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

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

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

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

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

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

County Bonding Proposal

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

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

Washtenaw County administrator Verna McDaniel.

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

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

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

Benefits cited by McDaniel include:

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

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

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

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

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

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

County Bonding Proposal: Board Discussion

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

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

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

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

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

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

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

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

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

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

Equalization Report

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Equalization Report: Board Discussion

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

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

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

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

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

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

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

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

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

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

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

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

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

Four-Year Budget Process

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

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

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

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

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

Four-Year Budget Process: Board Discussion

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

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

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

Ronnie Peterson (D-District 5).

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Weatherization Grant

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

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

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

Weatherization Grant: Board Discussion

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

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

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

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

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

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

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

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

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

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

Employees, Residents Honored

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

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

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

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

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

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

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

Outcome: Commissioners unanimously passed all resolutions of appreciation.

Washtenaw Ride Dissolved

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

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

Washtenaw County commissioner Conan Smith (District 9).

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

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

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

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

There was no discussion on this item.

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

CSTS Job Creation

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

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

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

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

CSTS Job Creation: Board Discussion

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

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

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

Public Hearing for Urban County Plan

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

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

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

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

1. Increasing quality, affordable homeownership opportunities

2. Increasing quality, affordable rental housing

3. Improving public facilities and infrastructure

4. Supporting homeless prevention and rapid re‐housing services

5. Promoting access to public services and resources

6. Enhancing economic development activities

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

Communications & Commentary

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

Communications & Commentary: Thomas Partridge

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

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

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

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

Next regular board meeting: Wednesday, May 1, 2013 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to confirm date.] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public commentary is held at the beginning of each meeting, and no advance sign-up is required.

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

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

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

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

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

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

From left: Mark Kettner of the accounting firm Rehmann; Carla Sledge, Wayne County’s chief financial officer; Kelly Belknap, Washtenaw County’s finance director; and Pete Collinson, accounting manager for Washtenaw County. (Photos by the writer.)

The county’s finance staff, along with the auditor, Mark Kettner of Rehmann, highlighted several points, including a relatively dramatic increase in the general fund balance over the last few years – from $9.7 million in 2009 to $16.8 million at the end of 2012. Kettner also explained upcoming accounting changes that will require unfunded liabilities from the county’s pension and retirement healthcare plans – now totaling nearly $250 million – to be recorded in a different way, with more disclosure.

The new accounting changes – required by the Governmental Accounting Standards Board (GASB) – won’t begin until 2015, but commissioner Dan Smith (R-District 2) wondered whether the county could implement the changes sooner. It might be possible, Kettner replied, but “I don’t know why you’d want to do it.” He suggested that the board hold a working session to go over the upcoming changes in more detail.

Kettner also pointed out that the changes will affect government entities in different ways. For example, it’s likely that there will be more impact on the city of Ann Arbor, because of how its many “enterprise” funds might be affected and the implications that would have on outstanding bonds. At minimum, the changes will mean more work for finance staff.

Also at the April 3 meeting, commissioners voted to add 39 new jobs in the community support and treatment service (CSTS) department, which provides mental health and substance abuse services to county residents. The work is primarily funded by the Washtenaw Community Health Organization, a partnership between the county and the University of Michigan Health System. Most of the new jobs are union positions. Dan Smith expressed concern about adding to the county’s payroll, but supported the resolution along with other commissioners in a unanimous vote.

The board also took an initial vote to dissolve The Washtenaw Ride. That Act 196 authority is a remnant of a failed attempt to create a countywide transit system last year. Efforts to expand the current reach of the Ann Arbor Transportation Authority are still underway, but don’t require the structure that was put in place under Act 196.

The topic of public transportation was raised later in the meeting as well, as Ronnie Peterson (D-District 6) asked about the county’s role in the southeast regional transit authority (RTA). The RTA was formed by the state legislature last year to coordinate regional transit in the city of Detroit and counties of Wayne, Macomb, Oakland and Washtenaw. There was not uniform support for Washtenaw County to be part of this effort, and it’s not yet clear what the impact will be on the AATA.

In other discussion, Yousef Rabhi (D-District 8) highlighted a proposal in front of the Ann Arbor city council regarding possible ordinance changes governing the Ann Arbor Downtown Development Authority. Depending on what the council decides, there might be implications for the county, he said, so he wanted to put it on the board’s radar. For background on this issue, see Chronicle coverage: “DDA Tax Capture Change Gets Initial OK” and “DDA Ramps Up PR after First Council Vote.”

Also briefly mentioned was a discussion that occurred at a late March county pension commission meeting, raising questions about the new labor contracts that the board approved on March 20, 2013. At issue is whether the county complied with a state law requiring supplemental actuarial analysis before pension benefit changes are adopted. The county administration subsequently conferred with outside legal counsel, and confirmed their view that no new actuarial analysis was necessary.

And although it wasn’t discussed at the April 3 board meeting, the recent labor contracts resulted in another issue related to compliance with state law: Elimination of the county’s healthcare benefits for domestic partners.

When the county’s previous labor contracts were opened for renegotiation, that triggered the need to comply with a state law passed in late 2011. PA 297 restricts public entities from offering domestic partner benefits. For the county, those benefits had been offered to “other eligible adults” who met certain criteria, like sharing the same residence. Nine county employees had been using those benefits, according to Diane Heidt, the county’s human resources and labor relations director. The benefits were eliminated as of April 1.

Heidt noted that even if the contracts hadn’t been renegotiated in March, the benefits would have eventually been eliminated when the previous contracts expired at the end of 2013. She said the administration was very disappointed about the change, and continues to explore other options that serve the employees while complying with state law.

2012 Finance, Audit Reports

The main action of the April 3 meeting related to the county’s financials, including a report from the auditor, Mark Kettner of the accounting firm Rehmann. Chronicle readers will likely recognize his name, as Kettner oversees audits for several local government entities, including the city of Ann Arbor.

Part of the financial presentation included an award to the county. As she has for the past several years, Carla Sledge – Wayne County’s chief financial officer and past president of the Government Finance Officers Association – presented the county with a certificate of achievement for excellence in financial reporting for its fiscal year ending December 2011. The award is based on the county’s timely completion of its state-mandated comprehensive annual financial report, or CAFR. This is the 22nd year that Washtenaw County has received a certificate of achievement.

Pete Collinson of the county’s finance department also gave a brief presentation with highlights from the current set of reports. The financial reports presented to the board are:

• Washtenaw County Comprehensive Annual Financial Report (CAFR) for the year ended Dec. 31, 2012.
• Washtenaw County single audit of federal awards for the year ended Dec. 31, 2012.
• Washtenaw County Building Authority financial statements for the year ended Dec. 31, 2012.
• Washtenaw County Department of Public Works projects financial statements for the year ended Dec. 31, 2012.
• Washtenaw County Water Resources Commissioner financial statements for the year ended Dec. 31, 2012.
• Washtenaw County Employees Retirement System (WCERS) financial statements for the years ended Dec. 31, 2011 and Dec. 31, 2012.
• Washtenaw County Money Purchase Pension Plan (MPPP) financial statements for the years ended Dec. 31, 2011 and Dec. 31, 2012.
• Washtenaw County Voluntary Employees Beneficiary Association (VEBA) financial statements for the years ended Dec. 31, 2011 and Dec. 31, 2012.
• Washtenaw County Community Support & Treatment Services (CSTS) financial statements for the year ended Sept. 30, 2012.
• Washtenaw County Employment Training and Community Services Fund (ETCS) financial statements for the year ended Dec. 31, 2012 (conducted by the accounting firm of Stewart, Beauvais & Whipple).
• Washtenaw County Employment Training and Community Services Fund (ETCS) single audit of federal awards for the year ended Dec. 31, 2012 (conducted by the accounting firm of Stewart, Beauvais & Whipple).

Collinson described the process of fiscal review leading up to the audit. Auditors arrive in January and stay for about five weeks, then work with county staff for an additional period to finalize the financial statements. The goal is to make a presentation to the board by the first meeting in April, he said. He joked that an audit “certainly isn’t something we’d choose to do” every year. An annual audit is mandated by the Michigan Uniform Budgeting and Accounting Act (PA 2 of 1968), which requires it for local units of government with a population of 4,000 or more residents.

There are two components to the audit, Collinson explained: (1) an audit of financial statements for all of the county’s funds, including assets, liabilities, revenues and expenditures; and (2) a “single audit” of all federal grants, to see if the county complied with federal requirements attached to those grants. Last year, he noted, the county received about $28 million in federal grants, “so it’s a significant part of our operation.”

The 206-page CAFR is the main document that’s produced as a result of the audit, Collinson said. He noted that the auditor has given the county a clean opinion.

He also highlighted the different sections of the CAFR. For example, a statistical section provides a range of trend data, including employee count, expenditures, revenues and other financial information. “It’s a helpful section to look at the trends over time,” he said. [.pdf of CAFR statistical section]

Collinson said he wouldn’t spend a lot of time on the general fund report, noting that the board had received a detailed update on 2012 year-end finances at its March 20, 2013 meeting. The general fund ended 2012 with a $2.3 million surplus, and a fund balance of $16.8 million – or 16.8% of annual general fund expenditures and appropriations. He characterized that position as very good, and in line with the minimum fund balance recommended by the Government Finance Officers Association (GFOA). It would be good to build on that, he added, but it was impressive to finally reach the minimum. “I didn’t think we’d get there in my years here,” he said.

From left: Commissioner Felicia Brabec (D-District 4) and county administrator Verna McDaniel.

Turning to the report on all of the county’s fund balances, Collinson noted that some funds are restricted and can only be spent for a limited range of purposes. All county fund balances totaled $102.275 million at the end of 2012. Of that, $31.989 million was unobligated. [.pdf of schedule of fund balances as of Dec. 31, 2012]

He also mentioned the CAFR’s schedule of long-term liabilities over the last five years. Primarily, those liabilities are debt – such as debt related to construction projects – and actuarial liabilities for the pension and retirement healthcare systems. [.pdf of long-term liabilities] The schedule of long-term liabilities shows that total liabilities have increased from $393.9 million at the end of 2008 to $446.6 million as of Dec. 31, 2012.

Collinson also highlighted the county’s state revenue-sharing reserve fund, which had a balance of $4 million at the end of 2012. That remaining amount will be spent in 2013, and the fund will “sunset,” he said. The state has reinstated revenue-sharing at a lower level, with the county getting about $2.8 million for the current year. That amount is expected to increase, he said.

New to the CAFR this year are changes that reflect the county’s implementation of Governmental Accounting Standards Board (GASB) statements 63 and 65. Certain items that were previously classified as assets are now called “deferred inflows.” And certain liabilities are now called “deferred outflows of resources.” In addition, the balance sheet (statement of net assets) is now called the statement of “net position.” Collinson joked that if he read the definition of these terms, it wouldn’t clarify things. He noted that the terms “assets” and “liabilities” have worked well for centuries, but GASB has decided to change the terminology. He characterized these changes as minor, though he noted that “bigger changes are coming down the pike.” [The reference was to implementation of GASB 67 and 68, which was discussed later in the meeting.]

Collinson reported that despite the economy, the county has maintained its AA+ bond rating with Standard & Poor’s, and an Aa2 rating with Moody’s. It’s the second-highest rating possible, he noted. The county administration hopes to secure the triple-A bond rating in the future.

Collinson concluded by introducing Mark Kettner from the accounting firm Rehmann, who reviewed the 2012 audit and answered questions from commissioners.

Kettner noted that the current report was “unmodified” – a new term that’s being used instead of the previous “unqualified.” Both mean that the audit was clean, which is the highest level of assurance for financial statements. He cautioned that “the auditor did not say that everything is OK.” That is, it’s not an opinion on internal controls or the county’s financial position. It’s an opinion that the financial statements are fairly presented in accordance with criteria that meet GASB principles, he said.

Kettner also highlighted some terminology changes that result from GASB’s new “clarity” standards. Like Collinson, he characterized the changes as subtle, adding that it created some “nuisance work” compared to previous statements.

Bigger changes are coming, however. About a month ago, Kettner said he met with county administration and board leadership to talk about the current report as well as upcoming GASB standards 67 and 68. It would take hours to explain, he said, but he summarized it as a very big change dealing with pension plans and retirement healthcare. It will require an extra actuarial report, more disclosure, and recording of liabilities in a different way.

He pointed to the current pension fund statement – on page 115 of the CAFR – and noted that the current unfunded actuarial liability of $101 million will be recorded in 2015 as a liability on the county’s governmental-wide financial statements. That won’t have as great an impact as it would if it were required to be booked as a general fund liability, he said. [.pdf of CAFR statement regarding pension fund] “It’s going to be a big pop into the financial statements,” he said.

Two years later, in 2017, the same thing will occur for retiree healthcare – the county’s Voluntary Employees’ Beneficiary Association (VEBA), a 501(c)9 trust established to pre‐fund retiree healthcare benefits. Kettner said the county will be booking that liability – now at about $148 million – on the governmental-wide financial statements. [.pdf of CAFR statement regarding VEBA]

There’s lots of lead time, Kettner said, but he suggested that the board hold a working session, and perhaps include the boards of VEBA and WCERS, to talk in more detail about what this transition will entail.

Kettner praised the county for completing its audit by the end of the first quarter, saying it’s as good as any publicly traded Fortune 100 or 500 company.

2012 Finance, Audit Reports: Board Discussion

Dan Smith (R-District 2) asked if there’s anything preventing the county from implementing GASB 67 and 68 standards sooner than required. There’s nothing to prevent that, Kettner replied, but “I don’t know why you’d want to do it.”

Smith said he’d like to do it in order to get a clearer understanding of the county’s financial picture, because the county will be forced to do it eventually. Kettner likened it to going to the dentist to get a root canal, and being offered the choice of doing it tomorrow or next week – you might want to put it off.

From left: Mark Kettner with the auditing firm Rehmann talks with Curt Hedger, the county’s corporation counsel.

The information about these liabilities is already provided in the CAFR, Kettner noted. The amount might change – either up or down – because different assumptions will be used under the new GASB reporting standards. The county will need to get a new actuarial report that uses a different set of assumptions. But he indicated that those changes likely won’t be dramatic. The main difference will be a greater amount of disclosures, and a booking of the liabilities under the governmental funds.

Kettner added that the county couldn’t implement the changes until it gets the necessary information from the Municipal Employees’ Retirement System of Michigan, a statewide system. Although only a small subset of county employees are enrolled in MERS, that pension system still must be included in the county’s audit. He described it as a “triple whammy” for Washtenaw County, because the county will be required to include information for all three systems: MERS, WCERS and VEBA.

For MERS, the county will have to include information related to the entire MERS system, not just for the small piece of it that relates to county employees. So under the new standards, the county’s financial statements will need to include a listing of all MERS investments and the rate of return for those investments. Then, the county’s financial staff will have to calculate the county’s “slice” of those investments as part of their report. “So it’s going to be rather complicated, and I don’t expect that you’ll have MERS ahead of time,” Kettner said.

Kettner also questioned whether the actuaries hired by the county are prepared to handle this additional workload yet. “I hear what you’re saying,” he told Smith regarding an early implementation, “but I would really advise against doing it.”

Smith noted that if the liabilities are currently on the county’s balance sheet – what’s now called its statement of net position – then the net position would be negative. It would make the statement look significantly different, he said.

That’s true, Kettner replied, but the rating agencies – Standard & Poor’s and Moody’s – are well aware of this information, and they know that actuarial information is based on an educated guess. In addition, it won’t be as big of a hit to the county as it will to the city of Ann Arbor, Kettner said. For a city that has a higher number of enterprise funds – like water, sewer and other utilities – the pension and retirement healthcare liabilities will have to be allocated to those funds. “All of a sudden those funds are going to get significant charges, and it could push them into a fund deficit,” Kettner explained.

The minor impact could be a requirement from the state to do a deficit elimination plan. But there’s potential for greater impact: If those enterprise funds have revenue bonds that are still being paid off, there might be covenants in those bonds stating that the funds can’t operate with a deficit. If that’s the case, Kettner said, then the city would need to figure out how to address it, which might entail rate increases. “That’s not going to go over very well,” he said.

The changes will hit governmental entities differently, he said. For the county, it will hit them in the governmental funds, “and to be honest with you, some people don’t even pay attention to those. Rating agencies are more concerned about your general fund, and any significant proprietary [enterprise] funds.”

Continuing his questions, Smith then highlighted a sentence from the CAFR, included in the notes on the pension system. He read it aloud, and asked Kettner to clarify. That sentence states: “However, for purposes of calculating the annual required contribution (ARC), the System uses the aggregate cost actuarial funding method, which does not identify or separately amortize unfunded actuarial liabilities.” Kettner explained that the county is using a different approach in its calculations to determine an annual required contribution to the pension plan, compared to what’s required as a GASB disclosure.

Smith indicated that he had other questions and comments, but he understood that Kettner’s scope was limited to the report of financial statements, not to the actual financial condition of the county.

Commissioner Kent Martinez-Kratz (D-District 1).

Andy LaBarre (D-District 7) asked Pete Collinson to elaborate on his remarks about the county’s fund balance.

Collinson noted that for many years, the fund balance was around $4 million, which would barely cover more than a couple of weeks of operating costs, he said. Former county administrator Bob Guenzel had tried to add to it every year, to build the fund balance slowly. In the last couple of years, the growth in the fund balance has been much greater, he said, from about $7 million to the current $16.8 million. [According to data provided in the CAFR, the general fund balance grew from $7.4 million in 2003 to $9.7 million in 2009, then jumped dramatically to $15.3 million in 2010.] Collinson called it a good surprise to reach that amount.

Yousef Rabhi (D-District 8) called the CAFR interesting, but noted that “the weeds can get tall pretty quick.” He was glad the county has a staff that’s “able to wade through those weeds” and provide answers to questions that commissioners might have. The work that the staff does is very valuable, he said.

Later in the meeting, Dan Smith made some additional comments on the CAFR, reflecting more on the county’s financial condition. He praised the staff, saying that even though many people were involved, the documents were unified with a consistent style that made it seem as though the same person wrote it.

Smith highlighted page 178 of the CAFR, with a chart comparing the county’s principle taxpayers in 2003 through 2012. [.pdf of Washtenaw County's top taxpayers] The county has a much broader tax base now than in 2003, he noted. Nine years ago, the top 16 taxpayers made up 9.89% of the county’s tax base. Now, that percentage is down to 6.88%. In 2003, several taxpayers represented more than 1% of the tax base. In 2012, no taxpayers are paying more than 1% of the county’s tax base. “I think that bodes well for the long-term future of the county,” Smith said.

The county’s top five taxpayers in 2003 were Pfizer, Visteon, General Motors, Detroit Edison and MichCon. By 2012, three of those – Pfizer, Visteon and General Motors – were not even in the top 16. The top five taxpayers in 2012 were Detroit Edison, McKinley Associates, Toyota, MichCon and Ford.

On pages 184-185, Smith pointed to a list showing the total debt across the entire county, including school districts, libraries, municipalities and other government entities. [.pdf of direct and overlapping debt table] The debt totals about $1.3 billion. If you divide that amount by the number of county residents, it works out to just $3,773 per person, Smith noted. If it was divided by parcels or taxpayers, that number would go significantly higher, he added. [Debt-per-capita is a factor weighed by bond rating agencies.]

Smith also highlighted page 23 of the audit for the office of the water resources commissioner. The office uses a straight-line amortization schedule of 50 years for its infrastructure. He noted that some of the county drains are well beyond that age, so there’s a building infrastructure deficit. It’s already clear that there are problems with roads, he said, and some of the county’s drains will likely start to collapse and fail as well. He pointed to a situation in Superior Township last year where a drain had not been maintained and it slowly sedimentized. The 50-year amortization schedule roughly equates to the lifespan of the county’s drainage infrastructure, Smith noted.

In wrapping up the discussion of financial reports, county administrator Verna McDaniel thanked the staff for their work. She thanked Dan Smith as well “for appreciating the CAFR to the extent that he does.” She joked that because she knew he would read the CAFR closely, “I read this darn thing front-to-cover myself.”

Outcome: This was not a voting item.

Jobs for Mental Health Services

A resolution was on the April 3 agenda to create 39 new jobs and reclassify 76 others for Washtenaw County’s community support and treatment service (CSTS) department.

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

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

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

Jobs for Mental Health Services: Board Discussion

Yousef Rabhi (D-District 8) said he supported the move. There’s a lot of need that often goes unmet in other communities, but the county rises up to the challenge, he said. CSTS has been seeing more customers, even though its staffing level has been relatively flat, he said.

The need for more staff is crucial, Rabhi said, because it means better service for people in the community. It will also mean a net increase in union jobs, he noted, which he said he is very supportive of. He also praised the fact that some of the people who have been doing these jobs on a temporary basis will now have permanent, full-time positions. “And as a temporary employee, I can tell you that being a temporary employee is no fun.” [Rabhi works for the city of Ann Arbor's natural area preservation (NAP) program.]

From left: County commissioners Yousef Rabhi (D-District 8) and Andy LaBarre (D-District 7). Both represent districts in Ann Arbor.

Even in the face of shrinking government, Rabhi said, this proves that government is still relevant and necessary for this kind of service, because there is no private market to provide it. “We need to be there for those folks,” he said.

Felicia Brabec (D-District 4) said she wanted to echo Rabhi’s comments. It’s an important move for mental health stability in the community, for residents as well as workers. She asked for an explanation of where the money to fund these positions is coming from.

Tim Florence, CSTS medical director, reported that WCHO is the funder for these kinds of mental health services, and CSTS is the service provider. No county general fund dollars are being used.

Ronnie Peterson (D-District 6) wondered if the additional staff would be serving a specific geographical region. He said he’s interested in “providing services where services are needed.” Florence replied that WCHO/CSTS are responsible for providing all medically necessary services for county residents on Medicaid. Recently there has been a push to engage in more outreach, he said, especially in areas where there might be opportunities to expand services. Those areas include the 48197 and 48198 zip codes, he said. [That's a reference to the Ypsilanti area, which is part of Peterson's district.] But the services are provided to anyone in the county, he added, regardless of location.

Andy LaBarre (D-District 7) asked Florence to explain the restructuring that occurred in 2002, and wondered if there would be another restructuring locally as part of a broader statewide initiative. It was his understanding that Washtenaw County is being left untouched by a statewide restructuring, “and I think that speaks to our strength in terms of this service provision,” LaBarre said.

Florence explained that the WCHO is the community mental health service provider for this county, going back to the year 2000. The county board and University of Michigan formed this freestanding entity to provide mental health and substance abuse services to people with Medicaid, as well as to the uninsured. In 2002, there was a change made by the state Dept. of Community Health, which provides funding to WCHO. The state created PIHPs – pre-paid inpatient health plans – which basically set up a managed-care structure for these services, Florence said. The WCHO became the PIHP for Washtenaw County, as well as for other surrounding counties. The WCHO contracted with CSTS, which actually provided the services.

Now, the WCHO is trying to ensure that CSTS has the tools it needs – including administrative resources – to deliver these services, Florence said. There are some functions previously provided by WCHO that will move over to CSTS, he explained. Regarding the broader statewide restructuring, the number of PIHPs has decreased, he said, but Washtenaw County has been untouched by that change. He felt the county could help inform the state about ways to integrate mental and physical healthcare, which he called a wave of the future.

Florence noted that CSTS is serving about 40% more people today than it was 5 years ago, but staffing hasn’t increased.

Dan Smith (R-District 2) expressed concern about adding to the county’s employee base. The county isn’t close to being out of the woods financially, he said, and in the not-too-distant future there will be about $250 million impacting the county’s bottom line. [The reference was to an upcoming change in how pension and retirement healthcare liabilities will be accounted for on the county's financial statements.]

The current budget is based on continued declines in tax revenues, he noted. With the additional CSTS jobs, plus the two jobs added in information technology and water resources [on a vote taken at the same April 3 meeting], the total county headcount will reach about 1,375. That will be the highest headcount since 2008, he said. The county could be faced with the “unsavory” prospect of letting people go, he said, which no one wants. He also noted that the employees with union positions could have various bumping rights. [A “bump” is a union term referring to reassignment based on seniority.]

“I’ll be supporting this,” Smith concluded, “but I am still very, very cautious and leery about increasing the county’s headcount at this time.”

Peterson pointed out that the funding is revenue-driven, coming from dollars that are outside of the general fund. Public health services have avenues for resources that haven’t been available before, he said. These are long-term dollars from outside the general fund, Peterson added, and that’s why he’s supporting it.

However, Peterson also noted that he had in previous years raised concerns about the creation of the WCHO. He said he’s an advocate of mental health services, but he believes only one entity should be responsible for the delivery of services. The costs should be directly related to delivering services, not for administrative overhead, he said. “There are two separate entities here,” he said. “I won’t get into how much these two separate entities cost, because I don’t want to put somebody on the spot.”

Florence explained that all services provided by CSTS are those delegated to it by the WCHO. To date, there were a limited number of services that hadn’t been delegated, however, including “front door” services like intake and assessments, as well as crisis care and 24/7 phone access. Those services will now be transferred to CSTS, he said. Peterson replied that he was glad to hear it.

Outcome: Commissioners unanimously gave initial approval to the creation and reclassification of CSTS jobs. Commissioners Alicia Ping, Rolland Sizemore Jr. and Conan Smith were absent. A final vote is expected on April 17.

New Jobs in IT, Water Resources

Final authorization to create two new jobs – in IT support and water resources – was on the April 3 agenda. The items had received initial approval on March 20, 2013.

The water resource specialist will work in the county’s office of the water resources commissioner, Evan Pratt. The job is authorized at a salary range between $30,515 to $40,253. According to a staff memo, the position is needed due to heavy drain construction activity and an increase in soil erosion application inspections. The job is described as a revenue-generating position, bringing in an estimated additional $41,337 in each of the first three years, and a minimum of $15,000 annually after that. The staff memo indicates that the office has identified reductions within its budget to offset the increased cost of the position.

Pratt had attended the March 20 meeting and told commissioners that the construction activity is primarily in the city of Ann Arbor, which is paying for the work. He had described the change as “budget neutral,” saying this was the most cost-effective way to proceed, by shifting some responsibilities elsewhere within his office.

The IT system support technician was authorized at a salary range between $37,464 to $52,355. According to a staff memo, the new position is needed to provide back-up for the IT help desk and other staff support. It will be funded from IT contracts and a structural reduction of $32,647 in the tech plan appropriation.

Outcome: The creation of two jobs in IT and water resources won unanimous final approval, without discussion. Three commissioners – Alicia Ping, Rolland Sizemore Jr. and Conan Smith – were absent.

Public Transit: Dissolving The Washtenaw Ride

Taking a step officially to end an effort that stalled last year, commissioners were asked to give initial approval to dissolve a countywide public transit authority known as the Washtenaw Ride.

The Act 196 authority, created in mid-2012 and spearheaded by the Ann Arbor Transportation Authority, never gained traction and was for all practical purposes ended late last year when the Ann Arbor city council voted to opt out of the transit authority at its Nov. 8, 2012 meeting. Of the 28 municipalities in Washtenaw County, the city of Ypsilanti is the only one that hasn’t opted out.

Commissioner Dan Smith (R-District 2).

The April 3 resolution was similar to one that county commissioner Dan Smith (R-District 2) had considered bringing forward in November of 2012, though he decided not to pursue dissolution at that time. [See Chronicle coverage: "End of Road for County Transit Effort?"] The April 3 resolution would rescind the board resolutions that created the transit authority, and request that the state legislature also take action to dissolve the Washtenaw Ride, in accordance with Attorney General Opinion #7003. That AG opinion stated that “the dissolution of a transportation authority organized under the Public Transportation Authority Act requires an act of the Legislature and may not be accomplished by the unilateral action of the city in which it was established.” [.pdf of AG opinion 7003]

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

There are two other transit efforts now under way. Washtenaw County is part of a southeast Michigan regional transit authority (RTA) created by the state legislature late last year. The RTA was formed to coordinate regional transit in the city of Detroit and counties of Wayne, Macomb, Oakland and Washtenaw.

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

Outcome: The initial vote to dissolve The Washtenaw Ride was approved unanimously, without discussion. Three commissioners – Alicia Ping, Rolland Sizemore Jr. and Conan Smith – were absent. A final vote is expected on April 17.

Public Transit: Regional Transit Authority (RTA)

The issue of public transit was also raised later in meeting, during one of the opportunities for communications from commissioners. Ronnie Peterson asked about the regional transit authority (RTA): When was the board going to discuss the county’s role in that effort, or in any alternative approaches to public transit?

Yousef Rabhi replied that he had attended the recent meeting of “urban core” communities, facilitated by the Ann Arbor Transportation Authority. The group – which included representatives from Ann Arbor, Ypsilanti, Ypsilanti Township, Pittsfield Township and other municipalities – talked about how to fund and govern expanded public transit. He noted that the Act 196 authority “did not work out the way most people had hoped, so we’re looking at new ways of funding it.”

Rabhi also hoped the RTA had a role to play, and said he was working with the county’s representatives on the RTA board – Richard Murphy and Liz Gerber – to make sure the opportunities for this county are fully explored under the new RTA structure.

Peterson asked whether the county board needed to take any action, or will there be any discussion about their involvement in the RTA or in any alternative to the RTA? Rabhi replied that the county’s involvement is governed by the state law that created the RTA. At this point, Washtenaw County is part of the RTA and the county board doesn’t need to take any action. The RTA board’s first official meeting is on April 10 in Detroit, he said, although the board met informally last month. Rabhi said he attended that meeting as well, and was the only elected official there from the four-county region and Detroit. Compared to other RTA board members, the Washtenaw County representatives have a lot of background and experience in transit, he said. “They bring a different voice to the table, which I think will be valuable.”

Commissioner Ronnie Peterson (D-District 6). In the background is Andy LaBarre (D-District 7).

The effort is being staffed by SEMCOG and other partners, Rabhi said, and has about $6 million in federal funding. The RTA board is discussing how to build sustainability within the organization and move forward.

Peterson wondered what the impact was on the AATA. It’s debatable, Rabhi replied. “I think the full implications of the legislation have yet to be determined.” He said he was working with the county’s RTA representatives and state legislators “to ensure that AATA is fully protected so that we can continue to have a robust transit system here in Washtenaw County, and potentially expand that transit system to the urban core areas.” The RTA was created to connect regions, Rabhi noted – like how to get from Ann Arbor to Detroit, and from Detroit to Mount Clemens. “But getting from Ann Arbor to Ypsilanti, that’s our task,” he said.

Responding to another query from Peterson, Rabhi said the county’s only obligation to the RTA at this point is to appoint two board members, which happened in December of 2012. [The appointments were made by the county board chair at the time, Conan Smith, and did not require confirmation by the full board.] If the RTA board decides to put a tax proposal on the ballot, or to pursue a vehicle registration fee, then voters of Washtenaw County will have an opportunity to weigh in on that, Rabhi said.

Regarding a possible transit tax to support the RTA’s efforts, Dan Smith said he wanted everyone to be clear about how that would work. If the RTA board decides to put a tax proposal on the ballot, the entire RTA region votes on it as a whole. That area – covering four counties and Detroit – has a population of over 4 million, he noted, although he added that there are fewer registered voters than that. Even so, Washtenaw County is a relatively small piece of that, he said, with a population of about 348,000 residents. So Washtenaw County voters “probably won’t have a whole lot of say-so” in the outcome of a millage vote, he said.

Andy LaBarre noted that in order for the RTA board to put a tax proposal on the ballot, a super-majority of that board would need to approve it. There’s also the option for a single county veto, he said. For example, if both representatives from Washtenaw County voted against putting a tax proposal on the ballot, it wouldn’t move forward. LaBarre hoped all of this information could be clarified at a future working session.

LaBarre, who chairs the board’s working sessions, continued by telling Peterson that the topic of the RTA will be on the agenda for a working session in August or September. By that time, he hoped they would have more information about what the RTA intends to do, so that the county board can talk about more specific roles that Washtenaw County can play.

Peterson said he appreciated Rabhi’s involvement in support of regional transit, but felt it was important to have a discussion about this issue by the full board.

Public Hearing for Urban County Plan

Commissioners were asked to set a public hearing for April 17, 2013 to get input on the Washtenaw Urban County‘s five-year strategic plan through 2018 and its 2013-14 annual plan. The hearing will be held at the county board of commissioners meeting at 6:30 p.m., in the boardroom of the county administration building at 22o N. Main St. in Ann Arbor.

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

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

Outcome: Authorization to set a public hearing on April 17 won unanimous approval, without discussion.

Communications & Commentary

During the evening there were multiple opportunities for communications from the administration and commissioners, as well as public commentary. Here are some highlights.

Communications & Commentary: Retirement System

During the time set aside for liaision reports, Dan Smith (D-District 2) gave a brief update on the late March meeting of the Washtenaw County Employees Retirement System (WCERS) commission. He noted that the stock market is doing very well, and that has had a positive impact on the balances in the WCERS account. The commission is starting to begin the discussion about doing some explicit inflation hedges, he said. There’s a concern that in a few years, inflation might start to inch up a bit, and at this point there are no explicit hedges against that.

Smith also reported that there had been a discussion about possible PA 728 pension change requirements in the recently approved labor contract.

Smith was alluding to an issue related to the precedent-setting agreements reached in mid-March with 15 of Washtenaw County government’s 17 bargaining units. The new contracts, approved by the board on March 20, aimed to protect unions before Michigan’s right-to-work law took effect on March 28, and cut legacy costs for the county. All but one of the new agreements run for more than 10 years, through Dec. 31, 2023.

The issue raised at the WCERS meeting was whether the process of securing new contracts violated Public Act 728 of 2002. In relevant part, PA 728 states [emphasis added]:

A system shall provide a supplemental actuarial analysis before adoption of pension benefit changes. The supplemental actuarial analysis shall be provided by the system’s actuary and shall include an analysis of the long-term costs associated with any proposed pension benefit change. The supplemental actuarial analysis shall be provided to the board of the particular system and to the decision-making body that will approve the proposed pension benefit change at least 7 days before the proposed pension benefit change is adopted. For purposes of this subsection, “proposed pension benefit change” means a proposal to change the amount of pension benefits received by persons entitled to pension benefits under a system.

The county’s new labor contracts state that employees hired after Jan. 1, 2014 will participate in a defined contribution retirement plan, instead of the current defined benefit plan – the Washtenaw County Employees’ Retirement System (WCERS). In defined benefit plans, retirees receive a set amount per month during their retirement. In defined contribution plans, employers pay a set amount into the retirement plan while a person is employed. The most common defined contribution plan is the 401(k). Similar changes in retiree healthcare plans will also affect new employees.

Although current employees will keep their defined benefit plan, anyone hired before Jan. 1, 2014 – including current employees – will be offered a one-time opportunity to transfer their WCERS employee account to the newly created defined contribution system. That decision must be made within a window between Jan. 1, 2014 and Feb. 28, 2014.

The county did not conduct a supplemental actuarial analysis related to these new contracts. Dan Smith, who cast the lone vote against the contracts, had cited a lack of information about the impact of the changes as one reason why he didn’t feel comfortable supporting the agreements. From The Chronicle’s report of the March 20, 2013 meeting:

A 10-year contract “severely binds future boards and dramatically eliminates the flexibility that they have to respond to situations that may face them seven or eight years down the road.” There are some benefits to that as well, [Dan] Smith noted, but he’s not able to find enough data or information that would make him comfortable with that length of time. It would be different with a two-year contract, which gives the county the chance to respond to changing conditions, he noted. With a 10-years contract and the unknowns surrounding the costs and benefits of the various provisions, “I’m just not comfortable moving forward with that at this time.”

D. Smith also cited concerns about legal questions “that continue to nip away at this.” He wished the legislature would just leave this issue alone, but instead they continue to pick at it “week after week after week.” He didn’t know how it will play out, but “I do know that if we did this contract in the traditional way … we wouldn’thave a bull’s-eye on our back for that.”

Responding to a follow-up query from The Chronicle, county administrator Verna McDaniel stated via email that the county had sought outside legal counsel on the issue. She indicated that the county’s position is: There was no need for an actuarial analysis because no changes were made to the existing pension benefits, and the law does not require an analysis for the new defined contribution system that will be offered to employees hired after Jan. 1, 2014.

Communications & Commentary: Retreat Follow-up

Ronnie Peterson (D-District 6) asked about the follow-up to a board retreat held on March 7. [See Chronicle coverage: "County Board Priorities Emerge at Board Retreat."] He noted that the board has set a course for the next 10 years on one of the budget’s largest components – labor costs. The 10-year contracts are rare in the state, he noted, but now the other budget components must be put in place for the county’s long-term stability. [For background on those labor agreements, see: "New Labor Contracts Key to County Budget"]

Yousef Rabhi (D-District 8) said he has received a report from the retreat’s facilitator, Mary O’Hare, but he hasn’t had a chance to review it yet so he hasn’t sent it to other commissioners. He plans send it out and possibly schedule a presentation on it. Rabhi added that it’s essential to have another retreat and a more focused discussion. That will likely happen in May, he said.

Andy LaBarre (D-District 7), chair of the board’s working sessions, reported that he would send out a revised schedule of upcoming sessions, and asked commissioners to let him know if there were topics they’d like to discuss.

Peterson said he hoped there would be time at the retreat for commissioners to get to know each other and learn about their priorities. Rabhi replied that he’d gotten feedback from a few commissioners, who felt that the last retreat wasn’t focused enough on the board’s priorities. So the format for a second retreat will be different, he said, with more opportunity for commissioners to share their thoughts.

Communications & Commentary: Ann Arbor DDA

Yousef Rabhi (D-District 8), one of the commissioners representing Ann Arbor, told the board that he wanted to make everyone aware of discussions happening at the Ann Arbor city council regarding funding for the Ann Arbor Downtown Development Authority. The council’s action could have implications for the county, he said, so he wanted to put it on their radar.

Commissioner Kent Martinez-Kratz (D-District 1), whose district covers Chelsea and other parts of the county’s west side, asked Rabhi to elaborate. What might the implications be for the county?

Rabhi said his understanding of the proposal is that the funding mechanism would change so that the DDA would capture fewer tax revenues in its district, and more dollars would come back to the county. The downside, he added, is that there would be less money for the DDA to do their work in downtown Ann Arbor. It’s just something to be aware of, Rabhi said.

For Chronicle coverage related to the proposed Ann Arbor DDA ordinance changes, see: “Planning, DDA: City Council to Set Course?” “DDA Tax Capture Change Gets Initial OK” and “DDA Ramps Up PR after First Council Vote.”

Communications & Commentary: Land Bank

Ronnie Peterson reported that he had asked county administrator Verna McDaniel to be involved directly with the new land bank committee. He’s also asked that she extend an invitation to communities that have been greatly impacted by the economic downturn, with neighborhoods that have seen home values drop – including Ypsilanti, Ypsilanti Township and Superior Township. He has asked that the meetings of the land bank committee be public, so that anyone can attend.

By way of background, at its March 20, 2013 meeting, the board voted to form a committee that will explore the feasibility of creating a land bank. The resolution named three people to the committee: Peterson, county treasurer Catherine McClary, and Mary Jo Callan, director of the county’s office of community & economic development. The committee is directed to report back to the board by Aug. 7, 2013.

A land bank is a mechanism for the county to take temporary ownership of tax- or mortgage-foreclosed land while working to put it back into productive use. “Productive use” could mean several things – such as selling it to a nonprofit like Habitat for Humanity to rehab, or demolishing a blighted structure and turning the land into a community garden.

Communications & Commentary: Waste Knot Awards

Yousef Rabhi highlighted the upcoming annual Waste Knot awards, on Thursday, April 11 from 5-7 p.m. at Weber’s Inn. The Waste Knot program encourages businesses and organizations to increase waste reduction and recycling activities.

Responding to a follow-up query from The Chronicle, Jeff Krcmarik – the county’s environmental supervisor – reported that this year the county is also partnering with the Community Partners for Clean Streams and recognizing the 2012 Environmental Excellence Award winners. The event’s guest speaker will be Josh Bloom, a building contractor who specializes in LEED-certified buildings. Locally, Bloom designed and built the new LaFontaine auto dealership in Dexter.

Communications & Commentary: Thomas Partridge

The only speaker during public commentary was Thomas Partridge, who criticized commissioners for not adopting a comprehensive, people-oriented agenda that focuses on the most vulnerable people in the county, including the disabled, senior citizens, mothers with children, and everyone who suffers from the difficult economic climate. Yet meeting after meeting, commissioners bring county managers and outside contractors, like the auditors, to make presentations, he said, while not sending resolutions to the state legislature calling attention to the waste of requiring annual audits. There are many unmet needs, he said, including needs for affordable housing, and accessible public transportation to that housing.

Present: Felicia Brabec, Andy LaBarre, Kent Martinez-Kratz, Ronnie Peterson, Yousef Rabhi, Dan Smith.

Absent: Alicia Ping, Rolland Sizemore Jr., Conan Smith.

Next regular board meeting: Wednesday, April 17, 2013 at 6:30 p.m. at the county administration building, 220 N. Main St. in Ann Arbor. The ways & means committee meets first, followed immediately by the regular board meeting. [Check Chronicle event listings to confirm date.] (Though the agenda states that the regular board meeting begins at 6:45 p.m., it usually starts much later – times vary depending on what’s on the agenda.) Public commentary is held at the beginning of each meeting, and no advance sign-up is required.

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The Act 196 authority, created in mid-2012 and spearheaded by the Ann Arbor Transportation Authority, never gained traction and was for all practical purposes ended late last year when the Ann Arbor city council voted to opt out of the transit authority at its Nov. 8, 2012 meeting. Of the 28 municipalities in Washtenaw County, the city of Ypsilanti is the only one that hasn’t opted out.

The resolution given initial approval on April 3 was similar to one that county commissioner Dan Smith (R-District 2) had considered bringing forward in November of 2012, though he decided not to pursue dissolution at that time. [See Chronicle coverage: "End of Road for County Transit Effort?"] The April 3 resolution rescinds the board resolutions that created the transit authority, and requests that the state legislature also take action to dissolve the Washtenaw Ride, in accordance with Attorney General Opinion #7003. That AG opinion stated that “the dissolution of a transportation authority organized under the Public Transportation Authority Act requires an act of the Legislature and may not be accomplished by the unilateral action of the city in which it was established.” [.pdf of AG opinion 7003]

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

There are two other transit efforts now under way. Washtenaw County is part of a southeast Michigan regional transit authority (RTA) created by the state legislature late last year. The RTA was formed to coordinate regional transit in the city of Detroit and counties of Wayne, Macomb, Oakland and Washtenaw.

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

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

At the Nov. 8, 2012 council meeting, when the Ann Arbor opt-out vote took place, Jane Lumm (Ward 2) described the effort that had gone into planning for The Washtenaw Ride as a colossal waste of time and money. Carsten Hohnke (Ward 5) countered that it had been valuable and appropriate to engage in that effort. And mayor John Hieftje pointed out that a criticism of the recently failed library bond proposal was that there was no specific plan for the new library building – and that the AATA’s approach had relied on first developing a plan, which required an investment of money.

The decision by the Ann Arbor city council ends this particular approach to expanding transportation services in the area by terminating a four-party agreement – between Washtenaw County, the cities of Ann Arbor and Ypsilanti, and the AATA – that would have governed a transition from the AATA to a countywide authority.

The language of the council’s resolution offered some optimism that expanded transportation services might be pursued with some other mechanism than a countywide Act 196 incorporation: “… AATA is encouraged to continue to discuss regional transportation options among Ann Arbor, Ypsilanti, Ypsilanti township, Ann Arbor township, Scio township and Pittsfield township, leading to a better understanding and process for improving local transit options …”

During public commentary, members of Partners for Transit described disappointment at the withdrawal, but urged the council to take the initiative to work toward a new accord on expanded transit, saying they were encouraged by the language of the resolution calling for continued dialogue.

AATA strategic planner Michael Benham was allowed to answer questions from the podium – over dissent from Stephen Kunselman (Ward 3) and Marcia Higgins (Ward 4). Benham indicated he was heartened by the language in the resolution that essentially says “keep going.” He indicated optimism that the community could arrive at a vision of expanded transit for those who need it the most. During questioning, Higgins made clear to Benham that she and other councilmembers had heard repeatedly that basic transportation among neighborhoods was a need that currently isn’t being met.

Kunselman sketched out a possibility of maintaining incorporation under Act 55, which would allow Ann Arbor to maintain control over the AATA, but also mooted the possibility of expanding the AATA board membership to include representatives of communities that have “skin in the game” through purchase-of-service agreements.

The Ann Arbor city council’s decision came in the context of opt-out decisions by most of the other 28 municipalities in the county. Until Ann Arbor’s decision, those jurisdictions still participating in the new authority included more than half the county’s population, and included the county’s largest population centers: Ann Arbor, Ypsilanti, Ypsilanti Township, and Saline.

Ann Arbor had been expected to help lead the initiative, and had been the first of the four parties to ratify the agreement, on March 5, 2012. Since incorporation on Oct. 3, more than one glitch was encountered in the technical implementation. Those included the unclarity about the start of a 30-day opt-out period, and the eligibility of current AATA board members to serve on the board of the new authority.

This brief was filed from the city council’s chambers on the second floor of city hall, located at 301 E. Huron. A more detailed report will follow: [link]

Possible action by the Ann Arbor city council this week could lead to dissolution of a newly incorporated Act 196 transit authority – called The Washtenaw Ride – just as it is emerging.

At its Nov. 8 meeting, the Ann Arbor city council is now scheduled to vote on the question of opting out of a newly incorporated countywide transit authority – an initiative that the city of Ann Arbor had been expected to help lead. With Ann Arbor’s withdrawal, this particular approach to expanding transportation services would be effectively ended.

Update: The Ann Arbor city council did decide to opt out of the transit authority, on a 10-0 vote taken at the Nov. 8 meeting.

And the topic of transit has already been raised at the post-election Nov. 7 meeting of the Washtenaw County board of commissioners. Dan Smith, a Republican who represents District 2 covering northern parts of the county, had been prepared to introduce two transit-related resolutions at the meeting, but wound up placing only one of them on the agenda. The one he brought forward was a proposal to rescind support for a metro Detroit regional transit authority (RTA) – which the board had given in September of 2011. Although board chair Conan Smith has been a champion of legislation to enable an RTA, Dan Smith’s resolution passed on a 6-4 vote.

More significantly, Smith had also considered bringing forward a resolution to dissolve The Washtenaw Ride, a new countywide transit authority created under Act 196 of 1986 when the county filed articles of incorporation last month with the state. [.pdf of resolution to dissolve The Washtenaw Ride]

The Oct. 3 filing was undertaken as part of a four-party transit agreement between the county, the cities of Ann Arbor and Ypsilanti, and the Ann Arbor Transportation Authority, which is leading this initiative. Since then, all but five of the 28 municipalities in the county have voted to opt out of the new authority. However, those that are still participating include several of the county’s largest population centers: Ann Arbor, Ypsilanti, Ypsilanti Township, and Saline.

Dan Smith’s resolution indicated that because so few municipalities are participating, the Act 196 authority should be dissolved. He held off introducing it, however, in part because of pending action by the Ann Arbor city council the next day. As The Chronicle reported in mid-October, Ann Arbor city councilmember Stephen Kunselman had said he planned to pursue the possibility of Ann Arbor opting out – because he felt he’d have the required six-vote majority after the new city councilmembers are sworn in on Nov. 19.

But now the city council will take up the issue of withdrawing from the new transit authority at its Nov. 8 meeting. And that withdrawal will be accomplished with the support of at least some of those on the council who previously advocated to expand the AATA’s governance and service area through incorporation of the new authority. A resolution on withdrawal of Ann Arbor from the Act 196 authority was added to the Nov. 8, 2012 agenda the day before the meeting – sponsored by not just Kunselman, but also mayor John Hieftje, and councilmembers Sabra Briere, Christopher Taylor and Marcia Higgins. That indicates the city council’s resolution on withdrawal is almost certain to pass.

Under the terms of the four-party agreement, once the city of Ann Arbor withdraws from the Act 196 authority, the city can terminate the entire agreement. The council’s resolution indicates encouragement to the AATA to continue to work towards regional transportation, but not with the mechanism of this Act 196 authority. 

Dissolving The Washtenaw Ride

The county board has never been unified in its support of the current approach to a broader public transit entity, an effort that the Ann Arbor Transportation Authority has been working on for more than two years.

The county’s role in creating the transit entity was laid out in a four-party agreement with Ann Arbor, Ypsilanti and the AATA, which commissioners approved on Aug. 1, 2012 in a 6-4 vote. Subsequent revisions involving the other entities resulted in the need for a re-vote. That second vote occurred on Sept. 5, 2012, and it also drew just six supporting votes on the 11-member board. Alicia Ping, Wes Prater and Dan Smith voted against it, and two commissioners were absent.

Commissioners had understood that the county’s only role in connection to the new authority would be to file articles of incorporation with the state under Act 196, which occurred on Oct. 3. But during their Oct. 17 meeting, commissioners learned that the county would be sending out additional notification letters to local jurisdictions about the new transit authority, called The Washtenaw Ride. That had come as a result of some disagreement between legal counsel for the various parties about when the 30-day opt-out period actually began – upon incorporation, or at some later time. For the county to send letters prompted concern among some commissioners, including from those who had opposed the county’s participation.

Since the incorporation of the new authority on Oct. 3, 2012, the second wave of letters has not been the only glitch. Another challenge was the composition of the new authority’s board. The initial expectation had been that the seven current members of the AATA board would also serve on the 15-member board of the new transit authority. But when views of legal counsel to various parties diverged on the ability to render simultaneous service on the two boards, the city of Ann Arbor elected to pursue a strategy of appointing different board members to the new authority. That appointment process is already partly underway.  [See Chronicle coverage: "Positions Open: New Transit Authority Board" and "Ann Arbor Mayor: Need Transit Board Members"]

Also since incorporation, the majority of jurisdictions have already opted out of the new authority, even if a majority of the county’s population would remain. The resolution that Dan Smith had considered bringing forward at the Nov. 7 board meeting cited complications arising from the number of municipalities that have opted out of the authority, stating that it will require a change to the articles of incorporation. The resolution also pointed to the availability of other options to provide public transit:

WHEREAS, municipalities throughout the county continue to provide transit services utilizing W.A.V.E., People’s Express, and Purchase of Service Agreements with AATA; and

WHEREAS, as an Act 55 of 1963 entity, AATA may form an Act 196 Authority on its own and without any involvement of the board; and

WHEREAS, the five remaining political subdivisions may form an Act 196 Authority on their own and without any involvement of the board;

The idea of continued service echoes the language of the city council’s upcoming Nov. 8 resolution, encouraging the continued effort to expand service, which reads in part:

Resolved, That AATA is encouraged to continue to discuss regional transportation options among Ann Arbor, Ypsilanti, Ypsilanti township, Ann Arbor township and Pittsfield township, leading to a better understanding and process for improving local transit options;

The language about continued provision of service in the resolution of both bodies implicitly addresses a condition of termination in  four-party agreement, which states: “No such termination or dissolution shall be effective unless and until provision for continued transportation services to Ann Arbor and Ypsilanti is in place, operational and all liabilities on the New TA have been satisfied.”

Dan Smith’s resolution would have rescinded previously approved board resolutions authorizing the county’s involvement.

However, it does not appear that the county board actually has the ability to dissolve the Act 196 authority known as the Washtenaw Ride. One way the authority could be dissolved is a scenario where no funding is identified before the end of 2014. From the four party agreement:

12. Termination of Agreement.
…
b. Discretionary Dissolution or Withdrawal Conditions. The Washtenaw County Board will also be allowed to dissolve the New TA if there is no Authority-wide voter approved funding passed before December 31, 2014, or voter approval passes Authority-wide but the same is defeated in the City of Ann Arbor.

But because it’s still well before Dec. 31, 2014, the necessary time has not elapsed for the board of commissioners to dissolve the transit authority under 12 (b).

The authority could also be dissolved based on which political subdivisions opt out. From the articles of incorporation:

SECTION 10.02: DISSOLUTION OF THE AUTHORITY 
The Authority may be dissolved in accordance with the provisions of Act 196 and as provided for in Section 12 of the Public Transportation Agreement referenced in section 3.01. If the City of Ann Arbor is the only political subdivision in the County remaining within the Authority after the expiration of the statutory 30-day withdrawal period, the Authority shall be dissolved.

However, the condition for dissolution in Section 10.02 isn’t met, because the city of Ann Arbor is not the only political subdivision in the county remaining in the authority after expiration of the 30-day withdrawal period – in part because the period isn’t over, and in part because the city of Ypsilanti, Ypsilanti Township, and the city of Saline have not withdrawn.

The resolution that Dan Smith had considered bringing forward also stated: “… that pursuant to Attorney General Opinion #7003 (December 23, 1998) the Washtenaw County Board of Commissioners requests the Michigan Legislature to dissolve ‘The Washtenaw Ride.’”

The Attorney General opinion cited in the resolution notes that an act of the legislature would be required to achieve the dissolution: “It is my opinion, therefore, in answer to your second question, that the dissolution of a transportation authority organized under the Public Transportation Authority Act requires an act of the Legislature and may not be accomplished by the unilateral action of the city in which it was established.” [.pdf of AG opinion 7003]

Ultimately, it’s not clear if any action by the board of commissioners would be necessary to end the approach to expanding transit  –  if the Ann Arbor city council approves the resolution that’s on its Nov. 8 agenda to opt out of The Washtenaw Ride.

It’s possible that the board of commissioners might pass a version of Smith’s resolution that calls upon the state legislature to dissolve the transit authority, once the Ann Arbor city council has acted. A member of the state legislature who’d be called upon to act is former Washtenaw County commissioner Jeff Irwin, who on Nov. 6 won re-election as representative of the 53rd District of the Michigan House. Irwin had been instrumental over the last few years in helping to shepherd the proposal to incorporate a new transit authority.

Rescinding Support for the RTA

At the county board’s Oct. 17, 2012 meeting, commissioner Wes Prater had asked for an update about proposed state legislation regarding creation of a regional transit authority (RTA) for southeast Michigan – the city of Detroit and the counties of Washtenaw, Wayne, Oakland and Macomb. Conan Smith has been an advocate for that effort, both as chair of the county board and in his role as executive director of the Michigan Suburbs Alliance.

About a year ago, at its Sept. 21, 2011 meeting, the board unanimously passed a resolution of support for the RTA. From then until the Oct. 17 meeting, little discussion of the RTA has taken place a commission meetings, and several commissioners seemed unaware of the county’s level of involvement in that effort.

So on Nov. 7, Dan Smith brought forward a resolution to rescind the board’s previous support. [.pdf of resolution to rescind support of the RTA]

The resolution also stated that the board opposes any other legislation that would involve Washtenaw County in an RTA:

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners opposes legislation which would include Washtenaw County in a Regional Transportation Authority, which does not protect:

• The ability of county entities to manage designated transportation funding.
• The right of county entities to independently mange a transit system.

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners supports the concept of a Regional Transportation Authority to enhance interconnectivity among the communities of the southeast Michigan region, but feels that Washtenaw County and the voters thereof should determine when to join the Authority.

Smith’s original draft – which was distributed to commissioners – had included references to specific pending state legislation. After a sidebar discussion with Conan Smith, Dan Smith revised the language to eliminate the citations to HB 5309 and SB 909. During deliberations, Conan Smith and Yousef Rabhi both thanked Dan Smith for “softening” the resolution, though both said they couldn’t support it, despite that change.

Rabhi and Conan Smith were joined by Felicia Brabec and Rolland Sizemore Jr. in voting against the resolution. However, six commissioners supported it – Dan Smith, Leah Gunn, Barbara Bergman, Rob Turner, Alicia Ping and Wes Prater – which was sufficient to pass the measure. Ronnie Peterson was absent.

Discussion on the topic might continue at the board’s Nov. 8 working session. That meeting includes an update on the RTA from Gary Owen with Governmental Consultant Services Inc., the Lansing-based firm that serves as the county’s lobbyist on state issues.

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Optimism was based on ridership data for the fiscal year that ended on Sept. 30 – which includes a record-setting 6,325,785 rides on the regular bus service, up 6.6% over the previous year, and 3.4% more than the previous record year of 2009.

AATA board member David Nacht expressed concern about the idea of adding back in project elements to the new Blake Transit Center, grounding his concern in part in the fact that he was wearing his “treasurer’s hat.” (Photos by the writer.)

Damping enthusiasm were the year-end budget numbers, which showed the AATA posting a deficit around $260,000 greater than the one it had budgeted for, leaving an excess of expenditures over revenues of $1,255,312. [.pdf of unaudited FY 2012 financials] That comes in the context of an approved budget for the just-begun current fiscal year, which includes an anticipated deficit of about $300,000. The board’s Oct. 18 deliberations revealed the fact that only by recalculating the amount in the AATA’s cash reserves did the organization currently have the required three-month operating reserve on hand.

In that financial context, board members were not inclined to add back in some elements that had recently been cut out of the new Blake Transit Center project, which would have brought the project budget to nearly $8.5 million. The construction contracts approved by the board at its meeting totaled a bit over $8 million, which was still dramatically larger than the smaller $3.5 million project the AATA had started with over three years ago. Instead of taking the less ambitious strategy, the AATA opted to locate the new, larger center on the opposite side of the same parcel where it currently stands. Construction on the two-story Fifth Avenue-facing center is now expected to start in late November or early December.

The board’s deliberations on the new transit center focused on whether to add back into the project some items that had been removed to bring the cost down from $8.5 to $8 million. Of the three items on the table – automatic ticketing kiosks, real-time bus arrival information displays, and LEED certification of the building – only the LEED certification was added back in, at a cost of $80,000.

At the Oct. 18 meeting, the board also got an update on the situation surrounding the incorporation of the new Act 196 board for The Washtenaw Ride. Michael Ford, AATA’s CEO, indicated that the AATA would be reimbursing Washtenaw County for the cost of renotifying jurisdictions in the county regarding their option not to participate in the new authority. He confirmed that AATA board members would not serve simultaneously on the current board and the board of the new authority, as previously expected. Ford indicated that AATA legal counsel believes that what the AATA has done to date already complies with the law, but the AATA is exercising extreme caution.

Several members of the future Act 196 board attended the meeting and had a voice at the table, but not a vote.

The board’s meeting concluded with a closed session lasting nearly two hours on pending litigation.

Budget

The fiscal year that just ended on Sept. 30, 2012 was one item discussed, as was follow-up from approval at the board’s previous meeting of the budget for fiscal year 2013, which began on Oct. 1. The state of the budget was general background for the discussion of the Blake Transit Center item, which was the one voting item on the board’s meeting agenda.

Budget: FY 2012

The Ann Arbor Transportation Authority had budgeted for a nearly $1 million deficit this year, but wound up with an excess of expenditures over revenues that was actually $260,000 more than that. The unaudited figures reported to the AATA board at its Oct. 18 meeting showed a deficit for the year of $1,255,312. [.pdf of unaudited FY 2012 financials]

Several reasons were given for the additional shortfall, which resulted in only $27,617,099 in actual revenues compared with the $29,418,995 that was budgeted. Those reasons included: $120,842 less in passenger revenue; $269,095 less in local transit tax revenue; $529,214 less in purchase-of-service revenue; and $927,149 less in federal funding. That was balanced somewhat by reduced expenses in some categories, including: about $500,000 less in compensation; $600,000 less in purchased services (including consulting); and $550,000 in savings due to the delayed launch of the service between downtown Ann Arbor and Detroit Metro Airport.

Based on board discussion at the meeting, the AATA currently has just about exactly the three-month operating reserves on hand that it’s required to maintain by board policy.

Budget: Reserve Status

Reporting from the performance monitoring and external relations committee, Roger Kerson noted there’d been shortfalls in the FY 2012 year-end numbers for various reasons. For the time being, those numbers put the AATA under the three-month’s worth of cash reserve level. According to Kerson, controller Phil Webb had identified additional money. And there’s an interpretation of what the three-month reserve actually means, Kerson said. Some one-time expenses – for example, for the connector study – are one-time expenses, and it’s not necessary to maintain a reserve against those types of expenses, he said.

Budget: FY 2013

As a follow-up from the previous regular meeting, AATA CEO Michael Ford noted that a worksheet had been provided in the board information packet detailing the budget changes that had been made to the current year’s budget, which began on Oct. 1. [.pdf of detail on budget changes] Those changes had been made shortly before the board voted on the final budget, which was different from one reviewed in committee. The changes were necessary due to a reduction in state operating assistance of around $800,000. It had still resulted a $300,000 planned deficit for FY 2013 instead of the essentially break-even budget that had initially been reviewed in committee. Ford noted that the worksheet included those items that had been considered for elimination but were kept in the budget – at the request of board member Sue Gott.

New Blake Transit Center

The board considered a resolution to approve construction contracts totaling $8,049,988 for a new downtown Ann Arbor transit center. The initiative began over three years ago with a much smaller budget of around $3.5 million.

Blake Transit Center: Background

The original concept was to build the new center on the same footprint as the existing Blake Transit Center.

This AATA-owned parcel, where Blake Transit Center is located, sits in the middle of the block bounded by Fourth and Fifth avenues on the west and east, and by Liberty and William streets on the north and south. (Image links to higher resolution view. Parcel map and aerial photo from Washtenaw County’s website: gisweb.ewashtenaw.org/website/mapwashtenaw/)

But the concept changed to one that will construct a larger building at a different location – still on the same parcel where it currently stands, between Fourth and Fifth avenues, but on the opposite side of the block from its current site.

Bus traffic to the new Fifth Avenue-facing center will enter from Fourth Avenue and exit onto Fifth, which is opposite from the current traffic flow. In order to square off the parcel for the new construction, a six-foot wide strip of land on the southwestern edge of the parcel was purchased by the AATA from the city of Ann Arbor for $90,000.

Construction bids came in totaling $8.5 million. But as of the board’s Jan. 19, 2012 meeting, the AATA had only identified about $7 million in funding for the project. At that meeting, the board authorized a $7 million project budget –  in the context of approving its capital and categorical grant program for 2012–2016. That amount was an increase from a $5.5 million project budget that been approved at the board’s Aug. 24, 2011 meeting, when it had revised the capital grant program. The initial project budget had been $3.5 million.

The increase in cost is described in a staff memo accompanying the board’s Oct. 18 resolution as due to a variety of factors, including changes in design based on community input and environmental analysis. The original $3.5 million design was for a one-story building on the current building’s footprint. The approved design is for a three-level structure (two above ground) with foundations that could support another two stories – at an additional cost of $100,000. Subjecting the project to the city’s regular site plan approval process – which is not a legal requirement – cost several hundred thousand dollars, according to the staff memo. The city’s planning commission reviewed the project on July 17, 2012 and the city council received the review as part of its Aug. 20 meeting written communications.

Aerial view of the Blake Transit Center site plan. The building will come in at around 12,000 square feet.

According to a memo to the board from AATA CEO Michael Ford, money identified by the AATA beyond the $7 million budget included $700,000 from a 2002 federal grant that apparently had been earmarked for a new Blake Transit Center. The gap between the $7.7 million and the $8.5 million total construction bid could have been covered through an additional $750,000 in federal formula funds (Section 5307) that are available this year.

The board’s performance monitoring and external relations committee was divided at its Oct. 16 meeting on the question of increasing the budget to the $8.5 million mark. The committee recommended revisions to the project to cover the gap only to the point of $8,049,988. [.pdf of constructions contracts for BTC] The committee was interested in consulting the board as a whole to contemplate the issue of possibly increasing the budget further.

A memo from Ford to the full board asked for consideration of nearly the full construction bid amount, so that key elements could be restored to the project: LEED Gold certification ($80,000); real-time bus arrival kiosk signage ($180,000); and ticket vending machines ($125,000). Those three items would have brought the total project cost to $8,424,988.

Blake Transit Center: Board Discussion – Preliminaries

Roger Kerson reported from the performance monitoring and external relations committee meeting and described a “spirited discussion” about the Blake Transit Center project. He noted that the proposed budget has increased quite a bit since the start. He characterized the increased scope of the project and the budget as coming from a deliberate process of gathering community input and addressing needs of riders and planning for the future.

AATA board members Sue Gott and Roger Kerson.

The result is that the original $3.5 million project is now an $8.5 million project. But there was only a bit more than $7 million budgeted for the project, he said. He and David Nacht had been concerned about that, he said. It might be possible to shift money out of federal capital funds. What the committee had asked staff to do was to reduce the project budget – reasoning that the best course was to leave it to the board’s “collective wisdom” as to which option to choose. The option of the reduced project was being presented for the board’s consideration, he said. But the items that were removed are specified, so the resolution can be discussed in that context.

He felt that committee members are aware of the hard work that has gone into the planning process, as well as the timelines that the AATA is up against to start construction. But the board also needs to be the best possible stewards of public funds. They’re state and federal funds, but it’s still taxpayer money, he said.

Some questions and commentary from Bill Lavery, Anya Dale and Michael Ford centered around the impact of using federal formula funds (Section 5307) to cover the gap in funding between the budgeted amount and the $8.5 million cost that had resulted from construction bids.

The programming of the Section 5307 federal funds through 2015 shows a balance of $419,281. A memo included in the board’s information packet and written by Chris White, AATA’s manager of service development, notes that allocating an additional $600,000 of Section 5307 federal funds – as required to bring the new Blake Transit Center budget to $8.5 million – would have an impact on other planned uses of the funds. [.pdf of White's memo and allocation of federal funds by year]

Ford indicated that the Federal Transit Administration (FTA) had also contacted the AATA indicating that there was additional money specifically for the Blake Transit Center. “It was some money they had sitting somewhere, and I hate to say it that way, but it was available to us for that purpose,” Ford said. Kerson noted that even the additional FTA money – which meant that the dedicated funds for the project rose from around $7 million to $7.7 million – did not get the budget to $8.5 million.

Blake Transit Center: Board Discussion – Justifying Cost

When the board reached the Blake Transit Center project on the agenda, Jesse Bernstein led off the deliberations. He characterized the PMER committee discussion about the costs as “lively.” He said that he, too, was concerned about the costs. The committee looks at the details behind the rationale, he said. He reviewed the extended time that had been taken to involve other partners in the area and customers. He pointed to the $90,000 purchase of land from the city of Ann Arbor, which increased the cost. Another reason the cost had increased, he said, was due to a contingency of $300,000 that had been added. That contingency had not been included in the original projection, he said. The committee felt that is was prudent to add that, which is typical with most construction projects. Another element that had increased the costs was city fees, he said – fees for building permits and water connections were assumed to be at a particular cost and they turned out to be much higher, he said.

So the committee had pressed staff to see what could be cut out, Bernstein said. Some back-and-forth between Bernstein and other board members and staff established that the three items left out of the final budget were: LEED Gold Certification ($80,000); real-time bus arrival kiosk signage; and ticket vending machines ($125,000).

AATA maintenance manager Terry Black, who is managing the Blake Transit Center project.

A $243,000 cost for heated sidewalks and driveways – to eliminate the need for snow and ice removal in the winter – was included in the lower budget figure. Terry Black, maintenance manager, confirmed that the AATA has spent up to $75,000 in a year for winter maintenance of the existing facility. Bernstein characterized the cost of the heated sidewalks and driveways as realizing a return on their investment in about three years.

David Nacht noted that he’d sat on the planning and development committee (PDC) during the last couple of years as the project was being considered. That committee had been comfortable with the doubling in cost from $3.5 million to $7 million – taking into account significant environmental concerns and community concerns about aesthetics.

Accommodating that input was appropriate to the AATA’s role in the Ann Arbor community as good partners with the city, the neighborhood associations, and the business community, he said. He also said that another significant increased cost in the building is that it has the future potential to be built higher than the currently planned two stories above ground – for example, by a private-sector developer, Nacht said. That developer could pay AATA or The Washtenaw Ride in some kind of public-private partnership and establish a future revenue stream. That would mean investing in this part of downtown, and possibly recouping some of that investment in the form of future revenue, he said.

Blake Transit Center: Board Discussion – Treasurer’s Concern

But Nacht was concerned about increasing the cost from $8 million to $8.5 million. The last time PDC looked at the project, the budget was $7 million, he noted. There’d been no contingency in the budget at that time, he said, and he was fine with adding $300,000 as a contingency, noting that he hoped it didn’t get spent.

And he was fine with increasing the budget from $7.3 million to $8 million – because that’s federal money earmarked for this project, and could be described as “use it or lose it.” The budget is mostly federal money that is specifically earmarked for the Blake Transit Center project, he said, that cannot be used for other purposes. The building was in need of renovations costing at least $1 million in any case, he said. But through the help of Congressman John Dingell and Senator Carl Levin, most of the funding had been obtained.

Nacht noted that the discussion at the last board meeting had included a fiscal challenge – because the state is cutting back its funding of the AATA. Nacht viewed the situation from the perspective of the board treasurer. He noted that the board had just heard during the discussion of the year-end budget figures that AATA is just at the three-month cash reserve level. The AATA is also in an expansionary phase, Nacht said. So far it’s been successful – and the expanded service is resulting in additional riders. That means the AATA is offering services that people are using. If you dig into the detail of the past year’s service, he said, NightRide and ARide services are being well-used and that had contributed to the current fiscal situation, because they are expensive to operate.

AATA board member David Nacht checked the nameplate as he arrived to make sure he was sitting in the right spot.

The AATA can’t just keep saying yes to expanded services without some sort of change in the fiscal direction. That wouldn’t be sustainable, Nacht said. So he didn’t care what cuts were needed to go from $8.5 million to $8 million, but “I don’t want to spend that half a million bucks,” he concluded. It’s a building – where people get on the bus and get off the bus, he noted. At the end of the day, buses cost $600,000, and fiscal challenges happen, and “at some point, we have to stop buying things,” Nacht said, in order to be fiscally prudent. He had nothing bad to say about any of the specific project elements, and figured there were many more that could be added, but he didn’t want to spend “a nickel more than 8 million bucks on it.”

Blake Transit Center: Board Discussion – Big Enough?

Eli Cooper said he was reminded of a conversation of an even larger opportunity at that location, where the AATA was looking to expand to include the Fifth and William parcel – the site of the former YMCA building. [It's now owned by the city and used as a surface parking lot.] That project failed for a variety of reasons, Cooper said. The current proposal looks like it has a number of challenges, he said. The reinforcement of the foundations to allow for just two additional levels was a concern for Cooper. The matter-of-right development allowed by the D1 zoning for the area was not just the 400% floor-area-ratio (FAR) that the two additional stories would yield, but rather the higher-density 700%, Cooper observed.

A response from Nacht described the possibility of eventually combining the new BTC building with a future development on what is now a surface parking lot at Fifth and Division. [But Cooper's point – that the AATA was not thinking of the largest possible option allowed under city zoning – seemed to elude Nacht and other board members.] Cooper reiterated that he wanted to make sure that the AATA was maximizing the potential of the site.

Cooper also wanted to know how space in the new building was allocated: staff use compared to rider use.

Jesse Bernstein responded to Cooper by recalling how the public meetings had included questioning of the need for so many staff restrooms. The explanation is that drivers have little time to go to the bathroom between ending and starting their routes. Access to bathrooms can have an impact on on-time performance, he said. The second floor also includes a backup emergency dispatch center, and space for getDowntown program staff offices, Bernstein said.

Later in the meeting, when AATA manager of maintenance Terry Black was asked to the podium to explain the scope of the current building’s programming, he described how the getDowntown staff, who are employees of the AATA, were currently leasing space in downtown Ann Arbor. [That cost is borne by the Ann Arbor Downtown Development Authority.] The 12,000-square-foot new building would provide office space for getDowntown, Black said. The AATA headquarters facility at 2700 S. Industrial is maxed out in terms of office space, Black said. [On the most recent visit to that location by The Chronicle, a cubicle had been set up in a hallway area.]

Black also described the new building’s canopy, stormwater collection system from that canopy for use of graywater (toilet flushing) within the building, and the phased demolition of the existing building.

Blake Transit Center: Board Discussion – Needed Elements

Cooper ventured it’s not an issue of the operators’ needs. But in doubling the size of building, in the context of a tight budget time, he wondered about the inclusion of a secondary dispatch center contrasted with “significant elements for the benefit of our customers.” Real-time information is simply an expectation at a modern transit center, Cooper said. Now the board is being given a choice to leave it out. He wondered if the AATA was carpeting and outfitting a second level of the building at the expense of some elements that would make the AATA’s service more useful for its riders. He’d not been involved in the planning, he allowed, but when funds are low and there’s a need to make some tradeoffs, he was raising the question because he wanted to be comfortable as a board member that the board is making the right tradeoffs.

Nacht asked for Black’s assessment of the choices to be made. He agreed with Cooper about the inclusion of real-time information. But the decision of how to save the $0.5 million had been left up to the staff, he said.

Black essentially reviewed all the building elements. The building is entirely barrier-free and will meet ADA [Americans with Disabilities Act] code, he said. At the conclusion of the meeting during public commentary,  Carolyn Grawi – Center for Independent Living director of advocacy and education – indicated she was happy that Black and Bernstein had mentioned the barrier-free design.

Black noted that the Federal Transit Administration requires the AATA to spend 1% on art. And some of the cost associated with the building stems from the choice of materials, he said. The choice was for limestone, instead of cast stone. Limestone would give a more durable long-lasting building, he said, but cost more. Drywall could have been specified for the bathrooms, instead of tile, but tile is more durable. The heated sidewalks and driveway cost more now, but they’re an effort to reduce maintenance costs, while ensuring safety for riders.

Blake Transit Center: Board Discussion – Contingency

Sue Gott asked about the contingency amount. Why wasn’t there a contingency originally and why is it set at the proposed percentage? Terry Black indicated that a contingency wasn’t something that had been talked about initially. The $300,000 contingency is “very tight,” he allowed. But he felt comfortable that everything had been scoped out and the numbers were good. There are unknowns in any construction project, he said, but he allowed that the contingency is a concern.

In connection with the contingency, Michael Ford ventured that the ticketing kiosk and real-time information components might be held back until the project is halfway constructed, and if it’s recognized at that point that the additional contingency is not needed, those elements could be re-included.

Charles Griffith was concerned that the proposal before the board was not to take the extra step to obtain LEED certification at the Gold level, given that the building had been designed to meet that standard. [LEED stands for Leadership in Energy and Environmental Design, a rating system for energy-efficient building practices.] Black told Griffith that the LEED-designed building would be built. But without the additional $80,000 for the certification process, there would not be a certificate. The $80,000 could be used on some other area.

Griffith ventured that seemed like a significant lost opportunity to go to the effort to design for that LEED standard, and not be able to show that the building had actually reached that level. He would not personally support taking that component out. [Griffith is energy and climate programs director at the Ecology Center, an Ann Arbor nonprofit.]

Gott received confirmation that eliminating the LEED certification in the budget would not result in the elimination of any design elements – but that it would mean that costs associated with the submittals for certification wouldn’t be incurred.

Roger Kerson ventured that part of the problem is that “the cake is pretty well baked.” He’d hate to take out real-time bus information. If the process was in an earlier stage, it might be possible to try to live without the training room on the second floor, for example. But changes to the square footage at this point mean a change in design and that’s not free, he said. What Black and the staff were trying to identify were those “standalone” elements that could be removed.

Gott wanted clarification of the cost increase due just to the more substantial footings that are designed to bear the load of potentially a four-story building. Black told her it’s about $100,000.

From left: Ypsilanti mayor Paul Schreiber and AATA board chair Charles Griffith chat before the Oct. 18 AATA board meeting started.

Ypsilanti mayor Paul Schreiber – who serves on the future Washtenaw Ride’s board – ventured that he was certainly no expert in construction, but the Hamilton Crossing project under construction in Ypsilanti is an $18 million project and had a 10% contingency. The amount the AATA has included for the Blake Transit Center is low compared to that, he said. [$300,000 on a $7.7 million project for total of $8 million is about 3.5%.]

Blake Transit Center: Board Discussion – LEED Certification

Griffith came back to the LEED gold certification. He felt the board could agree that the design was meant to achieve the LEED certification standard. But the AATA wouldn’t be able to state that in a public way. You’d have to be very careful about how you discussed it, if you don’t have the LEED certification. It’s highly improper to say you’ve achieved LEED certification if you haven’t, he said. You’d have to say, “Well, we built to potentially meet LEED.”

He asked Sue Gott, who’s the chief planner for the University of Michigan, if UM would ever go to the trouble to design a LEED-certified building and then not actually certify it. Gott’s answer: “We did that with North Quad. We utilized the funds for elements of the building rather than the cost of the LEED certification.” [North Quad is a new student dorm at the corner of South State and Huron.] Later in the meeting, Gott expressed some uncertainly about the level of the North Quad LEED design. Responding to a follow-up emailed query from The Chronicle, she wrote that the North Quad building would have met the basic certified level, if UM had pursued that certification. The other levels in order are silver, gold, and platinum.

Bernstein said he agreed with the concerns that had been expressed. Having been involved with the planning, there’d been several unexpected turns, he said, including the fact that no one ever figured that an easement might be granted by the federal building folks to provide a walkway on the northern side of the parcel, which was a precursor to thinking about moving the site of the new building.

Blake Transit Center: Board Discussion – “Go for it”

Other than through the buses themselves, the most public statement the AATA makes is through the Blake Transit Center, Bernstein said.

From left: AATA CEO Michael Ford and board chair Charles Griffith.

Around 5,000 people a day people go through the BTC. He agreed with the concern about financing, however. Without wanting to seem “crass” about it, Bernstein said he thought the AATA ought to “go for it” and increase the budget to $8.5 million so that the three elements could be restored. To the public, the AATA could say that everything had been checked at every step of the way and it had been reviewed by committees and the public. Some people feel you shouldn’t spend anything on anything, Bernstein.

The AATA has to look at a commitment to improving the infrastructure for the future. It’s possible to stay in the current building and simply give all the money back to the feds, he said. He argued for not doing something partway, but rather getting as much out of the building as the AATA can. Constructing a building to last 10-15-20 years versus 20-30-40 makes a big difference, he said. He didn’t see a huge difference in $8.05 million and $8.5 million.

Anya Dale noted that her understanding was that a lot of the extra cost stemmed from incorporating public requests for what they wanted in a downtown transit center. Real-time information was an important request, she said. She agreed with Eli Cooper that providing real-time information was a key element for providing quality service.

Griffith returned to the LEED certification issue. He described it as a fairly intensive process of gathering data and doing analysis. It’s not just paperwork, he said.

Blake Transit Center: Board Discussion – Contingency Redux

David Nacht said he had no opinion about the particular point of the LEED certification. His concern was based on comments from Sue Gott and Paul Schreiber about the amount set aside in the project for contingency – that the amount might not be sufficient. He wanted to hear something about that. In a context where the organization is taking itself right up to the point of its required cash reserve level, the idea that the contingency for the project might not be sufficient would make him want to table the project.

Terry Black asked Matt Berg from Spence Brothers Construction to address the issue. Berg said he’d been working with Black for the last year. He was recommending a 5% contingency, based on the level of the design that’s been done. The drawings are done, and the project has been bid and scoped, he said. There’d been 80 bidders on 16 different construction packages. Contracts could be written now, he said. He felt that 5% should be sufficient.

Matt Berg, construction estimator with Spence Brothers Construction.

Schreiber’s higher number of 10% would be more typical if they were further behind in the design process and were still drawing. Nacht responded to Berg’s comments by saying, “Well, that was comforting!” Nacht continued by saying he had no particular opinion about the items identified for possible re-inclusion. However, he did have an opinion about dipping into funds beyond those that had been previously budgeted. As treasurer, he didn’t want to be in a position of having to come back and remind the board of this moment and saying, “Okay, we’re going to cut bus service now and fire staff now, because you wanted to build a building and make it a certain level building.”

Jesse Bernstein got confirmation from Black that the funding for the building won’t come out of operations funding. So the construction of the building wouldn’t result in reducing service or firing staff. Rather, it’s about buying buses or buying replacement parts possibly later than they otherwise would.

A somewhat inconclusive conversational thread ensued about the nature of the funds that were being tapped. Nacht noted that under federal transit law, preventive maintenance funds could be converted into operations funding to pay people and to buy fuel, he said. The AATA had recently received a budget shock and could receive additional shocks – for example, if the U.S. were to go to war with Iran next year, fuel prices could go through the roof, he said. Wearing his treasurer’s hat, it was his job to say these kinds of things.

Roger Kerson felt the Section 5307 funds were normally allocated for projects such as park-and-ride lots, not buses, which CEO Michael Ford seemed to confirm.

Eli Cooper was particularly sensitive to the process that has more than doubled in price – but that was the result of working with stakeholders. He’d been preparing to add an amendment to restore the three items to the budget, but had elected not to do that – out of respect for Nacht’s concern as the treasurer. It might be more appropriate to add those items back when the AATA had more confidence in its financial position, he said. There has to be a point in time where prudence takes over, he said. To hear that careful accounting has to be done in order to confirm that the cash reserve policy is being met, he said, means that it’s time to look at the project and ask the staff to perhaps find different additional sources of revenue to make sure that those features can be included that will ensure the new building is state-of-the-art.

Karen Lovejoy Roe expressed some support for the idea that Ford has suggested – that about halfway into the project the AATA would have a better idea of whether some of the additional items could be included under the contingency. She agreed with Schreiber that 5% seemed like a really low number. [Lovejoy Roe is Ypsilanti Township clerk and a member of the future Washtenaw Ride's board.]

Griffith indicated that he’d be open to an amendment along the lines of the items would be added in, if it appears there are sufficient resources as construction on the project progresses.

Bernstein didn’t feel such an amendment was necessary. If the staff comes back and says there’s extra money, the board can vote on that if it’s brought forward. If the motion is passed, the staff will still know that the board would like to see those items eventually included in the project. Black noted that the LEED certification has to begin with the start of the construction. The approach that Bernstein suggested might work for the real-time information display and the ticketing kiosk, however.

Blake Transit Center: Board Discussion – Adding LEED

Griffith said he wanted to prioritize that LEED item because it can’t be added after-the-fact. He just feels like it would be a real shame not to get the building certified for the high level it’s designed to achieve.

So that amendment was offered formally.

Cooper ventured that the $80,000 for LEED certification “buys us a certificate,” but wondered, “What else does it get us?”

Black indicated that the cost would include a year’s worth of testing and an outside contractor to verify all systems and to ensure that they’re working correctly. It includes monitoring during the construction process and after.

Nacht indicated that he just didn’t understand the significance of the certification, so he wanted Griffith to make a pitch, saying, “My off-the-cuff reaction is that 80 grand for piece of paper so that we can waive it around isn’t the best use of taxpayer dollars, when I’m not buying a ticket machine that a human being can use to get on a bus.”

Griffith indicated that obtaining LEED certification is part of the process of proving you’ve built the building to any standard at all. The AATA would be hard-pressed to say anything about the intent to met LEED standards. It’s meaningless to say anything about what your intention was without the certification, he said.

Nacht interjected with a question: If the whole point is to design an environmentally-sound building that’s good for the planet, and good for energy costs and good for the community, what is the added value of being able to say that we did it?

Griffith replied that the added value is that many people make environmental claims, but don’t back them up. And if you don’t go through the process, you can’t claim that it meets the standard. Drawing an analogy to other kinds of standards, AATA wouldn’t want to omit documentation for safety standards, he said.

Griffith quipped that it’s too bad the FTA does not have the same commitment to LEED certification as it does to public art.

Some conversation ensued about the graywater features and other environmental elements in the building that were a part of the LEED design.

Outcome on the amendment: The board approved the restoration of the LEED certification in the Blake Transit Center project budget, over dissent from Eli Cooper and David Nacht.

Outcome on the main motion: Without significant  further deliberation, the board unanimously approved the project budget for the new Blake Transit Center.

Incorporation of New Act 196 Authority

During his verbal report to the board, AATA CEO Michael Ford reviewed events of the last few weeks in connection with the AATA’s effort to expand the geographic area of its funding and governance. At a special meeting on Oct. 2, 2012, the board had authorized filing of the articles of incorporation for the new transit authority – under Act 196 of 1986. They were filed with the state through the Washtenaw County clerk on Oct. 3, Ford said. The AATA’s interpretation was that the 30-day opt-out period had started with the filing of the articles, and letters had been sent out to all jurisdictions in the county to that effect.

Several members of the future board of The Washtenaw Ride joined the AATA board at the table for the Oct. 18, 2012 AATA board meeting. They had a voice but not a vote. Starting at the near right and going clockwise around the table are: Charles Griffith (AATA), CEO Michael Ford, Jesse Bernstein (AATA), Eli Cooper (AATA), Karen Lovejoy Roe (TWR), Bill Mester (TWR), Paul Schreiber (TWR), David Philips (TWR), David Nacht (AATA), Sue Gott (AATA), Roger Kerson (AATA), Bill Lavery (TWR), and Anya Dale (AATA).

The city of Ann Arbor had recently “communicated a different interpretation of the 30-day opt-out period,” he said. The city suggested that the articles were not in effect until 30 days after the filing. So the opt-out period could not begin until around Nov. 3, Ford said. AATA legal counsel feels that AATA has complied with all laws related to the formation of a new transit authority, Ford continued, but out of an “abundance of caution,” additional time will be provided to make a decision to withdraw from the new transit authority. According to Ford, the city has given the go-ahead for a second notification to be sent out, this time by Washtenaw County, and the AATA will reimburse any costs associated with that. Ford said the AATA felt it was “on firm ground” with those issues. Clerks of all municipalities have been notified about the planned re-notification, and Ford said that the AATA “regret[s] any confusion the delay may have created.”

Besides the 30-day window for opting out, the AATA is also working with the city of Ann Arbor to establish representatives from Ann Arbor on the board of the new authority. “Contrary to our plans and understanding that the Act 55 board would automatically become a part of the Act 196 board, the city has chosen to proceed in this manner, citing possible violations of the incompatible offices statute,” Ford said.

So the city will appoint seven new board members, and Ford noted that process has begun with mayor John Hieftje’s nomination at the city council’s Oct. 15, 2012 meeting of two people to serve on the new board: Susan Baskett, who currently serves as a trustee on the Ann Arbor Public Schools board; and Tony Derezinski, who currently serves on the city council. [Derezinski will be leaving the council in mid-November, because he did not prevail in his August Democratic primary race. His last city council meeting will be Nov. 8. For more details and analysis, see previous Chronicle reporting: “Positions Open: New Transit Authority Board.”]

From left: Paul Schreiber, Michael Ford and David Philips.

Other nominations to the new board are expected to be forthcoming, Ford said. “While the new development has caused some delays, we are viewing this as an opportunity for a coordination process going forward so all parties can be comfortable in working together,” Ford concluded.

Later during the meeting, AATA board chair Charles Griffith said it was “a little bit of a surprise that our process for creating this  new authority got a little adjusted this past month. We started out with a bang with our action earlier this month to initiate the process for creating the new authority.” He said it was  not really a big concern if it takes a little longer, adding that he was not worried if some of the faces are new, when the new board is actually seated. He’s not worried that they won’t be friendly, he said. The AATA board would do everything it can to ensure a smooth transition.

Communications, Committees, CEO, Commentary

At its Oct. 18 meeting, the AATA board entertained various communications, including its usual reports from the performance monitoring and external relations committee, the planning and development committee, as well as from CEO Michael Ford. The board also heard commentary from the public. Here are some highlights.

Comm/Comm: Record Ridership

At the start of the meeting, saying he didn’t want it to be buried in a committee report, David Nacht stressed that the 2012 fiscal year had concluded with a record number of riders – well over 6 million, he said.

Ridership for FY 2012 (bars) compared against FY 2011 (trend line).

The AATA is continuing to attract new riders – and it was not the case that the increase could be attributed to uniformly high gas prices, he said. A lot of the increase is related to expansion of service on particular routes, he said. He summed up his comments by saying that the board had a lot to thank the staff for and a lot to be proud of.

During his oral report to the board, CEO Michael Ford also noted the 6.3 million rides on the fixed-route service, which was the largest number of rides since the inception of fixed-route service in 1979, he said. The number is almost 7% above last year. Routes that have increased more than 20% include Routes #4, #10, and #18. Doubling the frequency on Route #4 – between Ann Arbor and Ypsilanti – has been beneficial to the community, Ford said. Commuter express bus service has also increased about 29% for the Chelsea-Ann Arbor service and about 54% for the Canton-Ann Arbor service. Ford noted that a total of about 25,000 people had ridden the AirRide service – between downtown Ann Arbor and Detroit Metro Airport – since its inception in April 2012. [.pdf of year end performance data]

Comm/Comm: Committee Membership

Charles Griffith, who was elected chair of the board at the previous regular meeting on Sept 27, 2012, had said he wanted to hold off on setting committee membership until he’d had a chance to touch base with other board members.

Anya Dale.

At the Oct. 18 meeting, Griffith announced that Roger Kerson would take over Griffith’s chairmanship of the performance monitoring and external relations committee and outgoing board chair Jesse Bernstein would take a spot on that committee. The third member of that committee is David Nacht.

Anya Dale will continue to chair the planning and development committee. The other two members of that committee are Sue Gott and Eli Cooper.

Comm/Comm: City Council Action – Connector, Rail

Eli Cooper, who also serves as the city of Ann Arbor’s transportation program manager, reported that the city council had two transportation items on the agenda for its Oct. 15 meeting and both were approved. One was the environmental review and preliminary engineering study for an Ann Arbor rail station. The other was a study for a transportation connector between the northeast and southern part of the city. Cooper reported that the city is “all in” for those two projects as they’re currently understood.

Comm/Comm: Bus Shelter

Jim Mogensen addressed the issue of a bus shelter at Chidester Place in Ypsilanti, which he’d raised at the board’s previous board meeting. He said he’d received a useful response from AATA staff explaining why the change had been made from a 6×12 shelter to a 5×10 shelter.

By way of background, the response is described in the CEO’s written report to the board:

The old 6’x12’ shelter at Chidester had been in place for a long time. The building management installed a ramp several years ago to permit wheelchair users to get up onto the shelter pad. However, there was not enough room (only 3’) for a wheelchair user to get by the shelter to the bus stop. The Americans with Disabilities Act requires a 5’ clear path. The new shelter measures 5’x10’ and includes a location under the roof for a wheelchair user, which was not the case with the old shelter. While the daily boardings (21) are well below the threshold for placing a passenger shelter at the stop (50), we have maintained a shelter there because we recognize that Chidester Place is home to many seniors and people with disabilities.

In his Oct. 18 remarks, Mogensen noted there’d been an Option 1 considered, but no Option 2, for achieving the 5 -foot clear path. He suggested Option 2 could have been extending the concrete pad on the other side by two feet and keeping the larger shelter. Mogensen characterized it as a cultural point: by fixing the ADA issue, AATA fixed its [legal] problem, but that created a problem for the ridership.

During his oral report to the board, which came shortly after Mogensen’s comments at the meeting, Ford indicated that additional checking would be done based on Mogensen’s remarks.

Comm/Comm: New Website

Reporting from the performance monitoring and external relations committee, Roger Kerson said that the new website being developed for the AATA is “really cool.” He described it as very sophisticated. The real-time information, which allows people to locate a bus and see how far away it is, adds a lot of value, he said. The vendor is in the final stages of the work, Kerson reported. Before final launch, some additional testing will be done with focus groups, with some final adjustments to be made as a result of that. When it goes public, he said, the website will have some “test miles on it.”

Comm/Comm: Purchase of Transportation

Jim Mogensen reiterated a comment he made at a previous meeting – that municipalities that have purchase-of-service agreements (POSAs) with the AATA are not actually purchasing transportation. The AATA gets revenue from the federal government and the state government, and from fares. The difference between the cost of providing that service and the revenue is the local match – so what communities with POSAs are paying for is the local match, he said.

Comm/Comm: Partridge

Thomas Partridge weighed in during public commentary calling for a commitment to affordable public transportation.

Present: Charles Griffith, David Nacht, Jesse Bernstein, Eli Cooper, Sue Gott, Roger Kerson, Anya Dale.

Also attending as representatives of the future Act 196 board of The Washtenaw Ride were: Karen Lovejoy Roe, Bill Mester, Paul Schreiber, David Philips, and Bill Lavery.

Next regular meeting: Thursday, Nov. 15, 2012 at 6:30 p.m. at the Ann Arbor District Library, 343 S. Fifth Ave., Ann Arbor [Check Chronicle event listings to confirm date.]

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Many commissioners expressed surprise at the county’s involvement in this way. Previously, the expectation was that the county would not be involved in the process after filing articles of incorporation – which occurred on Oct. 3 at the request of the Ann Arbor Transportation Authority. The Washtenaw Ride is an Act 196 authority, and is intended to create a much broader transit system than the current AATA. The process of creating a larger transit system has been in the works for more than two years.

There’s been some confusion and differing legal views regarding the process of forming the new transit authority. Letters of notification sent by the AATA in late September to all jurisdictions in the county referred to a statutory 30-day window starting with the filing of the articles of incorporation. But Act 196 also requires that the new transit authority itself notify jurisdictions, which also triggers a 30-day window for opting out. The statute makes clear that it’s the later of the two windows that is relevant. Because the new transit authority does not yet have a seated board, it has not yet acted to notify jurisdictions countywide. For a more detailed report on this issue, see Chronicle coverage: “Positions Open: New Transit Authority Board.”

At their Oct. 17 meeting, Hedger told commissioners that AATA had approached the county, as the incorporator of the new transit authority, and asked the county to send official letters instead of waiting for the new transit board to be formed. The county would do so as soon as the articles of incorporation become operational in early November, he said. That means letters would go out likely by Nov. 8, he said, which would create a 30-day “opt out” window that would close in early December. Jurisdictions are automatically a part of the new authority until they officially notify the authority of their intent not to participate. Since early October several township boards have already voted to opt out, including the townships of Salem, Manchester, Superior, York, and Augusta.

Hedger said he expects the letter, which hasn’t yet been drafted, will indicate that the new authority will honor the opt-out decisions that have already been made. But it also will inform municipalities that they could change their minds and rejoin the authority until the 30-day window closes in early December, he said.

Commissioners Dan Smith and Rob Turner, who have previously expressed reservations about the process, both noted that the county was not supposed to incur any costs in setting up the new authority – saying its only role was to officially file the articles of incorporation. They noted that this had been laid out in the four-party agreement between the county, AATA, and the cities of Ann Arbor and Ypsilanti. Now, it appears that staff time and postage costs will be paid by the county.

Hedger indicated that he doesn’t expect to spend a significant amount of time on drafting the letter, and will use the previous one sent out by AATA as a template. Commissioner Conan Smith noted that the county had pledged to ensure that municipalities would be notified, and if that simply means sending out 28 letters, then “I think we can foot the bill.”

There was some discussion about the need to notify each elected official individually, rather than just sending a notice to each of the township, village or city clerks in the 28 jurisdictions. That would significantly increase the number of letters that would be sent.

Hedger also noted that if the Washtenaw Ride board is appointed by early November, then that entity could take over the notification process. ”But it doesn’t look like that will happen at this point,” he said.

Before any AATA assets would be transfered to The Washtenaw Ride, voters would need to approve a funding source – likely a millage that could come as early as May 2013. The requirement of voter approval is part of a four-party agreement – between Washtenaw County, the city of Ann Arbor, the city of Ypsilanti and the AATA – that governs the possible transition to The Washtenaw Ride.

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

The creation of the new authority will be made official when the Washtenaw County clerk files the paperwork with the state, likely on Oct. 3. [Added shortly after initial publication: Although the Oct. 3 date was the expectation expressed at the AATA board's Sept. 27 meeting, the wording of a Washtenaw County board of commissioners resolution on the topic indicates that a step of alerting jurisdictions of the intent to file would need to take place beforehand.] However, that entity will initially have no assets, staff, or ability to operate transportation service in the county. A 15-member board composition for the new authority is already reflected in the membership of the board of the yet-to-be-incorporated board (called the U196 board), which has been meeting for a year.

In order for make a transition from the AATA to The Washtenaw Ride, under terms of a four-party agreement, voters would need to approve a funding source adequate to pay for the proposed expanded service plan. That four-party agreement was ratified by the city of Ann Arbor, the city of Ypsilanti, Washtenaw County and the AATA.

The AATA has indicated that a possible scenario is to ask voters in Washtenaw County to fund the new transit authority with a property tax of 0.584 mills – in an election that could come as early as May 2013. For a house worth $200,000, with a state-equalized value of $100,000, an 0.584 mill transit tax would cost that property owner about $58 per year. For an Ann Arbor resident with a $200,000 house, adding the 0.584 mill tax to the existing city transit tax of roughly 2 mills works out to a transportation tax burden of about $258 a year.

Also under the four-party agreement, the two cities’ transit taxes would become part of The Washtenaw Ride’s funding.

The transition would potentially not take place at all, if a majority of voters don’t approve it. Under the terms of the four-party agreement, a voter-approved funding source for the expanded services must be identified by the end of 2014.

Washtenaw County’s role is limited to the filing of the articles of incorporation. But incorporation of the new transit authority will include by default all the jurisdictions in Washtenaw County. However, filing of the articles opens a 30-day window for jurisdictions to opt out of the arrangement. That can be accomplished through a vote of a jurisdiction’s governing body.

Updated at 3 p.m. Oct. 3, 2012: According to Washtenaw County clerk staff, certified letters were sent on Sept. 27 to the clerks of all jurisdictions in the county of an intent to file the articles of incorporation on Oct. 3. Letters were also sent to all elected officials in the county. Information included in that communication was the last day to opt out of inclusion, Nov. 2, as well as sample resolutions that could be used by a jurisdiction’s governing body to decide the opt-out question. After the vote by the AATA board on Oct. 2, county administrator Verna McDaniel determined that the Washtenaw board of commissioners’ resolution requiring publication of the service plan and notification of intent to file had been satisfied, and then notified the county clerk of that. Then on Oct. 3, representatives of the AATA were authorized as couriers by the county clerk to physically convey the paperwork to Lansing.

This brief was filed from the downtown location of the Ann Arbor District Library, where the AATA board holds its meetings. A more detailed report will follow: [link]

Once incorporated, the new transit authority will include by default all the jurisdictions in Washtenaw County. The articles of incorporation for the new authority – to be called The Washtenaw Ride – would be filed by Washtenaw County under Act 196 of 1986 after getting a formal request from the AATA board. Filing the articles of incorporation for the new authority opens a 30-day window for jurisdictions to opt out of inclusion. That can be accomplished through a vote of a jurisdiction’s governing body.

Ultimately, the resolution on Act 196 board representation was withdrawn at the Sept. 27 meeting, when AATA board members could not get a clear understanding of the impact the resolution would have, and whether it amounted to “belt and suspenders” on outcomes that would follow naturally from the legal requirements of Act 196 of 1986. That’s the statute under which the new transit authority would be incorporated.

The drafted resolution was meant in part to address possible concerns about what might happen if a large number of local governments in Washtenaw County opt out of the new transit authority. Some non-Ann Arbor members of the as-yet unincorporated Act 196 board attended the Sept. 27 meeting and participated in deliberations (though they could not vote). Some expressed concern that the AATA’s planned Oct. 2 request for incorporation could be a “rush to incorporate.”

The membership of the new authority’s board can be altered only with a 4/5 vote on the 15-member board – based on the articles of incorporation. So the resolution discussed by the AATA board at its Sept. 27 meeting would have, in some sense, expressed the position of current AATA board members as follows: When they become Act 196 board members, they would not go along with a restructuring of the Act 196 board, even if several jurisdictions opt out during the 30-day period – until the point of asking voters to approve a millage.

The AATA board has called a special meeting for Oct. 2 to make a request that the Washtenaw County clerk file the articles of incorporation the following day. It’s possible that the withdrawn AATA board resolution will be re-worded and brought back for the Oct. 2 meeting.

The new authority will have a 15-member board, representing eight different districts in Washtenaw County. The Ann Arbor and Ypsilanti districts include just their respective cities – each city a single jurisdiction. Those two cities are not expected to opt out. Another single-jurisdiction district – Pittsfield Township – is not expected to opt out. But other districts include multiple jurisdictions. For example, the Northeast District includes four townships: Northfield, Superior, Salem and Ann Arbor.

The conversation at the AATA board meeting did not achieve clarity on the issue of what legal constraints would apply if every jurisdiction in a district were to opt out. And that was a consideration that led to the resolution’s withdrawal, with possible consideration at the Oct. 2 meeting.

The contractual agreement governing the transition from the current AATA to The Washtenaw Ride is a four-party agreement that was ratified by the AATA, Washtenaw County, the city of Ann Arbor, and the city of Ypsilanti. The transition would essentially not take place at all, unless a voter-approved funding source for the expanded services is identified by the end of 2014.

The AATA has indicated that a possible scenario is to ask voters in Washtenaw County to fund the new transit authority with a property tax of 0.584 mills – in an election that could come as early as May 2013. Once incorporated, the Washtenaw Ride would still not have any assets or be able to offer any service. That transition would depend on voter approval of the funding source.

Based on discussion at a Sept. 25 meeting of Ann Arbor’s district advisory committee (DAC) – which helps advise the as-yet-unincorporated authority – a transition to a new authority could take several months. Even if a millage vote were to be held in May 2013 and approved by voters, it would still likely take until Sept. 30, 2013 – the end of the AATA’s fiscal year – to complete the transition.

So the AATA board will need to continue to meet in its current guise through the end of a meeting schedule approved on Sept. 27, 2012. The general pattern is to meet on the third Thursday of the month, with a starting time of 6:30 p.m. The meetings are held in the fourth-floor boardroom of the downtown Ann Arbor District Library, located at 343 N. Fifth Avenue. So possibly the last-ever meeting of the AATA board is scheduled for Sept. 19, 2013. [.pdf of AATA FY 2013 meeting schedule]

This brief was filed from the downtown location of the Ann Arbor District Library, where the AATA board holds its meetings. A more detailed report will follow: [link]