Washington St., next to the 411 Lofts building. The site is currently an office building which formerly housed the Prescription Shop. The Varsity is planned to be a 13-story apartment building with 173 units that would house 418 people. It would include 77 parking spaces. [.pdf of The Varsity at Ann Arbor project presentation]

Outcome: The council unanimously confirmed the appointments of the design review board.

Scheduling of Work Session: Fuller Road?

The council was asked to vote on a revision to its calendar for the year to include a work session scheduled for July 11. While the staff memo accompanying the resolution indicates only that the additional session is due to “numerous activities developing in the city,” a likely topic to be addressed at the July 11 session is the city’s proposed Fuller Road Station.

Fuller Road Station would be located on what is now a city-owned surface parking lot south of Fuller Road, east of East Medical Center Drive. The parcel is included as parkland in the city’s park planning documents – some residents oppose the project because it’s on land designated as parkland. The initial phase of the project is being planned by the city and the University of Michigan as a large parking structure with bus bays and a bike station, with plans eventually to build a train station on the same site.

At the council’s June 6 meeting, the Fuller Road Station had received extensive public commentary, despite the lack of any item on the agenda related directly to the project.

Partly in response to that commentary and to remarks from Mike Anglin (Ward 5), at that meeting Sabra Briere (Ward 1) pushed for a city council working session on the project. From The Chronicle’s report of that meeting: “Sabra Briere (Ward 1) anticipated mayor John Hieftje’s reaction to Anglin’s comments [Hieftje has pushed hard for the project] by telling the mayor that she knew he had a lot of thoughts about Fuller Road Station. But she thought the council should have a working session, so that councilmembers can become more knowledgable about the issue. Hieftje indicated that he would look into adding something to the calendar.”

The city’s park advisory commission received an update on Fuller Road Station at its May 17, 2011 meeting.

Outcome: The city council voted unanimously to add a work session to its calendar.

Environmental Commission Appointment

Carsten Hohnke (Ward 5) had placed Jamie Woolard’s name before the council at the council’s previous meeting to serve a three-year term. Woolard brought valuable experience in environmental law, Hohnke said. He encouraged the council to support the appointment.

[Unlike appointments for most other boards and commissions, which are nominated by the mayor, the nomination for spots on the city's environmental commission originate with the city council.]

Outcome: The council unanimously approved Woolard’s appointment.

Communications and Comment

Every city council agenda contains multiple slots for city councilmembers and the city administrator to make 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. The agenda also sometimes includes items of interest on which there is no council comment.

Comm/Comm: Planning Commission Nomination

Eleanore Adenekan‘s name was placed before the Ann Arbor city council as the replacement for outgoing planning commissioner Jean Carlberg, who is ending her 16-year tenure on the commission.

At Carlberg’s final city planning commission meeting – a June 14 working session – no word had been received by staff or commissioners about the identity of Carlberg’s replacement.

The nomination will need to be confirmed at the council’s next meeting.

Comm/Comm: Student Relations Committee Proposal

Michael Benson introduced himself as a resident of Ward 2 and an electrical engineering PhD student at the University of Michigan. He was speaking as the president of the graduate student body. He began by telling the council about a recent encounter some university students in Iowa had with the state’s Senate education appropriations committee. Senator Shawn Hamerlinck told them: “I do not like it when students actually come here and lobby me for funds. That’s just my opinion. I want to wish you guys the best. I want you to go home and graduate. But this political theater, leave the circus to us, okay?” The quotation, read aloud, provoked smiles from councilmembers.

Then Benson reminded councilmembers that in 2005, the council had created a student relations committee – the council appoints and approves its members. The other members, however, are appointed by the Michigan Student Assembly. The student relations committee has not met for a long while, partly due to the fact that the MSA has not appointed members.

Benson proposed amending the method of appointment and expanding the membership of the committee to include some some high school students, some undergraduates, some graduate students and some students in professional schools. He suggested that the mayor appoint all the members, working with partners in the educational community, with the council giving confirmation of those nominations. The committee should meet monthly, he said, and should strive to find solutions to problems affecting the city and student community.

By way of additional background, back in 2005, when the council again contemplated a possible couch ordinance, the issue was seen as a topic appropriate to be addressed by the then newly-formed council-student relations committee. From a Nov. 12, 2005 Ann Arbor News article, “Fire Official Pushes for Couch Ban,” by Tom Gantert:

“The new student relations committee needs to talk about this,” said [councilmember Leigh] Greden, who will serve on that committee. “I want them to look at the issue and talk about ways to solve the problem. We are going to have a dialogue about it.”

Benson, who served on the council-student relations committee in 2008 and 2009 – while he was Michigan Student Assembly’s general counsel – wrote in a fall 2010 email to The Chronicle that the council-student relations committee had not met since Greden’s loss in the Democratic primary election of August 2009. In that email, Benson put responsibility for meeting on both the MSA and the city council:

This lack of meeting is a shared responsibility between the the Michigan Student Assembly and the Council … MSA did not appoint any representatives to the committee in the 2009-2010 academic year and the two Council members did not attempt to hold a meeting nor to ask that the MSA appoint its members. To my knowledge, the current MSA administration has not appointed either a City Council Liaison or the student membership of the student relations committee. As a comparison, when I was serving as MSA’s student general counsel, we appointed the student members of the committee in the spring, directly after taking office at the end of the Winter 2008 term.

The city council’s current representatives on the student relations committee are Carsten Hohnke (Ward 5) and Stephen Kunselman (Ward 3).

Benson had also reminded the council in an April 5, 2010 turn at public commentary that the student relations committee had not met in over a year at that point.

Comm/Comm: Skatepark

At the start of city council meetings, a slot called “introductions” is used by the council to invite guests to give short presentations or to hand out proclamations. At Monday’s meeting, Scott Rosencrans – former chair of the city’s park advisory commission, who is now working as a board member of the Friends of the Ann Arbor Skatepark – gave the council an update on that group’s efforts. He began by thanking the council for their support in collaborating on a government grant application.

By way of background, the council decided at its March 21, 2011 meeting to re-prioritize two grant applications the city was making to the Michigan Dept. of Natural Resources and Environment (MDNRE). The result of that re-prioritization was that a grant for the proposed skatepark at Veterans Memorial Park was ranked higher than the other grant – for improvements to the Gallup livery and park. For both grants, the city applied to MDNRE’s Michigan Natural Resources Trust Fund.

The city’s park advisory commission recommended approval of the applications at its March 2011 meeting. [Chronicle coverage: "PAC Supports Grants for Skatepark, Gallup"] The argument for changing the rank order of the prioritization was based on the opportunity to leverage $400,000 of matching funds from Washtenaw County Parks & Recreation, which will expire unless the skatepark’s construction is under contract by Jan. 1, 2012.

At the council’s June 20 meeting, Rosencrans alerted the council to Go Skateboarding Day at Wheeler Park. [It took place the following day, June 21, from 4-8 p.m.] He also told the council about merchandise sales that support the skatepark: T-shirts, coffee mugs and skateboard decks, which are available from a range of local merchants: Acme Mercantile, Launch Board Shop, Play It Again Sports, Vault of Midnight, Roos Roast and Produce Station.

Rosencrans gave a presentation emphasizing that skateboarding is a safe sport. He described in detail the work the Friends of the Ann Arbor Skatepark had done collaborating with the city’s commission on disability issues to ensure that the skatepark facility planned for Ann Arbor would be accessible to everyone.

After the presentation from Rosencrans, Carsten Hohnke (Ward 5) – in whose ward the proposed park location sits – thanked Rosencrans. Hohnke said he continued to be impressed by how professionally the Friends of the Ann Arbor Skatepark have moved the project forward. He asked Rosencrans what kind of helmets or pads might be required. Rosencrans told him that based on past experience serving on the park advisory committee, those kind of rules are produced by a rules committee working with city staff and the commission. He said if he were on such a committee, he’d recommend that helmets, wrist pads, elbow pads, and knee pads be required.

Comm/Comm: Housing, Not Skating

During public commentary at the start of the meeting, Thomas Partridge introduced himself as an advocate for the disadvantaged and called on the public to get behind the movement to give due priority to matters most paramount to those who are disabled. A priority item should not be the “risky sport” of skateboarding, he contended. Priority should instead be given to planning and constructing affordable housing, providing a countywide public transportation system and extending affordable educational services to all members of the public.

Partridge called on the council to bring about a truly equitable health care system. Partridge said we need to support the effort to recall Gov. Rick Snyder and to expand it to include the lieutenant governor, the attorney general and other elected officials.

Comm/Comm: West Park Renaming?

Steven Thorp, a former city planning commissioner, began by saying it had been good to see mayor John Hieftje and councilmembers Mike Anglin and Sabra Briere at West Park for the Father’s Day get-together. He thanked the city for organizing event. He said that city park planner Amy Kuras and the planning staff deserve many thanks. He noted that the park is around 100 years old – it was once a farm. It’s near Allen Creek, near the place where the first settler cabins were located. The park’s eastern boundary is also the downtown boundary.

Thorp told the council that he and Bob Dascola would like to offer “Central Park West” as the new name for the park. Based on an informal survey of friends and neighbors, there’s support for that idea, he said. The name offers an association with one of the most beautiful and famous urban parks in the world. He noted the park’s “Olmsteadean vistas” and forested places, broad play areas, curvilinear path system. Thorp encouraged the council to give it some thought, so that maybe that name can come about.

Comm/Comm: Library Lot

Alan Haber said he had not visited the council recently, but wanted to remind them that there’s still great enthusiasm for a place in the center of town for meeting, gathering, and for cultural events. When the RFP process for the Library Lot was terminated, he said, residents were promised a robust public process to look at the future of the city-owned lot, but have not heard anything from council or the DDA, he contended. [For recent Chronicle coverage of how the Downtown Development Authority is working to put together that process, see "DDA Preps Downtown Ann Arbor Process" and "Ann Arbor DDA Continues Planning Prep"]

Haber told the council that the public is continuing its own process to develop a vision for a gathering place. He’s been told it’s the most valuable piece of property in town and that the city should get top dollar for it. But it’s so valuable, he said, that it should not be sold at all. There’s plenty of room around downtown for density. A central park would be a complement for that. He said he’s also been told that the need to sell the land is based on $5 million of investments in foundational support for something to be built on the top of the structure. He contended there’d been no authorization to build anything.

[Later during council communications time, Carsten Hohnke (Ward 5) questioned the dollar figure for the investments, saying his recollection was that the extra foundation strength was a lower figure. The city's chief financial officer Tom Crawford indicated he did not recall off the top of his head what the figure was. Contacted after the meeting, Susan Pollay, executive director of the DDA, told The Chronicle that a dollar figure isolating the cost of the beefier footings had not been calculated.]

Comm/Comm: Recall Gov. Snyder

Thomas Partridge addressed the council at the conclusion of the meeting as an advocate for all those people who are vulnerable in the trying economy and trying political time. He called on the true Democratic members of the council to support the recall of Gov. Rick Snyder.

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

Absent: Tony Derezinski

Next council meeting: Tuesday, July 5, 2011 at 7 p.m. in the council chambers at 301 E. Huron. [confirm date]

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Mayor John Hieftje (standing) and interim city administrator Tom Crawford before the start of the city council's June 6 meeting.

For road users who head to the polls on Nov. 8, possibly the most important issue on the agenda was a brief presentation from the city’s project management manager, Homayoon Pirooz, on the city’s street repair tax, which would reach the end of its current five-year life this year, if not renewed by voters. The city council will convene a working session on June 13 to look at the issue in more detail.

Also related to infrastructure was the council’s initial action on setting rates for utilities (water, sewer, stormwater), voting unanimously to send the rate increases on to a second and final vote with a public hearing. The rate increases range from 3-4% more than customers are currently paying. All new and amended city ordinances require two votes by the council at separate meetings.

The council also approved an $800,000 agreement with the Michigan Dept. of Transportation for the initial, right-of-way portion of the East Stadium bridges replacement project. Construction on that public project is due to start later this fall.

For another public project, the council voted to add a previously budgeted $1.09 million to the construction manager contract for the new municipal center at Fifth and Huron.

In an action designed eventually to reduce employee benefits costs, the council passed a resolution – brought forward by its budget committee – that directs the city administrator to craft an ordinance revision that would alter the way non-union employee benefits are structured. What’s planned is a change from three to five years for the final average compensation (FAC) calculation, and a change from five to 10 years for vesting. In addition, retirees would receive an access-only health care benefit.

The city’s newest non-union employee is Chuck Hubbard, whose appointment as the new fire chief was approved by the city council on Monday night. Hubbard was previously assistant chief, which, unlike the chief’s job, is a union position. Hubbard has 25 years of fire protection experience, all of it in Ann Arbor.

Expected to begin construction this year – in late summer – is a private development on the First and Washington lot currently owned by the city. On that lot, Village Green is planning to build a 9-story, 99-foot-tall building featuring 156 dwelling units and a 244-space parking deck on the first two stories. After much discussion, the council approved a $100,000 reduction in the purchase price – from $3.3 million to $3.2 million – that Village Green will pay for the First and Washington parcel. The price break came in the context of water management and a decision to use a full “bathtub”-type design for the foundation. The unanimous vote came after two councilmembers had already left the meeting (which pushed nearly to midnight), but it seemed at one point to hang in the balance, with two of the remaining nine councilmembers expressing reservations. Because the resolution involved land purchase, it needed eight votes to pass.

Village Green’s project, a planned unit development (PUD) approved over two years ago, was not required to undergo the mandatory process of design review that is now part of the city’s code. The council gave final approval to that design review process on Monday night. The new ordinance sets up a seven-member design review board (DRB) to provide developers with feedback on their projects’ conformance to the design guidelines. While the DRB process is required, conformance with the recommendations of that body is voluntary.

Also receiving approval at first reading was a revision to the landscaping ordinance. Fuller Road Station also drew comment from the public and the council.

Final action on medical marijuana zoning and licensing is not expected until the council’s June 20 meeting. Council deliberations on medical marijuana will be covered in Part 2 of The Chronicle’s meeting report.

Ann Arbor Street Millage Renewal Planned

The council received a brief presentation setting out a timeline for renewing the city’s street repair millage, which is currently authorized through 2011 at a level of 2 mills, but is levied at 1.9944 due to the Headlee cap. One mill equals $1 for every $1,000 of a property’s state equalized value, or SEV. Renewal of the millage would need voter approval on Nov. 8, 2011.

As part of the council’s budget retreat discussion in January 2011, councilmembers briefly discussed the idea of folding the city’s sidewalk replacement program – for which property owners now pay directly – into the activities funded by the street repair millage.

And at a budget work session in late February, public services area administrator Sue McCormick outlined how funds received through the METRO Act, which are currently used for administration of the sidewalk replacement program, could be used to close out the 5-year cycle for the current program. Then in future years, the METRO funds could be used for other work in the right-of-way. METRO funds are paid to the city under state statute for use of the right-of-way by telecommunications companies.

The street reconstruction millage is listed as CITY STREETS on tax bills.

The short briefing that the council received on Monday was given by Homayoon Pirooz, who heads up the city’s project management department. He described how the millage actually has 27 years of history, dating back to 1984, when it was first approved. Over the years, the funds collected under the local street millage have generated an additional $67 million in matching grants.

The street repair millage has criteria attached to the use of funds, Pirooz explained: The street repair millage is for resurfacing and reconstruction of streets – it’s not for filling potholes. [The city has two other funds it uses for that kind of maintenance work, including snow removal – the Major Street and Local Street funds, which receive money from the state of Michigan through vehicle weight and gas taxes.]

One of the new ideas for the street repair millage when it’s put before the voters again, Pirooz said, is to include sidewalk repairs as part of the criteria. If the public is in favor of that, he said, the city would like to apply the same approach as it does to roads. Namely, the millage would not be used for winter maintenance, but rather for replacing existing sidewalks.

Pirooz sketched a timeline for the public discussion on the street repair millage – including the possibility of increasing it to 2.125 mills to accommodate the sidewalk replacement program. That timeline would include two public meetings in June, a city council work session on June 13, and an online survey. At the council’s July 18 meeting, they’d hear a report on the public engagement, and the city council would give direction on how to proceed. At the council’s Aug. 4 meeting, it could then approve the ballot language, which needs to be submitted to the city clerk’s office by Aug. 16.

Mayor John Hieftje noted that there’s now an opportunity to release money in the street repair fund that the city thought it might have to use to replace the East Stadium bridges. With receipt of a $13.9 million TIGER II federal grant, the city can spend more of the balance in the street repair fund on road repair.

Utility Rate Increases Get Initial OK

On the council’s agenda was a resolution to approve changes in rates for drinking water, sanitary sewer and stormwater facilities. In terms of revenue generated to the city, the rate increases are expected to generate 3.36% more for drinking water ($664,993), 4% more for the sanitary sewer ($829,481), and 3.35% more for stormwater ($176,915).

Because the rates are part of a city ordinance, the changes must receive a second approval from the city council, after a public hearing.

According to the city, the rate increases are needed to maintain debt service coverage and to maintain funding for required capital improvements.

The city’s drinking water charges are based on a “unit” of 100 cubic feet – 748 gallons. Charges for residential customers are divided into tiers, based on usage. For example, the first seven units of water for residential customers are charged $1.23 per unit. The new residential rate for the first seven units would be $1.27.

The city’s stormwater rates are based on the amount of impervious area on a parcel, and are billed quarterly. For example, the lowest tier – for impervious area less than 2,187 square feet – is currently charged $12.84 per quarter. Under the new rate structure, that would increase to $13.24. [.pdf of complete utility rate changes as proposed]

At the council’s Monday meeting, mayor John Hieftje asked public services area administrator Sue McCormick to comment on a study last year showing that Ann Arbor had some of the lowest rates in the state. Ann Arbor’s average increase of 3.2% compares favorably with the regional average of 9% increase this year, McCormick reported.

Councilmember Stephen Kunselman (Ward 3) questioned McCormick’s numbers, saying it looked like McCormick was relying on comparative data taken exclusively from communities served by the Detroit Water and Sewerage Department (DWSD). He asked that, when the council votes on the rate increases at its next meeting, councilmembers be provided with additional comparative data.

McCormick said she’d bring comparative data on other communities to the next meeting, before the final vote. Sabra Briere (Ward 1) asked that McCormick bring the actual rates together with percentage increases.

Outcome: The council voted unanimously to give initial approval to the utilities rate increases.

East Stadium Bridges

In front of the council for its consideration was authorization of an $800,000 agreement with the Michigan Dept. of Transportation (MDOT) for the right-of-way acquisition phase of the East Stadium bridge reconstruction project. Previously, at its April 4 meeting, the council had accepted easements from the University of Michigan for the right-of-way phase.

To be reimbursed for those easements – from federal TIGER funds that the city has been awarded for the project – the council needed to authorize the agreement with MDOT. MDOT acts as the conduit through which the city receives federal funds.

In August, the city council will be presented with a similar city-state agreement – for the construction phase of the project.

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

Retiree Benefits Change

On Monday, the council considered a resolution directing its city administrator and city attorney to begin work on an amendment to the city’s retirement benefits package for new non-union employee hires.

Under the amendment, for new hires after July 1, 2011, the final average contribution (FAC) for the pension system would be based on the last five years of service, instead of the last three. Further, employees would be vested after 10 years instead of five, and all new non-union hires would be provided with an access-only style health care plan, with the opportunity to buy into whatever plan active employees enjoy.

Christoper Taylor (Ward 3) introduced the resolution to his council colleagues, saying it came through the council’s budget committee that met earlier that day. It has resulted from the hard work of Marcia Higgins (Ward 4), he said. After reviewing the content of the resolution, he stated that the city’s potential financial exposure due to retireee health care is significant, and the resolution was a beginning of the reform.

Taylor asked interim city administrator Tom Crawford if an estimate had been calculated for the savings that would be realized. Crawford told him that no estimate had been generated yet – staff would need to do additional research. Crawford said it’d be 5-7 years before the city sees savings. The nature of the change is long-term, he said, so it’s unlikly to save money in short term.

Taylor asked Crawford to explain what an “access-only” benefit plan is.

[As the phrase suggests, what the retiree gets is access to health care coverage (and only that). Here, "access" means the ability to purchase health coverage as part of the same group to which active city employees belong. The access to insurance as a part of that group allows retirees to purchase health care more economically than they could as individuals.] In his remarks Crawford emphasized that retirees would be able to use money the city sets aside, as well as their own money, to purchase that health care.

Mayor John Hieftje appeared interested in heading off criticism that this kind of reform should have been done years ago, by noting that the city has not hired that many people in the last few years. Given that so few people have been hired, he concluded, the council was acting in a timely fashion.

Stephen Kunselman noted that the city would be hiring at least one person soon – a city administrator. Kunselman wondered whether the benefits policy is intended to be in place before the administrator is hired. Crawford noted that the ordinance would require two readings before the council.

Kunselman wondered about the change in the vesting period from 5 to 10 years. He asked what the vesting period was back in the Neal Berlin days – 10 years seems extreme. [Neal Berlin is a former city administrator, who preceded Roger Fraser.] What about seven years? Kunselman said he wouldn’t necessarily expect a new city administrator to last 10 years. He wouldn’t want to hinder the city’s ability to make a hire.

Crawford told Kunselman that the last major change was when Neal Berlin was city administrator – the vesting period was changed from 10 to 5 years. So the resolution would direct the preparation of an ordinance to restore what was in place previously. City staff could take direction from the council’s labor committee on preparation of the ordinance, Crawford said.

Hieftje said there was a myth that Neal Berlin had received an extraordinarily generous severance deal. In fact, Hieftje said, Berlin had paid $140,000 in order to receive a $26,000-per-year pension. That meant he had to wait six years before getting a return on that, Hieftje said.

Outcome: The council voted unanimously to direct staff to begin drafting an ordinance to change the benefits program for non-union employees. The resolution also indicated a goal to include union employees in a similar benefits program.

Ann Arbor Fire Chief

In front of the council for its consideration was authorization to appoint a new fire chief: Chuck Hubbard. Hubbard is an internal hire, who previously served as an assistant chief. His 25 years of experience in fire protection, coming up through the ranks, has all been in Ann Arbor.

Barnett Jones, head of public safety and chief of police, introduced Hubbard to the council with his recommendation. Jones has been serving as interim fire chief since the resignation of Dominick Lanza from that position earlier this year, after a bit less than a year on the job. Lanza had been an external hire.

Hubbard made some brief remarks by way of introducing himself.

Outcome: The council voted unanimously to approve the appointment.

Police Promotional Assessments

Items included on the consent agenda, which are normally moved together and voted on as a group, can be pulled out for separate consideration by any councilmember. It’s not uncommon for at least one item to be pulled out for that kind of separate consideration. On Monday, Sandi Smith (Ward 1) asked that an item be pulled out that approved a $35,830 contract with Industrial Organizational Solutions Inc. to conduct promotional assessment of Ann Arbor police department officers for ranks of sergeant and lieutenant.

Chief of police Barnett Jones explained that the item is related to layoffs and retirements – it helps create a clear path for promotions. It’s been a long time since sergeants and lieutents have taken exams, he said. While the department is faced with layoffs now, it will also be experiencing some retirements in the future – around 16-17 by 2013, he said. Some of those who are retiring will be sergeants and lieutenants. The department will need supervisors at those ranks to replace the retirees. He could not simply promote people as he passed people walking down the hall, Jones said. This will be one of the most imporatnt promotional teams in the history of the city. The assessment will contain a written part and and oral interview.

Outcome: The council voted unanimously to approve the contract for promotional assessment of police officers.

Landscaping Ordinance Gets Initial OK

On Monday the council was asked to consider initial approval to a revision of the city’s landscaping ordinance. The revision is intended to: (1) improve the appearance of vehicular use areas; (2) revise buffer requirements between conflicting land uses; (3) reduce negative impacts of stormwater runoff; (4) improve pedestrian movement within a development site; and (5) preserve existing significant vegetation.

Those benefits are meant to be achieved through several text amendments to the ordinance, which include: adding definitions for “bioretention” and “native or prairie plantings”; allowing the width of landscape buffers to vary; modifying requirements for interior landscape islands; prohibiting use of invasive species for required landscaping; and increasing fines for violation.

The city’s planning commision had given the ordinance change a unanimous recommendation at its March 1, 2011 meeting.

All city ordinances require a first and a second reading in front of the city council, after a public hearing, before final enactment. The landscape ordinance will need a second vote before its approval is final.

Outcome: The council voted without discussion to give the landscape ordinance change an initial approval.

Downtown Design Guidelines

In front of the council for its consideration was final approval to an amendment of its land use control ordinance that will establish design guidelines for new projects in downtown Ann Arbor, and set up a seven-member design review board (DRB) to provide developers with feedback on their projects’ conformance to the design guidelines. It’s the final piece of the A2D2 rezoning initiative.

Review by the DRB will come before a developer’s meeting with nearby residents for each project – which is already required as part of the citizen participation ordinance. While the DRB process is required, conformance with the recommendations of that body is voluntary.

The city council had previously approved the design guideline review program at its Feb. 7, 2011 meeting. The city planning commission unanimously recommended the change to the city’s ordinance at its April 5, 2011 meeting. [Previous Chronicle coverage, which includes a detailed timeline of the design guidelines work, dating back to a work group formed in 2006: "Ann Arbor Hotel First to Get Design Review?"]

Downtown Design Guidelines: Public Hearing

Thomas Partridge told the council they should use the word “democratic” with a big and a small “D” when considering these items. Too often, he said, an anti-democratic viewpoint is taken. He called on the council to advance the cause of using undeveloped land for mixed-use, including affordable housing. He noted there’d been no new housing cooperatives in the last 30-40 years.

Ray Detter thanked the council for their previous support of the A2D2 rezoning process and urged their support of the design guidelines. He told them he was speaking both as chair of the downtown citizens advisory council and as a member of the design guideline review committee. He reviewed some of the more recent history of the review committee. A group of citizens had formed in late 2009. In February 2010 the council had supported the formation of a design guidelines task force. Then in January 2011, members of task force had presented the outcome of their 34 weekly meetings at a city council working session.

James D’Amour told the council it was exciting to be present when the design guidelines are finally going to be approved. He’d served on the planning commission five years ago when talk about this started, he said. He urged councilmembers to support the proposal.

Downtown Design Guidelines: Council Deliberations

Marcia Higgins (Ward 4) said she thought Detter had summed it up well, and urged her council colleagues to pass it. Mayor  John Hieftje thanked the people who did the work, including Higgins, for seeing it through.

Outcome: The council voted unanimously to approve the new downtown design guidelines. The council also received nominations from the mayor for the membership of the design review board, which the council can confirm at its next meeting, on June 20: Tamara Burns, Paul Fontaine, Chester B. Hill, Mary Jukari, Bill Kinley, Richard Mitchell, Geoffrey M. Perkins.

First & Washington Purchase Price

Councilmembers were asked at Monday’s meeting to approve a revision to the purchase option agreement with Village Green on the city-owned First and Washington site, where the developer plans to build a 9-story, 99-foot-tall building with 156 dwelling units. That revision reduces the price from $3.3 million to $3.2 million.

The break on the price is related to the “bathtub” design for the foundation of a 244-space parking deck, which makes up the first two stories of the development. The site of the development is near Allen Creek, and some kind of design strategy is required in order to deal with the possibility of water entering the parking structure. Rather than use a hybrid design that would entail pumping water out of the structure and into the city’s stormwater system on an ongoing basis, Village Green wants to use a complete bathtub-type design that will cost around $250,000. The city’s price break is a portion of that cost.

The parking deck is being developed in cooperation with the Ann Arbor Downtown Development Authority, which has pledged to make payments on around $9 million worth of bonds, after the structure is completed and has been issued a permit for occupancy.

The timeline put in place on Aug. 5, 2010 – when the city council most recently approved an extension of Village Green’s option to purchase the First and Washington city-owned parcel – called for Village Green to purchase the land by June 1, 2011. However, that deadline was subject to an extension of 90 days by the city administrator – an option which interim administrator Tom Crawford exercised. That sets a new deadline of Aug. 30, 2011 for purchase of the parcel. Proceeds from the sale of the land are part of the city’s financing plan for the new municipal center at Fifth and Huron, which is currently in the final stages of construction.

First & Washington Purchase Price: Council Deliberations

Stephen Kunselman (Ward 3) led off council deliberations by saying that it appeared the council was being asked to reduce the purchase price by $100,000 due to construction issues related to high water. Alluding to the arrangement the DDA has to support the project, he asked why the DDA would not increase that support, instead of having the city reduce the purchase price.

Kunselman then said he wanted to take the opportunity to talk about the DDA. That organization’s 2009-2010 annual report included some telling numbers, he said. The report indicates over $18 million in annual revenue against expenditures of $22 million. Of those expenditures, $5 million is for debt service. The outstanding bond debt is $140 million – of that, $81 million is principle and $59 million interest. The report shows zero dollars in bond reserve. Kunselman noted that the number of jobs created is recorded as “n/a.”

Kunselman asked why the city is “bailing the DDA out for $100,000.” The issue that’s been identified (the bathtub design) is not a property issue, he continued, but rather a construction issue. Kunselman said he was having a difficult time voting for the resolution, but he did not want to see the resolution fail. But he noted that the resolution required eight votes for approval and two councilmembers had left the table.

[Margie Teall (Ward 4) and Marcia Higgins (Ward 4) had left. It was after 11 p.m. Higgins' hoarse voice during the meeting indicated she was under the weather. Votes on real estate transactions are required by the city charter to be ratified by an eight-vote city council majority.]

Interim city administrator Tom Crawford told Kunselman that the logic used in not involving the DDA on the price agreement was that it’s a city-owned asset. He noted that it’s possible to design the foundation without the full bathtub deign. But Crawford noted that the city and Village Green have worked with the DDA to use lessons learned from the current construction on the South Fifth Avenue underground parking structure. It’s the city’s decision to mitigate the risk with respect to flooding, and it’s a city decision to move forward with the bathtub design. The full bathtub design guarantees as close as you can that in the future, no pumping of water into the city’s stormwater system would be required, he said.

The agreement to reduce the price could have been set up to include the DDA, Crawford said, but the city did not structure it that way. That approach would have made it a tri-party agreement. The approach the city took – to amend the agreement between the city and Village Green – seemed the most approprate way, Crawford concluded.

Kunselman then asked Crawford to explain how the $100,000 would be made up – proceeds from the parcel were supposed to go into the building fund for the new municipal center. Crawford clarified that the original purchase price was $3.3 million and the amount designated for the building fund was $3.0 million. There’d always been a $300,000 excess, he said, so the price break of $100,000 would not compromise the funding of the municipal center.

Mike Anglin (Ward 5) expressed some frustration at the length of time the Village Green project had been in the works, saying it had been going on about five years now. Didn’t we already know, he asked, that the location had water issues? Anglin wanted to know if the developer was willing to move forward. Crawford indicated that Village Green was in fact moving forward, actively spending money on design. Anglin questioned why the city was putting itself at risk with respect to the Pall Gelman dioxane plume – the plume was mentioned in a staff memo about the Village Green project.

Crawford explained that the plume is actually a far distance away, and the reason it’s discussed in the memo is that the city is looking at the very long term. By having a full-bathtub foundation design, there’ll be no requirement to do any pumping of water, so the risk is mitigated of pumping water that’s polluted with dioxane – that would require onsite treatment before pumping. The bathtub design is an attempt to protect the city from every possible eventuality, Crawford said.

Anglin questioned whether adequate hydrological studies had been done. Crawford addressed Anglin’s remark a bit later, noting that the city had relied on Carl Walker, the DDA’s engineering consultant on parking structures, for geotechnical analysis. There’d been a host of consultants, he said, and a substantial amount of work done. That work was what had triggered the need for a 90-day extension.

Sandi Smith (Ward 1) drew out the fact that the bathtub design will cost $250,000, with Village Green picking up $150,000 of the cost and the city effectively picking up $100,000. She noted that a year ago, when the purchase option extension granted, nothing was getting built in the Midwest at all. The First and Washington project is a chance to get “another private crane in the air.” The council needs to support this, she concluded.

Mayor John Hieftje stated that using a pumping strategy would be much more of a problem. The full bathtub design offers the greatest amount of security.

Kunselman said he was still not convinced that selling the land should somehow result in an agreement about construction design. He came back to the point about DDA involvement. He felt the price reduction should be expressed in a three-way agreement.

Crawford responded to Kunselman by saying the city attorney’s office advised that this was a good way to proceed. Christopher Taylor (Ward 3) weighed in by saying that Ann Arbor would own the parking deck for the next 75 years [the expected life of the deck]. The city has a chance now to guarantee that they don’t have a problem, at a cost of $100,000, he said. Taylor supported that.

Carsten Hohnke (Ward 5) confirmed with Crawford that the developer currently has no obligation to pursue a full bathtub design. With Anglin and Kunselman having expressed their dissatisfaction, Hieftje recognized that if they both voted no, that would leave the agreement one vote short of the eight-vote majority it needed. Hieftje stated he would feel okay postponing it. Hieftje then filled some time with some general remarks about the structure, and Anglin followed up with an indication that what he wanted was to make sure the homework was done on it. Hieftje then called for the vote, which wound up being unanimous.

Outcome: The council voted 9-0 to approve the amendment to the purchase price from $3.3 million to $3.2 million.

Municipal Center

At Monday’s meeting, the council considered a $1,091,211 revision to the contract with Clark Construction Co., which is doing the construction on the new municipal center at Fifth and Huron, which houses the 15th District Court and the police department. Of that total, $693,327 is for security elements and $397,884 is for audio/visual.

Mike Anglin (Ward 5) said the revision brings the building’s total cost to $39 million. Interim city administrator Tom Crawford explained that the increase was for upgrades to the security of the building. He noted that the amount is not an increase to the budget of the entire project, but rather a recognition that implementation of the security measures is best done by the onsite construction manager.

Anglin wanted to know why the money is coming out of the city’s general fund. Crawford explained that the court is a general fund entity. Anglin asked why the funding for security was not part of the bonding process, saying he would rather have security outside the building [i.e, police officers on patrol] than inside the building. Crawford indicated that the expenditure is a one-time cost. The idea of how security in the building would be delivered was a conversation that had unfolded over time, Crawford said, and this was determined to be the most cost-effective. The fact remains that it’s coming from the general fund, Anglin grumbled.

Sue McCormick, the city’s public services area administrator, told the council that they’d previously decided they wanted to make these decisions about security later and had decided not to make decisions about installation of furniture and fixtures until later. It had been an early and deliberate discussion of the city council, she said.

Outcome: The council voted to approve the contract amendment, with dissent from Anglin.

Wireless for City Hall

Also pulled out of the consent agenda by Sandi Smith (Ward 1) was an item that authorized a $64,571 contract with Sentinel Technologies to equip the public areas and conference rooms of the city hall, the new municipal center and the Wheeler Service Center with wireless internet access – both secure and for public use.

Smith was curious about why the city used the middle bidder, instead of the lowest. She wanted to know why the city was using a non-Michigan bidder, who was not the lowest bid. Dan Rainey, head of IT for the city, explained that the low bid did not include the cost of recurring maintenance.

Outcome: The council voted unanimously to approve the contract with Sentinel Technologies.

Fuller Road Station

The proposed Fuller Road Station – a large parking structure, bus depot and possible train station that the city plans to build in partnership with the University of Michigan, near UM’s medical campus – drew considerable public and council commentary, although the council did not have any business to vote on that specifically referenced the project.

James D’Amour expressed various concerns. He responded to a contention of the mayor’s to the effect that Fuller Road Station would result in the city getting some open space back. What are we getting? he asked. D’Amour contended that current facilities for trains are adequate. If it’s so important, D’Amour said, we should come clean with the fact that it will be located on public parkland.

D’Amour also noted the public art commission’s annual plan, attached to the council’s agenda as a communication item, included proposed art for Fuller Road Station. He asked that the language be removed. He added that the city did not need murals on Huron Parkway, as described in the public art plan.

Barbara Bach told the council that the Fuller Road Station project is getting in the way of a discussion of rail transportation and about public park preservation. She then read aloud the sentiments of Tom Whitaker, who left a comment on an Ann Arbor Chronicle article about a recent meeting of the city’s park advisory commission.

As proposed, Bach said, Fuller Road Station is a huge warehouse for cars on parkland. She said that the city should work on getting cars out of the river valley and begin to talk about rail service.

Nancy Shiffler introduced herself as the current chair of the Huron Valley group of the Sierra Club. She said that the parcel where the Fuller Road Station is planned is used as parkland, appears on maps as parkland, and is included in the parks and recreation open space (PROS) plan as parkland. The city’s designation of the parcel as public land is used in the applications to the federal government for grant funding, but there’s no mention of its park designation.

The U.S. Dept. of Transportation requires a more extenstive environmental study for parkland, she said. The redefinition of allowable uses for public land, approved by the council, allows public land to be used as a transportation center. As councilmembers, they should think about the use of parkland, as they anticipate putting the parks maintenance and capital improvements millage before the voters in 2012, Shiffler concluded.

George Gaston told the council he was there to speak in defense of Fuller Park. It’s been a city park for more than 50 years, he said. The 1993 accord struck with the university for use of the parcel as a parking lot was a temporary agreement – it was never intended to be a permanent lot, he said.

In a draft of environmental assessment for selection of the site, he said, 15 sites had been considered. Of those, three were eliminated because they’re city parks. The University of Michigan’s Mitchell Field was considered, but rejected because it’s a recreational area. Gaston said he could see why the university wants a project with free land and a prime location. But if the university is truly interested, he said, then let the university become a stakeholder. Mitchell Field would offer better access to Fuller Road. He contended that there are too many connections between town and gown for it to be an untainted vote. He contended that everything had been decided a year and a half ago. It’s taken too much effort to put together a ribbon of parks along the Huron River to lose that now, he said.

Mike Anglin (Ward 5) called on his council colleagues to watch a recording of the May 17 park advisory commission meeting. Eli Cooper, transportation program manager for the city, had given a presentation on Fuller Road Station, Anglin said. Members of PAC were restrained but confused, Anglin said. [Anglin serves as one of two ex-officio representatives from the city council to PAC.] They thought they were going to have a train station, Anglin said. But now it’s looking like a parking structure more than anything else.

When the council voted to change the allowable uses for public land to include transportation facilities, that moved parks to another category, Anglin said. He said he did not think it sounds like the city’s share of the funding would be coming forward [roughly $10 million]. He stated that the city doesn’t need a large train station for a town this size – it just has one track.

At a time when the city is laying off police officers, $10 million for this project in unconscionable, he said. Anglin said he’s personally not excited by parking structures. The project has momentum behind it, but no funding, he said. There are no guarantees of a train coming to Ann Arbor, but there is a guarantee of a large structure. It’s such a pretty area, Anglin said, they should consider whether they should do that.

Sabra Briere (Ward 1) anticipated mayor John Hieftje’s reaction to Anglin’s comments [Hieftje has pushed hard for the project] by telling the mayor that she knew he had a lot of thoughts about Fuller Road Station. But she thought the council should have a working session, so that councilmembers can become more knowledgable about the issue.

Hieftje indicated that he would look into adding something to the calendar. He then went on to describe how he and Briere had attended a press conference in Detroit recently when $196 million in federal rail funding had been awarded to projects in southeast Michigan. U.S. senators Debbie Stabenow and Carl Levin were there, he said. Levin had called out Fuller Road Station as a good idea. Gov. Rick Snyder had also talked positively about rail transportation, he said.

Responding to Anglin’s contention that there is only one track, Hieftje noted that two tracks will be installed at Fuller Road Station. The design of the station has changed, he said, and will now put the train station inside the other building. But as far as the basic site selection, no other location is as ideal as the Fuller Road site – it has 24,000 people a day going to the university’s hospital. He then thanked Anglin for his previous vote in support of Fuller Road Station.

Communications and Comment

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

Comm/Comm: Volunteer of the Month

Karen Moore was recognized as volunteer of the month for her work in connection with downtown parks, in particular for Ann Arbor Downtown Blooms Day.

Comm/Comm: Affordable Housing

Forest Hills Housing Co-op received a mayoral proclamation for its role in providing affordable housing for the last 40 years.

Comm/Comm: Environmental Commission Nomination

Most nominations for the city’s various boards and commissions are made by the mayor. One of the exceptions is the environmental commission (EC), for which the council makes the nomination.

Carsten Hohnke (Ward 5) announced that a nomination for a three-year EC term was being placed before the council that evening and that it would be before the council as a resolution at the following meeting. Margie Teall (Ward 4), who sits with Hohnke as the city council’s representatives to the EC, prompted Hohnke to name the nomination, which he did: Jamie Woolard.

Comm/Comm: Municipal Center

Margie Teal (Ward 4) reported that the building committee reviewed construction of the new building at Fifth and Huron, and the renovation of the existing city hall building. They concluded that the project is on time and under budget.

Comm/Comm: Argo Bypass Channel

Interim city administrator Tom Crawford gave an update on progress for the construction of the Argo bypass channel. An application for a permit has been submitted to the state. The city is waiting for that permit to be issued before earthwork can begin. There’s no way to know when the permit will be issued, he said, but city staff is estimating six weeks. The contractor will go ahead and begin to mobilize in preparation to start the earthwork.

Comm/Comm: Rain

Crawford reported that cleanup continues in the area of Plymouth Road, where the railroad embankment collapsed after heavy rains at the end of May. The city received 87 reports of sewer backups in basements in areas where the system was stressed. Some residents were given vouchers for cleanup, he said. The affected areas were the neighborhood Packard & Stadium, and Hill & Division. The city is considering creating two new areas for the city’s footing drain disconnect program – adding to the five existing areas – and accelerating the program.

Comm/Comm: Historic District Awards

At the start of the meeting, the city’s historic district commission presented its annual awards to property owners. A complete listing of the awards is available in the city’s press release.

Comm/Comm: Ward 5 City Council Race

Henry Herskovitz introduced himself as a Ward 5 resident, saying that it’s a matter of public record that Neal Elyakin is running for city council in that ward. Herskovitz told the council it’s his understanding that if elected, councilmembers must promise to uphold the U.S. Constitution. Elyakin, he said, had chosen to fly a national flag in front of his home that is not the U.S. flag, but rather one from a country that 44 years ago on Wednesday (June 8) had killed 34 Americans. [Hersovitz was referring to an attack on the USS Liberty in 1967.] Herskovitz said that he supported Elyakin’s right to fly the Israeli flag, and his right to run for a seat on the city council, but wondered to which country Elyakin owed his allegiance. Elyakin should state his loyalty and allegiances clearly, Herskovitz said.

Comm/Comm: JFK, Dems, Mackinac

Thomas Partridge reminded the council that it was the 50th anniversary of numerous historic events in the first year of John F. Kennedy’s administration, like the test ban treaty and the beginning of work on the civil rights act. He said he wanted to remind everyone of the progress made beginning in 1961, and the need to keep up the struggle. He opposed the attitude of those who left southeast Michigan and traveled to the recent Mackinac Policy Conference – that was nothing but a right-wing Republican convention, he said. He called on voters 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: June 20, 2011 at 7 p.m. in the second-floor council chambers at 301 E. Huron. [confirm date]

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