The council has already convened two retreats on the budget – this report is a summary of those retreats.

From the May 19, 1936 edition of the Ann Arbor Daily News. The scan was passed along to The Chronicle by the city's environmental coordinator, Matt Naud. Naud's source was Craig Hupy, head of the city's systems planning unit, who discovered some old papers in an antique store.

Late last year, on Dec. 4, 2010, the Ann Arbor city council held the first of two budget retreats for the next year’s budget adoption process. The current 2011 fiscal year ends on June 30, 2011, and the council will need to finalize its FY 2012 budget in May. The council typically begins contemplating the next fiscal year’s budget at a retreat near the end of the calendar year.

Two days after the first retreat, at the Dec. 6 regular city council meeting, city administrator Roger Fraser and councilmembers recapped the event, with Stephen Rapundalo (Ward 2) describing it as the best retreat discussion on the budget since he’s been on the council. First elected to the council in 2005, Rapundalo has five previous budget seasons to compare against.

The December retreat agenda reflected two main items: (1) general economic conditions; and (2) a sustainable service delivery model. The grim condition of the state’s economy was a point that was also driven home by Kirk Profit – director of Governmental Consultant Services, the city’s lobbyist in Lansing – in a presentation to the council at their Dec. 6 regular meeting.

The second retreat, on Jan. 8, followed up with a focus on services. To prepare for the retreat, councilmembers had ranked various city services by priority.

At both retreats, councilmembers and staff took the opportunity to communicate a message to city labor unions, some of whom Rapundalo characterized as not yet having seen fit to “recognize economic reality.”

And as chair of the council’s labor committee, Rapundalo has said he’ll give updates at the council’s regular meetings on the status of labor negotiations. He started the updates at the council’s Jan. 20 meeting. The implicit message communicated by the first update: Ann Arbor’s labor unions aren’t making the kind of concessions they should reasonably make, given economic conditions.

This report features highlights of the discussion from both retreats – including issues like the city’s approach to fire and police protection, solid waste and composting, as well as possible replacement of the general fund operating millage with a city income tax.

At both retreats, city administrator Roger Fraser and key city staff did their best to frame the council’s conversation not as a question of what services to cut. Instead, they tried to get councilmembers to consider which services might be delivered in a different way. The sustainability of the service delivery model depends on how the city delivers those services to residents – ranging from employment of full-time city workers, outsourcing the work, or by not offering the service at all.

To frame the context of these comparatively brief retreat highlights, we first offer a look back to 1936, when the city delivered a sidewalk snowplowing service to its residents. How? Partly by hiring in teams of horses to do the job.

How Services Are Delivered

The list of services provided to councilmembers for their Dec. 4, 2010 retreat included a blank column headed with “eliminate/modify.” In the course of the morning and early afternoon at the retreat, it became apparent that councilmembers considered all the items on the list as part of the core set of services the city should deliver. That is, there was no consensus that any of the items should be eliminated outright. Councilmembers seemed open, however, to contemplating modifications to the way that some of the city services are delivered.

How: Clearing Snow

In 1936, Ann Arbor city engineer George H. Sandenburgh delivered a report to the common council of Ann Arbor suggesting that the city would in the future need to purchase tractors in order to continue to deliver the sidewalk snowplowing service it provided at that time. [This historical tidbit comes from the May 19, 1936 edition of the Ann Arbor Daily News. A scan from that newspaper, which is the lead art of this article, was passed along to The Chronicle by the city's environmental coordinator, Matt Naud. Naud's source was Craig Hupy, head of the city's systems planning unit, who discovered some old papers in an antique store.]

Six years earlier, a Feb. 3, 1930 report to the common council had included the following in the city’s inventory of equipment:

Snow Removal Equipment

10 Steel Snow Plows for Sidewalks 250.00
2 Standard Snow Plows              40.00
2 Wooden Plows                      5.00
2 High Speed Snow Plows           500.00
5 Doz. Snow Shovels                60.00
1 Doz. Snow Pushers                 8.00  

City Team Equipment and Supplies

1 Team Horses                   $ 300.00
1 Set Double Harness               70.00
2 Halters                           1.00
2 Stable Blankets                   1.00
2 Woolen Blankets                  10.00
3 Tons of Hay                      45.00
80 Bu. Oats                        50.00
1 Troy Dump Wagon                  75.00
1 Wagon with Wood Box              30.00
1 Pair of Bob Sleighs              10.00

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That inventory comes from part of the Ann Arbor District Library’s online set of 40 year’s worth of Ann Arbor city council minutes, from 1891-1930. [Chronicle coverage of the library's presentation of the online archive to the city: "Mayor Walker: 'Print it in the NEWSPAPER!'"] Based on the city’s inventory of a single team of horses, and 10 sidewalk snowplows, it appears that the strategy used for clearing snow from sidewalks involved hiring additional horse teams to do some plowing.

The modification to the sidewalk snow-clearing service that was suggested by city engineer Sandenburgh in 1936 indicated a future where city-owned equipment would be used to do the job. Sometime between 1936 and 2010, a decision was made that sidewalk snow-clearing would not be a service delivered by the city directly – except in the form of ordinance enforcement. Currently, property owners are required by ordinance to clear the snow from sidewalks fronting their property. Chapter 49 of the city code, which deals with sidewalks, dates in relevant part from 1986:

Within 24 hours after the end of each accumulation of snow greater than 1 inch, the owner or occupant of every residentially zoned property shall remove the accumulation from the adjacent public sidewalk and walks and ramps leading to a crosswalk. The accumulation may be from any source including precipitation and drifting. Immediately after the accumulation of ice on such sidewalk, it shall be treated with sand, salt or other substance to prevent it from being slippery and the ice shall be removed within 24 hours after accumulation.

The city service of sidewalk snow-clearing can be used to illustrate a range of different ways city services can be provided, including not providing the service at all:

• No service with respect to clearing snow from sidewalks.
• No clearing of snow by the city except through ordinance enforcement.
• Clearing of snow by the city through employment of temporary workers who use their own equipment (e.g. horses and plows).
• Clearing of snow by the city through employment of temporary workers who use a mix of their own and city-owned equipment (e.g., their own horses, but city plows).
• Clearing of snow by the city through employment of temporary workers who use only city-owned equipment (e.g., tractors).
• Clearing of snow by the city through employment of full-time city workers, who use only city-owned equipment.

If service delivery uses full-time city workers, it’s a fair question to ask: Where do city workers live? At the Dec. 4 budget retreat, Stephen Kunselman (Ward 3) indicated a preference to have city workers live in the city of Ann Arbor – they can be ambassadors for the city in their own community, and they will take greater pride in their work. It’s not possible, however, to enforce residency requirements.

Kunselman pointed to efforts by Detroit’s mayor Dave Bing to provide incentives for city workers to live in the city. City administrator Roger Fraser told Kunselman that he was open to a conversation about that. [It did not seem to be Kunselman's intent to draw out the fact that Fraser himself doesn't live in the city.] But of all the things Fraser wanted to focus on, there were many items on the list ahead of that. It’d be a low priority in terms of his optimism about the positive impact; it’d take time, even if the strategy were effective. Fraser concluded that the potential payoff is fairly remote.

How: Funding a Service

Photo taken Dec. 13, 2010 looking east along the north side of Liberty Street between Ashley and Main. The Main Street BIZ district begins at the alley just beyond the green and blue downtown way-finding sign in the right of the frame.

How a service is paid for – with general fund property taxes, gas taxes collected by the state, a special dedicated millage, a special assessment district, a combination of property and personal income taxes – also counts as the way a service is provided.

With respect to clearing snow from sidewalks, the newly created Main Street BIZ illustrates how property owners can choose to impose an extra property tax assessment on themselves to fund the clearing of sidewalk snow.

After the snow and ice accumulation that occurred in the city on Dec. 11-12, 2010, there was a visible difference in sidewalk snow clearing effectiveness inside the Main Street BIZ boundary compared to outside the boundary.

Sidewalks are one thing, but even on Ann Arbor streets, snow-clearing services are not delivered to all residents in exactly the same way. At the city council’s Dec. 21, 2009 meeting, Christopher Taylor (Ward 3) reported that the city had struck a deal to subcontract out snow removal with the Pittsfield Village Condominium Association. In that area, Taylor said, the city had a hard time doing snow removal well – due to the winding streets and the lack of lawn extensions. The association contracts with a snow-removal provider that uses smaller vehicles to navigate the tighter quarters, and street snow removal is coordinated with sidewalk snow-clearing done by the association.

The Main Street BIZ pursued a fairly lengthy process in winning its eventual approval. At their April 1, 2009 meeting, the Ann Arbor Downtown Development Authority board authorized $83,270 to help fund the administrative and legal costs associated with that process. After that meeting, former DDA board member and downtown property owner Ed Shaffran – who helped lead the effort to create the Main Street BIZ – told The Chronicle how he saw the BIZ fitting into the funding of government services:

Shaffran said that the intent of property owners on Main Street was to provide assurance – by undertaking to assess themselves a higher property tax – that the kind of services they wanted would actually be provided into the future. Shaffran went on to speculate that this could be a pre-cursor of “a la carte government” as revenues to municipalities dwindled. He suggested that the concept of a BIZ could be extended to residential neighborhoods as well. The strategy for providing services, he said, could evolve to be a system where a minimum baseline level would be provided by government, with BIZ-like affiliations electing to augment (or not) that baseline level.

Service When It’s Not a Snow Job

At the Jan. 8, 2011 retreat, councilmembers engaged in some back-and-forth about the quality of snow-removal service in the city of Ann Arbor. Mayor John Hieftje ventured that snow removal is twice as good as it was back in 1999. Stephen Rapundalo (Ward 2) reiterated the view, which he’d expressed at the December 2009 budget retreat, that the quality of snow removal in the city is “abysmal.” At this year’s retreat, he contended that if you go to the city limits, it’s as if someone draws a line where snow removal begins and ends. [It's a point that has been noted by others.]

The city council recently approved an expenditure for a remote vehicle monitoring system that includes, among other features, the ability to track the progress of snowplowing in real time.

Snow removal, of course, is just one service of many that cities might provide.

Not Snow: Solid Waste

Collection of waste material that residents prefer not to store on their property is a basic city service – stuff that ranges from grass clippings, to leaves, empty milk jugs, old newspapers, bags of cat litter, or empty cans of shaving cream. For the city of Ann Arbor, these items correspond to one of three wheeled collection carts – a compost cart, a recycling cart, and a trash cart – which have been distributed to residents and are emptied once a week with a truck equipped with a robot arm controlled by the driver.

At the Jan. 8 retreat, public services area administrator Sue McCormick revealed an underlying assumption by staff in the solid waste program: Residents would not tolerate different days for pickup for different collection carts. Some councilmembers suggested that this might not necessarily be the case. It was left for future thought, along with the possibility that this could simply be a “legend,” along with other assumptions. Why would the flexibility to pick up different carts on different days make a difference? It’s because it might be possible to be efficient enough to collect one kind of cart with few enough routes that only a four-day schedule would be required for that kind of cart.

As for the challenge of keeping track of which days certain carts were to be set out, it was suggested that the city could deploy messaging systems that would push the information to residents.

More significant than the possibility of varying the pickup schedule is the idea of contracting out the trash collection service to a private hauler. At the Dec. 4, 2010 retreat, city administrator Roger Fraser observed that the city had spent a lot of time developing its solid waste plan. The solid waste plan suggests the idea that the city would work its way out of the business of collecting solid waste.

The city has already worked its way out of the business of part of the solid waste collection that it previously ran: At its Dec. 6, 2010 meeting, two days after the first budget retreat, the council approved a contract with WeCare Organics to operate the city’s compost facility. It was a controversial issue for many residents and had led to the postponement of the measure at the city council’s Nov. 15, 2010 meeting.

So the idea of contracting out the collection of trash at the curbside is now also in the works – based on the city’s solid waste plan. From the city of Ann Arbor 2002-2007 solid waste plan:

Three key issues were built into the survey to determine public opinion on possible program directions for reducing waste – rolling back taxes with a for-fee trash collection system, anti-litter campaigns, and food waste composting pilots. … Under a PAYT system, the financing for trash collection would be directly paid by the consumer, with a partial roll-back in taxes, while recycling, composting and other waste services would continue to be covered at no extra charge. …The majority of those interviewed (61% residential; 79% business) felt that the existing system of “tax-paid full service” was preferable to a PAYT mechanism.

Some councilmembers appeared taken slightly unaware by Fraser’s update. But Fraser reminded the council that they’d heard the idea at the previous year’s budget retreat. From The Chronicle’s report of the December 2009 budget retreat:

Reduce solid waste millage

On this proposal, the city would get out of the business of garbage collection, but stay in the business of recycling. The city would contract with a waste hauler, which would then be paid directly by residents under some kind of franchising arrangement that would allow them to “pay as they go.” That would allow a reduction in the solid waste millage, which could be passed along to residents. Or voters could be asked to continue to pay the same percentage, but direct to other areas the part not needed to fund garbage collection.

When considering whether residents would choose to continue paying the same amount even though their service had been reduced, and then pay again separately for waste hauling, Stephen Rapundalo asked, “Why would they do that?”

Stephen Kunselman (Ward 3) cautioned that this kind of “pay as you go” system could have the unintended consequence of encouraging the dumping of trash wherever people could find a place – something he said he’d seen as administrator of  Sumpter Township in the early 2000s.

Now, Fraser said at the Jan. 8, 2011 retreat, the city is taking a full look at that to see if there’s a benefit to exploring implementation in the next fiscal year. He told councilmembers that an alternative study on trash collection would be presented to them in March.

Not Snow: Public Safety – Police, Fire

The idea of outsourcing police services – by contracting with the Washtenaw County sheriff’s office – was briefly touched on at the Dec. 4, 2010 retreat. Barnett Jones, head of the city’s safety services, reiterated the same sentiments he’d expressed at the 2009 retreat. He brought the perspective of having previously worn a brown shirt, working for the Oakland County sheriff’s department, selling townships on the idea of contracting for police services. The difference, he said, is that Ann Arbor already has the best police force in the county. Further, he explained, the county would have to add considerably to its force in order to provide service to Ann Arbor.

In any case, councilmembers did not appear to have great interest in altering the basic way Ann Arbor provides police services – which is by hiring full-time city employees to do the job.

Fire protection was a different story. Councilmembers expressed keen interest in exploring alternatives to providing fire protection by some other means than staffing fire stations around the clock with full-time career firefighters. Jones explained that there are three basic approaches to providing fire protection: (1) volunteer firefighters, (2) paid on-call firefighters, and (3) full-time career firefighters. Jones described how departments are starting to spring up that are a blend of (2) and (3) – a combination of full-time employees, who are career firefighters, and others who are paid to be on call to perform fire suppression duties. He cited Troy as perhaps the largest city that used such a combination department for fire suppression. He suggested that Troy would not use that strategy if they didn’t think they were getting effective fire protection.

Councilmembers were keen to get an understanding about what the implications for emergency medical response would be – many fire department calls are in response to medical calls. Fire dispatch is now handled by Huron Valley Ambulance, with the goal of reducing unnecessary medical runs by the fire department. But this goal has not been entirely met. Fraser explained that there’s a need to clarify existing protocols and to clarify the exact definition of a Category 2 call. The category had been defined two decades ago by responders in the eastern part of the county, he said, and hasn’t been reconsidered in two decades. He characterized the wasted runs as translating to a multimillion-dollar impact on the system.

Stephen Kunselman (Ward 3) expressed concern that when a combination paid/on-call department was introduced in the townships, it became a way for politicians to get elected – giving jobs to their neighbors, so that they could go hang out at the fire station with the big trucks. He urged caution about implementing a combination paid/on-call fire department.

Mayor John Hieftje pointed to a decrease in the number of fires since 1970, which he attributed to good building codes, suggesting that the need for fire suppression resources is not as great now as it was historically.

Unknowns

The budget planning process in any year includes a number of factors that cannot be completely known. These were also discussed at the two retreats.

Unknowns: Labor Contracts – Aligning Labor, Budget Strategies

Among the city’s assumptions in planning for the FY 2012 budget is that currently unresolved labor contracts will settle in a way that results in no increases to their wage structure, plus additional reductions equivalent to the cost savings the city would see if all employees were on the new health care plan. It is, of course, not possible to know if those contracts will settle in the way the city is assuming for budget planning purposes.

What’s the city’s plan for getting the contracts to settle? At the Dec. 4, 2010 retreat, city administrator Roger Fraser and the city’s CFO, Tom Crawford, described a strategy of aligning the budget and the labor strategy. Stephen Rapundalo (Ward 2) called it the “number one issue.”

What’s meant by aligning the two strategies? It essentially means including health care costs in the equation that determines the budget reduction target for each department.

By way of background, the city has a new health plan it would like all workers to use – it includes monthly employee contributions, higher deductibles, and out-of-pocket maximums. Non-union staff have transferred to the new plan, as have a few of the city’s unions – though not those with the greatest number of employees: AFSCME, police officers, and fire fighters. The city’s net cost per employee for the new plan is $10,686, compared with $12,310 for the AFSCME workers’ plan, $13,121 for the police officers’ plan, and $12,871 for the fire fighters.

At the Dec. 4 retreat, Sandi Smith (Ward 1) expressed surprise at the cost of even the city’s plan. She said it’s twice what she pays with a self-funded plan. Fraser noted that to truly compare the plans, you’d have to compare details, and there are different assumptions about risks. He also noted that in the public sector, you can’t go in and say, “Here’s your new plan!” Implementation has to be incremental, he said. Crawford also observed that with police and fire fighters “who are out there every day, it’ll be different than …”  and Fraser completed his sentence by quipping, “… people who work in real estate.” It was a playful allusion to Smith’s line of work.

Fraser explained the budget and labor strategy alignment this way: Suppose every department has a base reduction target of at least 2.5%. For departments with employees who have not adopted the new city health care plan, the inclusion of health care in the equation could result, for example, in an extra 1.5% added to the target. That department’s total reduction target would become 4%.

Councilmembers and staff alike were frank during both retreats about what this implies: Unions need to accept the new city health plan, or accept the fact that there will be fewer of their members employed by the city.

Rapundalo expressed some frustration that the major unions have not yet adopted the city health plan. He characterized it as a lack of understanding and appreciation or an unwillingness to understand impacts on the entire organization. “The consequences are not going to be pleasant,” he warned.

Fraser was somewhat more accommodating of the union perspective, telling councilmembers that as elected officials they are representing citizens. But people who are selected to lead labor unions, said Fraser, while they work at the city to provide services, their task is to “optimize their circumstances as employees.”

Unknowns: DDA Parking

The city has a contract with the Ann Arbor Downtown Development Authority under which the DDA manages the city’s public parking system. The contract currently runs through 2015. The 10-year contract stipulates that the DDA will pay the city $1 million in “rent” annually, with the provision that the city could request up to $2 million in a given, year as long as the amount for the entire 10-year period does not exceed $10 million. Through the first five years of the contract, the city requested the maximum $2 million payment – reaching that $10 million mark.

Last year, in the sixth year of the contract, the DDA decided to authorize an additional $2 million not required under the agreement – a vote that was controversial on the DDA board.  It was a move that allowed the city council to revise the city administrator’s proposed budget, which averted some planned layoffs of police officers and fire fighters. The city had not assumed the additional payment as part of its budget planning. As city administrator Roger Fraser explained at the Dec. 4 retreat, the $2 million was “not a part of our optimism,” because there were no ongoing conversations between the city and the DDA at the time.

This year, the city is assuming $2 million from the DDA for its budget planning. That’s because since June 2010, the city and the DDA have engaged in a regular extended conversation via their respective “mutually beneficial” committees about renegotiating the parking contract. The strategy the committees are currently exploring is switching from a fixed fee “rental” style agreement – based on the idea that the DDA is using city-owned assets to run the public parking system – to a percentage-of-gross style arrangement, which aligns the two parties’ interests. [Most recent Chronicle coverage: "Parking Money for City Budget Still Unclear"]

Based on the most recent percentage-of-gross figures the DDA has discussed, in the next year or two, the payment could amount to slightly less than $2 million. As parking revenues increase in later years of the contract, the return to the city is projected to reach and exceed $2 million, even on the lower percentage-of-gross figures the DDA is currently discussing. The city’s CFO, Tom Crawford, wrote in response to an emailed query from The Chronicle that if the amount received by the city is slightly less than $2 million in the first year, he would probably recommend making up the difference from the general fund reserve, based on the idea that the shortfall would not persist beyond the first year or two.

Unknowns: State Shared Revenue

The concept behind the state shared revenue system is that local municipalities in Michigan have a restricted ability to levy taxes, so the state reapportions to local municipalities some revenues out of the 6% sales tax that it collects. The reapportionment comes in two flavors: the constitutional portion (15% of the 4% gross collections of the state sales tax) and the statutory portion (up to 21.3% of the 4% gross collections of the state sales tax). The legislature controls the statutory portion, but not the constitutional portion.

Historically, the amount of statutory state shared revenue received by the city of Ann Arbor has fallen from $6.5 million in FY 2001 to just under $2 million in FY 2011.

The city’s budget planning right now assumes that state shared revenue will remain stable, despite some indications from the state legislature that the state might significantly reduce it. At the Dec. 4 retreat, Fraser indicated that the budget planning decision reflects less conservatism than the city has displayed in previous years of budget planning. Conservatism means that if anything, you understate revenues and overstate expenses, so that there is maximum flexibility to adjust mid-year.

This year, the city is minimizing the conservatism on both sides, to be as lean as it can possibly be, which means there’ll be less flexibility during the year, Fraser said. The risk associated with this strategy, said Fraser, is that a budget amendment might be needed in the middle of the year, if something unforeseen occurs.

Revenue: Operating Millage or City Income Tax

Local municipalities have four sources of possible revenue: (1) property taxes; (2) fees for services; (3) state shared revenue – apportioned from the state sales tax; and (4) city income tax.

The city of Ann Arbor does not levy just one kind of property tax. Ann Arbor tax bills include separate taxes to support: general operations, employee benefits, solid waste system, debt, street repair, city parks, open space acquisition and mass transit.

An example of fees for service is the drinking water utility – residents pay for the amount of water they use.

It’s not an option for a city to levy any kind of sales tax in addition to the state sales tax. For example, the city of Ann Arbor is not legally empowered to apply an entertainment tax that could be added to University of Michigan football tickets. Part of the rationale behind the state shared revenue system is for local municipalities to have their inability to levy extra taxes balanced out by revenue that is shared with them by the state.

A feature of the Ann Arbor city charter that distinguishes Ann Arbor from other Michigan cities is the relationship between the general operations property tax and a city income tax. Per the city charter, Ann Arbor can enact one, but not both kinds of tax:

City Tax Limit SECTION 8.7. (a) … In any calendar year in which the Uniform City Income Tax Ordinance is in effect on the day when the budget is adopted, the City may not levy any part of the three-fourths of one percent property tax previously mentioned …

But if the city of Ann Arbor were to enact a city income tax, it’s only the general operations property tax that would disappear – the other city property taxes would remain.

Cities can enact a city income tax under the state statute Uniform City Income Tax, which allows an income tax of up to 1% to be levied on residents of a city, and on non-residents up to 1/2 of the percentage levied on residents. For example, if a city enacted a .5% income tax on residents, then non-residents would pay no more than .25%.

Supporters of a city income tax for Ann Arbor typically defend against tax burden arguments by pointing to the fact that the city charter stipulates that a city income tax replaces, rather than supplements, the roughly 6 mill general operations property tax for residents. [For readers who wonder how much property tax they would save, the line item, on summer tax bills, is labeled CITY OPER].

Supporters also typically point out that 40% of the real estate in Ann Arbor is not subject to property tax – due to the large city park system and the presence of the University of Michigan, whose land is not subject to property tax. So funding operations from property taxes is more challenging than in cities where a greater percentage of the property is subject to a tax.

Supporters also typically point to the large number of workers who have jobs in the city of Ann Arbor – many of them at UM – who live outside the city. That translates into larger potential revenue from an income tax than in cities that have a smaller number of commuters.

Detractors of a city income tax typically point to the potential barrier such a tax might represent to businesses choosing to locate in Ann Arbor, or to the inequity of the income tax with respect to resident renters – who may not see the reduction in their landlord’s property tax passed along to them in lower rents. Some oppose the idea on philosophical grounds, arguing that applying the tax to non-resident workers amounts to taxation without representation. Income taxes as a source of revenue are also somewhat less stable than property taxes.

City Income Tax: Previous Discussions

Two years ago, at the Jan. 2009 budget retreat, then-councilmember Leigh Greden advocated for an exploration of replacing the general operating millage with an 1% city income tax. The budget retreat discussion resulted in the dissemination of a previous, 2004 city income tax study. The 2004 study had been preceded by a 1997 city income tax study.

In July 2009, the city released a more current study. But in August of that year, it became clear at a city council work session that there was no enthusiasm on the part of the council to place the issue on the ballot in the fall.

Yet at that year’s budget retreat on Dec. 5, 2009, Christopher Taylor (Ward 3) again raised the issue of exploring a city income tax. And at a Feb. 16, 2010 meeting of the city council’s budget committee, which included [and still includes] Taylor, members gave city administrator Roger Fraser the green light to conduct a survey of voter attitudes on the city income tax.

City Income Tax: Current Discussions

Through the city council and mayoral election season in 2010, the idea of a city income tax received some discussion as an issue. During his campaign, Tony Derezinski (Ward 2) in particular expressed support for the idea. He’s now part of a working group on the council, which also includes Taylor and Marcia Higgins (Ward 4), that is taking a closer look at revenue questions. At the Dec. 4, 2010 retreat, city administrator Roger Fraser expressed the same sentiment he’d conveyed to members of the budget committee back in February 2010: That he thought he had an obligation to ask the citizens to consider the income tax question before cutting services.

Fraser stressed the need to engage the public on the question, saying that the first thing people will ask is, What have you done already to address expenses? He said that they’d need to be clear about what the city had accomplished – that includes reducing the work force from a peak of 1,005 ten years ago to fewer than 750 today.

At the Jan. 8, 2011 retreat, there was some back-and-forth about whether the work group looking at the income tax question – as well as the possibility of a Headlee override – should be called a “committee” or a “work group.” Implicit context for the distinction is that council committees are supposed to do their best to conduct their meetings openly in accordance with the Michigan Open Meetings Act – based on a two-decades-old city council resolution. Work groups are not considered to have the same obligation.

Discussion at the Jan. 8 retreat included the possibility that the revenue work group would also take a look at the street repair millage. Stephen Kunselman (Ward 3) expressed some interest in wrapping sidewalk replacement into the activities the millage revenue could cover. Currently, property owners are responsible for maintaining the sidewalks adjoining their property.

Collaboration: UM, AAPS, County, Townships

At the Dec. 4, 2010 retreat, the council discussed collaboration by the city with a range of other entities – University of Michigan, Ann Arbor Public Schools, the county surrounding municipalities – as a way to maximize use of resources.

At some points, the conversation grew very specific. For example, public services area administrator Sue McCormick revealed the city would be presenting an invoice to UM in connection with traffic control and police staffing for the Big Chill hockey game, which was held on Dec. 11. Some councilmembers seemed to suggest that concessions from the university could be won by withholding city consent when the university wanted something from the city. The university’s desire to include Monroe Street as part of the UM Law School campus was cited as a specific example. Fraser, though, counseled that each situation should be evaluated unto itself. He pointed to the planned Fuller Road Station as an example of the importance of that principle.

McCormick indicated the possibility of future collaboration with UM on maintenance of longer buses. Background on this issue includes the inter-campus transportation challenge that UM faces, which could potentially be alleviated by purchasing longer, articulated coaches. UM currently has no maintenance facilities that can accommodate longer buses. But the city’s maintenance yard at the Wheeler Service Center could conceivably be used to work on such vehicles, because the maintenance bays are configured so they’re face-to-face. Nothing has come to fruition yet with UM on that possibility, McCormick reported.

Fraser stressed that any collaboration was a slow process, even when partners are willing. He pointed to the new integrated funding model for human services, which involved a collaboration between the city, Washtenaw County, the Urban County, Washtenaw United Way, and the Ann Arbor Area Community Foundation. Fraser said that effort required just short of 24 months – and the only thing that was done was to change a process. No organization gave up any of their authority. It wasn’t that it was uncomfortable, he said, but each one of the groups had boards and they each had their own process for approval.

Regarding the city’s relationship with other municipalities, Fraser described how he and the mayor had begun in 2003 working to change the nature of the relationship of the city of Ann Arbor and its neighbors. He said if he were to describe the nature of the relationship that he saw when he arrived in 2002 between the townships and the city of Ann Arbor, he felt Ann Arbor would have been described as “self-absorbed and selfish and not willing to play fair with others.” There was a lot of healing that needed to be done before the city could even begin to have a conversation about collaboration on service delivery, said Fraser.

But that had not been true with Washtenaw County, Fraser said:  ”[Bob] Guenzel and I hit it off right away.” [Guenzel was until last year Washtenaw County administrator – he retired in May 2010.] Fraser said that he and Guenzel had even talked about combining the city and the county together, but as a practical matter it’s not authorized under state law. But Fraser concluded that Guenzel’s and his vision were very similar in terms of looking for opportunities to seek collaboration.

Public Engagement

At both retreats, city councilmembers and city staff acknowledged the challenge of engaging the public effectively. Fraser noted that most citizens don’t pay attention to a fine level of detail. The city can put the information out there, he said, but the question becomes: “What information can be provided and what can we expect them to retain?”

At the Dec. 4, 2010 retreat, Mike Anglin (Ward 5) suggested that then was the time to engage the public on the question of re-thinking how fire protection would be provided. Stephen Rapundalo (Ward 2) objected, saying that at that point they had nothing to propose. So councilmembers grappled with the question: When should public engagement start? Regarding the community task forces that were eventually formed two years ago to study Mack Pool and Ann Arbor Senior Center – resulting in plans to help keep the facilities open – Sue McCormick noted that those processes didn’t begin with engagement, but rather with a proposal to to eliminate those facilities. Christopher Taylor (Ward 3) suggested that public engagement would most effectively begin with a proposal to do something different.

Fraser’s remarks made mid-retreat can serve as a summary of the message the city hopes to communicate to the public. The city can’t continue to pare down the number of people it employs and continue to provide the same services. “Our future has to be different. Your expectations have to be different. The community’s expectations have to be different about what it is that they can expect from us as an organization. … There’s nothing on the horizon to suggest that denial will work.”

Coda: Retreating to Luxury?

In recapping the first retreat at the Dec. 6 city council meeting, Fraser pointed out that the council’s budget retreat was not held in a luxurious location, but rather one of the crew work rooms at the city’s Wheeler Service Center on Stone School Road. [While not austere, the crew work rooms are in no way comparable to the Book Cadillac hotel, where Washtenaw Community College trustees held a retreat in March 2010.]

Orange juice is not just a healthy drink. Unlike clear liquids, it's also great for illustrating the classic glass as half empty or half full contrast between optimists and pessimists. Possible budget amendments may depend on how optimistic councilmembers are about state shared revenue. (Photo by the writer.)

Among the amendments that will be brought forward is one that calls for fewer layoffs in the police and fire departments. Instead of eliminating 35 total safety services positions, the amendment would eliminate five firefighters.

The police and fire positions would be maintained through a combination of extra revenue items. One of those is the Ann Arbor Downtown Development Authority’s $2 million payment to the city, which the DDA board approved on May 5.

A second additional revenue item is simply a more optimistic assessment of the prospects that state revenue sharing will remain at current levels next year. The third major additional revenue item comes from increased revenue from parking fines, which the council will also vote on at its Monday meeting. The projected increases in parking fine revenue had not been included in the budget proposed in April by Fraser.

Another budget amendment would tap the additional revenues to maintain human services funding at last year’s levels – right now, there’s a cut in human services amounting to $260,000 in the proposed budget.

The additional revenues would also be used to fund another budget amendment, which would eliminate the proposed football Saturday parking in Allmendinger and Frisinger parks, plus make the mowing cycles in parks more frequent than they would be in the currently proposed budget.

Other amendments that might be brought forward would make changes that would decrease revenue, compared to what is currently proposed, by (i) eliminating an increase in contractor registration fees, (ii) eliminating an increase in rental housing inspection fees, and (iii) reducing the general fund tax administration fee from its current maximum of 1%. A final amendment that might be proposed would eliminate the proposed loading zone permit program, replacing it with increased fines for parking in loading zones, for a small net gain in revenue.

The Math for Additional Revenue Items

Many of the amendments that have been compiled by councilmembers depend on revenue items that were not part of the city administrator’s budget proposed at the council’s April 19, 2010 meeting.

The largest chunk of those revenues is the $2 million payment that the DDA board approved on a 7-4 vote at its May 5 meeting, over strong dissent from some board members as well as from the business community.

But part of the discussion at the DDA’s board meeting – and at its operations committee meeting the week before – had centered on the fact that $2 million was not adequate to prevent the layoffs that were calculated into the city’s budget. The amount needed to avert all layoffs is closer to $3.5 million.

At the city council’s May 3 meeting, Margie Teall (Ward 4) had read a prepared statement indicating that she and mayor John Hieftje were planning to bring forward an amendment to the budget to prevent as many layoffs in police and fire services as possible, and to keep human services funding at the same level as previous years. Teall’s statement indicated that the $2 million from the DDA would provide the funding for that effort.

The amendment on fire and police jobs, which Carsten Hohnke (Ward 5) and Marcia Higgins (Ward 4) are now co-sponsoring, assumes an additional $3.639 million in available funds, compared with city administrator Roger Fraser’s proposed budget. So, where is the additional $1.639 million in the budget coming from?

A nominal amount, $62,000, is provided by a reduction in the fire department’s budget for capital equipment. The other chunks come from increases in parking fine revenues and a revised estimate in state revenue sharing.

At the council’s April 19 meeting, a vote on the revised fine schedule for parking violations – which features an increase in expired meter fines from $15 to $20, but keeps the discounted rate of early payment the same, at $10 – was postponed. It had previously been postponed from the council’s Jan. 19, 2010 meeting.

During the April 19 meeting, Tom Crawford, the city’s chief financial officer, clarified that the additional revenues from the increased fines had not been calculated into the proposed budget that was presented that night:

Mayor John Hieftje then asked if the increase in fine revenue was part of the budget. Crawford indicated that the increase was not assumed as part of the FY 2011 budget – it would be additional revenue.

The budget amendments to be brought forward on Monday night include an additional $625,000 in revenue from fines.

The other revenue item on which the budget amendments depend is an extra $952,000 in state shared revenue that the administrator’s proposed budget did not assume.

Summing the changes in revenue items with the proposed allocation of the new revenue – which is handled in three separate amendments (one for fire/police, one for human services, one for parks) – gives the following picture:

NEW REVENUE/EXPENSE ITEMS

  $ 2,000,000  DDA payment
      952,000  more optimism on state shared revenue
      625,000  parking fine revenue increase
       62,000  reduction in fire department capital expense

    3,639,000  total of new revenue items and expense reductions

ALLOCATION OF THE ADDITIONAL DOLLARS

  $ 1,585,783 15 police positions
    1,509,620 15 firefighter positions (leaving 5 still to be cut)
      260,000 human services
      138,000 mowing in parks
      120,000 trimming in parks
       25,000 eliminate football parking at Allmendinger and Frisinger parks

  $ 3,638,403 total of new allocations

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How Realistic Is New Assumption on State Shared Revenue?

The concept behind the state shared revenue system is that local municipalities in Michigan have a restricted ability to levy taxes, so the state reapportions to local municipalities some revenues out of the 6% sales tax that it collects. The reapportionment comes in two flavors: the constitutional portion (15% of the 4% gross collections of the state sales tax) and the statutory portion (up to 21.3% of the 4% gross collections of the state sales tax).

State Shared Revenue: Pessimistic View

In presenting the budget to the council on April 19, Fraser had indicated pessimism that state shared revenues would remain constant from this year to next year:

Fraser said the city had made a mistake in believing the state when they said state shared revenue would be held harmless in the state’s budget planning. In October 2009 the state announced that  reductions in state shared revenue would be implemented. This year, the city is forecasting that by this time next year the state will cut the statutory portion – that part of state shared revenue controlled by the legislature – by half of what is currently left. That would mean another $1.2 million reduction for the city.  [...]

The assumption is that the state of Michigan will continue to struggle with its own budget deficit. That is compounded this year, Fraser said, by the fact that there will be a massive turnover at the state legislature with a number of people in the House and the Senate and in the governor’s office, who will not be seeking election this fall because of term limits. It is yet to be seen what the impacts will be in terms of their willingness and ability to make decisions affecting the future of the state, Fraser concluded. “We have not assumed a great deal of optimism about that,” Fraser cautioned.

Fraser also indicated at the April 19 meeting that the statutory component of state shared revenue is predicted to disappear completely by FY 2012. The budget proposed by the city administrator estimated that the total of state shared revenues would be around $8.2 million. The budget amendments to be proposed on Monday assume a total closer to $9.2 million – the same as what the city received in FY 2010.

State Shared Revenue: Optimistic View

A more optimistic attitude on state shared revenues, which is reflected in the budget amendment, is consistent with the view of the city’s lobbyist in Lansing, Kirk Profit, as conveyed to the mayor in an email sent on Thursday, May 13:

In terms of parameters, the Governor recommended a flat appropriation for revenue sharing (no increase, no decrease); the House passed its version of this portion of the budget and called for a slight increase; and the version now under consideration in the Senate calls for a slight cut. And even in considering a slight cut in the Senate, the subcommittee chair, Sen. Pappageorge, was very uncomfortable with any cut to revenue sharing and said, “I don’t think that anything pains me more than what is being done to revenue sharing”.

It is clear that there is strong sentiment and motivation in both the House and the Senate to protect revenue sharing. Additionally, the Governor has been adamant that it will be held harmless. [...]

For now, I am comfortable in advising you that you can budget with an expectation of no cut to revenue sharing. While it is my opinion that an increase is more tenuous, the flat recommendation of the Governor is probably the most likely scenario.

Other Possible Budget Amendments

There are several other possible amendments to the budget on Monday.

Other Amendments: Contractor Registration Fees

As proposed, contractor registration fees are set to increase for registration of building, electrical, mechanical, plumbing, fire suppression and sign specialist contractors.

Increases for contractor registration in the administrator’s proposed budget vary – building contractors would face an increase from $5 a year to $25 a year, for example, while plumbing contractors would go from $1 a year to $15 a year. The fee increases are assumed to generate an extra $20,000 for the city‘s construction code fund.

The possible budget amendment would eliminate the fee increases, with the reduction in revenue to be made up from the city’s general fund reserves prior year’s fund balance in the construction code fund.

Other Amendments: Rental Housing Inspection Fees

Rental housing inspections are supposed to take place on a required schedule determined by the city. Inspection rates vary depending, based on the number of units in a building, and whether the inspection is a re-inspection or prompted by a complaint.

In the administrator’s proposed budget, most of the inspection rates are set for increases of 2-4%, with the exception of life safety inspections. By way of example, the life safety inspection rate is set to increase from $34 to $60 per room/unit for the initial inspection and from $34 to $70 for a first re-inspection.

The possible budget amendment would eliminate the fee increases, with the reduction in revenue to be made up from the city’s general fund reserves.

Other Amendments: Loading Zone Permits

Also on the list of possible amendments is one that would eliminate the proposed permitting system for loading zones, which is projected to increase revenues to the city by $20,000. In its place would be an increase from $25 to $45 in the fine for parking in a loading zone, which would raise an estimated additional revenue of $25,700.

Other Amendments: General Fund Tax Administration Fee

What is the general fund tax administration fee? The General Property Tax Act 206 of 1893, as modified in 1982 by Public Act 503, allows for the “local property tax collecting unit” – in this case, the city of Ann Arbor – to impose a fee on taxpayers not more than 1% of the total tax bill for the parcel.

Back in 2004, the city of Ann Arbor did not impose such a fee. From an April 24, 2004 article reported by Tom Gantert of the Ann Arbor News:

City Council members appear to be leaning toward a proposal by City Administrator Roger Fraser to impose a .67 percent administrative charge on all property tax bills. [...]

The proposed administrative fee – which many other cities already impose – would generate an additional $1.4 million a year in revenues for the cash-strapped city. It would cost a resident with a $200,000 home an additional $31.15 a year on their property tax bill (based on a taxable value of $100,000 and a total property tax bill of $4,650).

By 2007, the administrative fee was in place at a rate of .81%. In approving the budget for FY 2008, the city council approved an increase in the administrative fee from .81% to the maximum allowable by law of 1%. The increase came in an amendment proposed by Joan Lowenstein and seconded by Leigh Greden. From the city council minutes:

[from May 21, 2007, deliberations on the FY 2008 budget] Councilmember Lowenstein moved, seconded by Councilmember Greden, that the resolution be amended as follows:

Amendment 4

Increase Tax Administration Fee Revenue

Whereas, The Tax Administration Fee is a fee imposed to offset costs incurred by a collecting unit in assessing property values, collecting the property tax levy, and the review and appeal processes;

Whereas, The General Fund includes Tax Administration Fee revenue approximately equal to .81% of the current projected tax collections, and the maximum percent allowed by State law is 1.0%;

RESOLVED, That the General Fund Finance and Administrative Services revenue budget be increased by $473,970.00 to provide for the maximum 1% percent Tax Administration Fee allowed by State law.

On a voice vote, the Mayor declared the motion carried with two dissenting votes by Councilmembers Higgins and Rapundalo.

An amendment that might be brought by Stephen Kunsleman (Ward 3) on Monday night for consideration by the council would change the general fund tax administration fee from 1% to .81%. This would reduce revenues to the city by $453,000, with the reduction in revenue to be made up from the city’s general fund reserves.

Budget Amendment Principles

In past years, when Leigh Greden still served on the city council, a principle pushed by Greden as appropriate for decision making on budget amendments was that proposals for increased expenditures needed to be offset by identification of additional revenues.

In past years, offsets for proposed increased expenditures have taken the form of cuts to other expenditures. For example, last year an amendment for an additional expenditure of $28,350 for the Leslie Science and Nature Center was offset in part by a $24,000 savings through eliminating historic district consulting. That left a difference of $4,350. From The Chronicle’s account of last year’s FY 2010 budget deliberations [emphasis added]:

Amendment #2, which was also passed unanimously, allocated the remaining $4,350 from the general fund reserves – something that violated a basic principle set forth by Leigh Greden (Ward 3). That principle was that any additional costs needed to be balanced by an alternate revenue source. In the case of Leslie, Greden introduced five points that convinced him the violation of the basic principle was worth it [...]

This year, a large chunk of the offsets that are reflected in the possible amendments do not take the form of cuts to other expenditures, but are instead handled by additional revenues, compared to the administrator’s proposed budget – from parking fines and from state shared revenue.

So a possible point of discussion that may emerge during deliberations on Monday is whether an increased level of optimism about state shared revenue – supported by the city’s lobbyist in Lansing – should count as an alternate revenue source in evaluating the merits of budget amendments.

At the podium, Bill Godfrey of Three Oaks Group and Tom Fitzsimmons of the North Central Property Owners Association both express their support of the Near North housing project on North Main. In the background, Christopher Taylor (Ward 3). (Photo by the writer.)

Ann Arbor City Council meeting (Sept. 21, 2009): Ann Arbor’s city council approved both major development projects on its agenda, one of them enthusiastically, the other only reluctantly.

Although there was a smattering of opposition expressed to the Near North affordable housing development during the public hearing on the matter, the 39-unit project on North Main Street ultimately won the support of its closest neighbors. That support was reflected symbolically when developer Bill Godfrey and neighbor Tom Fitzsimmons stood side-by-side at the podium as they each addressed the council, which gave the project its unanimous approval.

The “matter of right” City Place project proposed for the block of South Fifth Avenue just south of William was also unanimously approved by the council, but councilmembers took turns criticizing both the project and the developer, Alex de Parry. The council had previously established a historic district study committee and enacted an associated moratorium on demolition and work in the area where the proposed project is located. Carsten Hohnke (Ward 5) compared de Parry’s decision to bring the project forward despite the moratorium to “stamping feet, being upset you didn’t get what you wanted.”

Many members of the audience held yellow 8×11 paper signs calling on councilmembers to support a resolution that would have released council emails sent during their meetings dating back to 2002. However, council rejected that resolution except for a resolved clause that would in the future provide the public with copies of electronic communications among councilmembers during its meetings – by appending them to the official minutes of the meeting that are eventually posted on the city’s website.

The council also put looming financial issues on the radar by passing a resolution that opposes a recent Michigan budget proposal that would cut state shared revenues to the city of Ann Arbor by about $1.2 million. At the council’s budget and labor committee meeting that was held Monday – before the regular council meeting – Tom Crawford, the city’s chief financial officer, floated some possible ideas for meeting that shortfall.

Near North

Near North is an affordable housing project of 39 units proposed for North Main Street. The nonprofit Avalon Housing and the developer Three Oaks are working on the project together. The project is a planned unit development (PUD), which by definition asks for a rezoning of the property to accommodate the project. As a PUD, it is evaluated by the city council in terms of whether its public benefit is adequate to justify the rezoning that is requested. It therefore differs from the City Place project, which is a “matter of right” proposal and does not ask for a rezoning of the property.

Public Comment on Near North

Close to a dozen people spoke in favor of the Near North project, most of them citing the affordable housing benefit provided by its 14 supportive housing units as well as the remaining units that target incomes at up to 50% of the area’s median income.

Dave DeVarti stressed that the project was important as a step in the direction of replacing the 100 units of affordable housing lost at the location of the old YMCA building at the corner of Fifth and William, when the city acquired the property and subsequent mechanical failures led to its demolition. The need for affordable units would, said DeVarti, become more acute as federally funded co-op housing was converted to market-rate condos. The benefit of the affordable units offered by Near North, he said, was that the affordability of the units was built into the zoning, which meant that their lower cost would extend beyond a 20- to 30-year horizon.

Tim Colenback immediately followed DeVarti, saying that he agreed with everything DeVarti had said, describing him as a “great and wise man.” The remark drew a laugh. Colenback went on to enumerate some of the city’s parking structures, saying how pleased he was to have so many great places in the city where he could “house his car.” He asked that the city think of making the same commitment to housing people has it does to housing cars.

Ray Detter took up Colenback’s comedic gambit, by declaring, “I am not a great and wise man!” But he then actually went on to disagree with Colenback and DeVarti’s conclusion about supporting the project. He noted that many of the same arguments against City Place also applied to Near North: It’s not consistent with the Central Area Plan and it’s too dense. Further, said Detter, it did not represent a significant increase in affordable housing – especially when weighed against the removal of the existing houses on the parcels where Near North would be built. Where, Detter wondered, would the people in the 27 bedrooms in the five existing houses go?

John Floyd argued against the project in two ways. First, he said, it would be healthier if the city attempted to surround downtown with neighborhoods similar to the Old West Side. And second, the fact of a PUD proposal – which by definition means that a variance to the existing zoning is requested – seemed to undermine the idea that the city was currently engaged in a process to reevaluate the zoning of the entire city.

Several speakers emphasized the positive benefit that had come from the collaboration between the North Central Property Owners Association and the developer. Architect Damian Farrell said that the collaboration had resulted in “a better design.”

That collaboration was reflected when Three Oaks Group developer Bill Godfrey and North Central Property Owners Association planning committee member Tom Fitzsimmons made their respective remarks standing jointly at the podium.

But the collaboration was hedged with some remaining serious concerns. They were expressed clearly by John Hilton, who first made clear what crucial point had finally won the neighborhood’s support: the revision in design that allowed for the planting of larger trees, which could develop into a mature landscaping. That, he said, was the key difference between near-downtown and downtown neighborhoods. He then expressed concern for a planning process that led from a project that was, five years ago, “laughed out of city hall,” to something seen in a completely different light when the phrase “affordable housing” had been attached to it.

Hilton singled out Tony Derezinski (Ward 2), who is the council’s representative to the planning commission, for particular criticism. Hilton criticized Derezinski for being “too tired” to deliberate on the project at a planning commission meeting, moving to postpone those deliberations, then “skipping” the meeting when the deliberations took place. Derezinski later contended that he would have voted yes on the project. [The planning commission vote was 5-2 in favor of the project, but did not reach the 6-vote majority needed for recommendation to the city council.] Derezinski, Hilton said, had “crossed the line to dishonesty.”

Hilton also singled out Sabra Briere (Ward 1) for special praise, saying that he had not imagined that a councilmember could be so resourceful.

Council Deliberations on Near North

In expressing his support of the project, Carsten Hohnke (Ward 5) said that the approval of a PUD required demonstration of “a bold benefit to the community.” Near North offered that, he said, in the form of 39 units of affordable housing, and the removal of three houses from the floodway. Massing of the building was, he said, a concern for a near-downtown neighborhood. But it represented a step forward in the drive for as many as 500 units of affordable housing.

Notes taken during city council deliberations on Near North by Michael Appel, executive director of Avalon Housing, which is collaborating on the project with Three Oaks Group. (Photo by the writer.)

Stephen Rapundalo (Ward 2) said that Near North set “a new standard for how developments should be collaboratively worked upon.” He stressed that the replacement of the 100 units of housing from the old YMCA site had not fallen off the radar.

Mike Anglin (Ward 5) said that he was at first disappointed in the project, due to the amount of opposition in the neighborhood, but felt that now it was a model that could be expanded throughout the city.

Sandi Smith (Ward 1) brought up the issue of LEED certification, which she has previously emphasized in connection with Near North. The project earned her support, despite the fact that she wanted a stronger commitment at this stage to LEED certification at a level as high as possible.

Sabra Briere (Ward 1) sought clarification on the side agreement reached between the developer and the neighborhood association regarding Phase Two of the project, which governed how and when the retail space in the project could be filled. Kevin McDonald, with the city attorney’s office, explained that it essentially was in the same spirit as what had been built into the supplemental regulations. The idea was to not allow use of the retail portion of the project until the existing retail store on the southeast corner of Main and Summit was no longer a commercial property.

Briere, though she ultimately supported the project, expressed the kind of reservations that Ray Detter had outlined in his public commentary. She was concerned about the construction of a building with a “factory-loft look” getting built in a near-downtown neighborhood. She said she would have had fewer reservations if the project had all 39 of its units reserved for supportive [not just affordable] housing and if it did not require removal of any houses.

Mayor John Hieftje expressed his support for the project by citing the opportunity to create greenspace on that corner, and the possibility that the retail space could become the equivalent of a Jefferson Market for this area.

Outcome: The council approved unanimously the PUD proposal for Near North.

City Place

The proposal before city council on Monday was a “matter of right” project with 24 total units, each with six bedrooms. There would be two buildings, separated by a parking lot. Currently there are seven houses standing on the parcels where the project is proposed. The project’s history includes the following dates:

• Jan. 15, 2008: Conditional rezoning – Ann Arbor Planning Commission recommended denial.
  YES: None. NO: Bonnie Bona, Craig Borum, Jean Carlberg, Ron Emaus, Joan Lowenstein, Eric Mahler, Ethel Potts, Evan Pratt, Kirk Westphal.
• May 20, 2008: PUD (planned unit development) – Planning Commission recommended denial.
  YES: Emaus. NO: Bona, Borum, Carlberg, Lowenstein, Mahler, Potts, Westphal. ABSENT: Pratt.
• Sept. 4, 2008: PUD – Ann Arbor Planning Commission recommended denial.
  YES: Borum, Lowenstein. NO: Bona, Carlberg, Potts, Pratt, Westphal, Woods.
• Dec. 15, 2008: City Council rejects resolution to establish a Historic District Study Committee for Germantown.
• Jan. 5, 2009: PUD – City Council denied on a unanimous 0-10 vote.
  NO: John Hieftje, Sabra Briere, Tony Derezinski, Stephen Rapundalo, Leigh Greden, Christopher Taylor, Margie Teall, Marcia Higgins, Carsten Hohnke, Mike Anglin. ABSENT: Sandi Smith.
• April 21, 2009: MOR (matter of right) – Planning Commission recommends approval on 6-3 vote.
  YES: Bona, Carlberg, Derezinski, Mahler, Westphal, Woods. NO: Potts, Borum, Pratt.
• June 1, 2009: MOR – City Council postponed it due to inconsistencies in drawings provided on website. [Errors attributed to city staff.]
• June 15, 2009: MOR – City Council sent it back to Planning Commission due to technical errors with drawings provided at the Planning Commission April meeting. [Errors attributed to city staff.]
• July 7, 2009: MOR – Planning Commission recommended denial on 5-1 vote to approve (needed 6).
• July 20, 2009: MOR – City Council postpones until January 2010, to give the developer the opportunity to pursue a revised PUD. A condition was that the developer could bring back the matter of right project with 35-days notice.
• Aug. 9, 2009: City Council establishes a Historic District Study Committee and moratorium on demolition for two-block area, including the proposed site of City Place.
• Aug. 11, 2009: “Streetscape PUD” receives planning staff initial review.
• Aug. 12, 2009: “Streetscape PUD” introduced to neighbors to comply with the neighbor participation ordinance.
• Aug. 17, 2009: City Council revises language of moratorium to include all forms of work, including demolition.
• Aug. 30, 2009: Application for “Streetscape PUD” was not at accepted by city planning staff.

Public Commentary on City Place

At least two dozen people spoke against the project during the public hearing.

Some argued that the council should deny the project on the basis that it did not actually meet the zoning code as contended by the city planning staff. Specifically, they said, the height of the building exceeded the allowable 30 feet, because what the staff was analyzing as a dormer was actually the roof. In addition, they contended that the building did not meet setback requirements, because the rule applied by city planning staff was intended for irregularly-shaped lots, not rectangular lots.

Others argued against approval of the project based on the contention that it jeopardized health, safety and welfare. The health claim was based on increased load to sewer and water systems, while the safety claim was based on increased vehicular traffic in the area.

Still others pointed to the value of the existing seven houses that would be torn down in order to build the project. That value was expressed both in terms of historic worth as well as the labor of the workers who had built the homes – labor should be honored.

Speaking in favor of the project was the developer, Alex de Parry, as well as the architect, Bradley Moore, and consultants David Birchler and Jamie Gorenflo. De Parry ticked through the key dates of the time line, including July 20, when he said the city was encouraging him to bring forward a “Streetscape PUD” as an alternative to the original PUD that had been rejected by the council on Jan. 5, 2009. The “Streetscape PUD” would have preserved the front part of six out of the seven houses, linking them with a structure at the rear of the property.

Believing that the city was acting in good faith, he said, they had asked the council to table the “matter of right” project in order to be able to comply with the city’s request to pursue the “Streetscape PUD” instead.

Moore cited his more than 20 years of experience working and designing buildings in Ann Arbor in every different zoning district in the city. He said that he’d always worked with the planning staff to follow their interpretation of the zoning codes and that this project should be approved based on the fact that it met the zoning codes. For Birchler’s part, he walked the council through the four relevant chapters of the city code – Chapter 55, 59, 62, 57 – concluding that for each chapter, the project conformed to the code requirements. Gorenflo attested to the adequacy of the sewer and water utilities for the project.

Council Deliberations on City Place

Carsten Hohnke (Ward 5) began deliberations by saying that there had been very little support for the project, pointing to the unanimous rejection by the council of the earlier PUD proposal in January. [Although the vote for the record was unanimous, the project enjoyed support from at least six, possibly seven, councilmembers. They  did not vote for the project after neighbors who were opposed to the project successfully filed a protest petition just before the January 5, 2009 vote – that petition raised the standard for approval to an eight-vote majority.]

Hohnke went on to say that while de Parry claimed there was no other choice for him but to submit the matter of right project, there was another choice that was represented by the outcome of the Near North project, that had seen a more collaborative approach. He said that de Parry had used “every tool in his tool box” and that the city council had merely used the tools it had in putting a powerful moratorium in place. He said he would support the outcome of the historic district study committee if the establishment of a district was recommended, which was a reasonable expectation, he said. Earlier during the evening in his communications to council, Mayor John Hieftje also had indicated he planned to vote for the establishment of a historic district.

Hohnke then compared the idea of bringing the matter of right project before the council in the face of the moratorium to “stamping feet, being upset you didn’t get what you wanted.”

Nevertheless, Hohnke said, he was going to “hold his nose” and vote for approval because the project met the zoning code, despite diligent attempts to find any possible violation.

Mike Anglin (Ward 5) said he felt that there might be some basis for denying the project based on the height and setback issues.

Stephen Rapundalo (Ward 2) indicated that he had preferred the original PUD proposal. He was not as sanguine about the historic district as Hohnke and Hieftje had been, saying that the process of the establishment of a historic district would need to be evaluated at the point the committee made a recommendation. Margie Teall (Ward 4) declared that she absolutely didn’t like this project and said she was looking forward to the historic district study committee report.

Sabra Briere (Ward 1) began her remarks by describing the developer as wanting to “have it all.” She contended that he had not given the city the best product he could, but rather something that they had to approve – which was, she said, a “creative way of using our own rules against us.”

However, there were some positive effects from the developer’s tactic, she said, which were that (i) it had caused the R4C zoning study committee to take a slightly different focus, and (ii) that she felt the council might be less reluctant to consider a historic district study committee in the future. [This was an allusion to the council's rejection in December 2008 of the establishment of a historic district study committee for the area. On that occasion, Christopher Taylor (Ward 3) had said he'd need to see a pile of additional data to support formation of a committee, and Leigh Greden (Ward 3) explained that he would not vote for a study committee, because he predicted he would vote against a district, even if one was recommended.]

On Monday, Taylor rejected the contention that the vote on the matter of right project was a matter of “standing up to them” or “having some fortitude.” It was, he said, simply a matter of following the law.

In his communications to council earlier in the meeting, Hieftje indicated that legal jeopardy was attached to not approving the project. And the council avoided that kind of legal jeopardy by voting unanimously to approve it.

The council thereby established what would have happened at either the June 1 or the June 15 meetings of council, when the council failed to vote on the matter of right project – due to errors made by city planning staff in preparation of the materials for the council.

Outcome: The council approved unanimously the matter of right City Place proposal.

Council Electronic Communications

Mike Anglin (Ward 5) had indicated at two prior council meetings his intention of bringing forward a resolution that would (i) release city council emails sent during past meetings – dating back to 2002, when laptop computers were first used by the council, and (ii) make public as an attachment to the meeting minutes the emails sent by councilmembers during future meetings .

Hatim Elhady, left, holds two yellow signs expressing support for Mike Anglin's email resolution. Elhady is an independent candidate for the city council's Ward 4 seat, challenging Marcia Higgins. To Elhady's right is Yousef Rabhi, who is the Ann Arbor Democratic Party's vice-chair of campus relations. (Photo by the writer.)

The resolution evolved from the release of emails by the city in response to FOIA requests made initially by the Great Lakes Environmental Law Center for emails sent during a meeting in February in which an underground parking structure was approved. That request was followed up with others by The Ann Arbor News, The Ann Arbor Chronicle and other citizens. The emails ranged from juvenile horseplay to  violations of the Open Meetings Act, which requires that deliberations of a public body be made at an open meeting.

Public Commentary on Council Email Resolution

Three people spoke during public commentary reserved time at the start of the meeting on the email resolution.

Andrew Ryder: After reading a brief poem, Dryer suggested that “people who don’t have anything to hide don’t hide it.” He asked those in the audience who supported the resolution – many of whom were already holding yellow signs with a statement of support – to stand. Something like thirty or so people stood.

Tim Colenback: Colenback thanked Sabra Briere (Ward 1) and Mike Anglin (Ward 5) for putting the resolution together, saying that it represented an important step to restore trust. He suggested that there was a stigma attached to the council itself and to the community as a whole as a result of the emails that had been made public. That harm could be repaired partly through Anglin’s resolution, he contended. He also argued that the release of past emails could properly inform future city councils of the basis for decision-making by past councils.

Jack Eaton: Eaton urged the council to pass Anglin’s proposed measure, saying there was no question that the councilmembers had engaged in improper email exchanges. He characterized the measures taken by councilmembers to date as half-hearted, saying that only some councilmembers had offered apologies, and that they had been only partial apologies. [To date, no councilmembers have made apologies in the council chambers during a council meeting.] With regard to a new council rule that restricts the sending of emails by councilmembers, Eaton noted that even the Open Meetings Act had not prevented councilmembers from sending emails to each other. If money was really a concern, he suggested, then councilmembers should dig into their own pockets – pointing out that the meeting in December of 2007 when council had considered its own pay raise [it's actually required to do so] was “tainted” by exchanges of emails that arranged the sequence and nature of deliberations.

Council Deliberations on Council Email Resolution

Mike Anglin (Ward 5) led off deliberations by making essentially the same case that the public speakers had made: it was an effort to increase transparency. The emails were subject to the Freedom of Information Act in any case, Anglin said, but requesting the emails under FOIA would cost the requesters money. The idea behind his resolution, which set out a timetable for release of all council emails during meetings dating back to 2002, was to relieve individual citizens of that financial burden.

With respect to the financial cost to the city, city administrator Roger Fraser said that the “worst case scenario” was around $45,000.

Sabra Briere (Ward 1), who’d worked with Anglin to craft the language of his resolution, said that some of the changes had been to address concerns of staff by lengthening and structuring the timetable for release of the documents. She said she’d read every word of the emails that had been requested to date under the FOIA, and that it had been a revelation – not always in a good way. She said that there would likely be a brief embarrassment to some councilmembers – present and past – when additional emails were released, but that it was a good move for all of council. She characterized it as “an ethical move.”

Sandi Smith (Ward 1) allowed that the changes that had been undertaken “make it begin to be palatable,” but she quickly dashed any hope she’d be supporting the resolution as it stood, saying “I can’t be shamed into doing this.” Her point was that the majority of her emails had already been made public, having just been elected to the city council in November 2008.

Smith said she agreed with the idea of attaching future emails during meetings to the meeting minutes. For the past emails, however, she said, “There’s a mechanism in place called FOIA. It is not a roadblock.”

Smith then attacked the proposal on grounds of its cost, saying that it reflected 6-7 years of Project Grow funding. [For FY 2010, the council did not approve the $7,000 that had been allocated to the gardening nonprofit in past years.] Or, she said, the $45,000 could fund six individuals for supportive services. Later in deliberations, Smith said she’d been turning over every stone in the budget trying to find a way to save $380,000 so that parking meters would not need to be installed in residential neighborhoods near downtown – she’d come up $90,000 short. In that context, she couldn’t support an expenditure on past emails.

She concluded her second speaking turn by addressing Anglin directly concerning his remarks about his intention to bring the proposal forward at a previous council meeting [presumably the Aug. 17 meeting]: “You emailed me not 30 minutes after you proposed this! I don’t take that lightly.”

Other councilmembers picked up on the cost issue, which Smith had introduced, with several of them characterizing the proposal as simply a shifting of the cost from individual requesters to the city – not something they were willing to contemplate in the current economic climate.

Tony Derezinski (Ward 2) related his recollection of his time in the state legislature in 1976 when the FOIA was being debated, saying that the debate at the time centered then, as now, on the question of full-disclosure versus reasonableness of cost.

Another theme identified by councilmembers in arguing against the original resolution was the need to look forward instead of backward. Margie Teall (Ward 4) said that everyone she’d talked to was supportive of the council looking ahead. In weighing the harm that the already-released emails had caused the council, Mayor John Hieftje said that he’d much rather see the council looking forward.

Only Carsten Hohnke (Ward 5) joined Anglin and Briere in supporting the idea of the city systematically releasing past city council emails.

So an amendment proposed by Smith – to eliminate from the resolution all but the part that would attach future emails during meetings to the official minutes – passed with dissent from Anglin, Briere, and Hohnke.

The resolution as amended passed with dissent only from Anglin, who told The Chronicle after the meeting that it had been “gutted” to the point that he couldn’t support it. [In that respect, the resolution thus played out in similar fashion to a recent moratorium on development in R4C zoning districts that Anglin had proposed. After substantial amendment to that resolution, Anglin voted against it.]

Outcome: With dissent from Anglin, council approved a resolution that will see electronic communications exchanged among its members during its meetings attached to the official minutes of meetings.

Analysis of Cost-Shift Argument

The “cost-shift” analysis that led many councilmembers to conclude that it was not fiscally responsible to voluntarily release past emails could be based on an incomplete understanding of who bears the actual cost of the effort in responding to a FOIA request.

The city’s policy is that the first four hours of labor required per request to separate and redact material is not charged to requesters. As a consequence, by making separate requests for material, requesters can virtually eliminate the cost to themselves of obtaining records.

Further, the FOIA carries a three-week time period for compliance, as contrasted with the comparatively relaxed, several-month time frame proposed by Anglin’s resolution. So if the city is forced to provide the material under FOIA, the fees the city could collect would (i) likely fall well short of covering the city’s cost, and (ii) require the city’s staff to do a large volume of work in a constrained time frame.

Budget Projections

Already at its Aug. 6 meeting, the city council had heard a slightly revised forecast from Tom Crawford, the city’s chief financial officer, that included possible shortfalls for FY 2010, which is the current fiscal year. The range for projected shortfalls was $2.4 to $3.3 million.

Ideas for covering that shortfall were floated at the council’s budget and labor committee meeting that was held at 5 p.m. this past Monday before the whole council met at 7 p.m. Councilmembers Mike Anglin (Ward 5), Sabra Briere (Ward 1), Stephen Rapundalo (Ward 2), Marcia Higgins (Ward 4) and Mayor John Hieftje constitute the council’s membership on the committee.

Also at the committee meeting were city administrator Roger Fraser, plus heads of all the city departments, including: Sue McCormick, director of public services; Jayne Miller, director of community services; Barnett Jones, director of safety services; Robyn Wilkerson, head of human resources; and  Stephen Postema, city attorney.

Among the ideas being considered in a preliminary fashion by staff to account for the FY 2010 shortfall is an extension of the mowing cycle for parks. Higgins was concerned that it was the previously longer mowing cycles that had led to complaints from the public about the upkeep in parks, and she noted that the idea of increasing from a 14-day to a 19-day cycle would mean that the city would be incrementing back up to a longer cycle. Hieftje wondered why in some cases an entire field needed to be mowed when simply carving a mowed path might suffice. Miller explained that much of the expense of mowing involved getting staff and equipment to the place to do the mowing. At the same time, McCormick said that staff always looked at the possibility of “naturalizing” areas.

Rapundalo drew out the fact that “savings from golf course losses” meant that losses for the golf fund were $130,000 less than anticipated – the measures put in place by the golf course task force and city parks staff to increase revenues were having an effect.

Briere asked about the idea that stump removal be eliminated from the general fund and assigned to the stormwater fund. “How does that save money?” she asked. Answer: It doesn’t, but it’s paid for out of a different revenue stream. The connection of stump removal to stormwater is this: To replant trees, which help reduce stormwater runoff, it’s necessary to remove stumps.

There’s been some stormwater funds freed up, explained McCormick, because stimulus funds have been used to reduce the debt service on some projects the city is doing through the office of the county’s water resources commissioner, Janis Bobrin.

Another idea to increase revenues is to look at the rates for expired parking meter fines.

The discussion was not exhaustive of all the various ideas, and it was stressed: They’re just ideas at this point.

There are enough ideas, however, that if implemented, the shortfall for FY 2010 could be mostly covered. The projected shortfall of $4 million to $5.8 million for FY 2011, said Crawford, still had a lot of “heavy lifting” to go. About $1.6 million in possible savings ideas had been identified, with another $2.1 million that might work, Crawford said.

One of the unknowns, and the factor that accounts for the range in the shortfall projections, involves the amount of statutory state shared revenue the city will receive. A budget proposed by state house speaker Andy Dillon would reduce statutory state shared revenue by 30%, which translates into a $1.2 million reduction for the city of Ann Arbor.

It’s in that context that Leigh Greden (Ward 3) brought forward a resolution at the council’s meeting that expressed opposition to that state budget proposal. The resolution urges state Sen. Liz Brater, and state Reps. Pam Byrnes and Rebekah Warren – all legislators representing the Ann Arbor area – to vote against that budget, and asks Gov. Jennifer Granholm to veto any budget that would cut statutory state revenues.

Outcome: The resolution opposing cuts to state shared revenue passed unanimously.

Publishing

During public commentary on the need to adopt a sense of “diminished astonishment” when trying to follow public events, Jim Mogensen mentioned the fact that the public hearing on City Place had been published in the Detroit Free Press, but not in AnnArbor.com’s print edition.

It’s worth noting that the state statute requires that a newspaper be in publication for a year before it meets the legal requirement for publication of legal notices – so AnnArbor.com, which started publishing in July 2009, doesn’t qualify.

During a break in council’s meeting, city clerk Jackie Beaudry clarified for The Chronicle that from the point of view of cost, the Washtenaw Legal News is the city’s preferred choice, but that sometimes the timing of the once-a-week Legal News publication schedule forces the city to resort to the more expensive Detroit Free Press. Compared to the old Ann Arbor News, Beaudry said, the Free Press notices cost 10 times as much.

The issue of legal notices came up on another occasion during the council’s meeting when Marcia Higgins (Ward 4) asked for clarification on the status of the ballot language for the proposed charter amendments on the publication of the city’s new ordinances.

At its Aug. 17 meeting, the city council had passed a resolution to place two charter amendments on the ballot, each related to the publication of ordinances after being approved by the city council. Then, at its Sept. 8 meeting, the city council revised the ballot language – at the suggestion of the state attorney general’s office and parallel with the suggestion already made by The Chronicle on Aug. 18.

County Clerk Larry Kestenbaum sent a letter dated Sept. 10 to the city of Ann Arbor’s clerk, to the effect that the ballot language revision made by city council could not be accepted, because it came after the deadline of Aug. 25, which is set by the state.

Kestenbaum followed up with a letter dated Sept. 17, which relaxed the clerk’s position: the ballot language revision could be accepted, with the provision that the city accepted any liability and financial implications that might attach to changing the language after the deadline. [See also Kestenbaum's comment written on The Chronicle's Sept. 20 caucus report.]

At council’s Monday meeting, the explanation offered to Higgins by city attorney Stephen Postema did not address the issue of the city’s possible liability and financial implications.

Plastic Bags

Before the council was a resolution that would restrict the use of plastic bags at retail establishments. Since its first introduction more than a year ago on July 21, 2008, the resolution had been postponed at the request of the resolution’s sponsor, Stephen Rapudalo (Ward 2), on four different occasions. On Monday it was a different story: no postponement. Instead, Rapundalo asked his colleagues to table the resolution. That means it will need six out of 11 votes to be brought back off the table for consideration.

Rapundalo acknowledged right out of the gate that he might be “incurring the wrath” of his colleagues in asking for another delay. He offered a kind of status report on the work, however, saying that the work was about 3/4 done, pointing to focus groups that had been conducted, as well as a comprehensive survey.

In response to a request from Mayor John Hieftje for some kind of timetable, Rapundalo said that before the end of the year, it would be ready.

Outcome: The council voted unanimously to table the resolution on plastic bags.

Applications Requested

Mayor John Hieftje announced that there were vacancies on several boards and commissions for which applications were being sought: the cable commission, the taxicab board, the board of review, and the sign board of appeals.

Descriptions of these bodies are from the city’s website.

Cable Commission

How Established: Section 2:128, Chapter 32, Title II of the Ann Arbor City Code. Purpose: To advise Council, City Administrator and Director of Cable Communications on all matters pertaining to the implementation of the provisions of the City’s Cable T.V. Ordinance and Franchise Agreement with the cable company; review and make recommendations on the general direction of Community Access Television. Special Qualifications for Appointment: Ability to interpret financial and other reports; time to be involved in committee work over and above regular monthly meetings; enthusiastic advocate of both Cable T.V. and local community television. Length of Terms: 5 years – However, with the approval of Council, the Mayor shall fix initial terms at 1, 2, 3, 4 and 5 years so that no more than 2 appointments expire in 1 year. Any vacancy in office shall be filled by the Mayor for the remainder of the term. Meeting Times and Frequency: This is a permanent commission that meets the 4th Tuesday of the month at 7:00 pm, at Community Television Network, 2805 S. Industrial. The meetings are telecast live and taped for replay. Member / Committee Composition: 7 members – maximum.

Taxicab Board

How Established: Section 1:207, Chapter 8, Title I of the Ann Arbor City Code. Purpose: The purpose of the Taxicab Board is to enforce the Taxicab Ordinance, hear appeals of those who are aggrieved by any decision made by the Administrator and adopt regulations to facilitate the administration of the Taxicab Ordinance. Length of Terms: Councilmember 1 year, other members 3 years. All terms expire the 2nd Monday in April. Members continue to serve after date of term expiration until a successor is appointed. Meeting Times and Frequency: This is a permanent committee that meets the last Thursday of every month at 8:30 a.m. in the 4th floor conference room. Membership / Committee Composition: 8 members: 5 voting members including 1 Councilmember, the CFO (non-voting), and the Chief of Police (non-voting).

Sign Board of Appeals

How Established: Section 5:517, Chapter 61, Title V of the Ann Arbor City Code. Purpose: To hear and decide appeals where the appellant alleges that the Administrator has made an error in the enforcement of the Code regarding signs and outdoor advertising. The Board can authorize a variance from the strict application of the Code if it involves practical difficulties of unnecessary hardships. Special Qualifications for Appointment: None. However, professional and business persons are recommended. Length of Terms: 3 year terms which continue until a successor is appointed. Meeting Times and Frequency: This is a permanent Board that meets the 2nd Tuesday of each month at 3 p.m. This Board meets only when an appeal has been submitted. Membership / Committee Composition: 7 members.

Board of Review

How Established: Section 9:10(a) of the City Charter – Chapter 8, Section 1:188 of the City Code. Second Board of Review Committee eliminated on March 3, 2003. Purpose: Examines and reviews the assessment roll of the City. Special Qualification for Appointment: Knowledge of taxation and of property values. Length of Terms: 3 years. Appointment in January to a term beginning in February. A member whose term has expired may not continue to serve. However, there is no limit to the number of consecutive terms a member may serve. Meeeting Times and Frequency: This is a permanent Board that meets at 9 a.m. beginning the 3rd Monday in March; 6 hours each day for 4 consecutive days. In addition, the Board meets on the Tuesday (for 1 day) following the 3rd Monday of July for correction of errors only and the Tuesday (for 1 day) after the 2nd Monday of December for correction of errors only. Membership / Committee Composition: 3 members – Number established by Charter. A second Board of Review was appointed by Mayor and Council on March 5, 1990 at the request of the City Assessor. The second Board of Review has been eliminated since the passage of Proposal A establishing limits on taxable values has reduced the number of appeals received from local residents and businesses and it is anticipated that the number of appeals will continue at this reduced level.

Other Business

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Public Comment

Among the topics addressed by speakers at public comment were the creation of the Ann Arbor Tree Conservancy . In a somewhat related theme, one person spoke to the importance of maintaining good sight-lines at intersections not obstructed by tree-limbs or other foliage.

Two speakers addressed the issue of homelessness in connection with Camp Take Notice.

One speaker addressed the importance of preserving the diverse and distinctive character of Ann Arbor’s neighborhoods.

Other Council Business

The city council approved a new historic district application fee schedule.

It also authorized application for funding of storm water improvements in the West Park area through the office of the county’s water resources commissioner. [See previous Chronicle coverage in "West Park Renovations Get Fast-Tracked."]

The council also approved an agreement with MDOT, that will see a start this fall to a project that will:

… replace the existing southbound US-23 ramp with a new “loop” ramp in the northwest interchange quadrant, construction of three roundabouts in place of the current traffic signals, constructing a new pedestrian bridge spanning US-23 along the south side of Geddes Rd and non-motorized multiuse asphalt path connecting Earhart Road to Dixboro Road, and reconstructing Geddes Road from the Bridge over US-23 west of Earhart Rd

The council also approved street closures necessary for the Big Heart Big House Run, on Oct. 4, 2009, which is a 5K/10K run that gives entrants a chance to finish their race by running down the tunnel of Michigan Stadium onto the football field, where the finish line is located. Marcia Higgins (Ward 4) got assurances from Jayne Miller, community services director with the city, that neighbors in the areas of the street closures had been adequately notified.

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

Next council meeting: Monday, Oct. 5, 2009 at 7 p.m. in council chambers, 2nd floor of the Guy C. Larcom, Jr. Municipal Building, 100 N. Fifth Ave. [confirm date]

At the work session, city administrator Roger Fraser and the city’s chief financial officer, Tom Crawford, indicated that their preferred strategy was not to build any firefighter layoffs into the FY 2010 budget – they wanted to see if they could squeeze the $260,000 out of the budget in the course the first part of the FY 2010, which for the city begins July 2009. There’s uncertainty still, said Fraser, about how many police officers will take advantage of the early retirement offer – a move the city is making to avoid laying off 27 officers for FY 2010. Officers have until mid-June to make a decision. That uncertainty factors into decisions on the FY 2010 budget that council will make on  May 18.

Councilmembers took turns calling city staff to the podium to clarify questions on other topics of interest. That included parking meters – their possible installation in residential areas, as well as the feasibility of maintaining current levels of ticket revenues without as many community standards enforcement officers dedicated specifically to ticketing. Other topics included the Local Development Finance Authority (questions about angels), historic district consultant (likely to be cut in FY 2010, instead of waiting until FY 2011), Project Grow (fund balance seen as too high) and the civic band (has not requested funding). The East Stadium bridges question came up, too (no money from state, but possibly from feds).

No formal decisions were made at the work session.

State Revenue Sharing Reductions

Kirk Profit and Kenneth Cole of Governmental Consultant Services, Inc. presented a grim economic picture to councilmembers in terms of the state shared revenue the city can expect. Of the four means of taxation – property tax, income tax, business tax, and sales tax – it’s sales tax that figures in state shared revenues.

The concept behind the state shared revenue system is that local municipalities in Michigan have a restricted ability to levy taxes, so the state reapportions to local municipalities some revenues out of the 6% sales tax that it collects. It’s 4% out of the 6% that the state can redistribute. The reapportionment comes in two flavors: the constitutional portion (15% of the 4% gross collections of the state sales tax) and the statutory portion (up to 21.3% of the 4% gross collections of the state sales).

Budget planning by the city of Ann Arbor in FY 2010 assumed the same amount of state shared revenue as last year – based on flat dollar amounts since 2005. Those figures were more conservative than the “consensus projected” numbers from January 2009, given by GCSI.  But the most recent projections – based on an Executive Order (2009-22) passed on May 5, 2009 by both the House and Senate appropriations committees – put expected state shared revenues at around $260,000 less that the number used for city of Ann Arbor budget planning.

                           Statutory           Constitutional       Total

A2 budget planning        $2,942,517          $7,884,545           $10,827,062
January 2009 forecast     $3,233,618          $7,763,929           $10,997,547
May 2009 forecast         $2,988,371          $7,576,700           $10,565,071

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The reduction in projections for the constitutional portion of the total is due to flagging sales tax revenues, which are coming in at around $22 million below what economists had projected for the current year. The reduction in the projection for the statutory portion stems not just from flagging sales tax revenues. It’s due to a stipulation in the executive order that calls for cities, villages and townships (“CVTs” in state legislative parlance) to get a payment that is only equal to the FY 2008 allocation. Without that executive order, the total revenue sharing amount would have been protected from cuts, even if sales tax collections decreased and caused a reduction in the constitutional portion. That protection is afforded by Public Act 251 of 2008.

Fire Protection

To address the shortfall of $260,000 against the numbers used for city of Ann Arbor budget planning, Tom Crawford, the city’s chief financial officer, suggested that one strategy would be to contemplate earlier layoffs than originally planned in the fire department. Those staff reductions had been planned for FY 2011. In response to a question by Leigh Greden (Ward 3), city administrator Roger Fraser indicated that the budget he wanted to put before council on May 18 would not include the fire department layoffs.

Fraser suggested a wait-and-see approach, in light of the fact that (i) it still was not clear how many police officers would take advantage of the early retirement option being offered, (ii) there was time to see how actual operating expenses played out from July 2009 to the end of the year. On the first point, Fraser said it was possible that more officers would take the early retirement than the minimum needed in order for the city to meet its budgetary goal (which might itself help cover the $260,000). Officers have until mid-June to decide, which is after council votes on the budget. On the second point, Fraser said that the city monitors its spending on an ongoing basis and would be able to evaluate whether it was managing to spend somewhat less than actually budgeted – which could mean layoffs in the fire department would be unnecessary.

On the scenario sketched out by Fraser, if it were necessary to do so next spring, the decision to lay off firefighters could be made through an amendment to the budget. A budget amendment could also be undertaken in July, if the financial picture became clearer by then, he said.

Fire protection was also the one bright spot in GCSI’s report to council. The $1.1 million grant from the state to the city to cover the cost of fire protection for public institutions like the University of Michigan would not be cut. Mayor John Hieftje, however, asked Profit to clarify that this amount did not reflect a “fully-funded” grant, but rather only about 60% of the actual cost of fire protection. Profit allowed that there were some problems with the formula – among them, vacant land can figure into it – but that the kind of fire protection required by the university, with its laboratories and larger buildings, reflected a greater challenge.

In the ensuing discussion, Sandi Smith (Ward 1) asked Fraser to explain where the $1.1 million could be found in the fire department’s revenue statement. Fraser said that the $1.1 fire protection grant was listed as revenue in the general fund, not the fire department specifically, because the city didn’t tie the provision of fire protection to having the grant.

Parking Meters and Law Enforcement

Barnett Jones, director of safety services for the city of Ann Arbor (police chief), was on hand to explain how parking ticket enforcement would be achieved, given the plan to reduce community standards enforcement positions (who are dedicated specifically to writing tickets). Faced with skepticism from Stephen Rapundalo (Ward 2) and Sandi Smith (Ward 1) about patrol officers’ ability to write the same number of tickets, thus preserving ticket revenue, Jones remained cheerful. Jones said that he’d be calling on his officers to respond and that they would rise to the occasion. Patrol officers had always written tickets, and they’d continue to do so.

On the topic of a police officer presence in the downtown, Jones said that he wanted to get those officers assigned to downtown areas (which they have the option to cover by bicycle or on foot) back out on patrol. That didn’t mean that downtown merchants wouldn’t see police officers walking around downtown, he said. That’s because there’s a general directive to patrol officers to spend at least an hour a day outside their cars. Some of that time could be spent downtown, when officers would park and write tickets. A parked police car could help act as a deterrent. The downtown officers that merchants had come to know, he said, would be replaced by a greater number of different officers filtering through.

Carsten Hohnke (Ward 5) tried to get an arithmetic handle on the shift of responsibility of ticketing from community standards officers to patrol officers. If there’s 64 patrol officers, and 5 community standards were to be cut, then each patrol officer is being asked to pick up the slack of 1/12 of a community standards officer, he reasoned. “And that’s what you think they can do?” he asked Jones. Jones’ answer: Yes.

Sabra Briere (Ward 1) expressed concern that the added responsibility for ticketing could have a negative impact on those officers’ ability to fight crime. Jones reiterated his belief that his officers would rise to this occasion. He also pointed out that 54% of the city’s budget is the police department and that he was operating within the reality of a situation where cuts were necessary.

It wasn’t just the ticketing at parking meters that was at issue, but also the possible installation of new meters in residential areas outside the DDA. Field services staffers Mike Bergren and Pat Cawley were on hand with maps to give the same presentation they’d given last week at the DDA board meeting.

There are an additional 208 meter locations proposed in the central business district, in many cases adjoining the University of Michigan hospitals system. Bergren said that the city would like to explore the possibility of having the DDA do the management – the DDA administers the city’s existing parking program. He also indicated that options were being considered for addressing the negative impact on free parking availability for residents in the area.

Sandi Smith (Ward 1) – who had heard the presentation at the DDA board meeting because she serves on that body – pointed out that the addition of meters in residential areas was counter to the recommendation in the Nelson/Nyaagard study, which saw residential areas as appropriate for residential parking permits, but not meters. If parking is not allowed except for residents, that pushes motorists into the parking garages, according to that strategy. Bergren said that if a motorist had to pay to park anyway, then they might choose to park closer to downtown (i.e., in a downtown parking structure). Otherwise put, the goal of getting more people to park closer to downtown could also be achieved with parking meters.

Smith was joined by Briere, Stephen Rapundalo (Ward 2) and Hohnke in expressing their skepticism of the proposal. Hohnke expressed concern that parking meters reflected a “commercial invitation” into residential areas. Rapundalo’s concerns were partly practical. He wondered if motorists would simply move to the next block down where there were no meters. From Bergren, he elicited the revenue projections per meter, which Bergren characterized as on  the low end – 30% occupancy. While a meter could potentially bring in $2,000 a year, they assumed only $500 for estimating revenues for the newly installed meters, he said.

Historic District Consultant

The city’s historic district consultant was originally slated by the budget plan to be cut in FY 2011. Christopher Taylor (Ward 3) called on Jayne Miller, community services director, to inquire what the impact on planning staff would be for eliminating that position a year earlier – in FY 2010. In what way was city staff poised to absorb the loss of the consultant’s services, Taylor asked. Miller described how the consultant [Kristine Kidorf] had worked with staff over the last three and a half years on the unification of guidelines across all the city’s various historic districts plus a project in one of the districts – the Old West Side – to identify contributing structures. That work, Miller said, was complete. The consultant had also worked to help train planning staff on historic district issues. Individual staff [Jill Thatcher] had furthered her professional training by taking courses at Eastern Michigan University.

LDFA

Stephen Rapundalo had questions for Tom Crawford about the LDFA’s budget. [There's useful backround on the LDFA board, on which Rapundalo serves, in a previous Chronicle article on the recent LDFA retreat.] Rapundalo elicted from Crawford that he had been unable to identify other SmartZones (of which the Ann Arbor LDFA is one) across the state that used LDFA monies to fund organizational costs for private angel investing groups. That’s what is proposed for Ann Arbor Angels, as a part of the LDFA’s budget.

Rapundalo also sought clarity on the question of LDFA microloans: When they get repaid, do they get repaid to the LDFA or to Ann Arbor SPARK, the region’s economic development agency which is funded in part by the LDFA? Crawford said that was still being worked out.

Rapundalo also wanted to know if he’d be provided with any additional clarity as to the specific duties and responsibilities of the LDFA’s proposed staff person. Crawford said he had nothing detailed to report, but responded in the affirmative to Rapundalo’s request to get that information from the LDFA’s president as well as the details of the microloan situation.

Also related to economic development was a brief discussion of the city’s economic development fund. The fund was created in order to pay for the parking spaces in DDA parking facilities, which were required by Google as a part of the deal that located one of the  internet company’s advertising divisions in Ann Arbor. Regarding the current fund balance of around $700,000 – the fund had budgeted for a faster hiring rate than Google has achieved  – Rapundalo acknowledged that it was an attractive amount of money  to be used for other purposes, but encouraged his colleagues to leave it in place to provide for the eventuality that another similar situation to Google might come along.

Project Grow and Civic Band

At Briere’s request, Jayne Miller gave some background on Project Grow and the Ann Arbor Civic Band, which are not slated to receive the $7,000 they’ve been allocated in previous years. In the case of the civic band, Miller said that the organization had not requested funds.  The city and the band, said Miller, were working together on an arrangement for the band to use equipment for their concerts (e.g., music stands). Miller said that the city had worked with the band on getting fundraising efforts started.

Project Grow, on the other hand, had requested funding, Miller reported. The main consideration the city was looking at was the organization’s fund balance, which is roughly equivalent to the operating budget for one year. Briere noted that Project Grow’s explanation of the current sizeable fund balance was that their income came all at one time [plot rental fees in the spring]. [Council had heard from Sheri Repucci, former staffer at Project Grow, on the previous Monday night during the proposed budget's public hearing. She had addressed the fund balance by saying that the reserve was necessary because it took an entire budget cycle to replenish it, given the one-time-a-year income stream.] Miller said that according to Project Grow’s IRS 990 forms, the balance had persisted for four years.

East Stadium Bridges

Kirk Profit, the city’s consultant in Lansing, gave a fairly grim picture on prospects that the state could provide the kind of funding required to replace the Stadium bridges over State Street. [Council approved an application for state funding at its last meeting.]  Said Profit, “There’s almost no state resource for that bridge.” But federal dollars might be available, he suggested, in the form of  the Discretionary Surface Transportation allocation, which provides $1.6 billion – for the whole country. Profit said that U.S. Reps. John Dingell and Mark Schauer were working diligently to obtain funds for this area. Profit characterized Terri Blackmore from the Washtenaw Area Transportation study (WATS) as “our quarterback” on DST issues.