Raman Patel, left, Washtenaw County's equalization director, shares a laugh with county board chair Conan Smith before the April 18, 2012 meeting. (Photos by the writer.)

The report includes a calculation of taxable value for all jurisdictions in the county, which determines tax revenues for those entities that rely on taxpayer funding, including cities and townships, public schools, libraries and the Ann Arbor Transportation Authority, among others.

It was the 41st report that Raman Patel, the county’s equalization director, has completed – and he delivered some positive news. The county’s general fund budget was approved with a projection of $59.734 million in tax revenues. But actual revenues, based on 2012 taxable value, are now estimated at $62.395 million – for an excess in 2012 general fund revenues of $2.66 million.

Despite reporting better-than-expected taxable value, Patel cautioned that if the potential repeal of the state’s personal property tax is passed – being considered by legislators in a set of bills introduced last week – it could 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.

Although most of the meeting focused on Patel’s presentation, other business covered a variety of issues. Commissioners discussed the next steps in an effort to deal with mandated animal control services in the county. A work group has met that includes representatives from the county, the Human Society of Huron Valley, and other municipalities that have animal control ordinances, such as the cities of Ann Arbor and Ypsilanti, and Ypsilanti Township. Some commissioners highlighted the need to develop a policy to guide the work group, which will give recommendations about the cost of animal control services.

Related to the March 15 tornado that touched down in the Dexter area, board chair Conan Smith reported that he had declared a state of emergency earlier this month and sent a letter to Gov. Rick Snyder requesting reimbursement to local municipalities for costs incurred as a result of the devastation. Local governments itemized about $1 million in costs, but the total – primarily in damages to residences – is estimated at over $9 million. [.pdf of Smith's letter to Snyder] [.pdf summarizing tornado-related expenses]

During the meeting, the board also passed a proclamation recognizing the National Training Institute, put on by the National Joint Apprenticeship & Training Committee – a partnership of the International Brotherhood of Electrical Workers (IBEW) and the National Electrical Contractors Association (NECA). The training institute is held in Ann Arbor at the University of Michigan and this year runs from July 25-Aug. 3, bringing more than 3,000 people to town. Commissioner Rob Turner, an electrical contractor, is a member of both the IBEW and NECA.

Among the other action items at the April 18 meeting, commissioners (1) set a public hearing for May 2 to get public input on an annual plan for the Washtenaw Urban County, which gets federal funding for projects in low-income neighborhoods; (2) authorized the issuance of up to $6 million in notes at the request of the Washtenaw County road commission, for work in Ypsilanti Township; and (3) approved the hiring of Nimish Ganatra as assistant prosecuting attorney over the dissent of Wes Prater, who objected to paying a salary above the midpoint range.

Equalization Report and Local Tax Revenue

The state-mandated equalization process runs throughout the year, as both the county and local assessors within each municipality examine the value of land and other property, such as buildings. Local assessors turn their findings over to the county, which then conducts independent assessments based on sales studies and physical appraisals. Next, the county’s equalization staff looks at how their findings compare with the local assessors’ findings. (The county has authority to request that local assessment rates be altered, if it considers them to be too high or too low.)

After this “equalization” occurs, the local municipalities send out notices to each property owner in their jurisdiction, stating each property’s assessed value as well as its taxable value. If property owners disagree, they can appeal that assessment. After appeals are ruled on, the county uses that data for its equalization report. Local decisions can be appealed to the state, so at any given time there are a certain number of parcels with assessments that might change, depending on the outcome of the state-level appeal.

Taxable value is a state-mandated formula, and is the lower of two figures: (1) a parcel’s equalized (assessed) value, or (2) a capped value calculated by taking last year’s taxable value minus any losses (such as a building being torn down), multiplied by 5% or the rate of inflation (whichever is lower – this year inflation is 2.7%), plus the value of any additions or new construction.

If the property changes hands, taxable value is reset at its equalized value.

Taxable value is used when calculating taxes for the county, as well as its various municipalities and other entities that rely on taxpayer dollars, including school districts, libraries and the Ann Arbor Transportation Authority, among others. [.pdf of chart showing 2012 equalized and taxable values for all jurisdictions]

Washtenaw County’s equalization report – along with similar reports from all of Michigan’s 83 counties – will be forwarded to the state. If the state agrees with the county’s report, then the county equalized values become the state equalized values (SEV) that appear on tax bills.

Equalization Report: 2012 Highlights

Raman Patel, director of the county’s equalization department, began his presentation by telling commissioners that this was the county’s 54th equalization report, and the 41st one that he has completed. [.pdf of Washtenaw County equalized values from 1959-2012] He introduced the department’s staff and thanked them for their work. The report requires coordination with all 73 local units of government, assessors and boards of review – he thanked everyone for their support. He also thanked commissioners Barbara Bergman and Leah Gunn, wishing them well as they end their tenure on the board. [Both have decided not to seek reelection this year.]

Patel reported that there are pocket of improvements, as well as some areas of concern. Unique to this year’s report, he presented an update on pending legislation that would phase out the state’s personal property tax, and provided a chart showing the financial impact on local taxing jurisdictions.

Also unique to this year’s report, Patel provided a detailed calendar of the equalization process, including deadlines for steps throughout the year. [.pdf of 2012 equalization calendar] He noted that unlike most other counties, his department prepares data regarding the county’s taxable value about two months ahead of the required deadline for doing that.

Here is a summary of highlights from the 2012 report:

• For 2012, taxable value in the county has fallen 0.77% to $13.7 billion. That’s an improvement over declines in recent years, when taxable value fell 2.85% in 2011 and 5.33% in 2010. It’s also a smaller decrease than was projected when preparing the 2012 budget. The general fund budget was approved with a projection of $59.734 million in tax revenues. But actual revenues, based on 2012 taxable value, are now estimated at $62.395 million – for an excess in 2012 general fund revenues of $2.66 million.
• Although the majority of local taxing jurisdictions still saw declines in taxable value compared to 2011, more showed gains than in recent years. The county’s largest local jurisdiction – the city of Ann Arbor – registered a 1.04% increase in taxable value, to $4.683 billion.
• This year, McKinley – an Ann Arbor-based real estate and property management firm – was the largest taxpayer in the county, with properties totaling $132.177 million in taxable value. Other taxpayers on the top 10 list are Detroit Edison ($133.919 million), Toyota ($115.896 million), DTE/MichCon ($104.726 million), Ford/ACH ($74.177 million), Briarwood Mall ($63.159 million), Domino’s Farms ($62.823 million), International Transmission ($51.296 million), Hyundai ($37.517 million) and THC Ann Arbor ($36.360 million).
• The Board of Review received 2,968 appeals of assessments, compared to 2,656 in 2011. This year, 1,589 appeals were granted – compared to just 738  last year – for a decrease of about $12.2 million in taxable value. Poverty exemptions increased dramatically, from 49 requested last year to 110 requested in 2012. This year, 74 poverty exemptions were granted, compared to 31 granted in 2011.
• In 2012, some types of property saw greater declines than others. Commercial property showed a 3.84% drop in equalized value, while equalized value for industrial property dropped 3.99%. Residential property value – the largest classification of property in the county – showed some signs of recovery, dropping only 0.57% compared to a 2.74% drop in 2011. The only category of property that showed an increase was agricultural, which increased in equalized value by 3.54%.
• The value of taxable new construction over the past six years has dropped sharply, from $578.89 million in 2007 to $246.313 million in 2012. However, this year showed the first increase in several years – up from $239.512 million in 2011.
• Washtenaw County’s less than 1% drop in taxable value was by far the smallest decrease compared to other counties in southeast Michigan. Both Genesee and Macomb counties saw the greatest declines in taxable values, falling by 6.83% and 6.01% respectively.

Patel noted that the gap between equalized (assessed) and taxable values is narrowing. This is important because when equalized value and taxable value are the same for a property – and if that property’s assessed value continues to fall – then its taxable value falls in tandem with that assessed value. And that means lower revenues for local municipalities. This year, 66.97% of property in the county – 92,547 parcels – had equal taxable and assessed values, compared to 65% in 2011.

There are a total of 138,203 parcels of land in Washtenaw County. Of those, 48.07% increased in taxable value, while 43.51% decreased in taxable value. The rest were unchanged.

Patel also highlighted the fact that many properties in the county are exempt from taxation, for a variety of reasons – as religious institutions, public entities like schools and universities, or businesses that are given tax abatements, for example. Since 2002, a total of 513 parcels have been granted this status with a 2012 taxable value of $230.293 million. It’s worth remembering the impact of that, he said. He also noted that this year, $2.135 million that would have otherwise come to the county government in tax revenues is being “captured” by other entities, such as downtown development authorities, tax increment finance (TIF) authorities, and brownfield authorities.

Patel’s presentation included a discussion of state legislation introduced earlier in the week – a package of eight bills that would phase out the personal property tax (commercial, industrial and utility) over the next 10 years. [.pdf of personal property tax update, including a chart showing the financial impact for all local taxing entities]

If the proposed legislation were to be in effect now, the county government would lose $5.223 million in tax revenues, Patel reported. Countywide, all local taxing jurisdictions would lose $41.679 million. Patel said he hoped lawmakers don’t enact this legislation, but that it might be wise to start looking at how to cover that loss.

Equalization Report: Board Discussion

Commissioners praised Patel and his staff for their work – Yousef Rabhi noted that Patel had been doing this work “since well before I was born.” Barbara Bergman recalled when she was a new commissioner 20 years ago, she met with Patel and he explained the equalization process to her and made her a cup of tea. It took more than a cup of tea for her to understand, she joked, and she thanked him for his kindness.

For this meeting report, the board’s comments and questions are organized thematically.

Equalization Report: Board Discussion – Personal Property Tax

Yousef Rabhi thanked Patel for presenting more detailed information about the impact of eliminating the personal property tax. He said he was glad that the board had passed a resolution opposing it, unless the state found replacement revenues. [The resolution was passed at the board's April 4, 2012 meeting.] Patel’s report should be a warning to Lansing not to follow through with this proposal, Rabhi said, calling it ridiculous and “absolutely devastating” to local communities.

From left: Washtenaw County equalization director Raman Patel with county commissioners Felicia Brabec and Leah Gunn. Patel has worked on 41 annual equalization reports. This will be the last one approved by Gunn, who is not seeking reelection, and the first one by Brabec, who was appointed to the board last year to fill a vacancy in District 7.

Rabhi pointed to a recent poll showing that 70% of voters oppose the PPT repeal. [He was referencing a poll conducted by the Lansing firm EPIC-MRA and commissioned by the advocacy group Replace Don't Erase Michigan's Personal Property Tax.] People recognize that the repeal would jeopardize local services and that it’s the wrong thing to do, he said. Rabhi noted that Saline mayor Gretchen Driskell recently testified against the repeal at a state legislative hearing. He encouraged everyone to call their state legislators to make sure that a repeal doesn’t pass. Local governments can’t keep giving up revenue sources and still provide the same level of services, Rabhi concluded.

Barbara Bergman echoed Rabhi’s remarks. She described property taxes as regressive, and said many of her constituents face increasing property taxes and decreasing pensions. They can’t sell their homes because of a soft market, so they’re forced to make tough choices. Bergman said she supported a progressive income tax in Michigan and hoped that it would happen someday.

Conan Smith asked Patel to comment on the impact of real and personal property tax laws in the county’s urban areas, which will be among the hardest hit by changes to the PPT. Places like Ypsilanti and Ypsilanti Township are also seeing declines in real property values, Smith noted. He asked whether those two communities are seeing sharper decreases in the value of commercial and industrial property, compared to other parts of the county.

Yes, Patel said – the closing of Ford and General Motors plants has affected those communities. [Ypsilanti's taxable value dropped 5.97% to $290.729 million in 2012, while Ypsilanti Township's taxable value dropped 6.09% to $1.14 billion. The only larger percentage decrease was seen in the Washtenaw County portion of the city of Milan, with an 8.16% decline in taxable value to $87.387 million. Part of Milan is located in Monroe County.]

Equalization Report: Board Discussion – Appeals

Wes Prater asked about the appeals process. There were 2,968 appeals and of those, 1,589 were granted – for a decrease of about $12.2 million in taxable value. How many of the appeals that weren’t granted locally will be appealed at the state level? he wondered. Patel pointed out that a property owner has until June to make an appeal to the state, so it’s not possible to know yet how many will be appealed.

Prater asked if there were more appeals this year than last year. Patel replied that he didn’t have the information at hand. [Last year, the local Board of Review received 2,656 appeals of assessments, and granted 738 – for a decrease of about $13 million in taxable value. Forty-nine poverty exemptions were requested, and 31 were granted. This year, 110 poverty exemptions were applied for, and 74 were granted.]

Patel explained that most of the larger appeals relate to industrial or commercial properties. There are a couple of large appeals that are still pending, he said, but in general that process appears to be stabilizing.

Equalization Report: Board Discussion – Trends, Projections

Dan Smith asked about the difference between agricultural valuations, which have increased by 3.54% over last year, and valuations for commercial and industrial properties, which dropped by 3.84% and 3.99%, respectively. Was there any history behind that, and would that trend likely continue?

Chart showing 2012 Washtenaw County equalized values. (Links to larger image)

Lori Cash, a management analyst in the equalization department, replied that over the past few years, the amount of land classified as “developmental” has declined. [In 2012, that category decreased by 19.11% to a total value of$49.493 million – the lowest of all property categories in the county.] The total equalized value increased in the agricultural category because local assessors have reclassified some parcels from the developmental category to the agricultural category, Cash said. So there are more properties classified as agricultural now than in the previous year.

Patel described the developmental category as a “parking lot.”  Assessors will use it when they’re uncertain about how the land will be used. D. Smith clarified with Patel that farmland isn’t necessarily becoming more valuable – it’s just that more property is now being classified as agricultural.

Pointing to the 3.99% decline in industrial value, D. Smith asked whether that trend would likely continue. Patel noted that several large manufacturers have closed plants in Washtenaw County – Ypsilanti Township in particular took hits from the closing of Ford and General Motors plants there, he said. [Ypsilanti Township's taxable value dropped 6.09% from last year, to $1.14 billion.]

Even so, Patel said Washtenaw County is remarkably resilient and has absorbed a lot of losses over the past five or six years. In addition to plant closings by large automakers, he pointed to the departure of Pfizer – that alone was a loss of $400 million in taxable value for the county, Patel said. And even more taxable value was lost when Pfizer sold its large research campus to the University of Michigan, he said, because as a public university, UM is a tax-exempt institution. Despite all that, Patel said, the county is stabilizing.

D. Smith then referred to a chart showing the number of parcels in which assessed value is equal to taxable value, as well as the number of properties in which those values are within 5% of each other or greater than 5%. Smith asked whether Patel expected that there will be more parcels in the coming years with equal assessed and taxable value.

Patel replied that it will depend on whether the real estate market moves values up or down – it’s difficult to predict. He noted that working on a two-year budget cycle, as the county does, is difficult. Because of the state-mandated process, the equalization department can’t prepare its report until April. That means the county doesn’t have a solid estimate of tax revenues for the year until more than three months into that year. And for the current budget – approved by the board in late 2011 for the years 2012 and 2013 – tax revenue estimates were made for 2013 even though the market values on which those tax revenues won’t be known until late 2012.

Rob Turner explicitly asked whether Patel and his staff had worked up projections for equalized and taxable values. Patel expressed some frustration, saying that he wanted to be respectful but that he had already indicated that he couldn’t make projections. When the equalization department completes its work each year, then they announce the results, he said. There are laws, rules and regulations governing their work, Patel said, and no one has pulled a projection from his mouth in 41 years. At that, commissioners laughed and Turner apologized for putting Patel on the spot.

Prater said he’s known Patel for most of the 41 years that Patel has been working on equalization reports, ”and I have yet to hear his first projection – and I’ve asked many, many times. So that just ain’t gonna happen.”

Outcome: Later in the meeting, the board voted unanimously to accept the 2012 equalization report.

Animal Control Services

There was no action item related to animal control services at the April 18 meeting. But during the board’s liaison reports, Rob Turner told his fellow commissioners that he had attended the first meeting of the animal control services work group, which included representatives of the county, the Humane Society of Huron Valley, and other municipalities that have animal control ordinances.

By way of background, at its Feb. 15 meeting, commissioners approved a $415,000 contract with the Humane Society of Huron Valley to provide animal control services for the county just through Dec. 31, 2012. The county’s previous contract with HSHV, for $500,000 annually, expired on Dec. 31, 2011. In the interim, the two entities had been operating under a $29,000 month-by-month contract.

From left: County commissioners Rob Turner and Rolland Sizemore Jr.

County officials said the new contract would provide time for ongoing talks to develop a longer-term solution to animal control services in Washtenaw County, including services that are mandated by the state. During the rest of 2012, the county plans to work with HSHV and other stakeholders to determine the cost of an “animal service unit” – that is, the itemized per-animal cost of providing animal control services. The county eventually will issue a request for proposals (RFP) to solicit bids for the next contract.

The budget approved by the county board for 2012 cut funding for animal control services to $250,000. However, during last year’s budget deliberations commissioners also discussed the possibility of paying an additional $180,000 to HSHV – if the nonprofit took over work previously done by the county’s animal control officers. That brought the total amount budgeted for animal control to $430,000 in 2012. HSHV officials have said that even $500,000 wasn’t sufficient to cover costs for all the work they do.

The $415,000 contract approved in February did not include the $180,000 that the county has budgeted for its own animal control officers. Instead, the county allocated an additional $165,000 from its general fund balance, to be added to the previously budgeted $250,000 for animal control services in 2012.

At the Feb. 15 meeting, the board spent considerable time discussing the roles of two entities – a board policy task force, and a broader animal control services work group led by the sheriff’s office – as well as a timeline for completing the work of these two entities. The resolution ultimately passed by commissioners included these resolved clauses that laid out a timeline for the work:

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners authorizes the Office of the Sheriff to develop a methodology to determine the cost of an Animal Service Unit (ASU) on behalf of the County. The Sheriff may choose the members of his work group, with the understanding that the Board of Commissioners will appoint Commissioner Rob Turner to act as a liaison. The work group’s report is due no later than September 15, 2012.

BE IT FURTHER RESOLVED that the Washtenaw County Board of Commissioners hereby establishes a Task Force on Animal Control Policy. This group will exist solely for the purpose of developing an animal control policy for the county. This policy will be reflected in the RFP for a scope of services that the county will purchase. Meetings will be posted. Membership is open to any Commissioner who wishes to attend, and the preliminary report will be filed May 15, 2012. Once the data from the Sheriff’s work group is published, the RFP will go out forthwith, and the final report of the taskforce will be published by October 15, 2012.

The board’s policy task force has not yet met.

The animal control services work group includes these members: sheriff Jerry Clayton; SiRui Huang and Rick Kaledas of the sheriff’s office; Greg Dill, the county’s infrastructure management director; Catherine Jones of the county finance department; commissioner Rob Turner; county prosecuting attorney Brian Mackie; Ann Arbor city administrator Steve Powers; Ann Arbor interim police chief John Seto; Ypsilanti Township supervisor Brenda Stumbo; Mike Radzik, Ypsilanti Township’s police services administrator; Bill McFarlane, Superior Township supervisor; acting Ypsilanti city manager Frances McMullen; Humane Society of Huron Valley executive director Tanya Hilgendorf; and Jenny Paillon and Matt Schaecher of HSHV.

On April 18, Turner said the work group had discussed the issue of what comes first – policy or specific services? The group is looking to the county board for direction, he said. When the work group met, Turner said he reiterated the need to determine the actual cost of taking care of animals, including the number and kind of animals, as well as the cost per animal that HSHV incurs.

The work group plans to meet every other week, Turner said. The next meeting is set for May 1.

Animal Control Services: Board Discussion

Barbara Bergman stressed the need for commissioners to give input and direction to the work group. She noted that commissioners hold various opinions on the issue, but that they need to come to a consensus so that the work group isn’t operating without guidance.

Turner said he totally agreed, and cited the need for the board’s policy task force to start meeting. Leah Gunn noted that an email had circulated trying to find acceptable dates for a meeting, so that effort is already underway.

Wes Prater said he felt like the board had already reached consensus about the need to figure out the county’s mandated, statutory duties regarding animal control. There’s a shortage of revenues available, he said – that’s a factor too. Prater felt the board shouldn’t get too involved until commissioners get a recommendation from the animal control work group.

Ronnie Peterson said he had raised this concern previously. The board needs to set the direction and scope of work for the work group, he said – that should have already happened. What’s the board’s expectation of an outcome, and how far-reaching should the work group’s recommendations be?

Peterson concluded his remarks by urging the board to make a policy that encompasses all of its nonprofit support, not just the payments that the county makes to animal control services.

Road Commission Debt

At its April 18 meeting, commissioners were asked to authorize the issuance of up to $6 million in notes at the request of the Washtenaw County road commission.

From left: County board chair Conan Smith talks with county road commissioner Ken Schwartz, who formerly served on the board of commissioners. Road commissioners are appointed by the county board.

The funding would be used by the road commission to pay for road work in Ypsilanti Township, including road repaving and reconstruction, intersection improvements, traffic control devices, drainage upgrades and other related projects.

According to terms of a contract signed between Ypsilanti Township and the road commission, the township would reimburse the road commission for the work. The notes would be issued by the road commission and backed by future tax revenues it will receive from the state. The debt would not be backed by the county’s full faith and credit.

Ken Schwartz, one of three appointed road commissioners and a former member of the county board of commissioners, attended the April 18 meeting along with some road commission staff. They did not formally address the board during the meeting.

Outcome: Without comment, the board authorized the issuance of up to $6 million in notes by the county road commission.

Urban County Plan: Public Hearing Set

A resolution on the agenda set a May 2 public hearing to take commentary on the annual plan for the Washtenaw Urban County.

The annual plan describes how the Urban County expects to spend the federal funding it receives from the Community Development Block Grant (CDBG), HOME Investment Partnerships Program (HOME) and Emergency Shelter Grant (ESG) programs, operated by the U.S. Dept. of Housing and Urban Development (HUD). [.pdf of 2012-2013 draft annual plan] [.pdf of list of planned projects]

The Washtenaw Urban County is a consortium of local municipalities that receive federal funding for projects in low-income neighborhoods. Current members include the cities of Ann Arbor and Ypsilanti, and the townships of Ypsilanti, Pittsfield, Ann Arbor, Bridgewater, Salem, Superior, York, Scio, and Northfield. An additional seven municipalities will become part of the Urban County as of July 1, 2012: the city of Saline, the village of Manchester, and the townships of Dexter, Lima, Manchester, Saline, and Webster.

“Urban County” is a HUD designation, identifying a county with more than 200,000 people. With that designation, individual governments within the Urban County can become members, making them entitled to an allotment of funding through a variety of HUD programs.

The Washtenaw Urban County executive committee meets monthly and is chaired by county commissioner Yousef Rabhi. The program is administered by the staff of the joint county/city of Ann Arbor office of community and economic development.

Outcome: Without discussion, the board set a May 2 public hearing for the Washtenaw Urban County annual plan.

Assistant Prosecuting Attorney

Commissioners were asked to give final approval to hiring an assistant prosecuting attorney at a salary of $81,690. The vacancy opened in December, following an employee retirement. The hire requires board approval because the salary is above the $69,038 midpoint of an authorized range ($68,074 to $96,565).

The position will be filled by Nimish Ganatra, who most recently has served as assistant prosecutor for Jackson County, and previously was an assistant prosecutor with the Washtenaw County prosecutor’s office from 2001-2009. He is a graduate of Ann Arbor Pioneer High School, the University of Michigan, and Wayne State University Law School.

Because of furlough days negotiated as part of the recent collective bargaining agreements, his salary will be adjusted down by 3.846% to $78,548. Brian Mackie, the county’s prosecuting attorney, had previously told commissioners that because the office is currently under-filling a senior assistant prosecutor post, there is an overall savings of $12,983.

Initial approval had been given at the board’s April 4 meeting, passing on a 9-1 with dissent from Wes Prater, who objected to paying more than a midpoint salary. Rob Turner was absent.

Assistant Prosecuting Attorney: Board Discussion

Wes Prater asked county administrator Verna McDaniel about a new hiring process that he said the county had implemented in February. McDaniel was initially unclear about what Prater was referring to, but then sussed out that he was talking about a name change to an existing policy. She said the process didn’t change, but the administration started calling it the “hiring review process.”

Prater asked if the process had been used to evaluate hiring the new assistant prosecuting attorney. It had, McDaniel said. What about the other vacancy that had been filled in that office? he asked. That vacancy had been triggered in February by Gov. Rick Snyder’s appointment of Joe Burke as judge to the 15th District Court in Ann Arbor. Burke previously served as the county’s chief assistant prosecuting attorney.

On filling that vacancy, McDaniel said her staff had worked with the county prosecuting attorney, Brian Mackie, who made an internal promotion for that position. She noted that Mackie’s restructuring had resulted in an overall savings [of $12,983].

Prater asked to see the paperwork for the review of these positions. He noted that earlier in the year the board had approved a position in the water resources commissioner’s office that was also above the mid-point salary range. He hoped the same evaluation process had been used in that position too.

McDaniel affirmed that it had. In both cases, there had been restructuring that resulted in overall cost savings, she said. Prater replied that it would save even more to consolidate positions. The county’s long-term fiscal stability is what it’s all about, he said. He requested that the board review the overall hiring process at a future working session.

Outcome: On a 10-1 vote with dissent by Wes Prater, the board gave final approval to hiring the assistant prosecuting attorney at an above-midpoint salary.

Weatherization Grants

Two items related to federal funding for Washtenaw County’s weatherization program for low-income residents were on the agenda for final approval at the April 18 meeting. Initial approval had been given at the board’s April 4 meeting.

Commissioners were asked to authorize acceptance of $185,326 in federal funds for the weatherization program. The federal program was cut by 65% compared to 2011, but the state of Michigan is reallocating the previous year’s unspent funds as “carry-forwards” for 2012. In 2011, the county received $241,863 for this program.

The funding is expected to provide air leakage testing, health and safety evaluations, furnace assessments, refrigerator efficiency testing, post-inspection of the completed work, and consumer education services to 25 units. To qualify for the program, residents must have an income at or below 200% of federal poverty, which is about $44,700 for a family of four.

In a separate item, commissioners voted on authorizing acceptance of an additional $103,600 in funds redistributed to the county through the American Recovery & Reinvestment Act (ARRA). According to a staff memo, this grant brings the total of ARRA weatherization funds received by the county to $4,867,138.

At the April 4 meeting, Aaron Kraft, who manages the program, said the applications are handled on a first come, first served basis. There’s a waiting list, and the grants now being approved are already spoken for, he said. In response to another query, Kraft said that less than half of all contractors being used for the weatherization work are based in Washtenaw County.

In response to a follow-up question from a Chronicle reader, Kraft later gave a more detailed breakdown of how the $185,326 will be allocated: Support and administrative costs covering client intake/assessment of need, project management ($63,136); energy audit inspections and quality assurance inspections ($8,820); labor and material costs to complete the recommended weatherization improvements ($106,196); and weatherization specific training funding ($7,174).

Outcome: Both weatherization items were given unanimous final approval by the board, without discussion.

Communications and Public Commentary

There are various opportunities for communications from commissioners as well as general public commentary. These are some highlights.

Communications: Dexter Tornado Aftermath

During his liaison report, commissioner Rob Turner – the board’s point person for cleanup efforts following the March 15 tornado that touched down in the Dexter area – reported that work by the county had curtailed the previous week. He itemized some of the costs that had been incurred: Between $250,000-$300,000 for road commission work; $91,697 from the county for dumpster rental, debris removal, and tree clearing; $23,039 for a county parks and recreation crew, and port-a-johns; and $53,847 in overtime expenses for the sheriff’s office.

Turner – who represents District 1, which includes the area damaged by the tornado – praised all the staff and volunteers who had helped with the cleanup. Some people who thought they’d have to declare bankruptcy were able to stay afloat, because of help from the county, he said. Turner noted that the area at least is cleaned up and people are starting to get back to their normal lives.

Board chair Conan Smith reported that he had declared a state of emergency earlier this month and sent a letter to Gov. Rick Snyder requesting reimbursement to local municipalities for costs incurred as a result of the March 15 tornado. [.pdf of Smith's letter to Snyder] [.pdf summarizing tornado-related expenses]

Specifically, the letter states that local government units “have incurred approximately $1,075,882 in unbudgeted response and recovery expenses including debris removal and disposal, emergency protective measures/ non-federal road and bridge systems, public utilities, and parks and recreation.”

An attached document summarized expenses related to the tornado, including an estimated $7.54 million in damages to residential property and $750,000 in damages to businesses.

Communications: National Training Institute

At the start of the April 18 meeting, board chair Conan Smith and commissioner Rob Turner presented a proclamation recognizing the National Training Institute, put on by the National Joint Apprenticeship & Training Committee – a partnership of the International Brotherhood of Electrical Workers (IBEW) and the National Electrical Contractors Association (NECA). The training institute is held in Ann Arbor at the University of Michigian and this year runs from July 25-Aug. 3.

Turner, an electrical contractor and member of NECA and IBEW Local 252, recalled that the training institute was formerly held in Knoxville, but moved to Ann Arbor in 2009 after “a little bit of arm twisting and a lot of work” by the Ann Arbor Convention and Visitors Bureau. It helped that UM is 100% union, he said. When members came to Ann Arbor, “it was love at first sight,” Turner said. Between 3,000 and 5,000 people attend from across the country, he said, and it’s a great benefit to local hotels, shops, and restaurants.

Turner also complimented the hospitality of local merchants and residents, saying that midwestern hospitality is as good if not better than the famed southern hospitality.

Public Commentary

Only one person spoke during public commentary. Thomas Partridge spoke at both opportunities for public commentary during the evening. He urged commissioners and U.S. president Barack Obama to give priority to serving the needs of the most vulnerable residents locally, in Michigan and nationwide. Residents should have access to affordable housing, health care, transportation, and education, he said.

Partridge argued that tax reforms are needed. Current restrictions on forms of taxation in Michigan were the result of a constitutional convention led by Mitt Romney’s father in the 1960s, he said, and since then civil rights have been denied to public employees, union employees, and schoolchildren – especially children who are physically and mentally disabled. Commissioners need to work on tax reform, Partridge concluded, as well as the reelection of Obama, and the recall of Gov. Rick Snyder and GOP state legislators.

Present: Barbara Bergman, Felicia Brabec, Leah Gunn, Alicia Ping, Ronnie Peterson, Wes Prater, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith, Rob Turner.

Next regular board meeting: Wednesday, May 2, 2012 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. [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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Dexter Township supervisor Pat Kelly, right, attended the March 21, 2012 Washtenaw County board of commissioners meeting to thank the county for its help in the aftermath of the March 15 tornado that touched down in the township and caused considerable damage. To the left is Mark Ouimet, a former county commissioner who is now state representative for District 52, which includes the Dexter area.

Pat Kelly, Dexter Township supervisor, attended the meeting along with Mark Ouimet, a former county commissioner who is now state representative for District 52, which includes the Dexter area. Both thanked the county for its support and praised county staff – from sheriff’s deputies who provided security, to parks workers and others who helped with cleanup.

Later in the meeting, the board unanimously approved up to $500,000 from capital reserves to fund disaster relief and assistance to residents, including overtime costs for staff and payment for dumpsters to haul away debris. County administrator Verna McDaniel said that full amount might not be used, but it’s also possible that she’ll return to ask for more funding if it’s needed.

The board received a budget update for 2011 from finance staff, with the caution that minor changes might be made after an audit is completed. Although the originally approved budget had anticipated needing to use more than $5 million from the county’s general fund balance, only about $800,000 was actually used for the year – significantly less than expected.

Also related to the budget, the board authorized the county treasurer, Catherine McClary, to borrow up to $45 million against the amount of delinquent property taxes in all of the county’s 80 taxing jurisdictions. This is a standard request at this time of year as taxing jurisdictions – including cities, townships, schools systems and libraries, among others – turn their delinquent taxes over to the county, and are reimbursed for that delinquent amount. The county treasurer then assumes responsibility for collecting the delinquent taxes.

McClary noted that delinquent taxes are a leading economic indicator, and in that respect the trend is positive. This year, there is a drop in delinquent taxes for the first time since 2005. All jurisdictions saw a decrease, she said, and that’s really good news for the economy. McClary also gave her annual treasurer’s report for 2011, noting that revenues earned from delinquent taxes and fees totaled $5.557 million – about $3 million more than had been budgeted.

Also at the March 21 meeting, the board took a first step toward becoming a charter member of the Washtenaw Health Initiative (WHI), an effort to expand health care coverage for the county’s low-income residents. The membership includes a $10,000 annual fee in both 2012 and 2013, which would be funded through the county’s office of community and economic development. The 8-1 vote included dissent from Alicia Ping, who said she preferred funds to go directly to services, not for administrative purposes. Barbara Bergman was absent and Ronnie Peterson was out of the room when the vote was taken.

Among its other action items, the board gave final approval to creation of a county food policy council, and to an increase in certain fees charged by the public health department.

As an item for future discussion, several commissioners raised concerns over the issue of hydraulic fracturing – known as “fracking” – in rural parts of the county, to access oil or gas. Paxton Resources, a Gaylord, Mich.-based firm, has been acquiring mineral rights in the county’s rural areas for several months. A group of local residents called “No Paxton” has formed to oppose the company’s actions. The board discussed the possibility of a resolution urging more state oversight of the practice, and will likely schedule a working session on the issue.

Dexter Tornado Disaster Relief

In an item added to the agenda during the March 21 meeting, commissioners were asked to authorize up to $500,000 from capital reserves to fund disaster relief and assistance to residents impacted by the March 15 tornado in the Dexter area. The funds will be used for a variety of purposes, including overtime costs for county employees and payments to vendors who’ve provided nine dumpsters for the use of residents. There is a fund balance of $7.718 million in capital reserves, according to the county.

Before the vote, the board was briefed by Mark Ouimet – a former county commissioner who’s now state representative for District 52, which includes the Dexter area – as well as Dexter Township supervisor Pat Kelly. Both Kelly and Ouimet thanked commissioners for their support and praised county staff who’ve been working in the area damaged by the tornado.

Ouimet began his remarks by joking that it was an honor to be before this “prestigious group, other than the two Smith brothers” – a reference to fellow Republican Dan Smith and Democrat Conan Smith, who are not related. Ouimet said he initially went out to the area a couple of hours after the tornado hit, and personally saw what a great job county employees did in responding to the disaster. About 30 state police were brought in to secure an outer ring around the area that was hit, while sheriff’s deputies and personnel directed traffic and went door-to-door making sure everyone was accounted for, he said. Sheriff Jerry Clayton and his troops worked tirelessly for many days, Ouimet said, and deserve special thanks, as do firefighters from eight surrounding communities who responded.

The entire community came together to help, Ouimet said. The Dexter school system opened a building for people to take inventory of what was needed. Groceries and restaurants donated food and water, and “everybody from the community pitched in,” he said.

Ambulances had lined up near the area and local hospitals had prepared their emergency rooms for the worst, Ouimet noted, but “that worst never came.” An emergency plan that’s been worked on for years kicked into effect, and while there were a few glitches to learn from, overall it went very smoothly, he said. There were no discussions about jurisdictions – people just stepped up and asked how they could help, from law enforcement workers to staff of the parks and recreation department, who brought wood chippers to help handle the debris. Ouimet thanked everyone involved in the effort for their work.

Pat Kelly, Dexter Township’s supervisor, also spoke briefly to thank the board. Kelly said the first call she got after the storm was from Mary Jo Callan, director of the county’s office of community and economic development. After that she heard from many others with the county, all asking how they could help. ”This county should be damn proud of themselves today and this whole week,” she said.

Kelly wrapped up by joking that initially, people had assumed the tornado touched down in the village of Dexter, ”so the carpetbaggers and media stayed away from the township and we were grateful.”

Dexter Tornado Disaster Relief: Board Response

Rob Turner – who represents District 1, which includes the Dexter area – also praised the county staff for their work. He reported that he and county administrator Verna McDaniel met with Pat Kelly to ask what they could do. He noted that the village of Dexter has a support infrastructure, but the township doesn’t have those resources. Kelly showed great leadership, he said.

County commissioner Rob Turner, whose district includes the Dexter area where a tornado struck on March 15.

The needs were very practical, including portable toilets for workers and volunteers to use, and a place to dump large amounts of trash and debris. Bob Tetens, director of the county parks and recreation department, had his crew deliver port-o-pots and wood chippers, Turner said. The county also contracted with a vendor to bring nine dumpsters into the area for residents to use as they cleaned up their property – the dumpsters were needed because there were a lot of things that insurance companies wouldn’t pay to have hauled away, Turner said.

Turner said he’s been calling Mary Jo Callan a lot – she and her staff at the office of community and economic development have been very helpful and are doing a wonderful job, he said. The shock of the disaster has worn off, and people are needing help. Security checkpoints were still in place, which gave residents a level of comfort knowing that they could sleep safely, he said.

It was a miracle that no one was killed or seriously injured, Turner said, and that no rescue or cleanup workers had been injured, either. It’s been amazing to watch as the community pulls together. On some of the boarded-up garages, people have written “We love Dexter,” he noted. It’s been exhausting, ”but it makes you feel good that you’re a part of a county that cares.”

Several other commissioners weighed in with comments. Leah Gunn said she appreciated that Ouimet and Kelly had come to the board – it’s rare for the county to hear thanks, she said. Gunn was proud that the county staff took action without worrying about the budget impact, because it needed to be done. She thanked the sheriff’s office and its emergency management division, and “above all, Rob Turner.”

Yousef Rabhi said his first instinct had been to grab his chainsaw and head over to help, but he realized that wasn’t the right thing to do. To find out how much the county was doing had been very moving, he said. The people of Washtenaw County stood up and helped the people in Dexter and Dexter Township, and that was ”a phenomenally moving experience to be a part of,” he said. Rabhi thanked the community leaders in that area for their work.

After expressing his thanks as well, Dan Smith asked Ouimet for an update on possible legislation related to the disaster relief. Ouimet said there are two possibilities that he’s researching. One would relate to how damaged properties are assessed for tax purposes, he said, given that many homes have been completely destroyed. The other possible bill might address how local governments could be reimbursed by the state for costs incurred from overtime and other cleanup-related expenses. It’s challenging for local governments that are already stretched thin, he said.

Wes Prater praised Marc Breckenridge, the county’s director of emergency management, as well as the sheriff’s office, public health department and road commission. He noted that every six months, Breckenridge organizes a mock emergency drill. The emergency command center is activated and organizations practice their response plans. Because they’ve done their training, Prater said, they can respond efficiently during an actual emergency.

McDaniel pointed out that she’s heard from a range of elected officials – including U.S. Sen. Carl Levin, state Sen. Rebekah Warren and others – who offered their support. The county has also set up a website with more information about how people can help.

Rolland Sizemore Jr. said there are a lot of times when the board has to deal with difficult issues, but commissioners stick together when emergencies like this arise. He was glad no one got hurt.

Dexter Tornado Disaster Relief: Resolution

Later in the meeting, the board took up discussion of the proposed resolution. McDaniel said she might not need as much as $500,000 but it’s also possible that she’ll return to ask for more. At this point, it’s unclear what would be needed. She said the board would receive a full accounting of the expenditures, which would be overseen by administration and finance staff.

Dan Smith said he fully supported this resolution – he’d seen firsthand that the need is great. This is why the county has a fund balance, he said, so that it can respond to emergencies. He wanted to put the expenditure in the context of broader budget discussions, noting that the board had made cuts to balance the 2012-13 budget. He asked McDaniel to clarify where the $500,000 would come from, and what the plans are for replenishing these funds.

McDaniel replied that the $500,000 will be taken from capital reserves, not from the general fund balance. There is a substantial amount in that capital reserves fund – a balance of $7.718 million. There are no specific plans to replenish it, she said, but the funds will be used conservatively and will be monitored.

Smith said he was more comfortable approving this expenditure after hearing the 2011 treasurer’s report and budget update from finance staff earlier in the meeting. [See below for coverage of those topics.] He was glad the county was in a position to support this relief effort.

Rob Turner said that as point person for the effort, he would work as a liaison to the board in providing oversight of this expenditure.

Outcome: Commissioners unanimously voted to allocate up to $500,000 for Dexter area disaster relief. Barbara Bergman was absent and Ronnie Peterson was out of the room at the time the vote was taken.

2011 Budget Update

Tina Gavalier, the county’s finance analyst, briefed commissioners on 2011 year-end financial results. She noted that these are preliminary numbers – after the audit is completed, there might be slight adjustments. [.pdf of year-end report]

Gavalier reminded the board that at the beginning of 2011, the finance staff had projected that $5.3 million would need to be drawn from the general fund balance for the year – the board had approved the 2011 budget based on that assumption. Over the months, it became clear that less of the fund balance would be needed, and by the end of the year only $791,059 had been used from the fund balance, she said.

Total revenues for the year were $101.208 million, compared to expenses of $101.999 million.

In several areas, revenues were higher than expected, Gavalier reported. One of the highest was a surplus of $869,000 from the sheriff’s office, from civil fees, state revenue, overtime reimbursements and E-911 surcharge transfers. Other areas with revenue surpluses compared to budget include:

• $749,000 in surplus revenue for the corporation counsel’s office, due to a settlement of the police services lawsuit.
• $348,000 in property tax revenue due to TIF (tax increment finance) reimbursement from the Ann Arbor Downtown Development Authority.
• $199,000 from the clerk/register of deeds due to higher-than-expected revenues from fees and transfers.
• $67,000 from information technology services supplied to other local governments.
• $59,000 from the treasurer’s office due to dog licenses and other fees.
• $54,000 from the office of the water resources commissioner due to drain contributions and local revenue.
• $27,000 from the prosecuting attorney’s office due to a new Title IV-E reimbursement grant.

However, Gavalier highlighted two areas where revenues fell short of projections: The district court, with a revenue shortfall of $169,000 from declining case filings, and the trial court, with a $69,000 revenue shortfall because of lower state revenue reimbursements. In both cases, the shortfall was offset by lower-than-budgeted expenses, she said.

Expenses were lower in several areas, she said. Information technology maintenance contracts were $369,379 less than budgeted. Net personnel services were $257,325 lower than expected because of attrition, job vacancies and planned reductions. Departmental operating expenses were $191,484 lower than budgeted, and unspent housing reserves contributed to $361,000 in lower expenses for that line item. The county also spent $424,000 less than expected in tax appeals and refunds, Gavalier said. However, appropriations and transfers out of the general fund were $1.579 million more than originally budgeted.

Gavalier noted that the general fund balance stood at $14.5 million at the end of 2011 – or 14.2% of expenditures for the year.

In April, the board will be presented with the year-end audit and comprehensive annual financial report (CAFR) for 2011. That same month, Gavalier said, the “highly anticipated” equalization report will be delivered. The equalization report, produced by the county’s equalization department, is the basis for determining the taxable value of property in the county, which in turn indicates how much tax revenue is collected by local taxing entities. It is critical in developing budgets for the coming year.

The board will receive quarterly budget updates in May, August and November, and will vote to reaffirm the 2013 budget – with adjustments, if necessary – this fall. [The county plans its budget in two-year cycles, generally with relatively minor adjustments made to the second year. The current two-year budget, which the board passed in late 2011, is for 2012 and 2013.]

2011 Budget Update: Board Discussion

Board chair Conan Smith reminded commissioners that in planning for the 2010-2011 two-year budget cycle, the budget had called for building up a fund balance in 2010 to be carried over and used in 2011.

As he’s done in the past, Wes Prater took issue with the use of general fund balance. It’s deficit budgeting, he said, and doesn’t conform to the state’s Uniform Budgeting and Accounting Act. [.pdf of the Uniform Budgeting and Accounting Act, which outlines how local units of government must prepare their financial reports]

County administrator Verna McDaniel suggested that she and the county’s finance staff meet with Prater later to go over the budget again and address his concerns. Leah Gunn characterized it as good news that the county needed to use far less of its fund balance than they had originally anticipated, “so thanks!” she told the staff.

Prater said that’s not what he’s concerned about. He noted that he’s the only commissioner who speaks up on this issue, and it appears that others don’t care. He’s concerned about how they’re preparing the budget, and they need to talk about it, he said. [Although he has raised similar concerns in the past, Prater voted to approve the 2010-2011 budget as well as the current 2012-2013 budget.]

Conan Smith responded by saying that he and Prater discussed this issue extensively when the 2010-2011 budget was being prepared. The county has never not complied with the Uniform Budgeting and Accounting Act, Smith said. Prater has a different view of the act than the entire finance staff and all other commissioners, Smith said, but to say that others don’t care “is simply erroneous.”

Gunn said the budget is what the county expects it will receive in revenues and what it expects to spend. The “actuals” are the actual amounts of revenues and expenditures. The budget is a policy document, she said, and can be adjusted. At the end of the year, the board receives the comprehensive annual financial report (CAFR), which provides a detailed accounting of actual revenues and expenditures, she said. That’s different from the budget, she noted. Gunn concluded by saying the county has been frugal and they are good stewards of the public’s money.

Dan Smith asked whether the results from 2011 will affect the projected $14 million budget deficit that the county is facing in 2014-2015. McDaniel replied that any time the county can reduce spending, they’ll be better off. The budget outlook will be clearer in April, when the equalization report is delivered, she said. The trends so far are good, in terms of improved revenues. But she expressed caution, saying the county isn’t yet out of the woods. The state revenue-sharing outlook isn’t yet clear – McDaniel said it’s uncertain how much money would be available, and whether Washtenaw County would qualify to receive it. Also unclear is whether the state will repeal the personal property tax, which would affect revenues.

McDaniel confirmed that the county wouldn’t prepare a revised budget projection until after the 2011 audit and 2012 equalization report are completed.

Rolland Sizemore Jr. highlighted the shortfall in the courts’ budgets, and called for the county administration to meet with Kirk Tabbey, chief judge of the 14-A District Court, and Donald Shelton, chief judge of the Washtenaw Trial Court, to figure out how to address these ongoing budget issues.

Prater pointed to a $2.2 million adjustment in the original 2011 budget for personnel expenses – an increase from $61.42 million to $63.65 million. Why wasn’t that $2.2 million in the original budget? he asked.

Gavalier said the adjustments were made in response to board actions that called for various increases over the year, which commissioners had approved. Conan Smith noted that one significant change related to an increase in costs to staff the jail expansion. [Extra jail staffing was actually budgeted for 2010, but some of the hiring was delayed until 2011.]

Rob Turner noted that budget adjustments had been brought to the board each quarter during the year, and the board had voted on those adjustments.

Most recently, the board voted unanimously at its Nov. 2, 2011 meeting to adjust the 2011 budget – increasing revenues and expenditures by $619,939. From The Chronicle’s report of the board’s discussion:

Wes Prater described the presentation as one of the best he’d ever seen. He noted that when the board originally approved the two-year budget in 2009, the finance staff had projected revenues for 2011 at $98.7 million. In fact, this year’s budget will be closer to $101.2 million, he noted – that means the projections were off by $2.5 million, he said.

Prater said he understood that the 2011 budget has been amended since then. His point is that he doesn’t want the staff to make the same mistake for 2012-2013. He said he was just raising the issue.

Delinquent Tax Borrowing

On the March 21 agenda was a resolution authorizing the county treasurer to borrow up to $45 million against the amount of delinquent property taxes in all of the county’s 80 taxing jurisdictions .

County treasurer Catherine McClary, left, talks with state Rep. Mark Ouimet (R-District 52) at the county board's March 21 meeting.

County treasurer Catherine McClary explained the process to the board. After March 1, taxing jurisdictions – including cities, townships, schools systems and libraries, among others – turn their delinquent taxes over to the county, and are reimbursed for that amount. The county treasurer then assumes responsibility for collecting these delinquent taxes. This is a standard procedure that’s conducted annually at this time of year. The borrowed funds – general obligation limited tax notes – are used for cash flow purposes, to fund operations for the first half of the year.

McClary told the board that she projected needing to much borrow less than the $45 million authorized – likely about $26 million. Last year, the county borrowed about $32 million for this purpose.

McClary noted that delinquent taxes are a leading economic indicator, and in that respect the trend is positive. This year, there is a drop in delinquent taxes for the first time since 2005. All jurisdictions saw a decrease, she said, and that’s really good news for the economy.

McClary also pointed to a drop in the number of parcels that are delinquent in paying taxes. In recent years there have been about 11,000 delinquent parcels each year, but this year it’s closer to 9,500 – about a 14% drop. If a family’s finances are tight, they’ll make other payments – like their mortgage – before paying taxes. So the fact that there are more people paying taxes on time is a good sign, she said.

Delinquent Tax Borrowing: Board Discussion

Alicia Ping wondered how long it takes to pay back the borrowed funds. McClary said that the 2011 notes have a maturity date of June 2013 – so about 2.5 years. Ping said it’s good to know the debt isn’t long-term.

Felicia Brabec asked why the resolution authorized up to $45 million, if McClary expected to use only about $26 million. McClary said she had to prepare the resolution before all of the jurisdictions turned in their delinquent tax amounts. Now she had a clearer indication of what those amounts would be – only two townships (Scio and Sharon) hadn’t yet reported their totals, she said.

Outcome: Commissioners unanimously authorized the treasurer’s request for delinquent tax borrowing.

Treasurer’s Report for 2011

County treasurer Catherine McClary also gave her annual report to the board, providing a look at the county’s investment portfolio as of Dec. 31, 2011.

Investment earnings totaled $860,891 for the year, on a portfolio valued at $116 million as of Dec. 31. [Investment earnings were $737,602 in 2010.] With an average weighted yield of 0.835%, the investments earned well above the three-month U.S. Treasury benchmark of 0.02%, McClary said.

McClary thanked the board for not pressuring her to generate a higher yield on investment. She said she manages the portfolio for safety, not for the highest yield. No one is happy with the current yields, she added – in past years, the portfolio was able to earn millions annually in investment income. Treasurers in other counties feel pressure to invest in riskier ways designed to generate higher yields, but “that’s not what you want to do with public funds,” she said. Investment rates are likely to remain low, as the Federal Reserve has indicated plans to keep benchmark interest rates at record lows in order to stimulate economic recovery, McClary said.

The portfolio is diversified by both the type of investment as well as the maturity date, she explained. At the end of 2011, cash and investments totaled $155.557 million (compared to $147.545 million in 2010). The portfolio is invested in the following ways: $63.11 million in certificates of deposit (CDs), certificate of deposit account registry service (CDARS) and money market accounts; $17 million in commercial paper; $14.5 million in U.S. treasuries and agencies of the U.S. government; and $27.657 million in bank accounts. [.pdf file of two-page 2011 treasurer's report]

Revenues earned from delinquent taxes and fees totaled $5.557 million – about $3 million more than had been budgeted, McClary noted. [Revenues in this category were $6.262 million in 2010.] The county has a healthy capital projects fund because of revenue that the treasurer’s office has generated, she said.

The accommodation tax, which is collected by the treasurer, brought in $3.993 million in 2011 compared to $3.539 million in 2010. The county collects a 5% excise tax from hotels, motels, and bed & breakfasts, which is then distributed to the Ann Arbor and Ypsilanti convention & visitors bureaus and used to promote tourism and convention business.

The county also got $18,344 in fees from tax searches that the county performs, down from $24,970 in 2010. The treasurer’s office charges 50 cents per search.

McClary noted that revenues from dog licenses increased dramatically – to $86,322 from $37,922 in 2010 – because of changes that commissioners approved in 2010. The changes included (1) allowing the treasurer’s office to issue multi-year licenses, and (2) increasing the license fee for the first time since 1981. [For spayed/neutered dogs, the fee is $12 for per year. It costs $24 per year for dogs that aren't spayed or neutered.] The increase in revenues is primarily from people buying multi-year licenses, so revenues are expected to be closer to $30,000 in 2012, she said.

Treasurer’s Report for 2011: Board Discussion

Wes Prater asked how much of the accommodations tax is kept by the treasurer’s office for administrative expenses. Very little, McClary said – just an amount that can be documented for expenses to collect the taxes.

By way of background, the county’s contract with the  Ann Arbor and Ypsilanti convention and visitors bureaus calls for the county to retain 10% of that tax revenue to defray the cost of collection and enforcement. A contract amendment passed by the board in September 2011 addressed the process for distributing excess funds that might accumulate from the county’s 10%, if that amount exceeds the expenses required to administer and enforce compliance with the tax. Beginning in May 2013, the county will continue to retain 10% of the tax proceeds, plus 10% of any remaining fund balance. If additional funds accumulate in the fund balance, they are to be returned proportionally to the two convention & visitors bureaus – 75% to Ann Arbor, and 25% to Ypsilanti.

At its Feb. 15, 2012 meeting, the board voted to make an early distribution of $200,000 from those administrative funds to help pay for a Pure Michigan national ad campaign focused on the Ann Arbor area. At the time, more than $350,000 was in that administrative fund, according to the county.

At the recent March 21 meeting, Prater also asked where the revenues from delinquent property taxes are deposited. Those go into the county’s capital projects fund, McClary explained.

Prater said he was glad to hear a good report from 2011, and wondered when the board would see the treasurer’s reports from January and February of this year. McClary said the finance department had those reports, and would also receive the March report in early April.

McClary then offered to brief the board on the status of tax foreclosures and mortgage foreclosures in the county, but there was no interest expressed on the part of commissioners in hearing that update.

Washtenaw Health Initiative

At the March 21 meeting, commissioners were asked to take the first step toward becoming a charter member of the Washtenaw Health Initiative (WHI), an effort to expand health care coverage for the county’s low-income residents. The membership includes a $10,000 annual fee in both 2012 and 2013, which would be funded through the county’s office of community and economic development.

The board had been briefed on the initiative, most recently at a Feb. 16, 2012 working session. The plan is intended to help local health care providers handle an influx of an estimated 50,000 newly insured patients when federal health care reforms take effect in 2014. The goal is to develop a plan to provide better health care for the county’s low-income residents, the uninsured and people on Medicaid – prior to changes that will be mandated by the federal Patient Protection and Affordable Care Act.

The WHI is a collaboration co-chaired by former county administrator Bob Guenzel and retired University of Michigan treasurer Norman Herbert, who both attended the March 21 meeting, along with Ellen Rabinowitz, executive director of the Washtenaw Health Plan. The effort is jointly sponsored by the UM Health System and Saint Joseph Mercy Health System – Guenzel told commissioners that retired Saint Joseph Mercy Health System CEO Bob Laverty had been the “sparkplug” behind the effort. It’s faciliated by Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation – a joint venture of UM and Blue Cross Blue Shield of Michigan.

Other partners involved in the project include the Ann Arbor/Ypsilanti Regional Chamber of Commerce, Arbor Hospice, Catholic Social Services, Dawn Farm, Hope Clinic, Huron Valley Ambulance, Integrated Health Associates, Packard Health, Planned Parenthood of Mid and South Michigan, United Way of Washtenaw County, and the Women’s Center of Southeastern Michigan.

County commissioner Wes Prater, left, talks with former county administrator Bob Guenzel, who is co-chair of the Washtenaw Health Initiative.

Organizers have said they hope this initiative will become a model for other communities nationwide that are facing similar issues.

Guenzel told commissioners that he’s been around a long time, and it’s hard to imagine how well the community has come together to support this initiative. More than 40 organizations have been involved, including the major hospitals, to focus on 11 efforts that will better coordinate care and deliver services for the uninsured and underinsured. Even if the Affordable Care Act weren’t in place, he said, the community would still have a plan to address these needs.

The WHI is looking for the county’s seal of approval, Guenzel said. It’s an all-volunteer effort, he noted, but signing the charter means that member organizations support it and that it’s OK for employees to work on it.

Rabinowitz said the effort is extremely involved in Medicaid outreach and enrollment. [A press release issued by the WHI earlier in the month stated that more than 700 people have been enrolled in Medicaid since the initiative got underway, out of an estimated 6,400 people in the county who are eligible but have not accessed the coverage. .pdf of press release] Other WHI efforts focus on providing access to dental care, and creating support structures for case management to help residents get the health care they need, Rabinowitz said. The Washtenaw Community Health Organization is involved in providing access to mental health services, she said.

Rabinowitz concluded by saying that the WHI is an example of the community coming together to address existing needs.

Washtenaw Health Initiative: Board Discussion

Alicia Ping said she appreciated the hard work of the organizers and all those involved, but she would not support the initiative. The idea behind it is good, she said. But the board had to make a lot of budget cuts last year that directly affected services to residents. She couldn’t support giving funds that would support another layer of administration and not directly support people who are delivering services. Ping said she’d want to see funding first restored to organizations like SafeHouse Center.

Outcome: On an 8-1 vote, with dissent from Alicia Ping, the board gave initial approval to the Washtenaw Health Initiative. Barbara Bergman was absent and Ronnie Peterson was out of the room when the vote was taken. A final vote is expected at the board’s April 4 meeting.

Workforce Development

Three items related to Washtenaw County’s administration of the Michigan Works workforce development program were on the March 21 agenda.

The board was asked to authorize acceptance of a $92,309 federal grant to operate a local Michigan Works service center. The primary location in Washtenaw County is the Career Transition Center at 301 W. Michigan Ave. (the KeyBank building) in Ypsilanti. Additional services are offered at the Harriet Street Service Center at 304 Harriet St. in Ypsilanti.

Acceptance of another $16,000 federal grant was on the agenda to fund ongoing professional and partnership development of the local Michigan Works operation.

The third item that the board was asked to approve would ratify a mandatory 2012 “system plan” for the local Michigan Works office. The plan provides annual documentation of local administrative policies and procedures for the employment and training programs, as well as for other documentation required in order to receive funding as a workforce development agency. [.pdf of the complete system plan for 2012] [.pdf of required grievance procedure documentation]

Outcome: With no discussion, commissioners gave initial approval to the workforce development items. A final vote is expected on April 4.

Environmental Planner

Approval to hire a senior environmental planner at an annual salary of $77,000 was on the March 21 agenda. The position required board approval because the salary is above a midpoint of $66,634 for that non-union job classification.

According to a staff memo, the $77,000 base salary is $2,659 less than what the previous person in that position was paid, and is within the authorized salary range of $53,732 to $79,537 for that job. The memo also notes that because of mandatory unpaid furlough days, the $77,000 salary would be adjusted down by 3.846% to $74,034.

Heather Rice is being hired to fill this position, which is part of the office of the water resources commissioner, an elected position held by Janis Bobrin. Rice is a senior environmental specialist for the University of Michigan’s Department of Occupational Safety and Environmental Health, and is responsible for the UM’s stormwater permit program. As senior environmental planner with the county, Rice would be responsible for administering and ensuring compliance with all requirements of the county’s Phase II stormwater permit program.

Environmental Planner: Board Discussion

Only one commissioner had questions on this item. Rolland Sizemore Jr. clarified with Bobrin that her request was for one position, not two. He also confirmed with her that the job would not be paying more than the maximum authorized salary range.

Outcome: The board unanimously approved the above-midpoint salary for the senior environmental planner job.

Public Health Fees

Commissioners were asked to give final approval to an increase in fees to treat sexually transmitted diseases – one of the mandated services provided by the county’s public health department. Initial approval had been given at the board’s March 7 meeting. The changes are being made in response to federal funding cuts and an increase in charges for state services.

The board also was asked to approve changes at the medical examiner’s office, including fees for organ procurement services provided to the Michigan Gift of Life program, and a new late payment policy. According to a staff memo, about 10% of revenues are not realized because of non-payment. [.pdf of revised fee schedule]

By way of background, the adult clinic – which treats sexually transmitted diseases – is a mandated service that has relied on federal funding administered by the state. In mid-2011, the county was notified that federal funding for this program, which the state passed through to local health departments, would be cut by 33%. Since then, the Washtenaw County public health department has been notified that it will receive just half of its expected appropriation for this program. At the same time, the department was notified that the Michigan Dept. of Community Health (MDCH) would be increasing its testing fees for gonorrhea and chlamydia from $36 to $78 in January of 2012. It’s in this context that the fee increases are being proposed.

There will be a sliding fee scale for low-income residents, and a commitment that no one will be denied services, according to the county. In order to verify income, as well as to handle the billing and collection process, the public health department will be buying ePrescribing software at a cost of $28,000. Most of that – $21,500 – will be covered by a federal incentive program.

Outcome: Without discussion, the board gave final approval to the requested public health fee increases. 

Food Policy Council

Final approval for a county food policy council – with the goal of supporting and coordinating activities in the local food system – was on the March 21 agenda. The board had been briefed on this effort at a Feb. 16 working session, and it received initial approval at the board’s March 7 meeting.

The Washtenaw Food Policy Council would support local “small and mid-sized farmers by fostering policies that encourage local food purchasing and production,” according to a staff memo. Among other activities, the council could also: recommend policy changes at the local, state and national levels; provide a forum for discussing food issues; encourage coordination among different sectors of the local food system; evaluate, educate, and influence policy; and launch or support programs and services that address local food needs.

Partners who have been working on this initiative include the Y of Ann Arbor, Growing Hope, Food Gatherers, the Food System Economic Partnership (FSEP), Slow Food Huron Valley, Eat Local/Eat Natural, Michigan Farmers Union, Ypsilanti Food Coop, and the Washtenaw County public health department.

The council will have a 15-seat membership roster, with members drawn from the following sectors: agriculture, nutrition, education, emergency food system, health care, food services, food manufacturers and distributors, waste management, planning or transportation, retail/business or economic development, human services, faith-based organizations, local governments (board of commissioners), public health, and at large community member(s). The county public health department will be responsible for recruiting members. A draft set of bylaws has also been developed. [.pdf of of food policy council draft bylaws]

The council will convene its first meeting later this spring using grant funds from the Michigan Dept. of Community Health, passed through to the Washtenaw County public health department. The council eventually expects to secure financial support from private grants and philanthropic funds. The project will also seek significant in-kind and volunteer support, according to a staff memo.

Outcome: The board unanimously approved formation of a county food policy council.

Communications & Commentary

During the meeting there were opportunities for public commentary, as well as for communications from the administration and commissioners.

Comm/Comm: Public Commentary

The only person to speak during public commentary was Thomas Partridge, who addressed the board twice. He described himself as an advocate for all people who are challenged during these challenging times, and called on the state legislature to fully restore funding for important assistance programs. He urged the board of commissioners to pass a resolution in support of the Detroit mayor and city council in their efforts to resolve the city’s financial problems and remain a viable democratic institution. [The city of Detroit is negotiating a consent agreement with the state in hopes of preventing a state-appointed emergency manager from taking control of the city's operations.] Partridge applauded the items on the county board’s agenda that related to grants the county would receive, but noted that the grants were negligible in light of the great needs of residents.

During his second speaking turn, Partridge noted that the area had been literally struck by a tornado recently, but was also figuratively struck by the tornado of Republican Gov. Rick Snyder and GOP state legislators who are attacking cities across the state. We need to prepare for both emergencies, he said.

Comm/Comm: Fracking

Wes Prater raised the issue of fracking in the county, saying he had attended a recent meeting of the Washtenaw County Road Commission where the board had voted unanimously not to enter into an oil and gas lease agreement for land it owns in Saline Township. [Paxton Resources, a Gaylord, Mich.-based firm, has been acquiring mineral rights in the county's rural areas for several months. The term fracking – also known as hydraulic fracturing – refers to a practice of extracting oil or gas by injecting high-pressurized fluid into rock. A group of local residents called "No Paxton" has formed to oppose the company's actions.]

Prater suggested that the board prepare a resolution that it can send to the governor and Michigan Dept. of Environmental Quality, requesting that the state increase inspections of wells where fracking occurs.

Yousef Rabhi said that he and Alicia Ping have met with several county department heads to talk about the county’s options on this issue. He also thought a resolution would help, as well as getting informational material to residents who might be approached by Paxton or other companies. He suggested that the board schedule a working session on the topic.

Rob Turner, the board’s liaison to the road commission, noted that even though the road commission rejected leasing its property to Paxton, the company plans to appeal to the state because the road commission’s land is only a small part of the 160-acre area that Paxton is hoping to explore. Turner said that one of his concerns is the transport of oil from Washtenaw County to the refinery. The company plans to use tanker trucks, he said, which will be running back and forth through that area causing wear and tear on the roads.

Present: Felicia Brabec, Leah Gunn, Alicia Ping, Wes Prater, Yousef Rabhi, Rolland Sizemore Jr., Conan Smith, Dan Smith, Rob Turner. Ronnie Peterson was present at the meeting, but was out of the room when votes occurred.

Absent: Barbara Bergman

Next regular board meeting: Wednesday, April 4, 2012 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. [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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Auditors David Helisek and Pam Hill of Plante Moran. (Photos by the writer.)

Still, the board transacted two pieces of business. The first was to approve the report of its auditor, Plante Moran. The overall opinion was “unqualified,” which is the highest rating that can be given. Still, the audit revealed some issues that need to be addressed, one of which was dealt with as part of the audit – the recording of revenue from the tax levy in the year it’s received. That actually increased the amount of AATA net assets by $7 million, but is an accounting change, not an actual change. The auditors found one case of a contract that should have been subjected to Davis-Bacon compliance requirements but was not.

Another issue identified by the auditor involves the AATA’s practice of investing in fuel futures as a hedge against the volatility of diesel prices – the advice was to review the practice with legal counsel. Plante Moran also flagged an issue involving the shelf-life of federal grants – but the AATA and auditors see that issue differently.

The second business item was approval of revisions to the AATA management personnel handbook – it was part of a periodic review and revision. Among myriad other changes, the amended document adds “sexual orientation” to the list of protected classes.

FY 2011 Audit

The board received a presentation on its audit for the previous fiscal year, which ended Sept. 30, 2011.

FY 2011 Audit: Background

The AATA board has typically accepted the audit in March for the past fiscal year, ending the previous fall. The AATA’s auditor is Plante Moran PLLC, which the AATA board selected for a one-year contract at its Sept. 15, 2011 meeting.

A policy adopted by the AATA board on June 16, 2011 limits contracting with any one auditing firm to a total of eight years. That meant the auditing firm that the AATA had previously used, Rehmann, was not eligible to provide auditing services when the AATA awarded the contract last year.

[.pdf of final audited statements AATA FY 2011] [.pdf of Statement on Auditing Standards 114]

FY 2011 Audit: Presentation

The presentation on the audit was given by David Helisek and Pam Hill of Plante Moran. Helisek described how the two had met with the AATA board’s performance monitoring and external relations (PMER) committee and had covered the audit report in more depth than the highlights they’d be providing at the full board meeting.

Board chair Jesse Bernstein peruses the audit report as a presentation is given by the auditors.

Helisek explained that the AATA had received an “unqualified opinion,” which is the highest level that can be given about an organization’s financial statements. The unqualified opinion means that the statements provided by the AATA fairly represent the financial position of the authority. It’s the opinion that the AATA should strive for, he said.

That being said, Helisek added, Plante Moran did propose something that the AATA then did, which is to record a prior period adjustment, related to the recognition of the property tax levy that goes out July 1 of every year. Plante Moran’s interpretation of the relevant standards, which the AATA’s financial staff also agreed with, Helisek said, was that the July revenue should be recorded as revenue upon levy. Historically, he said, only 1/4 of the levy was reported in the audit year, he said, with the remaining 3/4 deferred until the next fiscal year. As a result, he said, there was a restatement of beginning net assets equal to roughly $7 million. That’s an accounting change only, not a change in cash or available resources, Helisek explained.

The Sept. 30, 2009 and Sept 2010 the net assets were restated, because the audit report is done on a comparative basis. [.pdf of balance sheet before restatement] [.pdf of revenue expenses before restatement]

Hill continued the presentation by saying that the overall financial health of the AATA is sound.

Based on the report, the operating revenue increased by about 17% over the previous year ($5,381,000 compared to $4,605,000 in the previous fiscal year) primarily due to fare increases in May 2009 and May 2010. That stacked up against an increase in operating expenses of around 3% ($29,532,000 compared to $28,673,000 in the previous fiscal year). Non-operating revenue remained flat compared to the prior year – remaining at around $20 million. Non-operating revenue is the amount the AATA receives as proceeds from the local Ann Arbor millage, as well as from the state of Michigan and the federal government.

What’s important, Hill said, is the working capital of the AATA – current assets minus current liabilities. Working capital, she explained, is the amount of resources the AATA has available to spend on operations. That amount has decreased about $200,000 from last year. [$18,702,079 – $1,939,425 gives the AATA $16,762,654 in working assets for FY 2011. That compares with $20,033,532 – $3,078,381 = $16,955,151 in working assets for the prior year.]

The reason that the amount of working capital is a better measure than the AATA’s income statement is that the income statement also includes a long-term view, so the income statement will factor in depreciation of fixed assets, for example. So it makes sense to look at working capital, because that’s the amount the AATA actually has available to spend, Hill said. She reiterated that overall, the amount of working capital had decreased by $200,000, which is what the AATA had budgeted and planned for.

AATA has a healthy level of non-restricted net assets, Hill said, and that amount totals a little over $15 million. When you take the $7 million out – due to the restatement of the income statement, which Helisek had described earlier – the AATA is still left with a little over $8 million in unrestricted net assets. The $7 million from the restatement will need to be spent in the next nine months of the fiscal year, Hill explained. Hill said that the AATA shows good oversight over the spending process, and has taken advantage of grant money for capital items. She noted that the majority of capital items acquired by the AATA are purchased with federal money.

In the federal grant award audit, Hill alerted the board to one item that she characterized as a “minor finding.” It involved compliance with the Davis-Bacon Act. Davis-Bacon requires that prevailing wages be paid for public works projects, and part of compliance is to document the payrolls. The way the compliance requirements were interpreted for one of AATA’s contracts was to not require Davis-Bacon compliance, because all the different projects completed under the contract were under $200,000, which is the amount that triggers Davis-Bacon requirements. However, compliance rules on the federal side say that all contracts over $200,000 trigger the requirement – even if the contract covers multiple smaller projects, Hill explained. So the AATA did not request or receive certified payrolls for that contract.

Audit: Board Discussion

Board chair Jesse Bernstein said that AATA staff had done a superb job. He said he wished AATA controller Phil Webb were present. [Some AATA staff who ordinarily attend board meetings did not attend, due to the inclement weather – including Webb.] Bernstein said it was just a marvelous audit.

David Nacht had a question about the recognition of the $7 million of revenue. Should the AATA think about that in terms of its budgetary impact for the current year? he asked. Helisek told Nacht that the impact on the budget is negligible. Under the restatement, nothing has changed from a cash-in/cash-out perspective, he said.

Nacht noted that the AATA has a policy about dipping into net assets, and explained that the AATA is currently in an investment phase to fund some pilot programs. [The AATA's policy is to maintain three-month's worth of operating expenses as a reserve. The AATA's FY 2012 budget calls for tapping the reserve for around $1 million, which would leave the AATA with about a three-month reserve by the end of FY 2012, on Sept. 30, 2012. The pilot programs to which Nacht was alluding include increased service on the Route #4 connection between Ann Arbor and Ypsilanti, as well as service to Detroit Metro Airport.]

Nacht was worried about the impact of the restatement on the policy and the AATA’s planned investments in increased service. Has anyone thought about any of this? he wondered.

Responding to Nacht, Charles Griffith noted that the restatement actually results in the AATA showing more, not less, net assets. So he felt that the AATA would not even be close to the minimum threshold.

Commenting on Griffith’s remarks, Hill noted that the $7 million really is slated to be used in the coming nine months. That’s not actually available as a reserve, she cautioned. Nacht wanted to make sure that the AATA financial staff thinks about any possible implications.

Nacht asked Helisek and Hill if they had any concerns about internal controls. No, replied Helisek. But he added that the audit they’d conducted is not an internal control audit. They had tested the control process and nothing came to their attention as indicating a weakness in the system.

Griffith added that during the PMER committee meeting another issue had also been discussed, involving fuel futures that the AATA purchases as a hedge against diesel fuel price volatility. Griffith characterized it as an unusual and perhaps innovative practice, and said that it has saved money over the last five years. The auditors had indicated a concern that the practice might not be compliant. It should be double-checked and reviewed by legal counsel. Nacht wanted to note that while the idea of purchasing fuel futures was AATA controller Phil Webb’s idea, the board had approved it. Nacht ventured that it would require a specialized legal opinion as to whether the purchase of fuel futures by the AATA comports with state law.

From the Plante Moran report on the fuel futures issue:

Based on our review of the Authority’s investment policy, it does not appear that this investment complies with the Authority’s policy. Plante Moran, PLLC discussed the investment with the Authority’s management. Based on a review of Public Act 20 of 1943, it does not appear that this investment is in compliance with state law. However, we encourage the Authority to consult with their legal counsel regarding this matter and, based on the opinion received regarding the legality of this investment, either adjust the Authority’s investment policy or appropriately adjust the types of investments in which the Authority is investing.

Another issue identified by Plante Moran involves the time period during which federal grants can be spent:

… we noted instances where dated grants (grants that have exceeded the period of availability) are still being drawn down by the Authority and reimbursed by the Federal Transit Administration (FTA). … Although the FTA has not enforced this compliance requirement in the past, under grants that are funded with the American Recovery and Reinvestment Act (ARRA) monies, enforcement will be more stringent. Additionally, we understand that as this is being enforced under ARRA, it is anticipated that enforcement for all federal grant programs will also be more rigorous in future years. Given the significance of federal awards to the Authority, we encourage the Authority to review its processes and procedures for ensuring that grants are being spent within the period of availability going forward to ensure that awarded amounts are not forfeited.

However, AATA manager of service development Chris White’s view of the federal grant periods differs from Plante Moran’s. Commenting on Plante Moran’s assessment of the federal grant deadlines, White wrote to AATA controller Phil Webb:

I believe that they [Plante Moran] are mistaken about the period of availability for federal grants. First, ARRA grants are different. We do have to complete MI-96-0024 by the end of FY 2012. However, for all other programs, the period of availability (3 or 4 years) refers to how long after the fiscal year of appropriation funds have to be obligated (i.e. in an approved grant contract), not when they have to be expended. …

This is not a matter of FTA enforcement. The grant agreement does not include any expiration date, and grants are frequently approved just before the period of availability expires. We submit a project schedule for each line item that frequently goes beyond the period of availability

However, FTA does have the ability to require grant funds to be expended within a reasonable period, and can set deadlines and unilaterally close out grants if they are inactive. FTA has been moving to be more diligent about taking action in this area.

Outcome: The board unanimously approved acceptance of the FY 2011 audit.

Management Personnel Handbook

The board was asked to approve changes to its management personnel handbook. Among myriad other changes, the amended document adds “sexual orientation” to the list of protected classes.

During the board discussion, David Nacht wanted to know if the AATA’s legal counsel had reviewed it. CEO Michael Ford confirmed that legal counsel had done a review. Charles Griffith indicated that the performance monitoring and external relations committee had also reviewed the changes and unanimously supported them.

Outcome: The board unanimously approved the changes to the management personnel handbook.

Communications, Committees, CEO, Commentary

At its March 15 meeting, the 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 reports were abbreviated due to the short time available to complete the meeting. The meeting was roughly an hour late in starting, because of a tornado warning during which all occupants of the Ann Arbor District Library’s downtown building – where AATA meetings are held – retreated to the basement in accordance with the library’s policy.

No one spoke during either of the two periods on the agenda available for public commentary.

Comm/Comm: Four-Party Agreement, Transit Master Plan

By way of brief background for some of the commentary made at the meeting, the AATA has developed a transit master plan that would include an expansion of service geographically as well as in its current service area. The AATA would like to implement the master plan by transitioning to a new countywide governance structure.

View from the top floor of the Ann Arbor District Library after the March 15 tornado warning was lifted. It was around 7:30 p.m. before the meeting began. The scheduled meeting time is 6:30 p.m. The tornado bypassed Ann Arbor, but touched down in the Dexter area and caused considerable damage.

That transition would entail incorporating a new transit authority under Act 196 of 1986. To that end, an unincorporated Act 196 board (U196), with representatives from around the county, has been meeting monthly since the fall of 2011. The initial step toward the new governance and funding structure would be for four parties – AATA, the city of Ann Arbor, the city of Ypsilanti and Washtenaw County – to sign an agreement establishing how that transition could take place.

During his report to the board, CEO Michael Ford reviewed the status of the four-party agreement that would establish a framework for the possible transition of the AATA to a new governance structure.

The Ann Arbor city council has ratified the agreement. Ford indicated that the AATA is now working on the timing of bringing the agreement to the Ypsilanti city council and the Washtenaw County board of commissioners for their consideration. [The item was not on the agenda published online for the Ypsilanti city council meeting of March 20. There's some sentiment on the Ypsilanti council that a delay until after the May 8 election would be in order, when Ypsilanti voters will be deciding on a question of a citywide income tax and a separate question of a millage to support bond payments on the Water Street property.]

Board chair Jesse Bernstein described it as an exciting month moving forward with the transit master plan (TMP). Gov. Rick Snyder, he said, had some surprises and some ideas about how to fund and structure transit. The financial task force, which has been helping advise the AATA, just did a fantastic job looking at services the AATA needs to provide in the next five years in order to achieve the vision in the TMP, Bernstein said.

The group had looked at the costs and separated the federal and state-funded projects from those that are locally funded, Bernstein explained. The task force had suggested as an example that the roughly $30 million in additional revenue the plan would require over the next five years could be covered by a 0.5 countywide tax. Because of uncertainty about what might happen with respect to possible state legislation, the task force is inclined to wait to make a specific funding recommendation until it’s clearer what impact, if any, that legislation might have on the local scene.

David Nacht indicated that as a new member to the U196 board, he felt like it would be beneficial for Bernstein or some other member of the U196 board to inform the full AATA board about what’s going on.

By way of background, Nacht is replacing Rich Robben as a representative from the AATA board to the U196 board. Robben resigned from the AATA board and has been replaced by Sue Gott. Gott was not able to attend the March 15 meeting, her first since having her nomination to the board confirmed by the city council on March 5, 2012. Bernstein, in his remarks leading off the meeting, welcomed her to the board, describing her as the University of Michigan’s university planner, and a third-generation resident of the city of Ann Arbor.

Bernstein responded to Nacht’s request for a U196 update to be given by saying the U196 board has been meeting monthly. He said he’s thoroughly impressed by support the AATA is getting from around the county. He characterized the participation on the U196 board as including representatives from 95% of Washtenaw County’s population who are attending the meetings.

The AATA is also still in touch with those units of government who’ve declined to participate, Bernstein said. The U196 board meetings have focused on two things: (1) education about how the transit system works and what the policy issues are; and (2) how to move forward and implement a countywide vision. The U196 board was pleased to get the report from the financial task force, Bernstein reported. The next meeting of the U196 board will be April 2, he said.

In connection with the work of the U196 board, Bernstein said there was a great deal of emphasis on the district advisory committees. Representatives from the districts in different parts of the county will chair meetings, which will be ongoing. Bernstein stressed that the public input process has not reached the end of the line – it’s just the beginning.

During his comments, Roger Kerson called the level of participation achieved on the U196 board remarkable, given the complexity of that process. It’s a compliment and a testament to the hard work that’s been done, he said.

Comm/Comm: Ridership

Charles Griffith noted that there had been another increase in ridership in February 2012, compared to last year – a raw total increase of 14% for the fixed-route service. Even factoring out the extra day in February this year and the nice weather, Griffith said, AATA manager of service development Chris White had calculated that it was around a 7.5% increase in ridership.

The Canton and Chelsea express services have been increasing as well, up 67% compared to last year. That means that operating expenses have declined on a per passenger basis, which decreases the amount of funding the service requires from the Ann Arbor millage, Griffith said.

Not discussed at the meeting were ridership figures for the increased Ypsilanti-Ann Arbor service provided by Route #4. The frequency of service was increased on the route starting in February 2012.

Compared to a corresponding four-week period in February 2011, ridership on Route #4 was 26% greater. Chris White, AATA manager of service development, is still cautious about drawing conclusions from the initial data, writing in an email to The Chronicle, “It is very positive, but please note that the service has not been in place long enough to judge the results.”

The on‐time performance of Route #4 increased from 74% in 2011 to 95% in 2012. System‐wide on-time performance increased from 85% to 91%.

The initial report on Route #4 ridership, one week after more frequent service was offered, showed an increase of 8% compared to the previous week and compared to a systemwide ridership decrease of 0.6%. The AATA board authorized the increased service on Route #4 at its Nov. 17, 2011 meeting.

Comm/Comm: Airport Service

During his report to the board, CEO Michael Ford told board members that the launching of the AATA’s airport service would take place 18 days from then. He was happy to say that, he said, and indicated there’d be a press conference on Friday, March 30 at 11 a.m. to kick things off.

Present: Charles Griffith, David Nacht, Jesse Bernstein, Eli Cooper, Roger Kerson

Absent: Anya Dale, Sue Gott

Next regular meeting: Thursday, April 19, 2012 at 6:30 p.m. at the Ann Arbor District Library, 343 S. Fifth Ave., Ann Arbor. [confirm date]

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Before the vote, the board was briefed by Mark Ouimet – state representative for District 52, which includes the Dexter area – as well as Dexter Township supervisor Pat Kelly. Both Kelly and Ouimet thanked commissioners for their support and praised county staff who’ve been working in the area damaged by the tornado.

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