From left: Washtenaw County equalization director Raman Patel with commissioners Conan Smith (D-District 9) and Dan Smith (R-District 2) at the April 16, 2014 board of commissioners meeting. (Photos by the writer.

The report was presented by Raman Patel, the county’s long-time equalization director. “Washtenaw County is showing improvements in the market,” he told commissioners. “We are slowly regaining our county’s equalized base. It appears that the worst part of the decline in market value is behind us.”

For 2014, taxable value in the county increased 2.02% to $14.18 billion. That’s a greater increase than the 1.68% climb in 2013, and an improvement over declines seen in recent years. Patel cautioned that several factors are impacting revenue for local governments, including the phase-out of personal property taxes, a variety of exemptions, and tax capture from entities like downtown development authorities.

More of the tax burden is also being shifted to residential property owners, he noted, compared to other categories, like commercial property. The category of residential property accounts for 67.34% of total property value in the county. Five years ago, in 2009, it was 63%.

In other action on April 16, commissioners gave initial approval to distribute proceeds from a countywide tax on hotels and other accommodations. For 2013, $472,846 was available for distribution. If the resolution is given final approval, the county will keep 10% ($47,285) to pay for enforcement of the accommodation ordinance. The remainder will be divided between the Ann Arbor Convention & Visitors Bureau ($319,171) and the Ypsilanti Convention & Visitors Bureau ($106,390).

During public commentary, Mary Kerr, president of the Ann Arbor Convention & Visitors Bureau, and Jason Morgan, director of government relations for Washtenaw Community College, highlighted the union training programs that will be coming to the area this summer. The CVBs have been instrumental in recruiting these kinds of events to Washtenaw County.

Commissioners also gave initial approval to the annual Urban County action plan, which outlines proposed projects funded by the U.S. Dept. of Housing and Urban Development. The Urban County is a consortium of Washtenaw County and 18 local municipalities that receive federal funding for low-income neighborhoods. Members include the cities of Ann Arbor, Ypsilanti and Saline, and 15 townships.

Final authorization was given to a two-year pricing proposal – for 2016 and 2017 – to provide police services to local municipalities through contracts with the county sheriff’s office. And commissioners gave final approval to a new brownfield redevelopment plan for the Thompson Block in Ypsilanti’s Depot Town.

In other action, the board passed a resolution declaring April 13-19 as National Public Safety Telecommunicator Week in Washtenaw County. They also honored Dr. Eugene Glysson, who had served on the county’s board of public works (BPW) since 1986, and was its chair since 1996. He died on April 2.

Several issues were raised during public commentary, including concerns about emergency sirens installed by a pasture in Scio Township. The owner told commissioners that the sirens spook his horses, causing a dangerous situation if anyone is riding them or standing nearby. Other topics discussed by the public included the creation of a new group to help end homelessness, called Our 2020 Vision, and efforts by University of Michigan students to reduce the use of plastic bags by imposing a per-bag usage fee. They’re garnering support in part through a MoveOn.org petition.

Equalization Report

The 2014 equalization report was presented by Raman Patel, the county’s long-time equalization director. He began by noting that this was Washtenaw County’s 56th report, and he’s been involved in the process for 43 of those years. [.pdf 2014 equalization report] [.pdf chart of largest county taxpayers]

This year, Patel said, “Washtenaw County is showing improvements in the market. We are slowly regaining our county’s equalized base. It appears that the worst part of the decline in market value is behind us.”

Raman Patel, director of equalization for Washtenaw County.

Equalized (assessed) value is used to calculate taxable value, which determines tax revenues for the county as well as its various municipalities and other entities that rely on taxpayer dollars, including schools, libraries and the Ann Area Arbor Transportation Authority, among others. There are 72 units of government in Washtenaw County that rely on property tax revenues.

For 2014, taxable value in the county increased 2.02% to $14.18 billion. That’s a greater increase than the 1.68% climb in 2013, and an improvement over declines seen in recent years.

It’s also an improvement over projections made when the county administration prepared its 2014 budget. The general fund budget was approved with a projection of $63.79 million in tax revenues. But actual revenues, based on 2014 taxable value, are now estimated at $64.511 million – for an excess in 2014 general fund revenues of $720,486. Patel stressed that at this point, the taxable value is a recommendation and must be approved at the state level.

Patel also presented tentative taxable values for specific jurisdictions. The city of Ann Arbor shows a 2.68% increase in taxable value, while the city of Ypsilanti’s taxable value is an 0.87% increase over 2013. All but three municipalities showed an increase in taxable value. Those municipalities with decreases are the city of Saline (-1.41%), Ypsilanti Township (-0.37%), and the city of Milan (-0.85%).

Properties in the Ann Arbor Public Schools district – which includes the city of Ann Arbor and parts of surrounding townships – will see a 2.37% increase in taxable value. Properties taxed by the Ann Arbor District Library, covering a geographic area that in large part mirrors the AAPS district, increased in value by 2.36%.

Taxable value is determined by a state-mandated formula, and is the lower of two figures: (1) a parcel’s equalized (assessed) value; or (2) a capped value calculated by taking last year’s taxable value minus any losses (such as a building being torn down), multiplied by 5% or the rate of inflation (whichever is lower – this year inflation is 1.6%), plus the value of any additions or new construction.

In 2014, commercial property showed a 3.97% gain in equalized value. Residential property value – the largest classification of property in the county – showed an increase of 5.84%. That’s stronger than last year’s 2.37% increase, which had been the first climb in value since 2007.

Values for developmental property – a relatively small category that covers properties not yet developed – continue to struggle, registering a decrease of 9.54% in equalized value. Industrial property, which dropped 4.78% in equalized value last year, is essentially flat in 2014 at 0.1%. Over the past few years that category has lost significant value, falling from an equalized value of nearly $1 billion in 2007 to this year’s value of $422.146 million.

Some staff of the county’s equalization department.

Countywide, about $400 million is captured by entities like local downtown development authorities (DDAs), local district finance authorities (LDFAs), brownfield tax increment financing, and other entities that are allowed to capture funds from taxing jurisdictions. For taxes levied by Washtenaw County government alone, $2.472 million goes to these other tax-capturing entities that would otherwise be revenues for the county’s general fund. That’s an increase of $67,409 compared to last year.

Patel reported that in 2013, the county had seen new construction valued at $368.14 million. Of that, 30% of that taxable value is capture by DDAs within the county, he said. This year, new construction is valued at $334.18 million, with 26% of that captured by DDAs.

The category of residential property accounts for 67.34% of total property value in the county. Five years ago, in 2009, it was 63%. That means the tax burden is shifting onto residential property owners, Patel said. He noted that residential property values are increasing – from an average sales price of $154,015 in March 2009 to $231,541 this March.

This year, Patel noted that 1,709 appeals were made to the various boards of review – property owners who contested their assessments. That’s significantly lower than last year, when 2,793 appeals were made. Of this year’s appeals, 1,128 appeals were granted, decreasing the total assessed value of property countywide by $21.112 million. In addition, 134 poverty exemptions were granted and 73 parcels were given exemptions for disabled veterans.

Patel highlighted state legislation regarding personal property taxes (PPT) that would affect the overall growth of equalized and taxable value. This year, property valued at up to $40,000 is exempt from the PPT, affecting 5,137 parcels. It’s part of a gradual phase-out of the PPT over the next 10 years, he said. The county’s equalization department is responsible for tracking this process for each unit of local government in Washtenaw County. A referendum on the Aug. 5, 2014 ballot will ask voters to approve a replacement of PPT revenues, directing a portion of the state’s “use tax” to local governments.

In addition, Public Act 161 of 2013 extends the homestead property tax exemption for disabled military veterans to spouses of deceased veterans. These new exemptions and the resulting losses in tax revenues are reflected in the county’s equalized and taxable value, Patel said.

Patel noted that Washtenaw County’s gross tax revenue is further decreased from downtown development authorities (DDAs), local development finance authorities (LDFAs), tax increment finance authorities (TIFAs), brownfield redevelopment authorities, and obsolete property rehabilitation authorities (OPRAs). These are issues that commissioners should be aware of, Patel said.

Equalization Report: Board Discussion

Several commissioners thanked Patel and his staff for their work. Yousef Rabhi (D-District 8) asked how the number of appeals granted this year (1,128) compared to last year. Patel replied that last year, more appeals were granted than this year – but in 2013, more appeals were sought as well.

Felicia Brabec (D-District 4).

Dan Smith (R-District 2) noted that the report gives separate equalized and taxable values for Willow Run and Ypsilanti public school systems. He wondered when the consolidation that took effect last year would be reflected in the equalization report. Patel indicated that the report will continue to list the districts separately for two more years, in case they split up again.

Smith also asked Patel if he could provide more historical information about the shift toward residential property, as a greater percentage of the total property in the county. “I think we need to be more aware of that shift that may be taking place, because it affects a lot of different policies in various ways,” Smith said.

Regarding that percentage, Felicia Brabec (D-District 4) asked if there were an optimal balance to be struck, in Patel’s opinion. Patel replied that 72 units of government rely on the tax base. The only way to increase or decrease that base is through changes in market value, he said. Aside from market value, the base is decreased through legislative exemptions. “And when you reduce your tax base, somebody has to pick up the burden – that’s the bottom line for everybody,” Patel said.

In Washtenaw County, he said, there are 140,161 parcels. Of those, 4,509 parcels are tax-exempt, he noted. Every year, additional parcels go into this category. In 2014, 69 parcels were exempted, with a taxable value of $8.27 million. Those exemptions are issued by townships, cities, the county and other entities. Someone has to pick up the burden, Patel said, adding that “it’s not a small thing.” In addition, a portion of the taxes from certain properties are being captured by entities like DDAs, he noted. “It all adds up.”

Conan Smith (D-District 9) referred to information that Patel had provided showing how property tax revenue would have increased if the state’s Headlee Act and Proposal were not in place.

Corporation counsel Curtis Hedger and Alicia Ping (R-District 3).

By way of background, the Headlee Amendment was approved by a voter referendum in 1978 as an amendment to the state constitution (Article IX, Sections 24-34). It limits the growth of property tax revenue by controlling how the maximum authorized millage rate is calculated. The maximum authorized millage rate is “rolled back” when taxable growth is greater than inflation. That limits the increase in tax revenue to the rate of inflation.

In 1994, Michigan voters approved Proposal A, a constitutional amendment that affected Article IX, Sections 3, 5, and 8. Designed to slow the increase of property taxes on individual parcels, it limits the increase in taxable value of each property to either the rate of inflation or 5% annually, whichever is less – even if the state equalized value (SEV) grows at a greater rate. When property is sold or transferred, the taxable value is reset – or “uncapped” – to the SEV.

Smith noted that during a strong economy, Proposal A didn’t have much effect. But when the economy turned down, Smith said “you saw this pretty dramatic skewing of what our revenue could have been from what it is.” In order to keep local governments whole, he said, legislative fixes are needed.

Patel noted that when the market value increases, it doesn’t mean that local governments will see that same growth in tax revenues. He pointed out that this year, equalized value for properties countywide grew 4.7%, but the increase in taxable value is only about 2%.

If Proposal A weren’t in place, the estimated tax revenue in 2014 would be about $87 million for the county’s general fund, Patel reported. Instead, it’s about $65 million.

Outcome: Commissioners voted to approve the equalization report.

Police Services Contract

A two-year pricing proposal for contracts to provide police services to local municipalities was on the April 16 agenda for final authorization. Initial approval had been granted by the board on April 2, 2014.

Washtenaw County sheriff Jerry Clayton.

For 2016 and 2017, the police services unit (PSU) price will be $156,709 and $158,276, respectively. An initial vote had been taken on April 2, 2014.

By way of background, on July 6, 2011, commissioners had authorized the price that municipalities would pay for a contract sheriff’s deputy through 2015. The price in 2012 – $150,594 per “police services unit” – was unchanged from 2011, but has been rising in subsequent years by about 1% annually. The complex, politically-charged process of arriving at those figures in 2011 involved more than a year of discussion between the sheriff’s office, other county officials and leaders of local municipalities that contract for these services.

The board’s decision in 2011 was based on a recommendation from the police services steering committee. That same group recommended the next pricing changes as well, based on the cost of a police services unit (PSU). The PSU price for 2014 is $153,621. For 2015, the PSU price will be $155,157. In the following two years, the PSU price was proposed to be $156,709 in 2016 and $158,276 in 2017. The pricing for those two years was authorized by the board in its April 16 action.

Those figures are based on a 1% annual increase in direct costs to contracting municipalities. That rate of increase for PSUs is included in revenue projections for the county’s four-year budget, which the county board passed at its Nov. 20, 2013 meeting. The budget runs from 2014-2017, and includes revenue projections based on contracts for 79 PSUs.

According to a staff memo, there will be an addition to the 2016 and 2017 prices for in-car printer replacement, after the total cost of ownership is determined. The memo also notes that the pricing is based on salaries stipulated in current union contracts with the Police Officers Association of Michigan (POAM) and the Command Officers Association of Michigan (COAM). Those contracts run through 2014, and new contracts are currently being negotiated. The memo states that “no assumptions were made for salaries or fringes change in this cost metric in anticipation of any union negotiations.” [.pdf of staff memo]

The county – through the sheriff’s office budget – pays for the difference between the price charged for each PSU, and the actual cost to provide those services. In 2011, that difference was $25,514.

In 2016, the cost per PSU is expected to be $195,104 – a difference of $38,395 compared to the price being charged to municipalities. In 2017, the cost per PSU is estimated at $199,188 – a difference of $40,912. [.pdf of cost estimates]

Discussion during the April 2 meeting included concerns by some commissioners about the financial sustainability of this approach to funding police services, and the need for new revenue sources for public safety. Sheriff Jerry Clayton had been on hand to present the pricing proposal, and supported suggestions to seek new funding for public safety. He characterized the issue of public safety as one that encompasses economic development, human services and other aspects of the community.

There was no discussion on this item during the April 16 meeting.

Outcome: Commissioners gave final approval to the police services contract price.

Thompson Block Brownfield

A resolution giving final approval to a brownfield redevelopment plan for the Thompson Block in Ypsilanti’s Depot Town area was on the April 16 agenda. [.pdf of Thompson Block brownfield plan] Commissioners had granted initial approval on April 2, 2014.

This photo of the Sept. 23, 2009 fire on the Thompson Block property was included in the brownfield redevelopment plan packet.

The plan covers 400-408 N. River St. and 107 E. Cross St., an historic property that has been declared ”functionally obsolete and blighted.” That qualifies the project as a brownfield under the state’s brownfield redevelopment financing act (Public Act 381), which allows the owner to receive reimbursements for eligible activities through tax increment financing (TIF). Approval also would allow the developer to apply for Michigan Business Tax Credits. The property is currently owned by Thompson Block Partners LLC, led by Stewart Beal of Beal Properties.

Beal plans to create 16 “luxury lofts” in the structure’s second and third floors, and up to 14,000 square feet of commercial space in the remainder of the site. The project is estimated to cost about $7 million.

The resolution considered by the board also ends a previous brownfield plan for part of the same site, which was approved in 2008. A fire in 2009 delayed the project. The new plan now covers the 107 E. Cross, which was not part of the original plan, and includes public infrastructure improvements, such as streetscape enhancements along North River Street.

The Washtenaw County brownfield redevelopment authority approved this plan at its March 6 meeting. Subsequently, the plan was approved by the Ypsilanti city council on March 18. The city council’s action included approving an “Obsolete Properties Rehabilitation” certificate, which freezes local millages at the current, pre-development level for 12 years. Because of that, the project’s TIF capture will apply only to the state’s school taxes.

The project can get up to $271,578 in eligible cost reimbursed over a 12-year period, for activities including brownfield plan and work plan preparation, limited building demolition, selective interior demolition, site preparation and utility work, infrastructure improvements, architectural and engineering design costs, asbestos and lead abatement, and construction oversight.

The intent of the state’s brownfield redevelopment financing is to support the redevelopment of urban sites that will increase the municipality’s tax base. Tax increment financing allows an entity to capture the difference between the taxable value before a project is undertaken, and the value of the property after it is developed.

A public hearing on this proposal was held at the April 2 meeting, when the board also voted to give initial approval to the plan. Only one person – Tyler Weston, representing Thompson Block Partners – spoke, telling the board that it would help the project.

Weston attended the April 16 meeting, but did not formally address the board. There was no discussion on this item.

Outcome: Commissioners gave final approval to the Thompson Block brownfield redevelopment plan.

Accommodation Tax Distribution

A resolution to give initial approval to distribute proceeds from a countywide tax on hotels and other accommodations was on the April 16 agenda.

Mary Kerr, president of the Ann Arbor Convention & Visitors Bureau, and Jason Morgan, director of government relations for Washtenaw Community College.

For 2013, $472,846 was available for distribution. If the resolution is given final approval, the county will keep 10% ($47,285) to pay for enforcement of the accommodation ordinance. The remainder will be divided between the Ann Arbor Convention & Visitors Bureau ($319,171) and the Ypsilanti Convention & Visitors Bureau ($106,390).

A final vote on that distribution is expected on May 7.

The county collects the 5% excise tax from hotels, motels, and bed & breakfasts, which is then distributed to the Ann Arbor and Ypsilanti convention & visitors bureaus and used to promote tourism and convention business. The contract calls for the county to retain 10% of that tax to defray the cost of collection and enforcement. (Until 2009, the county had only retained 5% for this purpose.) The remaining funds are split, with 75% going to the Ann Arbor Convention & Visitors Bureau, and 25% going to the Ypsilanti Convention & Visitors Bureau.

In December 2009, the board approved five-year contracts with the CVBs, outlining the distribution arrangement and creating an accommodation ordinance commission to oversee the process. An amendment made in September 2011 addressed the process for distributing excess funds that might accumulate from the county’s 10%, if that amount exceeds the expenses required to administer and enforce compliance with the tax. Beginning in May 2013, the county retained 10% of the tax proceeds, plus 10% of any remaining fund balance. If additional funds accumulate in the fund balance, they are to be returned proportionally to the two convention & visitors bureaus – 75% to Ann Arbor, and 25% to Ypsilanti.

Subsequently an ordinance change was made in October 2012, when the board voted to shift responsibility for collecting and enforcing accommodation tax from the county treasurer to the county finance director. The ordinance amendment transferred a 0.7 full-time equivalent accounting job from the treasurer’s office to the county finance department, and amended the accommodation tax policy to clarify that the tax is only assessed against the actual price of a hotel, motel or other rental – not against other amenities that the business might charge its customers, such as Internet access or an extra cot in the room.

Accommodation Tax Distribution: Public Commentary

The specific resolution was not addressed directly during public commentary. But Jason Morgan, director of government relations for Washtenaw Community College, and Mary Kerr, president of the Ann Arbor Convention & Visitors Bureau, attended the meeting to highlight the union training programs that will be coming to the area this summer. The CVBs have been instrumental in recruiting these kinds of events to Washtenaw County.

The United Association (UA) is coming in August, marking the 25th year that UA training has been held at WCC, Morgan said. The ironworkers union will also be training at WCC for the fifth year. The National Joint Apprenticeship and Training Committee (NJATC) National Training Institute for electricians is coming in July.

Morgan said he and Kerr wanted to make sure that the unions know they are appreciated by Washtenaw County and by WCC.

Kerr noted that the NJATC is celebrating its 25th year as a training program, so that milestone – along with the UA anniversary – will be bringing hundreds of additional people to this area. Collectively, the economic impact from these union training programs is $12 million annually in Washtenaw County, she said. That amount includes money spent on hotels, restaurants, entertainment, retail and transportation. “They do have a significant economic impact on the community,” Kerr said. “Our goal is to keep them here. Our goal is to roll out the red carpet and make this not only an educational opportunity for them, but also an entertaining and relaxing one as well.”

Accommodation Tax Distribution: Board Discussion

Several commissioners thanked Morgan and Kerr, and said they supported the economic vitality that unions bring to this community. Commissioner Ronnie Peterson (D-District 6) praised the work of the AACVB, saying that the county had an excellent partnership with them. He requested that Kerr return in the future to talk about the full range of activities that the CVB does. He wanted people to know that sometimes the government works well with the private sector. [.pdf of 2013 AACVB annual report]

Outcome: Commissioners voted unanimously to give initial approval to the accommodation tax distribution. Commissioners Dan Smith (R-District 2) and Conan Smith (D-District 9) were out of the room when the vote was taken. A final vote is expected on May 7.

Urban County Action Plan

The 2014 Urban County action plan was on the April 16 agenda for initial approval. The plan covers the period from July 1, 2014 through June 30, 2015 and outlines how the Urban County consortium intends to spend federal funding received from the U.S. Dept. of Housing and Urban Development (HUD). [.pdf of draft action plan]

Map of Urban County participants.

The Urban County is a consortium of Washtenaw County and 18 local municipalities that receive federal funding for low-income neighborhoods. Members include the cities of Ann Arbor, Ypsilanti and Saline, and 15 townships. “Urban County” is a designation of HUD, identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, entitling them to an allotment of funding through a variety of HUD programs. Locally, the Urban County is supported by the staff of Washtenaw County’s office of community & economic development (OCED).

Two HUD programs – the Community Development Block Grant (CDBG) and HOME Investment Partnership – are the primary funding sources for Urban County projects. For the upcoming year, the Urban County will be receiving $2.914 million, including $1.832 million from CDBG and $925,308 from HOME. That represents a 5% decrease in CDBG compared to the current year, and a 2% increase in HOME funding.

The 2014 plan identifies six overarching goals: (1) increasing quality, affordable homeownership opportunities; (2) increasing quality, affordable rental housing; (3) improving public facilities and infrastructure; (4) promoting access to public services and resources; (5) supporting homelessness prevention and rapid re-housing services; and (6) enhancing economic development activities.

A public hearing on the 2014 plan was previously held on March 19, 2014. A final vote on the plan is expected on May 7.

Urban County Action Plan: Board Discussion

Discussion was brief. Felicia Brabec (D-District 4) noted that there was almost a $90,000 decrease in CDBG funding. She asked what that decrease means in terms of the county’s ability to provide services.

Mary Jo Callan, director of the county’s office of community & economic development, replied that the decrease is “better than we feared.” The staff had been anticipating more of a 7% cut, so a 5% decrease was good news. The $90,000 in cuts won’t affect just one program, she said. So it will result in either fewer projects or scaled-down projects.

Outcome: Commissioners voted unanimously to give initial approval to the Urban County action plan. Commissioners Dan Smith (R-District 2) and Conan Smith (D-District 9) were out of the room when the vote was taken. A final vote is expected on May 7.

Bond Re-Funding

Commissioners were asked to give final authorization to the re-funding of up to $16.5 million in outstanding capital improvement bonds, which were originally issued in 2006 to fund expansion of the county jail. Initial approval had been given at the board’s April 2, 2014 meeting.

According to a staff memo, $16.9 million in principal remains of the original $21.675 million bond sale. The county’s bond counsel, Axe & Ecklund, is advising the re-funding because of lower interest rates, and estimates a net savings of about $869,000 over life of the bond issue. The new issue would be called “County of Washtenaw Capital Improvement Refunding Bonds, Series 2014.” [.pdf of refunding resolution]

At the board’s April 2 meeting, bond counsel John Axe had told the board that current interest rates are between 4% and 4.3%. He estimated that the re-funding interest rates would be between 2.2% and 3.8%.

Outcome: Without discussion, commissioners gave final approval to the bond re-funding proposal.

Honoring Eugene Glysson

Commissioners held a moment of silence for Dr. Eugene Glysson, who had served on the county’s board of public works (BPW) since 1986. He died on April 2. They later passed a resolution of appreciation for his service to Washtenaw County. [.pdf of resolution for Eugene Glysson]

Ned Glysson, son of Eugene Glysson.

Glysson had served as chair of the BPW since 1996, and was considered an expert in solid waste management and planning. He also was a professor emeritus of civil and environmental engineering at the University of Michigan.

The resolution noted several of Glysson’s accomplishments, including his leadership in reviewing and approving an agreement with Washtenaw County’s only active landfill “that has provided long term support for the County’s solid waste program including its household hazardous waste program that has removed tons of hazardous materials from the environment…”

Glysson’s son, Ned Glysson, was on hand to accept the resolution, saying it would have meant a lot to his father. He noted that his father refused to retire from the BPW, and about a month ago he had attended a meeting “and was incredibly rejuvenated by it.” It had given his father something to live for.

Evan Pratt, who as the county’s water resources commissioner also serves as director of public works, said Glysson had been a good chair. Commissioner Yousef Rabhi, who served on the BPW for almost four years, recalled that in the early days he’d been late to a few meetings, and Glysson hadn’t been happy about that. “He told me I wouldn’t be late anymore, and I wasn’t,” Rabhi quipped. Rabhi called Glysson a mentor to him and a great environmental leader.

Rabhi noted that a new member will need to be appointed to the BPW, so he’ll be seeking applicants for that.

Telecommunicator Week

The board passed a resolution declaring April 13-19 as National Public Safety Telecommunicator Week in Washtenaw County. [.pdf of board resolution]

From right: Marc Breckenridge, the county’s director of emergency services; commissioner Yousef Rabhi; and Dave Halteman, manager of the county’s dispatch operations.

Marc Breckenridge, the county’s director of emergency services, was on hand to receive the resolution. He noted that six or seven dispatchers were working that night just a few blocks away.

Breckenridge introduced Dave Halteman, saying he’s worked with the county for 22 years, starting as a 911 dispatcher. In the mid-1990s, Halteman was promoted to lead the countywide 911 effort. Most recently, Halteman was involved in co-locating and integrating dispatch operations in Washtenaw County.

This month, Halteman was promoted to be manager of the county’s dispatch operations, Breckenridge said.

Halteman thanked the board, saying that the job of dispatcher is very difficult and requires the ability to multi-task.

Communications & Commentary

During the April 16 meeting 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: Emergency Sirens

Speaking during public commentary, James Richardson of Scio Township told commissioners that there’s a potential life-threatening danger – a new emergency siren that was installed at the edge of his pasture.

James Richardson of Scio Township.

When the county approved the expansion of emergency sirens into the townships, he said, they probably viewed it as an improvement in public safety. But they might not have considered the resulting unintended danger. When he first learned that the siren would be installed, he expressed concern that it would bother his horses. He eventually spoke with Marc Breckenridge, the county’s director of emergency services, who assured him that studies show that livestock get used to these types of sounds. “I can assure you that these experts haven’t seen horses very near a siren,” Richardson said.

On Saturday, April 5 at noon, the sirens went off for the first time that he was aware of, Richardson said. He happened to be watching his horses, who reared and bolted, running wildly through the pasture. If someone had been riding a horse at that time or even standing near them, it could have caused serious injury and possibly death, he said. If the horses had been near the north end of the pasture, they might have bolted through the fence and onto Liberty Road.

Richardson said he was appealing to the board to have the siren removed from this location. He doubted that his horses would get used to the sound, especially since the sirens are only tested once a month for 1-2 minutes. “I’m notifying you of this danger, and also notifying you that if you fail to act, the board and the county will assume full responsibility for all and any of the resulting damage or injury to my horses, to my property, or any personal injury resulting from the dangerous situation that the emergency siren creates.”

Commissioner Conan Smith (D-District 9) urged Breckenridge to explore how the county can protect the interests of landowners as well as public safety. Sometimes those things come into conflict, he added, but it’s worth having a conversation to explore the options. Commissioner Ronnie Peterson (D-District 6) said he’d like to ensure that someone in the county administration follow up on this issue.

Communications & Commentary: Budget

Responding to a query from Ronnie Peterson (D-District 6), Felicia Brabec (D-District 4) described the process for this year’s budget affirmation. Although the board passed a four-year budget in late 2013 – for the period of 2014 through 2017 – they also need to vote each year to reaffirm the next year’s budget, with any changes they might make.

Commissioner Andy LaBarre (D-District 7) talks with Greg Dill, the county’s director of infrastructure management.

As a first step, Brabec said, commissioners authorized the county administrator to hire a contract employee who will support budget-related work this year for the county board and administration. That authorization took place at the board’s March 19, 2014 meeting. That person will help the board work on aligning the budget to support community outcomes that commissioners had identified.

By way of additional background, as part of adopting a four-year budget, the board set up a new strategic model to help it determine where the county’s resources should go. The board set goals as well as outcomes that are intended to measure how those goals are being achieved. The priority areas for investment that were approved by the board in 2013 are: (1) ensure community safety net through health and human services, inclusive of public safety; (2) increase economic opportunity and workforce development; (3) ensure mobility and civic infrastructure for county residents; (4) reduce environmental impact; and (5) ensure internal labor force sustainability and effectiveness.

On April 16, Peterson asked whether there could be a working session to review the goals and outcomes, saying that some things might have changed since those goals were adopted. Brabec replied that those kinds of discussions are being planned. Because of frequent low attendance at working sessions, she wondered whether it might be better for the discussion to occur at a ways & means committee meeting. “The discussion will happen,” she said. “We just need to find the best way for those discussions to happen.”

Communications & Commentary: MPRI

Ronnie Peterson (D-District 6) spoke at length about the need to support the Michigan Prisoner Re-Entry Initiative (MPRI), calling it an unfunded mandate from the state. Yousef Rabhi (D-District 8) agreed that it was an issue the board needs to tackle. Rabhi noted that he serves on the board of the Religious Action for Affordable Housing (RAAH), which has made the Washtenaw County prisoner re-entry program one of its three top priorities. He thought the county should prioritize it too.

Peterson said he wanted a working session on the topic, including a discussion about how the county allocates its dollars for human services programs in relationship to the coordinated funding approach. “It’s not about stopping coordinated funding,” he said. “It’s about how we address the unmet needs of this community.”

Andy LaBarre (D-District 7), who chairs the board’s working sessions, said he’d be glad to schedule a session on this topic. He noted that this year, the working sessions had not yet achieved 100% attendance. So he hoped commissioners would attend.

The following week, on April 22, LaBarre emailed commissioners an updated schedule of the next six working sessions:

• May 8: MSU Extension update; and follow-up on road commission expansion
• May 22: Community Health Improvement Plan report; and report on homelessness in Washtenaw County task force
• June 5: Report on Virtual Business Advisor initiative
• July 10: Dog licensing public awareness campaign; and Mental Health Court update
• August 7: ID task force report
• September 4: Prisoner reentry (MPRI)

Communications & Commentary: Smoking

During the time on the agenda to bring up items for current or future discussion, Alicia Ping (R-District 3) pointed out that earlier this year, she’d raised the issue of possibly requiring that new hires be tested to make sure they’re nicotine-free. It’s a policy that’s trending in the private sector, Ping noted, and she’d like to have a broader discussion about it. “It’s an expensive liability to take on people who are purposefully are not contributing to their good health,” Ping said.

County administrator Verna McDaniel replied that staff are looking at a range of wellness issues, including that one.

Communications & Commentary: Homelessness

Elizabeth Kurtz spoke about the Delonis Center homeless shelter’s warming center. She thanked the board for funding an extension of the warming center until April 30. If it had closed on April 6 as previously planned, she said, a lot of people would have been outside during cold weather. She told commissioners that she’s lived on the streets for over a year, and based on the needs that she sees, she’s been working with others to end homelessness.

County administrator Verna McDaniel and commissioner Yousef Rabhi (D-District 8).

They’ve formed an organization called “Our 2020 Vision,” and are seeking support from local governments and private entities to help end homelessness by the end of this decade. The urgency of this issue will no longer allow it to be placed on the back burner, Kurtz said. Specifically, she called on commissioner Ronnie Peterson (D-District 6) to help acquire the vacant East Middle School in Ypsilanti for use in this effort, and asked other commissioners to help as well.

Ray Gholston also thanked commissioners for helping extend the warming center through April. The county had provided $35,000 to keep it open, he noted, but he questioned why it would cost so much “just to throw a few mats on the lunchroom floor, say goodnight and turn off the lights.” He said he still has a job and is still trying to figure out where he’ll sleep after this month. He’s part of the Our 2020 Vision effort, calling it a human rights organization that’s focused on the homeless population. The group is requesting a meeting with some or all commissioners, to help deal with the crisis.

Commissioner Yousef Rabhi (D-District 8) thanked advocates for the homeless for coming to the meeting, and said he looked forward to the board’s May 7 meeting when a timeline would be presented for addressing an update to the Blueprint to End Homelessness. [At its April 2, 2014 meeting, commissioners had directed county administrator Verna McDaniel to bring forward a plan by May 7 for updating the county’s Blueprint to End Homelessness, which was originally adopted in 2004. The process of updating that plan is to be completed by Oct. 1, 2014. For board discussion on this issue, see Chronicle coverage: "Homeless Issues Emerge on County Agenda."]

Communications & Commentary: US-23

Yousef Rabhi noted that an environmental assessment is being conducted for MDOT’s proposed expansion of US-23 near Ann Arbor. MDOT is seeking public input, and Rabhi said he intended to express his opposition to the project because of environmental concerns. It would be expanded from M-14 to just north of 8 Mile Road near Whitmore Lake. He encouraged others to provide input as well.

Communications & Commentary: Misc. Public Commentary

Several University of Michigan students spoke during public commentary. As a class project, they’re working on an initiative to reduce the use of plastic bags in Washtenaw County.

University of Michigan students spoke during public commentary.

Their proposal is based on a model used in Washington D.C. that includes imposing a small usage fee on single-use plastic bags. The goal is to nudge consumers to be more aware of their consumption choices. They’ve spoken with commissioner Yousef Rabhi to explore their options. To gauge possible support, they’ve started a petition on MoveOn.org and have reached out to community groups like Recycle Ann Arbor and the Huron River Watershed Council, as well as student groups at UM, Eastern Michigan University and Washtenaw Community College.

Lefiest Galimore touched on several issues during public commentary. As he has in the past, Galimore argued that the coordinated funding approach tends to prevent African-American organizations from getting funded. If his small organization is given $1,500 and a larger organization is given $35,000, then that larger organization will have more capacity to do its work, he said. So the county needs to look at that. Galimore also said that people with mental illness who get involved in the criminal justice system get labeled as criminals, and it’s then impossible for them to get productive jobs. “We need to look at that as a community.”

Thomas Partridge told commissioners that the agenda needed to give more attention to greater priorities, including efforts to eliminate homelessness by providing true affordable housing and countywide public transportation. He supported the transit tax that’s on the May 6 ballot in Ann Arbor, Ypsilanti and Ypsilanti Township.

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, May 7, 2014 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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In April, the county’s equalization department produces an annual report describing Washtenaw County’s total equalized (assessed) value of property. The report is part of a state-mandated equalization process, and gives an indication of how much revenue the county will receive from property taxes in the coming year. [See Chronicle coverage: "Equalization: Washtenaw Property Values Rise."]

Later in the year – in October or November – the equalization and property description department presents an apportionment report, which gives details of the taxable valuations for property in the county, by municipality. The report also includes the amount of millages levied and the dollar amounts collected in taxes. Like the equalization report, the board is required by state law to vote on adopting the apportionment report.

This year, all the taxing entities in Washtenaw County will be levying in total an estimated $629.608 million in property taxes – an increase from $621.687 million in 2012. It’s also an increase from $622 million in 2011, but has not yet regained ground to the level of $639 million in 2010.

The county alone will levy an estimated $80.669 million, including millages for the general fund, parks & recreation, and Huron Clinton Metroparks.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor, where the board of commissioners holds its meetings. A more detailed report will follow: [link]

From left: Raman Patel, Washtenaw County’s equalization director, greets Leila Bauer, chief deputy treasurer who is retiring after 41 years with the county. (Photos by the writer.)

After several years of reporting declining tax revenues, Raman Patel – the county’s equalization director – gave commissioners a report showing stronger signs of economic recovery, reflected in a 1.68% increase in taxable value. That translates into an estimated $2.327 million more in property tax revenues for county government than had been budgeted for 2013. [.pdf of Patel's presentation]

Also related to the budget, commissioners gave initial approval to a four-year budget planning cycle, a change from the current two-year cycle that’s been in place since 1994. Voting against the item was Ronnie Peterson (D-District 6). He and other commissioners expressed a range of concerns, including the fact that commissioners are elected every two years and therefore might not be able to contribute adequately to setting budget priorities. Although Peterson remained unconvinced, several commissioners observed that the annual budget affirmation process acted as a fail-safe, allowing the board to make adjustments based on changing priorities.

Another item that could have a dramatic impact on the county’s budget was only briefly mentioned: A proposal to issue up to $350 million in bonds to fully fund the county’s pension and retiree healthcare plans. It would be by far the largest bond issuance in the county’s history. County administrator Verna McDaniel plans to make a formal presentation about the proposal at the board’s May 2 working session. She distributed materials on April 17 to help commissioners prep for that meeting. [.pdf of bond proposal handout]

Commissioners also took a final vote officially to dissolve a countywide public transit authority known as the Washtenaw Ride. There was no discussion, but Conan Smith (D-District 9) – a vocal advocate for public transit – cast the sole vote against the resolution.

Other action handled by the board included a federal weatherization grant, a public hearing for the Urban County strategic plan, and resolutions honoring county employees and residents. Among them was Leila Bauer, the county’s chief deputy treasurer who is retiring after 41 years with the county. She received a standing ovation from the board.

County Bonding Proposal

County administrator Verna McDaniel passed out information to commissioners on April 17 regarding a major bonding proposal. She plans to make a formal presentation at the board’s May 2 working session. [.pdf of bond proposal handout]

The proposal is for a 25-year bond issue of up to $350 million to fully fund the county’s pension and retiree healthcare plans – the Washtenaw County Employees’ Retirement System (WCERS) and Voluntary Employees Beneficiary Association (VEBA).

Washtenaw County administrator Verna McDaniel.

Although commissioners were alerted to the possibility of this bonding proposal earlier in the year, the communication from McDaniel was the first time it had been formally raised at a public board meeting. She told commissioners that the material she was providing outlined six key points, including the purpose and objectives of bonding, and cost comparisons between estimated payments of debt service compared to the county’s annual required contribution to its pension and retiree healthcare funds.

She also provided a summary of relevant provisions in Public Act 329 of 2012, which the Michigan legislature passed in October of 2012. [.pdf of Public Act 329] The law enables municipalities to issue bonds to cover unfunded accrued pension and retiree healthcare liabilities, but has a sunset of Dec. 31, 2014.

The material distributed by McDaniel also lists benefits and risks of bonding, and a comparison of budgets based on bonding or not bonding.

Benefits cited by McDaniel include:

• Easier long-term budgeting provided by having predictable bond payments, rather than fluctuating amounts each year to cover pension (WCERS) and retiree healthcare (VEBA) costs. For example, the current combined WCERS and VEBA contributions in 2014 are estimated at $23.5 million. A bond payment is estimated at $18.6 million. [These annual lower payments don't take into account the higher amounts paid in interest over the life of the bonds, however. Details on the interest payments were not provided.]
• The complete elimination of the WCERS and VEBA obligations after 25 years.
• Proceeds from the bond, held in an intermediate trust, could be used to call the bonds after nine years, if some future event eliminates the WCERS and VEBA liabilities.
• Current rates for issuing bonds are at an historic low. Average debt service is estimated at 4%.

McDaniel also listed a few risks of bonding, including the size of the debt load, the uncertainty of market conditions, and the impact of defaulting, which would have consequences for the county’s credit rating and ability to issue bonds for other purposes.

The timetable proposes an initial board vote to approve the bond issuance on May 15 at its ways & means committee meeting, with a final vote on June 5. The board would vote on July 10 to approve the final bonding amount. During the summer months of June through August, the board typically holds only one regular board meeting each month.

McDaniel is also recommending that the county set up an intermediate trust to receive net proceeds from the sale of the bonds, and to invest and distribute the assets.

“This is an important and critical issue,” she said, “and we wanted to make sure you had as much information as possible in advance.”

Based on the county’s most recent comprehensive annual financial report (CAFR), Washtenaw County’s total outstanding debt at the end of 2012 was $60.877 million, up from $35.67 million in 2003. In 2012, the county paid $8.77 million in principal on its debt, $2.69 million in interest and other charges, and $166,892 related to bond issuance costs. [.pdf of debt data from 2012 CAFR]

County Bonding Proposal: Board Discussion

Ronnie Peterson (D-District 5) confirmed with McDaniel that the county’s legal counsel and bond counsel, John Axe, would attend the May 2 working session. [Axe has been advising the county on this proposal, and likely would be paid based on a percentage of the bonded amount.]

Peterson wondered if this proposal would impact the county’s current bonding capacity and ability to borrow for other needs.

McDaniel replied that this amount would be “well within our capacity.” The rating agencies allow the county to bond up to 10% of the county’s taxable value. According to the equalization report that was presented earlier in the meeting, the county’s taxable value is $14.416 billion.

Peterson asked McDaniel to provide more information at the May 2 working session about the county’s current bonding ability, as well as the impact that a $350 million bond issuance would have on the county’s ability to bond beyond that.

From left: Washtenaw County commissioners Dan Smith (R-District 2) and Kent Martinez-Kratz (D-District 1) review materials prior to the start of the county board’s April 17 meeting.

Dan Smith (R-District 2) said he was very interested in the impact that this bond would have on other communities in Washtenaw County. Rating agencies look at the total debt throughout the county, he noted. Communities have different levels of debt and taxable values, and he wanted to know how that would be affected regarding the “debt overhang.” [Debt overhang refers to the point at which debt is so great that an entity is unable to take on additional debt.]

The bond issuance that’s being proposed would add a substantial amount of debt on a per-capita basis, D. Smith said. Based on the data from the current equalization report and on the county’s current debt as provided in the most recent comprehensive annual financial report (CAFR), the county’s total debt – for all municipalities – is 9.2% of the county’s total taxable value.

Kent Martinez-Kratz (D-District 1) confirmed with McDaniel that the assumptions built in to her calculations factor in the new labor contracts, which eliminated defined benefit plans for new employees hired after Jan. 1, 2014. [See Chronicle coverage: "New Labor Contracts Key to County Budget"] He also highlighted a chart that showed “savings” that the county would see from this bond issuance, and indicated that he’d like more information about how those amounts are calculated. [.pdf of budget projection charts]

Yousef Rabhi (D-District 8) encouraged commissioners to email their questions to the administration prior to May 2, so that the financial staff would have adequate time to prepare responses. “It’s a big decision,” he said, “and we want to make sure we’re walking into this with a body of supporting information, both from professionals and from others in the community, to make sure we’re making the right decision on this.”

Rabhi said he had asked the administration to provide this material prior to the May 2 working session, so that commissioners would have time to review it and ask questions.

Equalization Report

Raman Patel, the county’s equalization director, made his annual presentation to the board on April 17. He began by noting that he has worked on 42 of the 55 equalization reports that the county has produced over the past few decades. [.pdf of Patel's presentation] [.pdf of equalization report]

Equalized (assessed) value is used to calculate taxable value, which determines tax revenues for the county as well as its various municipalities and other entities that rely on taxpayer dollars, including schools, libraries and the Ann Arbor Transportation Authority, among others.

After several years of reporting declining tax revenues, this year’s report showed stronger signs of economic recovery, reflected in a 1.68% increase in taxable value.

For 2013, taxable value in the county increased 1.68% to $14.2 billion. That’s an improvement over declines seen in recent years, when equalized value fell 0.76% in 2012, 2.85% in 2011 and 5.33% in 2010. It’s also an improvement over projections made when the county administration prepared its 2013 budget. The general fund budget was approved with a projection of $60.9 million in tax revenues. But actual revenues, based on 2013 taxable value, are now estimated at $63.236 million – for an excess in 2013 general fund revenues of $2.327 million. Patel stressed that at this point, the taxable value is a recommendation and must be approved at the state level.

Patel also presented tentative taxable values for specific jurisdictions. The city of Ann Arbor shows a 3.34% increase in taxable value, while the city of Saline’s taxable value is a 3.97% increase over 2012. All but six municipalities showed an increase in taxable value. Those municipalities with decreases include the city of Ypsilanti (-0.38%) and Ypsilanti Township (-2.53%).

Properties in the Ann Arbor Public Schools district – which includes the city of Ann Arbor and parts of surrounding townships – will see a 2.32% increase in taxable value. Properties taxed by the Ann Arbor District Library, covering a geographic area that in large part mirrors the AAPS district, increased in value by 2.11%. [.pdf of taxable value list by jurisdiction]

Taxable value is determined by a state-mandated formula, and is the lower of two figures: (1) a parcel’s equalized (assessed) value; or (2) a capped value calculated by taking last year’s taxable value minus any losses (such as a building being torn down), multiplied by 5% or the rate of inflation (whichever is lower), plus the value of any additions or new construction. This year inflation is 2.4%.

Patel reported that the county’s millage rate will not be rolled back this year. The state’s Headlee Amendment rolls back millage rates to prevent property tax revenues from increasing faster than the rate of inflation. That won’t happen this year, because the inflation rate of 2.4% is higher than the increase in taxable value.

In 2013, several categories of property saw increases in equalized value for the first time in years, according to the report. Commercial property showed a 2.2% gain in equalized value, compared to a 3.84% decline last year. It was the first increase in commercial property values since 2009. Residential property value – the largest classification of property in the county – showed an increase of 2.37%, gaining in value for the first time since 2007. Last year, the equalized value for residential property had dropped 0.57%, and had registered a 2.74% drop in 2011. The average residential sales price in February 2013 was $216,220 – up from a low of $154,015 in 2009.

Personal property values also increased, growing 3.15% compared to 2012.

Last year, agricultural property had been the only category that showed an increase. Growth continues in 2013, but at a slower pace. Agricultural property registered an 0.67% increase in equalized value this year, compared to an increase of 3.54% in 2012.

Industrial and developmental property values continue to struggle. Those were the only categories to register a decline in 2013. Industrial property showed a drop in equalized value of 4.78%. That compares to a 3.99% drop in value last year. Over the past few years that category has lost significant value, falling from an equalized value of nearly $1 billion in 2007 to this year’s value of $421.72 million. Developmental property – a relatively small category that covers properties not yet developed – had a 7.12% drop in equalized value.

Patel also highlighted the value of new construction in the county – $368.1 million, a 30% jump over the value of new construction in 2012. But most of the new construction is happening in DDA districts, he reported, so the full increase in tax revenue isn’t going directly to the taxing jurisdictions.

From right: County commissioners Rolland Sizemore Jr. (D-District 6), Ronnie Peterson (D-District 5), Andy LaBarre (D-District 7) and Alicia Ping (R-District 3).

Patel noted that countywide, about $418 million is captured by local downtown development authorities (DDAs), local district finance authorities (LDFAs), brownfield tax increment financing, and other entities that are allowed to capture funds from taxing jurisdictions. For Washtenaw County government alone, $2.405 million goes to these other tax-capturing entities that would otherwise be revenues for the county’s general fund. He noted that although the official taxable value for Washtenaw County increased by 1.68%, the net increase is just 1.35% – after subtracting the amounts captured by DDAs and other tax-capturing entities.

Another factor is the impact that the Headlee amendment has had since the state’s voters approved that measure in 1978. The county was originally authorized to levy 5.5 mills, but since 1978 that rate has been rolled back to 4.5493 mills, Patel noted. In order to levy its full rate of 5.5 mills, the county would need to ask voters for a Headlee override.

Compared to surrounding counties, Washtenaw is faring well, Patel reported. Taxable values were flat in Oakland and Lapeer counties, and Livingston County showed a modest increase of 1.18%. But values in other counties continue to decline, including Wayne (-1.20%), Macomb (-0.55%) and Genesee (-2.43%).

Though the news for Washtenaw was generally positive, Patel cautioned that the loss of the state personal property tax – which Michigan legislators repealed last year – could ultimately result in a loss of more than $5 million in annual revenues for the county government alone, and more than $40 million for all taxing jurisdictions in Washtenaw County. The tax will be phased out starting in 2014 through 2022. As part of that change, a statewide voter referendum is slated for 2014 to ask voters to authorize replacement funds from other state revenue sources. It’s unclear what will happen if voters reject that proposal.

The county also hasn’t recovered from a loss in property value over the past few years. Although the $14.21 billion in total taxable value this year is higher than 2012, it’s 9.2% lower than the taxable value of $15.65 billion in 2008. “Even with the improved market, it will take a number of years to regain the valuation status,” Patel said.

Equalization Report: Board Discussion

Several commissioners praised the work, thanked Patel and his staff, and generally applauded the news. There were also several questions.

Dan Smith (R-District 2) asked how Patel got the comparative data with other counties. Patel replied that there are 83 counties in Michigan with 83 equalization directors. “We get together every month,” he said. “This is my job, because I want to make sure that my county is going to equalize property just like every other county.” Every assessment should reflect uniformity and equity – that’s his responsibility, Patel said, adding that the state Constitution is very clear about this equalization process.

D. Smith also asked about tax tribunal cases, and wondered what the impact might be on appeals made regarding this year’s assessments. Patel reported that the county has about $800 million in taxable value that’s in contention. That doesn’t mean that the county will have to refund $800 million worth of tax revenue, he explained. Often the original assessments aren’t changed, even if they are challenged.

Responding to another query from D. Smith, Patel explained that the “developmental” category is used to classify property that would eventually be developed. At the point when it’s developed, the property will be reclassified – as commercial or residential, for example, depending on its use. So the developmental category fluctuates considerably from year to year. It’s a category “parking spot,” he said.

D. Smith also clarified with Patel that the total amount of tax dollars levied countywide – including all municipalities, school systems, libraries, etc. – was $632.299 million, based on 2012 millage rates. Yes, Patel said. The amount will likely change only slightly for 2013.

Yousef Rabhi (D-District 8) thanked Patel and called the report wonderful news. After years in recession and making budget cuts “down to the bone,” Rabhi said, it’s good to hear that the county will be taking in more revenues than it budgeted for. But he noted that the federal government is cutting back on its funding, and budget cuts at the state level are expected to continue. He wanted to highlight the fact that the county now has a potential opportunity to help sustain some of the ongoing community investments that would otherwise be damaged or cut back due to federal and state funding cuts.

Rabhi noted that Washtenaw County is doing well compared to other areas in Michigan, and a lot of that is due to government investments, he said – through the county, the universities, and other local entities. “We’re putting money back in our community for economic development,” he said, “and we’re building the economy here in Washtenaw County. I don’t think it’s just a coincidence that we’re seeing a return in property values.”

Conan Smith (D-District 9) noted that the county is still seeing fairly significant losses in industrial property values. He wondered if it was due to properties being taken out of that classification, or because those industrial properties continue to decline in value. Patel replied that these properties continue to decline in value. As an example, he noted that General Motors had removed personal property from its closed Willow Run plant in Ypsilanti Township, which contributed to the property’s loss in value.

C. Smith said it might be something to talk about with Ann Arbor SPARK, this region’s economic development agency. Even though several classifications are seeing a turnaround, he noted, that hasn’t yet happened for industrial properties. In order for that to occur, the properties need to become competitive in the marketplace, he said. SPARK is really the county’s “go-to partner” in terms of recruiting tenants for those buildings, he added, so perhaps that effort should be given more weight in SPARK’s strategic plan.

County administrator Verna McDaniel reported that Paul Krutko, SPARK’s CEO, is very active in working on GM’s Willow Run plant as well as other industrial facilities in the county. “I think he knows that that’s a huge concern,” she said. [Both McDaniel and Conan Smith serve on the executive committee of SPARK's board of directors. The county allocated $200,000 to SPARK in the 2013 budget.]

C. Smith asked Patel to provide a list of the top 10 industrial parcels in the county, based on valuation, as well as the 10 parcels that are experiencing the greatest loss in value. This information would help in targeting any marketing that might be done, he noted.

Alicia Ping (R-District 3) thanked Patel, noting that this was the first good news the equalization staff has delivered since she was elected in 2010. “I’m surprised you aren’t all out there doing the happy dance,” she joked.

Outcome: Commissioners unanimously voted to accept the 2013 equalization report.

Four-Year Budget Process

Commissioners were asked to give initial approval to a four-year budget planning cycle, a change from the current two-year cycle that’s been in place since 1994.

From left: Washtenaw County commissioner Felicia Brabec (District 4) and county administrator Verna McDaniel.

The board had been briefed on the issue at a Feb. 21, 2013 working session. County administrator Verna McDaniel has cited several benefits to a longer budget planning cycle, saying it would provide more stability and allow the county to intervene earlier in potential deficit situations. [.pdf of McDaniel's Feb. 21 presentation] State law requires that the board approve the county’s budget annually, but a quadrennial budget would allow the administration to work from a longer-term plan.

With a two-year approach, larger cuts must be made within a shorter timeframe to address anticipated deficits. A four-year plan would allow the administration to identify potential deficits at an earlier date, and target savings that would compound over the longer period, making the overall budget more manageable.

The county is currently working on a new budget starting in 2014. Earlier this year, the county administration projected a $24.64 million general fund deficit over the four-year period from 2014 through 2017. A much smaller general fund deficit of $3.93 million is projected for 2014, but McDaniel hopes to identify $6.88 million in structural changes for that year – a combination of new revenues and cuts in expenditures – in order to eliminate the cumulative deficit going forward. These numbers will be revised in light of the county’s equalization report, which estimates that the county will receive $2.327 million more in 2013 tax revenues than had originally been budgeted.

Four-Year Budget Process: Board Discussion

Dan Smith (R-District 2) said he thought it was a step in the right direction, though he still had some concerns. He’s talked with county administrator Verna McDaniel about this process, and sees more positive than negative things coming from the change.

His basic concern is that commissioners are elected on a two-year cycle, which is in “direct conflict with a four-year budget,” he said. Although McDaniel has plans to accommodate that, he said, there’s no getting around the basic fact. However, he noted that countywide elected officials are on a four-year election cycle, which would synch well with a four-year budget. [Countywide elected positions are the sheriff, treasurer, county prosecuting attorney, clerk/register of deeds, and water resources commissioner.]

D. Smith said he’d like a more intense budget discussion with the county departments. The board is rather removed from that department-level discussion, he noted. One way to intensify that discussion would be to institute zero-based budgeting, he said. On a four-year cycle, each department would wipe its slate clean and be required to justify each item in its budget. Doing this every four years might not be as onerous as doing it every one or two years, he said.

Ronnie Peterson (D-District 5).

Ronnie Peterson (D-District 5) clarified with McDaniel that the four-year budget process would begin with the budget that’s being developed, from 2014-2017.

Peterson then said that although his politics often differ greatly from Republican Dan Smith’s, he respected Smith as an individual and in this case he shared some of Smith’s concerns. Peterson stressed that this was the first time he had participated in a discussion about a four-year budget. [Peterson did not attend the Feb. 21 working session when McDaniel and the county's financial staff briefed commissioners on this approach.]

The responsibility for the county’s budget rests with the elected board of commissioners, he noted. Sometimes they just come to meetings “because we somewhat enjoy each other’s company,” he joked. But often there are pressing items related to appropriations, he added, citing the allocation of funds in the wake of last spring’s tornado touchdown in the Dexter area.

This responsibility is entrusted to the board, he said. In recent years, because of the economy, the board has made difficult decisions that sometimes resulted in residents not getting the services they need, he said, like the decision to stop administering the HeadStart program. [The responsibility for the Washtenaw HeadStart, which the county has administered since the 1960s, is in the process of being handed over to another to-be-determined entity.]

It’s not the board’s role to micromanage, Peterson noted, and the county would run quite well even if the board met only once every six months. Commissioners set the millage rate, accept the equalization report, make key hires – and set the budget, he said.

Earlier this year, the board approved new labor contracts that will determine the wages and benefits of employees for the next 10 years. As part of that, the board has the obligation to “right the ship,” Peterson said, and he didn’t know if commissioners could do that with a four-year budget cycle. They haven’t yet assessed some of the programs and structures that have been in place for years – programs and structures that need to be re-evaluated, he said.

Peterson told commissioners that they hadn’t really started the process for the next budget year, let alone for four years. He said he wouldn’t be supporting a four-year budget. The board needed to have a retreat to discuss it, he said, adding that perhaps others have already met and made that decision. The public should have input too, he said.

Peterson concluded by saying that even for a two-year budget, things can change – either because of the economy, or because of changing priorities among commissioners. “If you can count to a majority, you can change the budget,” he said.

Andy LaBarre (D-District 7) spoke next, indicating that he shared concerns about the impact of elections on the budget process. But he said he’d support a four-year budget. Everything the board and administration has done so far this year has been with the goal of providing more stability and predictability, he said. A four-year budget process would add to that. “And I feel secure in that we have a fail-safe in the [budget] reaffirmation each year,” he noted. “To me, if that wasn’t there, this wouldn’t be in any way, shape or form a prudent or responsible thing to do.”

In some ways, LaBarre added, a four-year approach moves the county away from a crisis-to-crisis mentality and more toward a strategic and tactical approach.

Yousef Rabhi (D-District 8) emphasized that the board’s responsibility is to pass an annual budget, and the four-year budget cycle won’t change that. In two years after the next board is seated, commissioners could decide that they didn’t want to do a four-year budget cycle, he said. So he didn’t feel that he was forcing anything on future boards.

There’s value in having a budget process and in allowing commissioners to delve into the details, Rabhi said. So there should be some sort of budget process every two years, with the understanding that the budget extends beyond a two-year time period.

In terms of the budget process so far, Rabhi reminded commissioners that they’ve had one budget retreat so far. Also, there was a working session in February specifically about the four-year budget proposal. “It wasn’t as well-attended as it could have been,” he added, but materials from that working session were provided to all commissioners, weighing the advantages and disadvantages. [.pdf of McDaniel's Feb. 21 presentation]

Rabhi said he’s scheduled a second retreat for the board on May 16 at the county’s Learning Resource Center. [The LCR is located near the county jail, at 4135 Washtenaw Ave.] The meeting is open to the public, and will be held at the same time as the board’s working sessions, which begin at 6 p.m.

If approved, Washtenaw County will be one of the only counties in Michigan if not the country to do a four-year budget, Rabhi said. “It’s a wonderful way to lead the nation in fiscal stability and fiscal responsibility.”

Conan Smith (D-District 9) also shared concerns that had been raised about process considerations. From the standpoint of staff and administration, he said, a four-year budget makes a lot of sense because of the long-term planning process. But from the board’s perspective, he still was concerned about the two-year election cycle.

The resolution in front of the board simply gave direction to the staff, C. Smith said. It’s a good model, because it leads to longer-term decisions with more predictability. But it doesn’t obviate any of the concerns that had been raised by other commissioners, he said, so the board needs to develop a budget policy for this four-year approach. If they were operating on a two-year cycle, commissioners would approve the two-year budget for 2014-2015 at the end of 2013, but in 2014 they’d likely just rubber stamp it, he said. Commissioners know that they’ll be around for two years, so that second year budget is one they’ve already worked on.

It would be different on a four-year cycle, C. Smith said. There’s no guarantee that a commissioner would be around for four years. So it’s important to differentiate what happens in each of the four years. In the third year, perhaps there should be a substantive review of the budget – have the priorities changed, or are the original objectives being met? Then in the fourth year, commissioners would begin the budget process again with a “fulsome” assessment of the previous four years, he said.

In concept, the four-year process is a good approach, C. Smith said. But the board hasn’t yet articulated clearly the role that commissioners should be playing inside that process. He supported the resolution, saying that it simply gave direction to plan for four years. In September, if commissioners decide they want to adopt only a two-year budget, “we still have that right.” He said he’d be happy to be a leader in thinking through how the board can engage in the next four-year budget process.

From left: Pete Simms of the county clerk’s office and Yousef Rabhi (D-District 8), chair of the county board of commissioners.

Peterson spoke again at length, saying it was amazing to him that the board had only held two short retreats, but had already made decisions about budget priorities. [In fact, there has been just one budget retreat so far – on March 7, 2013 – although budget issues have come up during discussions at several regular meetings.]

The budget isn’t the responsibility of administration, Peterson said, and he hoped the board assumed responsibility for it soon. He praised the county’s employees and talked about their sacrifices over the past few years. He urged the board to assess the county’s programs and services, to make sure the county never gets into this same kind of position again. He questioned how anyone could see the needs of the county four years from now, when things have changed so dramatically just over the past nine months. National healthcare reform is one example of changes that could impact the budget in the future, he said.

Rabhi responded, thanking Peterson for raising these concerns. Rabhi said he wanted to have a robust budget process, whether it’s a two-year or four-year budget. He expressed willingness to address Peterson’s concerns over the current budget process, and noted that another retreat is scheduled for mid-May. There will also be more budget-related working sessions, he said. “I don’t know of any private discussions that have been had around the budget,” Rabhi added.

A budget task force has been working under the direction of the administration, Rabhi said, noting that Felicia Brabec – chair of the board’s ways & means committee – has been very active in those. In addition to retreats, working sessions and regular meetings, Rabhi said he was open to other suggestions from commissioners in the budget process.

Brabec agreed that the board needs to be thinking more strategically, and said the next retreat will focus on that approach, looking at things like community impact. Rabhi added that the budget can’t just be about dollars and cents – it’s also about community impact, and developing a framework for assessing impact.

Dan Smith stressed that the board would be voting on something very specific that night, and he read from the resolution’s only resolved clause: “… that the Washtenaw County Board of Commissioners approve the development of a Quadrennial County Budget.” It doesn’t say that the board will adopt a quadrennial budget, he noted – it’s just the beginning of the process. At any point, commissioners could change this approach. The actual voting on the budget itself is a long way off, he said, and this is just the first step in the process. He said he’d continue evaluating it over the next few months.

Conan Smith reported that he had communicated to Brabec and LaBarre – but not to Rabhi, the board chair – his concerns that the board hasn’t allocated sufficient time so far for a robust budget conversation. Waiting until late May for the next board retreat means that administration will already be deep into the budget process, he said, and it gets harder to change direction if you want to keep the process on schedule. He expressed concerns that presentations at the working sessions had been on topics with lower priority than the budget.

C. Smith said he knew there’s keen interest in bonding for pension and healthcare liabilities, but going down that path before the board has a conversation about budget priorities is not the right sequence. He thought there should also be more conversations on the budget at the board’s ways & means committee meetings.

In the last budget cycle in 2011, C. Smith said, the board had held three retreats “all before March.” [He had been board chair at the time. Retreats – including sessions on Jan. 29, 2011 and Feb. 9, 2011 – culminated in the board adopting a set of budget priorities and principles at its March 16, 2011 meeting.]

The board had “a more engaged conversation by this point in the last budget process,” C. Smith said, “so I think that might be part of what the tension is – it feels like we’re getting late, in all honesty.” He urged the board leadership – Rabhi, Brabec and LaBarre – to examine their budget schedule and possibly call additional meetings to focus on the budget.

Outcome: Commissioners voted 7-1 to approve the resolution directing the administration to develop a four-year budget. Dissenting was Ronnie Peterson (D-District 5). Rolland Sizemore Jr. (D-District 6) was not in the room when the vote was taken. A final vote is expected on May 1.

Weatherization Grant

Commissioners were asked to give initial approval to accept $185,654 in funds for the county’s weatherization assistance program.

The funding roughly equals the amount of federal weatherization dollars that the county received in 2012, which was a decrease of about 65% compared to 2011 federal funding levels. The current funding is allocated through the 2013 Low Income Home Energy Assistance Program (LIHEAP). The county last received LIHEAP funding in 2010, but has received weatherization grants from other federal funding sources in the intervening years.

For the period from April 1, 2013 to June 30, 2014, the program is expected to weatherize 27 homes. According to a staff memo, the work includes an energy audit inspection and follow-up inspection of the completed weatherization work, which might include attic and wall insulation, caulking, window repairs, furnace tune-ups, furnace replacements, and refrigerator installations. To qualify for the program, residents must have an income at or below 150% of federal poverty, which is about $35,325 for a family of four.

Weatherization Grant: Board Discussion

Dan Smith (R-District 2) asked whether the county would use outside subcontractors for this work, or if staff would do it. Mary Jo Callan – director of the county’s office of community & economic development (OCED) – replied that licensed contractors are hired to do the weatherization work, while staff members act as project managers and oversee the work.

Washtenaw County commissioners Alicia Ping (R-District 3) and Andy LaBarre (D-District 7).

D. Smith also noted that it’s been a few years since the county has received this type of grant. As he had read through the contract, there seemed to be some rather onerous requirements – such as making sure contractors meet the federal requirements needed to do the work. He wondered whether the county had sufficient resources to make sure all of those contract requirements are met. [.pdf of LIHEAP agreement]

Callan noted that although the county hasn’t received LIHEAP funding since 2010, there were large amounts of federal recovery (stimulus) dollars available in the interim. The requirements for all of this funding are similar, she said. Getting federal funds isn’t simply being given a blank check, she noted. It’s sometimes onerous, she acknowledged, but the county has a robust structure in place to manage dozens of federal grants.

Andy LaBarre (D-District 7) asked for Callan’s opinion on the proposed 30% reduction in LIHEAP funding that’s part of President Barack Obama’s budget. Callan replied that this is part of the analysis that her staff is doing related to the impact of federal sequestration. “A cut to this program is actually not new,” she said. It’s been a recurring recommendation in the federal budget for at least three years – either LIHEAP specifically, or weatherization in general.

Callan noted that the president’s budget also proposes a 50% cut in the Community Development Block Grant, which would have a tremendous impact on local programs. County staff is following this closely, she said. If the cut materializes, it would absolutely mean a decrease in the number of weatherization projects done each year. “And at some point, if you receive such a low allocation, you can’t have a program,” she said.

Ronnie Peterson (D-District 5) wondered how the county establishes criteria for delivering services. He said he’s very concerned about the elderly getting the services they need. In the past, he said, the program has served a lot of rental properties, while there are elderly homeowners who haven’t received the weatherization services. He wanted to see if senior citizens could get some kind of preference.

Brett Lenart, OCED’s housing and infrastructure manager, replied that the elderly are given a priority. The scoring system goes beyond a first-come-first-served approach, he said, and includes criteria like whether there are senior citizens or young children in the home, among other things. In response to additional queries from Peterson, Lenart noted that more information is available on the county’s weatherization website.

Conan Smith (D-District 9) reported that the Better Buildings for Michigan program has an version that’s available for non-low income families. A lot of people don’t qualify for weatherization program based on their income level, he noted, but could still use some support. He said he could help OCED connect with that program. [The Better Buildings for Michigan program is run by the Michigan Suburbs Alliance, where Smith serves as executive director.]

Outcome: Commissioners unanimously gave initial approval to accept the weatherization grant. A final vote is expected on May 1.

Employees, Residents Honored

At its April 17 meeting, the board presented resolutions of appreciation honoring Rabbi Robert Dobrusin and several residents from the city of Saline, as well as to Leila Bauer, the county’s chief deputy treasurer who is retiring after 41 years of service.

In addition, the board declared the week of April 14-20 2013 as National Public Safety Telecommunicator Week in Washtenaw County. Several members of the county’s dispatch operations were on hand and received recognition from the board. [.pdf of telecommunicator resolution] Marc Breckenridge, Washtenaw County director of emergency services, said dispatch operators have gone through a lot over the last couple of years, citing new technology and changes related to combining county dispatch operations with the city of Ann Arbor. “They’ve really come through for us, and we’re really proud of them,” he said.

Marc Breckenridge, Washtenaw County director of emergency services, was among those on hand to accept a resolution regarding national telecommunicator week.

Dobrusin was recognized for 25 years of “providing spiritual and pastoral support” for the Beth Israel congregation in Ann Arbor, the city’s “oldest Jewish Institution.” [.pdf of Dobrusin resolution] Also cited was his work as a founding member of the Interfaith Round Table of Washtenaw County and with the Interfaith Council for Peace and Justice. The resolution noted his human rights efforts, including his current position as national co-chair with T’Ruah: The Rabbinic Call for Human Rights.

Former county commissioner Barbara Bergman attended the meeting to accept the resolution on behalf of Dobrusin. She highlighted his work in supporting the rights of indentured workers, then indicated that this would be a surprise for him. “If you know Rabbi Dobrusin, don’t talk!”

The board also passed a resolution of appreciation for Leila Bauer, the county’s chief deputy treasurer. Her work over the years has included serving on the Washtenaw County Health Organization, Washtenaw County Community Mental Health board, Washtenaw County Human Services board, and the Washtenaw County Health Authority. She received a standing ovation from the board. [.pdf of Bauer resolution]

Several Saline residents were also recognized by the county board. Helen Martin was honored for her work with the Saline Downtown Merchants Association and Saline Main Street. Jeff Dowling was recognized for receiving the “Saline Salutes” 2013 Citizen of the Year Award, as well as for work with the American Cancer Society and various Saline community events. Joy Ely, owner of The Pineapple House, was recognized for receiving the “Saline Salutes” 2013 Lifetime Achievement Award, and for her support of downtown Saline. Also honored by the board was Sarah Chu, who received the city of Saline’s 2013 Youth of the Year Award. [.pdf of Martin resolution] [.pdf of Dowling resolution] [.pdf of Ely resolution] [.pdf of Chu resolution]

Outcome: Commissioners unanimously passed all resolutions of appreciation.

Washtenaw Ride Dissolved

On the agenda for a final vote was a resolution to officially dissolve a countywide public transit authority known as the Washtenaw Ride. Initial approval had been given on April 3, 2013.

The Act 196 authority, created in mid-2012 and spearheaded by the Ann Arbor Transportation Authority, was for all practical purposes ended late last year when the Ann Arbor city council voted to opt out of the transit authority at its Nov. 8, 2012 meeting. Of the 28 municipalities in Washtenaw County, the city of Ypsilanti is the only one that hasn’t opted out.

Washtenaw County commissioner Conan Smith (District 9).

The county board’s April 17 resolution rescinds a board resolution that created the transit authority, and requests that the state legislature also take action to dissolve the Washtenaw Ride, in accordance with Attorney General Opinion #7003. That AG opinion stated that “the dissolution of a transportation authority organized under the Public Transportation Authority Act requires an act of the Legislature and may not be accomplished by the unilateral action of the city in which it was established.” [.pdf of AG opinion 7003]

The county’s role in creating the transit entity had been laid out in a four-party agreement with Ann Arbor, Ypsilanti and the AATA, which commissioners approved on Aug. 1, 2012 in a 6-4 vote. Subsequent revisions involving the other entities resulted in the need for a re-vote by the county board, which occurred on Sept. 5, 2012.

There are two other transit efforts now under way. Washtenaw County is part of a southeast Michigan regional transit authority (RTA) created by the state legislature late last year. The RTA was formed to coordinate regional transit in the city of Detroit and counties of Wayne, Macomb, Oakland and Washtenaw. Conan Smith has been a strong advocate for the RTA, and made Washtenaw County’s two appointments to the RTA board before his term as county board chair ended on Dec. 31, 2012.

Separate from the RTA effort, the AATA has been meeting with representatives of the county’s “urban core” communities to discuss possible expanded public transit within a limited area around Ann Arbor. It would be a smaller effort than the previous attempt at countywide service. The AATA hosted a meeting on March 28 to go over details about where improvements or expansion might occur, and how much it might cost. [See Chronicle coverage: "Costs, Services Floated for Urban Core Transit."]

There was no discussion on this item.

Outcome: On a 7-1 vote, commissioners passed a resolution dissolving The Washtenaw Ride. Voting against the resolution was Conan Smith (D-District 9), but he did not comment on his vote during the meeting. Rolland Sizemore Jr. (D-District 5) was absent.

CSTS Job Creation

On the April 17 agenda for a final vote was a resolution authorizing the creation of 39 new jobs and the reclassification of 76 others for Washtenaw County’s community support and treatment service (CSTS) department. Initial approval had been given on April 3, 2013.

CSTS is a county department employing about 300 people, but receives most of its funding from the Washtenaw Community Health Organization, a partnership between the county and the University of Michigan Health System. The WCHO is an entity that receives state and federal funding to provide services for people with serious mental illness, developmental disabilities and substance abuse disorders. WCHO contracts for services through CSTS. Although staffing has remained fairly constant in the last five years, demand for services has increased by about 40%. These jobs are being created to provide the capacity to meet that demand.

The new jobs include client service managers, support coordinators, mental health professionals, mental health nurses, management analysts, administrators and a staff psychiatrist. All of the reclassified positions are client service managers. Of the 39 new positions, 30 of them are union jobs, represented by AFSCME.

According to a staff memo, the changes will add $14,255,535 to the CSTS 2012-2013 budget, bringing the budget total to $41,822,489. Of that, WCHO is providing $38,692,815, including revenues from grant pass-throughs. Other revenues include $165,190 from the Haarer bequest and $246,846 from a contract with the Washtenaw County sheriff’s office.

CSTS Job Creation: Board Discussion

Ronnie Peterson (D-District 5) clarified with CSTS staff that they would be returning later in the year to secure approval for their annual budget. The CSTS budget runs from Oct. 1 through Sept. 30. At that time, there would be a broader picture of the services that CSTS offers, he noted. The organization is shifting to more of a fee-based approach, Peterson said, and someone will need to assume responsibility for paying for these services. It would be helpful to show exactly what services are delivered by CSTS. It’s a very complex department, he said, and most people don’t know what services it provides. “You are the resources of last resort for many of our citizens,” he said. It’s important that the county provide the support that CSTS needs to deliver its services, he noted, especially as funding changes at the state and federal levels.

Yousef Rabhi (D-District 8) thanked the CSTS staff for their work, and said he echoed Peterson’s sentiments.

Outcome: On a final vote, commissioners unanimously approved the creation and reclassification of CSTS jobs.

Public Hearing for Urban County Plan

A public hearing to get input on the Washtenaw Urban County‘s five-year strategic plan through 2018 and its 2013-14 annual plan was held during the board’s April 17 meeting. [.pdf of draft strategic and annual plans]

The Urban County is a consortium of Washtenaw County and 18 local municipalities that receive federal funding for low-income neighborhoods. Members include the cities of Ann Arbor, Ypsilanti and Saline, and 15 townships. “Urban County” is a designation of the U.S. Dept. of Housing and Urban Development (HUD), identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, entitling them to an allotment of funding through a variety of HUD programs. The Urban County is supported by the staff of Washtenaw County’s office of community & economic development (OCED).

Two HUD programs – the Community Development Block Grant and HOME Investment Partnership – are the primary funding sources for Urban County projects.

The plans indicate that the Urban County area is expected to receive about $2.7 million annually in federal funding, which will be used for these broad goals:

1. Increasing quality, affordable homeownership opportunities

2. Increasing quality, affordable rental housing

3. Improving public facilities and infrastructure

4. Supporting homeless prevention and rapid re‐housing services

5. Promoting access to public services and resources

6. Enhancing economic development activities

Only one person spoke during the April 17 public hearing. Thomas Partridge criticized the lack of affordable housing in the county, and said there was insufficient funding for adding adequate housing. He urged commissioners to hold their retreat and do their strategic planning in the boardroom, where the proceedings can be televised and accessible to residents.

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: Thomas Partridge

Thomas Partridge spoke during the evening’s two opportunities for public commentary – each time speaking for the full three minutes that speakers are given. He described himself as an advocate for the most vulnerable residents, and called for ending housing discrimination in every city and township in Washtenaw County. He advocated for zoning and planning policies that ensure non-discrimination in housing. Partridge also demanded the recall of all elected officials who ran for office on the platform of advancing Michigan, but who subsequently neglected their promises and have taken the opposite attitude.

He also noted the much lower turnout during public commentary at the county board meeting compared to an Ann Arbor city council meeting earlier in the week. [The council's April 15, 2013 meeting had included two public hearings on controversial topics: 45 speakers participated in the public hearing on proposed changes to the Ann Arbor Downtown Development Authority ordinance, and 51 people spoke on the 413 E. Huron site plan.]

Responding to Partridge’s comments about the need for more public participation, county board chair Yousef Rabhi said the board wanted to ensure that there aren’t any barriers to citizens participating in its meetings. Any time he speaks with constituents, Rabhi said, he stresses the importance of the county’s work and encourages input. But he conceded that the county board doesn’t draw the same kind of crowd that the Ann Arbor city council does. On the other hand, he noted, the county board’s meetings don’t last until 3 a.m. [The council's April 15 meeting had adjourned after 3 a.m., before the council finished its business. Most council agenda items were postponed until May 6.]

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

Next regular board meeting: Wednesday, May 1, 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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Equalized (assessed) value is used to calculate taxable value, which determines tax revenues for the county as well as its various municipalities and other entities that rely on taxpayer dollars, including schools, libraries and the Ann Arbor Transportation Authority, among others.

For 2013, taxable value in the county increased 1.68% to $14.2 billion. That’s an improvement over declines seen in recent years, when equalized value fell 0.76% in 2012, 2.85% in 2011 and 5.33% in 2010. It’s also an improvement over projections made when the county administration prepared its 2013 budget. The general fund budget was approved with a projection of $60.9 million in tax revenues. But actual revenues, based on 2013 taxable value, are now estimated at $63.236 million – for an excess in 2013 general fund revenues of $2.327 million. Patel stressed that at this point, the taxable value is a recommendation and must be approved at the state level.

Patel also presented tentative taxable values for specific jurisdictions. The city of Ann Arbor shows a 3.34% increase in taxable value, while the city of Saline’s taxable value is a 3.97% increase over 2012. All but six municipalities showed an increase in taxable value. Those municipalities with decreases include the city of Ypsilanti (-0.38%) and Ypsilanti Township (-2.53%).

Properties in the Ann Arbor Public Schools district – which includes the city of Ann Arbor and parts of surrounding townships – will see a 2.32% increase in taxable value. Properties taxed by the Ann Arbor District Library, covering a geographic area which in large part mirrors the AAPS district, increased in value by 2.11%.

Taxable value is determined by a state-mandated formula, and is the lower of two figures: (1) a parcel’s equalized (assessed) value, or (2) a capped value calculated by taking last year’s taxable value minus any losses (such as a building being torn down), multiplied by 5% or the rate of inflation (whichever is lower – this year inflation is 2.4%), plus the value of any additions or new construction.

In 2013, several categories of property saw increases in equalized value for the first time in years, according to the report. Commercial property showed a 2.2% gain in equalized value, compared to a 3.84% decline last year. It was the first increase in commercial property values since 2009. Residential property value – the largest classification of property in the county – showed an increase of 2.37%, gaining in value for the first time since 2007. Last year, the equalized value for residential property had dropped 0.57%, and had registered a 2.74% drop in 2011.

Last year, agricultural property had been the only category that showed an increase. Growth continues in 2013, but at a slower pace. Agricultural property registered an 0.67% increase in equalized value this year, compared to an increase of 3.54% in 2012.

Industrial and developmental property values continue to struggle. Those were the only categories to register a decline in 2013. Industrial property showed a drop in equalized value of 4.78%. That compares to a 3.99% drop in value last year. Over the past few years that category has lost significant value, falling from an equalized value of nearly $1 billion in 2007 to this year’s value of $421.72 million. Developmental property – a relatively small category that covers properties not yet developed – had a 7.12% drop in equalized value.

Patel noted that countywide, about $418 million is captured by local downtown development authorities (DDAs), local district finance authorities (LDFAs), brownfield tax increment financing, and other entities that are allowed to capture funds from taxing jurisdictions. For Washtenaw County’s alone, $2.405 million goes to these other tax-capturing entities that would otherwise be revenues for the county’s general fund.

Though the news was positive, Patel cautioned that the loss of the state personal property tax – which Michigan legislators repealed last year – could ultimately result in a loss of more than $5 million in annual revenues for the county government alone, and more than $40 million for all taxing jurisdictions in Washtenaw County. The tax will be phased out starting in 2014 through 2022. As part of that change, a statewide voter referendum is slated for 2014 to ask voters to authorize replacement funds from other state revenue sources.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor. A more detailed report will follow: [link]

In April, the county’s equalization department produces an annual report describing Washtenaw County’s total equalized (assessed) value of property. The report is part of a state-mandated equalization process, and gives an indication of how much revenue the county will receive from property taxes in the coming year. [See Chronicle coverage: "Report: Better-Than-Expected '12 Tax Revenue"]

Later in the year – in October or November – the equalization and property description department presents an apportionment report, which gives details of the taxable valuations for property in the county, by municipality. The report also includes the amount of millages levied and the dollar amounts collected in taxes. [.pdf file of 2012 preliminary apportionment report] Like the equalization report, the board is required by state law to vote on adopting the apportionment report.

This year, all the taxing entities in Washtenaw County will be levying in total about $621.687 million in property taxes – a drop from $622 million in 2011 and $639 million in 2010. The county alone will levy about $80.578 million this year, compared to roughly $81 million in 2011 and $83 million in 2010.

This brief was filed from the boardroom of the county administration building at 220 N. Main St. in Ann Arbor, where the board of commissioners holds its meetings. A more detailed report will follow: [link]

City of Ann Arbor chief financial officer Tom Crawford before the Feb. 13, 2012 working session. (Photos by the writer.)

With the exception of one significant change – adding one police officer instead of cutting nine – the blueprint for this year’s budget will, with some slight revisions, follow the plan put in place last year. That includes a plan to eliminate five firefighter positions, pending labor negotiations with the firefighters union.

At the December budget committee meeting, city administrator Steve Powers described this year as taking a “breather” – while stressing that the review of the organization is an ongoing process.

The relative luxury of essentially following the second year of a two-year plan is made possible this year by positive news and outcomes on several fronts.

But at Monday’s working session, the city’s chief financial officer, Tom Crawford, urged a cautious approach, given pending uncertainties about the basic structure of funding local governments in Michigan. Among those uncertainties is the future of the personal property tax, which could drop the city’s general fund revenue by $1.76 million, if that tax were to disappear completely. He advised the council not to use one-time positive outcomes to increase expenditures. Instead, he recommended that the city should strive to increase its fund balance reserve to 15-20% of expenditures – it currently stands around 13%, or $10.5 million. The general fund budget for the city this year calls for $78,321,015 in expenditures.

One of those positive outcomes is the retiree health care funding level for FY 2013, recommended by the city’s actuary – $12.4 million. The city’s planned cost for FY 2013 was $15.3 million. But Crawford is recommending that all but $400,000 of that $2.9 million savings should continue to be paid into the city’s voluntary employees beneficiary association (VEBA), to reduce unfunded liabilities and to guard against future liabilities. The potential $2.9 million savings is a citywide figure.

But as a result of another VEBA-related policy choice that Crawford is recommending, the city’s general fund – out of which basic services like police, fire, planning, and the like are paid – would see a roughly $1 million boost. That policy change would start treating retiree health care as a true pre-funded system, instead of the current pay-as-you-go hybrid. The current hybrid pay-as-you-go approach places a higher burden on those funds that have a relatively large number of associated retirees – workers who were paid out of that fund while they worked for the city. [As of December 2011, the city's general fund had 366 active employees and 532 retirees.] Crawford’s recommended approach focuses on the gaps in pre-funding, which puts the financial burden where most of the liability is currently accruing – active employees. And that would translate to a $1 million general fund savings, compared to the current approach.

Crawford put specific pieces of positive budget news in the context of general positive news, suggesting that the city has now seen the worst of the 2008 economic downturn. Unemployment numbers are dropping – in the Ann Arbor area, unemployment stood at 5.5% in December. And state sales tax receipts are coming off depressed levels – that’s important, because the “revenue” in state shared revenue (the amount the state distributes to local units of government) comes from state sales tax receipts.

Among the specific pieces of positive news Crawford presented to the council was the expectation that the city would break even on the current budget year (FY 2012), which ends June 30, 2012. The city had expected to tap the general fund reserve for $1.1 million this year. In the previous year (FY 2011), the city also essentially broke even, when it had anticipated needing to spend $1.5 million from its fund balance reserve.

Compared to what was anticipated in the two-year plan for FY 2013, on the revenue side several categories are expected to increase. Additional expenses, compared to the two-year plan, include adding a police officer instead of eliminating nine positions.

The net effect of all the changes from the two-year plan is a $1.6 million surplus of recurring revenues against recurring expenses for FY 2013. Of that surplus, Crawford is recommending that the council allocate $150,000 for a pilot program for recruiting police officers. But the rest he’s advising the council to add to the fund balance reserve to guard against leaner years projected in FY 2015-16.

The police recruitment program would allow potential hires to work under the direction of an Ann Arbor police officer before being hired on as a sworn officer. The program’s rationale was described by police chief Barnett Jones at the Feb. 13 working session as stemming from the hiring process to fill nine officer positions that came open at the end of 2011, due to retirements.

Jones gave a presentation of year-end crime reports showing that crime in major categories is trending down for Ann Arbor. Despite the net gain of 10 officers now anticipated for FY 2013, compared to the AAPD staffing levels in the two-year plan, the department’s 118 sworn officers leave Jones 32 short of the 150 that he described at the working session as the “perfect” number of officers for Ann Arbor.

After the jump, this article includes charts and graphs of crime reports, more detail on the impact of retiree health care on the budget, the budget outlook for FY 2013, and the city council’s work schedule for ratifying the FY 2013 in late May.

Work Schedule

Some elements of budget timing leave very little room for flexibility. The city administrator is required by the Ann Arbor city charter to present a budget to the city council each April. And the administrator’s proposed budget must be adopted by the city council, with any amendments the council wishes to make, no later than the council’s second meeting in May.

This year, those constraints have translated into the following schedule.

• Feb. 13: Working session (budget overview, strategy, and police impacts)
• Feb. 27: Working session, if necessary
• March 12: Working session (fire department and other organizational impacts)
• March 26: Working session, if necessary
• April 16: City administrator presents recommended budget
• May 7: Public hearings on budget and fee changes
• May 21: Council consideration of the budget – amendments, adoption

The schedule indicates an apparently late start compared to the last three years, when the council has held off-site retreats to identify priorities and goals, starting in December or early January. Of those three years, the second was actually an exception to the strategy the council has tried to use since CFO Tom Crawford came on board six years ago: Plan in two-year cycles, even though the council adopts budgets one year at a time. On that strategy, every other year should work out to be a fairly straightforward exercise of making minor adjustments to the plan already in place.

So in late 2009, when the city was preparing its FY 2011 budget, that would have ordinarily been a light year for budget work. However, given the dramatic economic downturn a few months before, it wasn’t possible to pursue a strategy of making minor adjustments. Counting that middle year, the council’s pattern over each of the last three years has been to start in December or early January. So this year’s “late” start, though apparently an exception, is essentially a return to the two-year planning approach.

Retirement System Background

At the Feb. 13 work session, Nancy Walker, executive director of Ann Arbor’s employee retirement system, sketched out some background on the system, including its board membership: Jeremy Flack (fire trustee, chairman);
Alexa Nerdrum (citizen trustee, vice chairman);
Dave Monroe (police trustee, secretary);
Terry Clark (general member trustee);
Tom Crawford (city CFO);
Brock Hastie (citizen trustee);
Mark Heusel (citizen trustee);
Steve Powers (city administrator);
and Brian Rogers (general member trustee).

Walker noted that the board still has the same composition as it did before the charter amendment on board composition was approved by voters in the Nov. 8 election, because the change has not yet been collectively bargained. The pre-election charter language set forth the board composition as follows:

(1) The City Administrator and the Controller to serve by virtue of their respective offices; (2) Three Trustees appointed by the Council and to serve at the pleasure of the Council; (3) Two Trustees elected by the general city members from their own number (general city members being members other than Policemen and Firemen members); and (4) Two Trustees elected by the Policemen and Firemen members from their own number.

The revised charter language, which was approved by voters with a margin of 68% to 32% (with a majority in every precinct of at least 61%) retains nine members but distributes them differently, most notably by eliminating from the board the city administrator and one of the trustees elected from the general city membership. The revised board composition is: (1) the city controller; (2) five citizens; (3) one from the general city employees; and (4) one each from police and fire.

The Aug. 15, 2011 city council resolution that placed the charter amendment on the ballot noted that the change would also need to be collectively bargained:

RESOLVED, That if the amendment is adopted, the City Administrator and City Attorney shall immediate commence negotiation with the City’s collective bargaining units to implement the amendment and present to Council the necessary ordinance and contract documents for adoption to make the amendment effective.

Although the new city administrator, Steve Powers, is serving on the retirement board until the new board composition is collectively bargained, the terms of his contract state that he is not a beneficiary of the city’s retirement plan, but will instead have a 401(a) plan. The rationale for the change in the board’s composition was to reduce the number of board members who are also beneficiaries of the plan.

That recommendation had come from a 2005 “blue ribbon” commission – tasked to make recommendations about the city’s retirement board and the city’s pension plan. In 2008, a member of the retirement system’s board of trustees, Robert N. Pollack, Jr., resigned from the board in part due to the city’s failure to enact recommendations of the blue ribbon panel. [.pdf of blue ribbon panel report] [.pdf of Pollack's resignation letter]

At the Feb. 13 work session, Walker reported to the council that most of the blue-ribbon panel’s recommendations had now been implemented.

By way of additional background, the city’s retirement program is supported in part by the levy of a retirement benefits millage [labeled CITY BENEFITS on tax bills], currently at a rate of 2.056 mills, which is the same rate as the city’s transit millage. A mill is equal to $1 for every $1,000 of taxable value of a property.

Walker noted that the retirement system had undergone many changes in its administration, but described the transition as smooth. Among those changes include a new investment manager, a new medical director, a new pension analyst and a new executive director. Walker had joined the Ann Arbor retirement system in January 2011 after Willie Powell had retired in June 2011. Powell served as executive director for the retirement system for 11 years.

Walker also noted that the actuary used by the system as a consultant is also new. Previously the city’s retirement system had used Gabriel Roeder Smith & Company. Starting in 2011, the city began using Buck Consultants as its actuary. The Buck Consultants representative who handles the city of Ann Arbor, Larry Langer, was employed for 10 years by Gabriel Roeder Smith.

Retirement/VEBA Allocation

Larry Langer of Buck Consultants gave the council an overview of the pension fund and the VEBA systems. [.pdf of slide presentation]

Retirement/VEBA Allocation: Overview

City of Ann Arbor retirement system funded ratio graph.

Key takeaway points given by Langer to the council included the fact that the pension fund, for FY 2011 (ended June 30, 2011) had greater investment returns and lower salaries than expected and more retirements than expected. All those changes generated better-than-expected results compared to the June 30, 2010 projections. For FY 2013 the expected employer contribution is now $9,748,510. Based on projections from the prior year’s June 30, 2010 valuation, it had been expected that the city would need to contribute a total of $10,784,00 to the pension fund in FY 2013.

The funded ratio for the pension fund at the end of FY 2011 was 88%, which is a drop from the end of FY 2010 (June 30, 2010) when the funded ratio was 90.3%. But that’s less of a drop than was expected, Langer said. Based on projections from FY 2010 valuation, he had expected a funded ratio of 86.3%.

For FY 2012-14, the dip in the valuation, and the corresponding spike in required employer contributions, drew some questions from councilmembers. Langer explained that the dip corresponded to the economic downturn in 2008-2009. The valuation is keyed to a rolling five-year average, in order to damp the volatility of the measure, so those years continue to have an impact on the valuation until at least five years have passed. Langer cautioned that the funded status will continue to slip in the next few years as the last of the returns from the down years in 2008 and 2009 are reflected in the valuation.

On the VEBA side, which funds retiree health care, key presentational takeaways for the council were greater investment returns than expected, lower salaries than expected, and fewer claims. For the coming fiscal year 2013, the expected employer contribution for employees citywide is $12,379,000, not including some adjustments and interest.

Retirement/VEBA Allocation: VEBA Allocation Policy – How Much?

When the city’s chief financial officer, Tom Crawford, took the podium, he contrasted the expected employer contribution with the number that had originally been planned for FY 2013: $15.3 million. That reflects a citywide savings of roughly $2.9 million.

A number of factors contributed to the reduced cost, including a higher return on investments – 28% last year compared with the standard assumption of a 7% return. Crawford also pointed to ordinance changes reflected in recent collective bargaining agreements, which reduce the health care costs to the city for active employees. And employees hired after July 1, 2011 have an access-only retiree health care plan.

City of Ann Arbor retiree health care contributions. Red line: Historical and projected claims expenses. Green line: Actuarial calculation of contribution. City CFO Tom Crawford is recommending the city continue to make contributions based on the FY 2012 level (dashed blue line), in order to guard against rising claims expenses. (Image links to higher resolution file)

But Crawford noted that the investment returns and the claims amounts – which had contributed substantially to the savings – are relatively volatile and could reverse in the future.

So, of the citywide $2.9 million savings, Crawford recommended that the city continue to contribute $2.5 million of it to the VEBA to pay down unfunded liability and reduce future expenditures. In his presentation, Langer had noted that the VEBA is only 34% funded. On that figure, Langer said that the council might wail and gnash their teeth over the low amount, but it’s still 34% more than a lot other communities.

Crawford also noted that putting $2.5 million of the $2.9 million savings toward the VEBA would help pay down the city’s other post-employment benefit obligations (OPEB) – the city has a $12 million OPEB obligation arising from a settlement with the IRS. Crawford hopes to have that obligation paid off in 5 years.

Crawford noted that the city’s contribution to the VEBA has typically been more than the retiree health benefit costs. And the excess in the contribution, beyond the cost of claims, contributes to pre-funding future benefits. However, because of the increased number of retirees and the rising cost of medical care, the cost of claims is expected to exceed recommended employer contribution in the future. And that will mean that the city will have to rely more heavily in each year on the accuracy of the assumptions underlying the contribution (like at least a 7% return on investments).

In that context, Crawford recommended a VEBA funding policy that makes future city contributions to the VEBA based on the FY 2012 level – but adjusted up or down as a function of the total general fund revenues. That would provide better stability in financial planning and investing, and reduce radical changes in city expenditures, Crawford concluded.

Retirement/VEBA Allocation: VEBA Allocation Policy – Targeting Liability

Crawford’s recommended strategy for the overall citywide retiree health care funding level does not call for the kind of reduction in the city’s contribution that could be achieved if the actuarial OPEB cost were used to determine the city’s contribution.

City of Ann Arbor retirees by fund (department). The majority of city retirees – 65.8% – worked in positions paid for out of the city's general fund (red wedge).

However, a different policy change – one that would assign contributions to those city departments (funds) based on where the future liability is being accrued – would have the effect of saving the city’s general fund roughly $1 million a year.

Under the current system of allocating the city’s retiree health care costs, roughly 73% goes to pay retiree health care claims and the remaining 23% goes to pre-funding – through payments into the VEBA. It’s a hybrid between a pay-as-you go approach (in which each year’s retiree claims are paid out of the current year’s budget) and a pre-funding approach.

The current method essentially treats all retiree health care claims in any given year as unfunded liabilities. That approach means that a city fund (department) with a relatively high number of retirees compared to currently active employees has a relatively higher retiree health care contribution compared to other city funds.

City of Ann Arbor active employees by fund. While the majority of city workers are paid out of the general fund (53.3%), it's a lower proportion than the number of retirees paid out of the general fund (65.8%).

The new approach Crawford is recommending is a true pre-funding approach, and takes into account where the new liability is accruing. The city has already made contributions to the health care of retirees, so not all of the retiree health care claims in a given year are unfunded liabilities – part of those claims have, in a sense, been pre-funded.

So the accruing liability is with currently active employees as they work each additional year. And eventually, as new hires who came on board after July 1, 2011 are vested in the system, the city will see just a $2,500 per year liability in connection with those employees’ access-only plans. So instead of a 73%/27% split, the new allocation methodology would work out to 40%/60% – with 40% going toward the unfunded liability due to existing retirees’ health care and 60% going toward the accruing liability of active employees.

The effect of that shift has a variable impact on different city funds (departments), based on the proportion of retirees and active employees associated with each fund. In late 2011, for example, the general fund had 366.3 active employees, compared to 532.5 retirees. By way of contrast, the parks maintenance fund had 22.59 active employees, compared to just 10 retirees. So for the general fund, under the new methodology recommended by Crawford, the total retirement health care allocation would drop from $9,600,241 to $8,584,649, for a savings of roughly $1 million. But for the parks maintenance fund, the retirement health care allocation would increase from $258,909 to $322,960.

FY 2013 Budget Outlook

The $1 million savings to the general fund – which would result from the retiree health care funding methodology recommended by city CFO Tom Crawford – figures into the overall budget outlook for FY 2013 presented to the council by Crawford.

He began by putting the current year’s budget discussion in the context of the general economic and political climate. Unemployment is improving, he said. In the Ann Arbor area, the unemployment rate stood at 5.5% in December 2011, compared to a rate of 9.3% across the state of Michigan. State sales tax receipts are coming up from their depressed levels. Short-term interest rates are still near 0%. Property tax revenues are fluctuating slightly. Revenue from the federal stimulus package is disappearing. He noted that the state legislature is still considering the elimination of personal property taxes, but has focused little discussion on addressing the structural funding issue for local governments.

Crawford noted that for the previous fiscal year, the city had broken even, when it had planned to spend down the fund balance by roughly $1.5 million.

FY 2011
Revenues                $ 81,065,793
Expenditures              80,938,127

Net Excess/(Deficit)       $ 127,666
Unassigned Fund Balance $ 10,525,445 (13% of expenditures)

-

Crawford told the council that again this year, for FY 2012, the city is working realistically to break even, despite having budgeted to tap the fund balance for over $1 million. If the city does break even, that will result in maintaining its $10,525,445 in unassigned reserves, which is 13% of annual expenditures.

Compared to the two-year plan associated with the previous year’s budget, there’s been a net increase in expected recurring revenues [figures in millions]:

FY 2013
Recurring Revenues

$77.8 planned
----------
  0.6 increased tax revenues
  0.7 state shared revenues
  0.2 increased fire inspection revenues
 -0.6 remove police dispatch (loss of PSAP revenue)
 -0.2 bond user fees
  0.2 other
----------
$ 0.9 total change
----------
$78.7 revised

-
On the expenditure side, Crawford presented the council with a net reduction of $0.7 million compared to the two-year plan. The bulk of those reductions were related either to health care or the contracting out of the city’s police dispatching operation to the Washtenaw County sheriff’s office:

FY 2013
Recurring Revenues

$77.8 Planned
----------
 -1.2 remove dispatch (19 positions)
  0.8 add back 1 police officer, not cutting 9
 -1.0 change retiree health allocation method
 -0.3 police union employees health care
 -0.1 AFSCME union employees health care
  0.1 increased pension contribution
  0.3 higher energy costs
  0.2 higher tax refunds
  0.1 AATA
  0.1 AFSCME president
  0.1 increased severance
  0.2 Other
----------
 -0.7 total change

$77.1 revised

-

The increase in revenues and reduction in expenditures resulted in a net surplus of $1.6 million for FY 2013. Crawford cautioned against spending that surplus, even on one-time items, and advised instead that it be added to the city’s fund balance. The reason for his caution is based on a continued projected increase in expenses in FY 2014-16 of around 2% per year – which he characterized as about what you’d expect in a organization where the primary expense is employee compensation. Personnel costs outpace inflation, he explained.

Against that 2% increase in expenses, the city is projecting only a 1% increase in revenues. On that basis, Crawford is currently projecting that the city would need to spend $792,973 of its fund balance in FY 2015 and $2,112,030 in FY 2016.

In order to guard against any future economic downtown, Crawford said he’s advising that the city increase its fund balance reserve target to the range of 15-20% of annual expenditures. It currently stands at 13%. Still, Crawford said that compared to previous years, it was a nice forecast, with basically a $1 million challenge to meet in coming years – compared to the $2.5 million in savings the council had needed to find in previous years.

Policing, Crime Statistics

Out of the $1.6 million surplus anticipated for FY 2013, one new program that Crawford is recommending the city fund is a pilot program for recruiting police officers. It would cost $150,000. At the Feb. 13 working session, chief of police Barnett Jones explained that the rationale for the program stemmed from difficulties with the hiring process to replace nine officers who retired at the end of 2011. The city received a few hundred applications, but Jones told the council that seven of the nine candidates it had initially identified didn’t turn out to have the kind of backgrounds that rose to the level of professional standard that AAPD wants.

The pilot program would give the department a chance to work with officers on the beat before being hired on as full-time sworn officers. They’d work under the supervision of an AAPD officer and would spend a portion of their time downtown addressing nuisance issues. Despite the net gain of 10 officers now anticipated for FY 2013, compared to the AAPD staffing levels in the two-year plan, the department’s 118 sworn officers leave Jones short of the number he’d like. At the working session, he described the “perfect” number of officers for Ann Arbor as 150.

At the working session, Jones also presented year-end crime totals for the city – in the context of trends since 2002. In all categories of major crimes, the city is trending downward, except for one, criminal sexual conduct:

Ann Arbor Crime Trends: 2002-2011 (UDAA is automobile theft) (Image links to Google Spreadsheet and other charts.)

As a possible theory on why that category of crime has increased, Jones ventured that it’s the kind of crime that carries with it a stigma that acts as a barrier to reporting it. As women are increasingly comfortable reporting such crimes, the numbers have risen, he theorized.

At the working session, Jones rejected the idea that for other crimes the decrease in frequency could be attributed to a decreased number of officers – the idea being that are simply fewer officers to take the reports, leaving more crimes unreported. Jones said that for these types of crimes, he thinks it’s unlikely that anyone would fail to report them – in many cases they’re tied to payouts of insurance claims.

Data for categories of serious crimes was not presented at the working session. The most recent six months of all crime reports for Ann Arbor and some other jurisdictions are available through the website crimmapping.com

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