money « A2Politico: Ann Arbor Politics Grilled To Perfection

September 8, 2010

The Politics of Boondoggles: “Creating More Job Announcements Than Real Jobs”

Filed under: economic development, money — Tags: 21st Century Jobs Fund, A2Politico, Ann Arbor Public Schools, Ann Arbor SPARK, Atwell-Hicks, Bernie Madoff, Charles Ponzi, Edwards Brothers, John Hieftje, Katherine Yung, Lansing State Journal, Laurel Champion, Mackinaw Center, Matt Kraner, Michigan Economic Development Corporation, Mike Finney, Nathan Bomey, Rick Snyder, Tony Dearing — A2 Politico @ 8:00 am

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“Creating More Job Announcements Than Real Jobs”: I couldn’t have said it better myself. Oops, I did. And well before the conservative-leaning folks at the Mackinaw Center, and editors at the Lansing State Journal decided to jump on the bandwagon and actually wonder out loud how in the names of Charles Ponzi and Bernie Madoff it’s possible to spend hundreds of millions of tax dollars on “job creation” programs and have a net loss of 750,000 jobs in our state.

Here at A2Politico, I’ve been questioning the claims of out-sized “job creation” and “job retention” “successes” made by the good old boys (and girls) at the local “job creation” front, Ann Arbor SPARK, for the past year. In response to this A2P post, a SPARK representative suggested in an email that I learn more about the good work SPARK does. I’d love to, so long as it includes recent 990 forms filed with the IRS, because I suspect folks at SPARK have been fibbing to Uncle Sam concerning the actual number of jobs created and retained. On its 2008 990 form, SPARK spinmeisters told the IRS that the entity had created 2,033 new jobs and helped retain 1,561 jobs. Yeah. Right. SPARK’s CEO Mike Finney signed the 990 form. I’m hoping the IRS gets nosy and asks for documentation. I suspect what we’ll see is something very similar to what Katherine Yung uncovered.

In a May 2010 exposé the Detroit Free Press revealed the fact that the Michigan Economic Development Corporation’s (MEDC) 21st Century Jobs Fund program, the first of two major initiatives under the 10-year, billion-dollar program, created only about a third of the actual jobs promised by recipients of Jobs Fund money. The Freep reporter writes, “only 1,147 direct jobs had been created, about 33 percent of the jobs promised, according to a report from the MEDC.” Reporter Katherine Yung goes on to pen the knock-out punch, “Excluding jobs created by the research projects, most of which are temporary, only 935 direct jobs have been added.” The 21st Century Jobs Fund was created in 2006.

Three months after the Freep piece was published, the brave editors at the Lansing State Journal decided it was finally safe enough to editorialize on the boondoggle. Since 2006, editors and reporters at the Gannett-owned newspaper have worked tirelessly to look the other way. Fortunately for the 40,000 subscribers who pay to read AnnArbor.com, the Three Musketeers who run AnnArbor.com (Matt Kraner, Tony Dearing and Laurel Champion—Treasurer of SPARK’s Executive Committee, and a board member since 2006) are not caving into journalistic peer pressure to actually investigate or report on the clearly outlandish “job creation” claims, or ask nosy questions about the spending of the local MEDC love-child, Ann Ann SPARK.

In a February 2010 post AnnArbor.com’s business reporter, Nathan Bomey, did little more than re-post a press release from SPARK touting the number of jobs the outfit had “created.”

When asked by readers to substantiate up SPARK’s claims, Bomey replied thusly, “This story was not meant to take a deep dive into SPARK’s claims. That may be good idea for the future project, however.”

May be?

Ann Arbor SPARK is diverting money from our local public schools through a local LDFA financing arrangement set up in 2006. While the money diverted from schools should, in theory, be refunded to the District by the State of Michigan, the fact is that the State is not keeping up its end of the bargain. So, while Ann Arbor Public Schools spends less on instruction, students and their parents are asked to put up with crowded classrooms, expected to pay for supplies, field trips, and bus rides to outings, and while dedicated teachers buy their own classroom materials, between 2006 and 2008, the handful of employees at Ann Arbor SPARK spent over $210,000 on a web site and IT services, $953,000 for office space (2007 and 2008), and $109,616 on travel, meals and entertainment.

And “created” zero jobs that wouldn’t have otherwise been created, according to what the LDFA’s Richard King told Ann Arbor City Council members in March 2009. As I wrote in November 2009:

Who could want less for more? It’s a Bernie Madoff Special—no actual job creation in return for millions in public money. How long will it take the public to realize that they’re being robbed?

There’s a possible explanation as to why Nathan Bomey hasn’t “dived” into SPARK’s business practices or its job creation/retention claims. Detroit Freep reporter Katherine Yung writes in her May 2010 piece:

Four years after Michigan launched the 21st Century Jobs Fund to diversify its economy and create jobs, the first two major initiatives under the 10-year, billion-dollar program have generated mixed results so far. A handful of small companies that received loans look promising, a handful have failed and only a small number of direct jobs have been created. Venture capital firms outside the state that were awarded millions have been slow to invest in Michigan businesses. And the majority of the grants, loans and investment dollars went to recipients in one city: Ann Arbor.

In a comment in response to his February 2010 post, an AnnArbor.com reader cuts up Bomey’s food for him and gives us an idea of what a little concerted digging could reveal:

I read the full [SPARK] press release, and did a little digging. My admittedly shallow research (plugged a couple of business names into the site’s search mechanism) pulled up a story showing that Atwell-Hicks was evicted from one Ann Arbor site, moved its headquarters to Southfield, reorganized, and opened a smaller Ann Arbor office than previously existed. SPARK puts Atwell-Hicks on the list of companies that “located and expanded” in Ann Arbor during the last year. Does using SPARK money to move its headquarters out of Ann Arbor but retain a smaller Ann Arbor office count as a SPARK success story? http://www.annarbor.com/business-review/ann-arbors-edwards-brothers-book-manufacturer-competes-in-shrinking-market/

Also, I looked up Edwards Brothers, and a recent article indicates that revenues were down in 2009, and that Edwards Brothers lost employees during 2009. So how did Edwards Brothers make the list? http://www.annarbor.com/business-review/ann-arbors-edwards-brothers-book-manufacturer-competes-in-shrinking-market/

Just wondering why we would be giving taxpayer money to long-time Ann Arbor companies who end up on a SPARK report as a “success story” despite the evidence to the contrary on this website. Is there any other way to get additional information about SPARK’s “success stories?

In a September 3, 2010 piece, the news hounds at the Lansing State Journal wrote in an editorial, ”An April report from the Michigan Auditor General’s Office indicated that many recipients of the tax credits were not providing sufficient documentation of their efforts to create jobs, retain jobs or build new capital projects in the state.”

The first time I questioned the claims of the MEDC-love child Ann Arbor SPARK was in 2008. I pointed out that the job creation fantasies—fairytales repeated by SPARK Board member John Hieftje during the past election—had never been verified by an independent agency. At the time, in it’s 2008 annual report, Ann Arbor SPARK officials, including gubernatorial candidate Republican Rick Snyder among others, were taking credit for having “created” and “retained” thousands of jobs.

In response to the growing scrutiny, the executive committee of the Michigan Economic Development Corporation publicly cried foul over “unwarranted criticism” of the agency and warned that “political in-fighting” could hurt the state’s business investment climate. But the criticism of the state’s chief “jobs” department is not only warranted, it’s overdue.

The Mackinaw Center recently had this to say about the MEDC’s claims that criticisms of its efforts were unwarranted.

The MEDC’s letter specifically references the MEDC’s Michigan Economic Growth Authority tax credit program as evidence of effectiveness, claiming the program is “enabling us to compete successfully against other states and countries. …” The officials cite no supporting evidence. The claim, however, is at odds with the four scholarly analyses of MEGA that have been produced since its inception – two by the Mackinac Center, one by the Anderson Economic Group and one by the Upjohn Institute.

A 2005 study by the Mackinac Center showed that MEGA had no impact on per-capita personal income or job creation. We did find that for every $123,000 in tax credits offered, one construction job was created, but 100 percent of those jobs disappeared within two years.

Last year, we used a different modeling technique to isolate MEGA’s effects from the larger economy and found that for every $1 million in tax credits earned in a county there was an associated loss of 95 manufacturing jobs.

The Anderson Economic Group study, published in March and funded by the Michigan Education Association, found that MEGA and two similar state programs cost the state 25,000 jobs and $85 million in tax revenue annually.

The Upjohn study, published in April, was by far the most favorable study done. Even so, the authors’ claim that MEGA has created 18,000 jobs since 1996 totals just 1,600 a year on average. If this is the MEDC’s idea of success, we would hate to see their definition of failure.

In March 2010, the MEDC offered a refundable tax credit deal to a convicted felon out on parole. While the state would not allow embezzler Richard A. Short to possess a credit card, the MEDC placed him on stage with Gov. Jennifer Granholm to celebrate his $9.1 million subsidy deal.

In April 2010, the state Auditor General chastised the job agency for handing out MEGA tax credits to companies that had not earned them. During later testimony before a House committee, MEDC CEO Greg Main acknowledged that for its first 10 years, the MEDC did not audit the businesses that were collecting tax credits.

To date and to our knowledge, MEDC officials have not refuted a single fact in these critiques. Since its creation, the MEDC has spent hundreds of millions of dollars in appropriations and tax expenditures while Michigan has lost 708,500 jobs and led the nation in unemployment. Yet they have the temerity to describe public discussion of these failings as “unwarranted.”

The MEDC is a highly secretive organization that in recent years has become even less transparent. The Mackinac Center has documented many of its efforts to delay, deflect and obfuscate. Why hide? Because the MEDC is creating more job announcements than real jobs.

The MEDC model needs to be closely evaluated and, obviously, either discontinued or seriously re-tooled with an emphasis on absolute accountability. Each of the ten Smart Zone entities created under the auspices of the MEDC, including Ann Arbor’s and SPARK, need to have their claims substantiated and their finances scrutinized. Michigan’s taxpayers deserve no less. It’s time to stop robbing the public schools to pay for meals, entertainment and lush office space for a handful of people who spend their time and millions of our tax dollars churning out fiction disguised as press releases and annual reports to justify their own employment, salaries and benefits, not to mention providing “job creation” bullet points for local and state politicos to use on their résumés.

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August 18, 2010

The Politics of Prying: Borders Gets Tight-Lipped

Filed under: economic development, money — Tags: A2Politico, AnnArbor.com, Bill Gates, Borders, FuckedCompany.com, John Hieftje, LiveJournal, Marcia Higgins, MediaBistro, Pud, Sergey Brin, Tony Dearing, UsedBookBlog — A2 Politico @ 8:00 am

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Here’s a recent headline from AA.com: “How many people now work at Borders’ headquarters in Ann Arbor? Borders won’t say” Sigh. When you pry, or at least try to pry into the business of other companies, it’s good to be slightly more industrious. The piece reveals little about Borders. I always chuckle, of course, when AnnArbor.com makes big noise about other companies being tight-lipped about their businesses. In December of 2009, when a reporter from the radio show “Marketplace” asked for specifics from AnnArbor.com Kontent King Tony Dearing, she got stiff-armed. I wrote about it here, and Dearing subsequently shared the information with A2Politico he’d refused to give to “Marketplace.”

Of course, MediaBistro did an even worse job of prying about the Borders layoffs. The go-to media industry site provided a Cliff Notes version of the AnnArbor.com piece:

Today AnnArbor.com broke the news that Borders Group had cut more employees at the bookseller’s corporate headquarters in Michigan. A spokesperson declined to say how many people were laid off.

The company provided this statement: “we have made changes to our staffing levels so that the right people are in the right positions and that those positions are aligned with our strategic objectives.”

Earlier this month, we noted that Borders will cut another 100 workers in its distribution facility located in La Vergne, Tennessee. When asked about those cuts, the company provided the same statement.

At Borders, this latest round of lay-offs was, in fact the fifth round the bookseller made in 2010. This round came just seven days after the company made its fourth round of lay-offs. Prior to the most recent round of cutting, Borders employed some 650 employees at its Ann Arbor headquarters. On the UsedBookBlog, Borders employees, evidently, were slightly more forthcoming about the life-saving measures being implemented. One Borders employee writes:

From the front lines, those “strategic alternatives” included getting rid of managers and supervisors, eliminating the employee gift card of $25/mo. for full time employees, eliminating time and a half for all employees working holidays and the thing that is guaranteed to save their rosy butts — charging employees 35 cents for tea and coffee that had been previously free.

We have also been vigorously sending back music and book product to the vendors in order to get quick credit back at the expense of our empty bookshelves and music/DVD units …

… managers have been asked to cut back on supply ordering, and necessary repairs are not being completed.

My brother works for Borders and he said that they have just cut out the employee of the month program (probably because there was a $25 gift card given to the recipient).

I guess if I’d implemented a money-saving strategy that included getting rid of the employee of the month program, I’d be pretty tight-lipped, as well, because I’d be terrified shareholders would roll their eyes and laugh at my incredibly short-sighted business decision. After all, tending to employee morale is so passé. Everyone knows preventative medicine is for managerial pantywaists such as Sergey Brin and Bill Gates.

Well, all of this makes me miss Pud, who oversaw FuckedCompany.com. The site was a dot-com dead pool, but posts from employees fired from all kinds of companies shedding dead, live and other employee weight, popped up with regularity. There’s no one quite as willing to share information as a recently sacked employee, particularly low- to- mid-level employees.

Over at LiveJournal, a site where Borders employees shoot the breeze about their employer’s financial viability (a sort of micro-FuckedCompany), there is an entry dated August 12th in which the poster writes “About 55 people were laid off yesterday….If your not actively applying for a different job at a different company, let me be the first to tell you; your sucking a life. Everyone working at Borders needs to be actively searching for another job.” Another LiveJournal poster writes: “I urge everybody to actually read the quarterly statement when it comes out (on Sep 1st I believe). It doesn’t take much Googling to get copies of past years and compare them. There’s a LOT of information if you know how to read between the lines and translate the corporate speak into what it really means.”

Having company headquarters in a town provides politicos with bragging rights and photo opps—of which the current bunch in office avail themselves liberally. When Borders celebrated the grand opening of its first nationwide concept store in the Waters Place shopping center, Hizzoner was on hand for the festivities and ribbon-cutting. Now that Borders is in a death spiral, it’s likely the only dismissed Borders employee to receive Hieftje’s sympathies was, perhaps, Fourth Ward Council member Marcia Higgins, who was among the many people the company has let go in its many rounds of lay-offs.

So should we care that Borders, Google, AnnArbor.com and other companies that do business is our town get light-lipped when the going gets tough, revenue projections and employee head counts fall short? Absolutely. Pfizer’s departure was blamed by every incumbent who was recently re-elected for the disaster that is Ann Arbor’s slash-and-burn budget. That voters couldn’t figure out losing a paltry 4.68 percent of property tax revenues couldn’t possibly explain the desire to privatize Huron Hills Golf course, cut police and fire staffing, boggles the mind. Then again, a recent New York Times piece about the economy of Italy placed the blame for the disaster that is Italy’s debt-ridden, anemic, stagnant economy on the fact that primarily older voters in Italy go to the polls—people loathe to see the status quo disturbed. Couple cronyism, local politicos willing to tell whoppers, and invent whatever they need to invent to keep up appearances for the old folks and, as one CPA told me, we have a city that will be insolvent in five years unless things change drastically. Borders, you see, is not the only tight-lipped organization in an economic death spiral. Thus, the advice from the Borders employee who counseled colleagues to study the company’s financial statements, and to be making plans to relocate seems startlingly prescient and apt.

A member of the Ann Arbor Parks Advisory Commission (PAC) with a wicked sense of humor and a wonderful sense of the absurd put it to me this way: Ann Arbor politics is controlled by the canes and walkers, ex-hippies who think the city should be encased in lucite for the benefit of said canes and walkers. It was an astute observation. A look at the rolls of regular voters in Ann Arbor, and you will see that the list is dominated by Boomers, as well as canes and walkers. Around 10 percent of registered voters decided local elections this past August.

Don’t expect AnnArbor.com to pry about city finances any time soon. In July, the company passed the one-year mark necessary to have official announcements printed in the pages of its newspaper. AnnArbor.com, I predict, will soon get a boatload of new advertising from the City of Ann Arbor, and while editorial departments at papers of record such as the Washington Post and New York Times fight for editorial independence from advertising concerns, it’s quite clear that no such struggle goes on at AnnArbor.com. Otherwise, instead of headlines like “How many people work at Borders?” we’d have investigations into the financial malarky presented as the Gospel truth by local politicos, and city staff—starting with CFO Tom Crawford’s fabrication that the now over-budget Police-Court Tin Can would cost exactly $44.7 million dollars.

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May 18, 2010

The Politics of Responsibility: Taking Credit For Everything and Responsibility For Nothing

Filed under: infrastructure, money — Tags: Ann Arbor Chamber of Commerce, Ann Arbor SPARK, LDFA, Marcia Higgins, Margie Teall, Representative John Dingell — A2 Politico @ 12:14 pm

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Last Friday afternoon, I went to a Meet the Candidate event sponsored by the Ann Arbor Chamber of Commerce. There were Chamber members from Ann Arbor, the surrounding townships and cities, as well as national, state and local candidates for office. I had a chance to meet numerous owners of small and medium-sized businesses who not only understand what “responsible spending” means, but who practice it in their own businesses. Yeah, there were lots of Republicans at the event, but you know what? They pay taxes, too, and own businesses. A business in Ann Arbor that provides an individual or a family with an income is an asset to our community. Since 2005, Ann Arbor has seen almost 10 percent of its jobs disappear, and the total number of unemployed residents jump from 8,000 to 16,000 individuals. Despite frittering away millions of tax dollars on economic development boondoggles such as the LDFA and Ann Arbor SPARK, our city’s residents have significantly fewer job opportunities. On the up side, lots of local politicos and business big wigs have board positions to list on their campaign web sites and professional résumés.

We can’t expect our elected officials to be responsible for the jobs lost in Ann Arbor, can we? Of course we can. And should. Our elected officials willingly push their way to the front during photo shoots done by the local press, and take credit for construction jobs created by building the new Police-Court Building and the Library lot parking garage. Heck, the Mayor and Representative Dingell went hat in hand to the federal government for TIGER grant money to rebuild our Stadium Bridges by touting the number of jobs the work would create—an incredible 448 (TIGER grants are made to shovel ready projects that preserve and create jobs and promote economic recovery). 448 jobs in one fell swoop of federal funding for the project. That’s more jobs than have been created in Ann Arbor over the past three years.

I believe we have every reason to expect elected officials to take responsibility for the overall economic health and vitality of our city—or lack thereof. However, that’s not how politics is currently played in our city.

We have politicos who take credit for everything and take responsibility for nothing.

Take the Stadium Bridges. Please.

When I met with Representative John Dingell a few weeks ago, and we spoke about the Stadium Bridges, I made clear my opinion the current state of disrepair of those bridges was in no way his political responsibility. That wet, hot, infrastructural mess has been simmering on the back burner of every local politico and the responsible city staff since 2006. Mr. Dingell was recently quoted in the Press as describing the state the bridges have been allowed to deteriorate by our city staff and local elected officials as “miserable” and “disastrous.” Be that as it may, it was recently reported that Mr. Dingell helped bring the U.S. Deputy Secretary of Transportation to Ann Arbor for a political dog and pony show. All that was missing were the tasty treats one gives to performing politicos.

The whole gang was there for the photo shoot with the U.S. Deputy Secretary of Transportation: Mayor Hieftje, Representative Dingell, Fourth Ward Council members Margie Teall and Marcia Higgins. State Street was closed for the photo shoot, and in the end what Ann Arbor politicos got out of the Washington politico was, well, lots of tea and sympathy. It’s all they deserved.

Now that it’s election season, the Stadium Bridges have become a national emergency, literally. In reality, what we have here is a political mess so toxic that our local officials are willing to stretch the truth to get federal funding for the project. To begin, Ann Arbor lost out on the first round of federal TIGER grant funding because though the City Council and Mayor voted in 2006 to spend $1.5 million dollars on the design of a replacement bridge, the design wasn’t completed in 2006 by the company given the money. So, the project missed the first round of federal funding because, literally, no one followed through and checked on the work of the contractor hired to produce the design. Then, Ann Arbor missed out on a $750,000 grant that could have been used to repair the bridge because Marcia Higgins and Margie Teall never appointed a citizen committee necessary to the application process.

The Mayor works. He has been working on funding the bridge for five years. He was quoted in the press as saying he’s been working on a PILOT program to negotiate voluntary payments in lieu property taxes from the University of Michigan for years. He’s been working to negotiate a deal with DTE so our city’s windmills and solar panels to nowhere can be hooked into the power grid. Our elected officials have been fixing on fixing the roads since George W. Bush was president. Well, we have a Roads Millage Fund that is a fat $19 million dollars, a supplemental road millage that brings in $9 million dollars per year, and roads that will loosen your fillings, dent your tire rims and, generally, make driving from one side of town to the other reminiscent of life as a 19th century settler. Ann Arbor has recreated the long lost era of corduroy roads. We also have a falling down bridge that our fire trucks can’t drive across.

Interestingly, the latest TIGER grant application states that Ann Arbor needs that money in part because there are two fire stations within a short distance of the bridge. Don’t tell the Deputy Secretary of Transportation, or your Burns Park friends, but Fire Station Number 2, on Packard and Stadium, has been closed since 2003. It’s a furniture store house now. Stretching the truth to get federal grant dollars, I would imagine, is de rigeur in some cities, but it shouldn’t be in ours.

Now, we’re being told: “Communities don’t finance projects like the Stadium Bridges on their own. I don’t know of another instance when it happened,” Hieftje said. “We’ve been after those funds for quite some time, but we’re very hopeful now. You can’t do much more than bring the deputy secretary of transportation to town along with the congressman….and we just think it’s something we can make happen.”

It’s the Think Method of bridge repair and road reconstruction. Professor Harold Hill perfected that over in River City, Iowa. Think, Men. Think.

Think about this: The city of San Francisco financed and built the Golden Gate Bridge in 1937, in the midst of a Great Recession. How’d they do it? They floated bonds. Here’s something else for you to think about: why have our elected officials been trying to get financing to repair the Stadium Bridges for five years? Why didn’t they simply float bonds in 2006 as opposed to keeping things quiet about the state of the bridge’s failing beams, then being forced to close a portion of the artery that runs over State Street? Why didn’t they float $22 million in bonds to rebuild the bridge instead of floating bonds to build a new Police-Court building? Why didn’t they float bonds to fix the Stadium Bridges instead of borrowing $56 million dollars to build an underground parking garage we don’t need next to the Fifth Avenue library downtown? Why didn’t they repair the bridge instead of borrowing $30 million dollars to build the Wheeler Center, to house city trucks, some of which are now unable to cross the Stadium Bridges safety?

Contrary to what our politicos would have us believe, competent city leaders all over the United States maintain their roads and repair their bridges from their own city funds, and, when necessary, they float bonds to finance large ticket bridge repairs and replacements. Thanks to a long-term public policy that has put shiny new buildings before road repair/maintenance, and city services, the amount we pay to service long-term debt rose from $934,000 in 2005 to $10 million dollars per year in 2010. Debt service on $10-$15 million dollars in bonds to pay for the Stadium Bridges project would be around $800,000-$1,000,000 per year, or about 1.0-1.3 percent (tip o’ the keyboard to Jim Rees) of the $77 million dollar General Fund.

So why the dog and pony show with the press, Congressman, local politicos and the Deputy Secretary of Transportation? Why include the Ann Arbor taxpayers in the ridiculous French farce of pretending that our bridge can’t be repaired without welfare from the American taxpayers? Why blame the United States Congress for not fishing our local infrastructural fannies out of a fire we kindled all by ourselves and watched burn? At the Chamber of Commerce event last Friday, an official running for state office suggested to me that the current elected officials in Ann Arbor have such unmitigated contempt for the citizenry, that our local politicos didn’t believe they needed to repair the bridge in any big hurry. So, they missed deadlines for grants, gave the bridge design company $1.5 million, and never got a design in return, neglected to appoint citizen committees, and blamed everything on the dearth of federal funding, and a $450,000 dollar annual decrease in state revenue sharing.

Why not? If people will believe the current budget crisis is the result of losing “state revenue sharing,” and the loss of less than $2 million in tax revenue from Pfizer, why shouldn’t our politicos be confident that the public will believe them when they fib and say that “communities don’t fund projects like the Stadium Bridges?” It’s a beautiful lie.

So where’s the University of Michigan on all of this? Refusing to partner with the city because, spokesman James Kosteva pointed out to the press who asked, U of M is busy spending $500,000 to restructure one of our city roads that abuts their campus to suit themselves and their own needs.

The ugly truth is that we need to float bonds to rebuild the bridge, and use our Road Millage Fund money to repair the 187 miles of roads in our city the state classified as in “poor” condition—the third worst roads in Michigan.

How do we make the bond payments?

In the 2010-2011 budget City Council voted to give the IT department additional millions for new electronic toys, and the Fleet Department additional millions for new vehicles. Over the past four years, the IT budget has doubled to almost $7 million dollars per year. IT charges are being used as a tool to skim millions, via inflated IT charges, from other city departments. The IT Department, not surprisingly has a fund surplus of $4 million dollars. Fleet has a fund surplus that has been built up, using a similar scheme of inflating charges, of $7.5 million dollars. Our city has $102,000,000 million in unrestricted surplus tax dollars sitting in the funds of various city departments.

By cutting over-allocations in the city’s budget that allow department to accumulate such large unrestricted surpluses, we would have the money needed for payments on bonds to fix the Stadium Bridges—and then some. Better yet, Council could vote to halt the underground parking garage project and repurpose a portion of those bonds to fix the Stadium Bridges. SEC officials have said the garage bonds may be legally repurposed for use on any capital improvement project in the city. I wrote about a plan to do that, here.

President Obama’s administration has said no to Ann Arbor for federal money to build a new train station on Fuller Road, no to Ann Arbor for federal money for the financially unsound commuter train boondoggle, and no to Ann Arbor for federal money for the Stadium Bridges. The Stadium Bridges are falling down and yet we are still told by the current politicos up for re-election: “You can’t do much more than bring the deputy secretary of transportation to town along with the congressman.” Well, that, and submit an application for federal funding peppered with little white lies.

Maybe bringing the deputy secretary to town along with the congressman is all the current politicos can do. I’m ready and prepared to do much, much more than close traffic on State Street and stand under the Stadium Bridges in a hard hat to get my picture taken with Representative Dingell, Margie Teall and some sympathetic fellow from Washington, D.C. who won’t be the one who chooses which of the only 12 TIGER grant applications will get approved by an administration that seems to be sending a clear message that “free” money in the form of federal funding for our various projects (pie-in-the-sky and otherwise) won’t be forthcoming anytime soon.

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May 10, 2010

The Politics of the DDA: Time to Clean House

Filed under: DDA, money — Tags: A2Politico, Ann Arbor City Council, Ann Arbor.com, Christopher Easthope, Downtown Development Authority, Housing Commission Board, Jennifer Santi Hall, Joan Lowenstein, John Splitt, Leah Gunn, Leigh Greden, Mayor John Hieftje, Rene Greff, Roger Hewitt, Russ Collins, Sandi Smith, Tony Dearing — A2 Politico @ 10:17 pm

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Rene Greff and Jennifer Santi Hall are spilling the beans about the down and dirty inner-workings of the Downtown Development Authority to Ann Arborites, and anyone else who would care to know. At the most recent DDA meeting, at which Russ Collins, Leah Gunn, Roger Hewitt, Mayor John Hieftje, Joan Lowenstein, John Splitt, and City Council Member Sandi Smith supported siphoning off $2 million to prop up the city’s leaky bucket of a budget, Santi Hall alleged “secret” back room wheeling and dealing. She is quoted in a May 5, 2010 post to Ann Arbor.com as saying:

DDA board members and Ann Arbor City Council members who worked out the framework for the $2 million transfer behind closed doors during the last year. Hall said the meetings of the working group should have been open to the public, but even some DDA board members were kept away from sitting in on the discussions. ”I don’t support this type of conduct,” Hall said. “I find it sneaky, and underhanded, and corrupt, and possibly illegal, and in violation of the public trust in our government. Obviously not everyone is in agreement with me on this or things would have happened in a different way. But at the very least you should be able to understand why I’m so angry today.”

Not to be overly cynical, but I have to wonder if Hall was present at the January 20, 2009 meeting called by First Ward Council member Sandi Smith. It was revealed in FOIAed emails that Smith had invited everyone on Council over to the DDA office to discuss what should be built atop the underground parking garage planned for the Library lot. This was, of course, seven months before July 2009, when City Council actually issued the RFP to solicit proposals from developers interested in building atop the Fifth Avenue parcel. There was no public notice of the January 20, 2009 meeting, nor were minutes kept. Just City Council and DDA Board members alone in a room deciding what should be built on land owned by the public. If Jennifer Hall was at that meeting, her outrage at the behavior of her colleagues and City Council members over being excluded from meetings concerning the ultimate disposition of the $2 million dollars requested by the city from the DDA, seems somewhat staged. Then again, if she wasn’t at the January 20, 2009 meeting called by Smith, the outrage seems somewhat puzzling.

The DDA only posted its annual budget to its web site in 2008. While running against Sandi Smith for the First Ward City Council seat (Jennifer Santi Hall was Smith’s campaign manager), I questioned why the DDA’s financial information wasn’t readily available online, and why the noon-time meetings weren’t televised. In the midst of that election season, the annual budget was posted to the group’s web site in .pdf format. DDA meetings have only just begun being televised. These were two very important steps toward transparency, and I’m delighted I helped bring them about. However, surely Santi Hall knew that the DDA Board members cut a $10 million dollar back-room deal with former Council members Leigh Greden and Christopher Easthope in exchange for Main Street beat cops for a decade (a promise that the City Council broke after taking the DDA’s money), according to Rene Greff, in an October 2009 interview she did for A2Politico.

Thus, the current ruckus over how, when and by whom it was decided that the DDA would hand over $2 million dollars to the city with no strings attached demonstrates quite amply that the politicization of the group as evidenced by changes to its mission in the DDA’s 2003-2033 early renewal, has worked against its initial mission, tending to Ann Arbor’s downtown. The DDA’s renewal includes the following objective areas:

Identity
Infrastructure
Transportation
Business Encouragement
Housing
Development Partnerships
Community Services
Sustainability

All are laudable goals, of course, but most involve influencing or changing the course of the city’s public policy. That’s the job of our elected officials. In other towns, including Royal Oak, the budgets of their DDA’s must be approved by elected officials. Ours is not. In fact, First Ward Council member Sandi Smith has argued that the City Council has no business sticking its collective nose in DDA parking policy, and members of the DDA Board have argued that the entity is autonomous. Jennifer Hall, in her interview with A2Politico said that: “I wish Council provided the kind of oversight, check and balance that an independent agency such as the DDA (or AATA or any other authority) should have. But they don’t always do that. They don’t really look into our bylaws and make sure that we aren’t abusing our power.”

The DDA Board is abusing its power. The Board recently voted to expand its own state-mandated boundary so as to be able to give a $500,000 tax dollar giveaway to the Near North project, located outside the long-established DDA boundary. Then there is the recent $2 million dollar giveaway to the city of Ann Arbor. County officials are investigating the legality of that transfer, because it involves tax capture money that would, otherwise, go into Washtenaw County coffers. The DDA Board recently cost the taxpayers $500,000 when the project manager it chose to oversee the construction of the underground parking garage awarded a $22 million dollar contract to its own subsidiary. The Christman subsidiary bid was $500,000 higher than the lowest bidder. This prompted an editorial in the AnnArbor.com titled “Concrete deal for DDA underground parking structure a bad deal for taxpayers.” In that editorial, Tony Dearing writes:

“It looks bad and raises serious questions when a company managing construction of a major public project rejects a lower bid from a competitor and awards the work to its subsidiary….We have spoken to many experts who find it hard to believe that a public entity would allow such an outcome, but this now appears to be a done deal. Because of the DDA’s autonomy on this project, we are not aware of any other entity that has the ability to step in after the fact and give this questionable bid award the level of review or scrutiny that the DDA failed to provide.”

But there is an entity that can step in: City Council. Just as the group recently dismissed the entire Housing Commission Board, the City Council could vote to dismiss the entire DDA Board, and direct the newly appointed replacements to suspend the Christman contract, and give the questionable bid award the scrutiny the previous DDA Board obviously failed to provide.

Though this is the obvious solution to the DDA’s failure to act in the best interests of the taxpayers whose money they have access to through the TIF capture, it won’t happen as long as the incumbent remains in office. Why? Because over the past half a dozen years, the DDA Board has been stacked with friends, donors and political pals. It’s tough to tell a group of people whose combined donations during your last campaign totaled close to 25 percent of the donations you took in, that their services are no longer needed because, well, they cost the taxpayers half a million dollars.

That’s why Mayoral appointments of friends, political pals and donors to city boards and commissions has to end. In addition, there are members of city boards and commissions who have overstayed their welcome.

For instance, County Commissioner Leah Gunn has served far too many terms on the DDA, having been appointed when George H.W. Bush was president. The quality of her recent work shows why she is no longer an asset, and a look at the Mayor’s 2008 campaign finance forms will make clear exactly why he will never replace her. She has donated thousands in in-kind goods, services and monetary donations to his campaigns over the past half a dozen years.

To justify the $2.28 million dollar purchase of additional parking kiosks, Gunn went before the DDA Board and gave the jolly explanation that they should pony up the money for the detestable and over-priced kiosks because, “We have found that everybody likes them.” How she knew that for a fact remains a mystery, as the DDA conducted no user study, and Gunn’s colleagues neglected to stop for a moment before writing the check to enquire just how she came to that blowsy conclusion. Then, on May 8, 2010, she was quoted in AnnArbor.com as saying that a proposal to use DDA money to return the Beat Cops to Main Street: ”…needs…a lot of homework done. There’s a lot of data that needs to be collected and a great deal of discussion that needs to be held.”

Seriously? With six police officers patrolling all of Ann Arbor on any given morning she thinks returning the Beat Cops to Main Street needs lots of data collected and a great deal of discussion? As you can imagine, she found support from Mayor Hieftje. He called the proposal to fund beat cops on Main Street “premature,” and said “beat cops might not be the best way to police downtown.” I’m not sure what he thinks might be the best way to police downtown, but at the moment whatever it is it involves cutting more police to fund a parking garage on Fuller Road for his friends at the University of Michigan, and to pay for cost over-runs on the price-”guaranteed” Police-Court facilty. Those cost over-runs have cropped up in the 2010-2011 proposed budget. Suddenly, the “guaranteed” cost of that capital project is, well, is fungible, as they like to say on Council.

Every Main Street business owner whom I’ve spoken to wants that police protection back. In October of 2009, just three months after Council adopted a budget that cut Beat Cops from downtown, the Chief of Police went down to the Main Street Area Association and offered to return the Beat Cops in a pay-for-policing offer. I wrote about that here. Was Chief Barnett Jones just trying to up sell our Main Street Merchants police coverage like so many matching handbags, police protection they didn’t need? I doubt it. Here’s a better question: Should the appointed officials on the DDA Board be deciding whether Ann Arbor’s downtown needs police protection? Absolutely not.

City Administrator Roger Fraser suggested in December of 2009 that we dissolve the DDA in order to return some $2.4 million dollars per year to our city’s General Fund. If elected, I want to actively pursue Roger Fraser’s suggestion. Until then, I think it’s time for the DDA to immediately make as much of its financial information available online as possible. That information should include previous year’s budgets going back to 2000, parking data, monthly budget statements, quarterly budget statements, audits, and the DDA’s check register.

Appointed officials have no business dictating police coverage, wasting half a million dollars of taxpayers’ money through lack of oversight of a contractor, extending their own boundary as they see fit so as to facilitate tax giveaways to private developers partnered conveniently with local non-profits. Appointed officials and elected officials on the DDA Board have no business holding “work sessions” so that their decisions can be formulated out of the public eye, and away from the coverage of the local press. Our DDA’s appointed officials have no business setting transportation policy, housing policy, or spending parking/tax dollars on private developments. Subverting the Open Meetings Act simply makes the public more wary and mistrustful of whatever good deeds such an entity could (and does) accomplish.

Be that as it may, public money must be controlled by elected officials, not appointed ones. It’s time to clean house at the DDA through Mayoral appointments made not as recompense for political support, but rather for the good of the downtown and in support of our local merchants. I agree with Roger Fraser that we have to reassess whether the entity should exist in its current form, or dissolve the DDA and form an Advisory Commission with absolutely no access to public money. We’ll lose the TIF capture, but that money will go back to the city’s coffers, county’s coffers, schools and libraries, institutions that service the entire community.

Finally, and most importantly, the contract between the city and the DDA that established the DDA as the entity that oversees our parking program should be bid out competitively. Until we make parking revenue neutral, alternative/mass transportation programs and initiatives in Ann Arbor will remain political step-children dragged out every election season to be used as bullet points on political web sites.

Ann Arbor taxpayers deserve accountability, and in the case of the DDA, and every other board and commission in Ann Arbor, the City Charter provides City Council with the mechanism to make sure the members of boards and commissions are held accountable. Whether Mayor and Council will continue to appoint friends, donors and political pals to our city’s boards and commissions, or choose to give the taxpayers in the fifth largest city in Michigan the accountability they deserve is another matter that will be decided August 3rd.

Popularity: 54% [?]

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May 4, 2010

The Politics of Rescue Heroes: What in the Billy Blazes Is Going On?

Filed under: campaigns, elections, money, politicians, politics — Tags: Avalon Housing, Downtown Development Authority, Interfaith Hospitality Network of Washtenaw County, Jamie Adkins, Julie Steiner, Katie Doyle, Marcia Higgins, Margie Teall, Michael Appel, Ozone House — A2 Politico @ 5:49 pm

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On April 30th, I predicted the future. I wish I had the same luck with lotto numbers. I think the state jackpot is somewhere around $266 million dollars, and like everyone else out there, $266 million minus taxes could come in pretty handy right about now as my kids close quickly in on the ages where we need to start saving for university. So how did I predict the future with pinpoint accurately? Actually, it wasn’t too tough, and it was a clear-cut case of much of what is dysfunctional in our city government at the moment being played out on the big stage for the general public who care enough to watch on CTN, or read on AnnArbor.com.

At the May 3rd City Council meeting, several “changes” to the proposed 2010-2011 budget were announced. One major “change” was thanks to a $2 million dollar quick fix of cash from the Downtown Development Authority’s coffers. I sat in Council chambers and listened as the incumbent announced that he hoped to “greatly minimize” layoffs in police and fire. He added that the “budget…will be quite remarkable in the state of Michigan when we look at so many cities with tax increases on the ballot and so many cities that are facing very deep cuts and layoffs.”

So, we’ll lose only 10 police and 10 firefighters instead of 20 each, and we’ll see politicos stumping for re-election claiming to have “saved” jobs.

Malarky.

Police officer Jamie Adkins explained to City Council on Monday night exactly why playing politics with safety services is like playing with fire. Our city has lost close to half of its police officers and half of its firefighters since 2003. At any given time, there are six-twelve police officers on patrol and just 17 firefighters staffing our five stations. Just so you understand what that means, it takes 17 firefighters to suppress one fire. In a town with a major research university and 45,000 residences, what do you think the chances are that there might be two fires simultaneously? If there were two fires called in, the awful truth is that one of houses would burn while the first fire was being handled. Our firefighters respond to auto wrecks, and emergencies involving hazardous materials, as well. In 2003, before there was the misguided notion that “streamlining” fire and police would be a great way to save a buck, our emergency service departments could handle three emergencies at once.

So, right now, if my house and your house burn, and I call my fire in first, you should call the Mayor and your two City Council members to come over and help with your own bucket brigade, because that’s all you’re going to have until any mutual aid might arrive. I say might, because if the firefighters from the three small surrounding communities with which we are trying to hammer out a mutual aid agreement are busy, they can’t offer any support to Ann Arbor. In fact, only three communities (Ann Arbor Township, Ypsilanti and Ypsilanti Township) would consider participating in our City Administrator’s grand scheme of mutual aid. Several city administrators from surrounding communities turned Ann Arbor down flat: they left a meeting scheduled for two hours after just 20 minutes, and refused to subsidize our safety services at the same time our Mayor and Council were balancing the budget by eliminating police and fire.

At the May 3rd Council meeting, I sat in chambers and watched my predictions come true. Fourth Ward Council member Margie Teall (up for re-election) announced that she and her colleague Marcia Higgins had come up with a plan to save the residents in the Frisinger/Allmendinger Park neighborhood from the indignity of Saturday football parking, proposed in the 2010-2011 budget to raise less than $40K in revenue. Mayor Hieftje then announced that he hoped to “greatly minimize” police and fire layoffs.

Then came the most touching display of pandering I’ve seen in quite some time. Councilmember Teall announced that she and the Mayor had a plan to to bring forward an amendment on May 17 to maintain funding for human services at 2010 budget levels. In essence, they were announcing a zero percent increase in the funding. What item better to be “rescued” than Human Services funding? Margie Teall even threw out a bone to the other Council members up for re-election when she said that she hoped “other Council members would support her proposed amendments to the 2010-2011 budget.” It was a touching display of political gamesmanship, and a perfect example of how much time, citizen effort and energy is wasted so City Council members can have bullet points for their political résumés.

I was truly offended, but not the least bit surprised. Every budget cycle, there are high profile items put on the chopping block in private Budget Committee meetings for certain Council members up for re-election to “rescue.” In the 2010-2011 budget, it was the Burns Parks Senior Center (Christopher Taylor), Mack Pool (Carsten Hohnke), police, fire and human service funding (Hieftje/Teall), and protecting Allmendinger Park (Teall).

There were police and firefighters present at the Council meeting to plead for funding to keep our city and its citizens safe. There were leaders of several local nonprofit agencies at the meeting Monday night, begging the council not to make cuts to human services.

So Julie Steiner from the Interfaith Hospitality Network of Washtenaw County took an evening off of her work helping homeless families to remind City Council members that the families served by her agency need, well, help. Ironically, I had earlier in the day helped the folks at Alpha House plan their veggie garden (I built them a raised bed garden the year before as a part of a project sponsored by our synagogue). Katie Doyle from Ozone House took an evening off of her working with homeless youths and runaways to remind Mayor and Council that, well, young people served by her agency need help.

Michael Appel of Avalon Housing was there pleading for human services funding, as well. During 2010, Avalon has enjoyed a taxpayer-funded $500,000 from the DDA for Avalon’s Near North Development, as well as a two year property tax abatement on all of its properties—a resolution presented to Council without a dollar amount so that Council members would actually know how much of the taxpayers’ money Avalon was being given in abatements.

You know who was absent? Representatives from U of M begging for the $10 million dollars for the Fuller Road parking garage. I didn’t see a single person from the city’s IT department there to plead for that department’s increased allocation, or a single representative from the fleet department pitching the case for the extra couple of million that department was allocated in the 2010-2011 budget. There was no one there to bow and scrape for money set aside for the so-called Economic Development Fund. No. IT, the Fuller Road parking garage boondoggle, and the Economic Development Fund allocations are not going to be cut.

I have an idea: let’s get Council focused on the multi-million dollar budget items, like city employee pension and health care costs, as opposed to spending endless hours playing Rescue Heroes so they can have something to put on their campaign web sites and campaign literature. It was Thomas Edison who said that invention was 10 percent inspiration and 90 percent perspiration. Inventing crises to resolve, and budget items to “save,” wastes 100 percent of the public’s time and money.

Popularity: 49% [?]

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April 30, 2010

The Politics of Surpluses: Fudging the Numbers

Filed under: city services, money, taxes — Tags: budget, Mayor Hieftje, money, Roger Fraser, Sue McCormick, taxes — A2 Politico @ 3:23 pm

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In the 2010-2011 proposed budget, the General Fund is projected to bring in $76.3 million in taxes and state profit sharing, and spend $77.9 million dollars, with a $1.5 million dollar deficit (provided all of the City Administrator’s proposed cuts are adopted). Over the past three years, the city’s General Fund has been pushed, pulled and manipulated inexorably toward structural deficit. The 2009 budget book has a message from the City Administrator that includes this: “For the foreseeable future we will continue to experience 1-3% revenue shortfalls with each annual budget.”

The result, of course, has been the decimation of our city’s human capital, and the ongoing deception that the loss of 239 city staff, including almost half of our firefighters and over 100 employees (civilian and sworn officers in our police department) has saved taxpayers money. In campaign literature we’ve read time and again that this “streamlining” has saved taxpayers $10 million dollars per year. It’s a cruel deception, not only to those who were dismissed from their jobs for no reason other than sheer managerial incompetence, but also to taxpayers who trusted that they were being told the truth.

In a February 9, 2010 presentation before Council, the City Administrator claimed that the “streamlining” of city government had saved taxpayers $25 million dollars since 2002. Below you’ll find the nifty chart he used to illustrate this fairytale.

Layoffs

Why is it a fairytale? Because the city’s income tax returns don’t corroborate Mr. Fraser’s claims of saving $25 million dollars on employee wages and benefits since 2002.

Here’s a graph with information from Ann Arbor’s income tax returns filed between 2000 and 2009:

Fiscal Year	Number of FTE and Contract Employees Claimed	Wages Claimed
2000	1,230	$49.6 million dollars
2001	# of employees not recorded on tax return	$58.7 million dollars
2002	1,149	$55.9 million dollars
2003	1,102	$54.7 million dollars
2004	1,079	$54.2 million dollars
2005	1,128	$57.5 million dollars
2006	1,104	$60.3 million dollars
2007	1,069	$57.2 million dollars
2008	1,018	$55.3 million dollars
2009	1,029	$54.7 million dollars

You should, of course, have an immediate question: Where’s the purported $25 million dollar “savings” Mr. Fraser told Council has been realized by the “streamlining” of those 239 employees? It cost exactly the same amount in 2009 to compensate our city employees as it did in 2003, when Mr. Fraser was hired. The next question is why the total number of employees declared to the IRS doesn’t match information presented to the public by Mayor Hieftje and Mr. Fraser. In December of 2009, Mr. Fraser, in a presentation to Council, told the group that as of December 2009 Ann Arbor employes 756 people.

One of most frequent questions I get from voters is where our I’ll find the money to fund core services, such as police and fire. The short answer is that the money is already there. Finding it is not a difficult task. One simply needs the financial skills to know where to look. Ann Arbor also needs leaders who will no longer allow city staff to fudge numbers and data to support their requests for funding and their claims of competence. Something else has been happening, something even more disturbing than the false claims of savings and the patently absurd claim that our services have not been systematically reduced.

First, we must keep in mind that Mr. Fraser has inaccurately projected revenue shortfalls in our General Fund since 2003, when he began his job as City Administrator. There have actually been budget surpluses in the General Fund since 2003, with the exception of 2009. This is significant, because those projected deficits have resulted in convenient opportunities for certain City Council members to “rescue” items budgeted to be “cut” thanks to the projected pretend shorfalls. This happened for several years to the Human Services funding. It would be eliminated in private meetings by the Council’s Budget Committee, then “saved” by Council members in public. In this election season, look for Council members who claim to have “rescued” the Burns Park Senior Center from the chopping block, as well as Mack Pool. Look for a Council member to “rescue” Allmendinger Park residents from the outrage of football Saturday parking—a “revenue source” proposed in the current budget to raise under $40,000.

These phantom budget shortfalls have been used to pad political résumés of those on the very Committee (the Council Budget Committee) that oversees the city’s budget. This cycle of projecting General Fund deficits, targeting high profile programs for elimination, then Council members stepping in and “saving” the high profile programs is nothing short of remarkable in its political ingenuity. The result has been budgeting and governance by three ring circus. P.T. Barnum would have loved the showmanship.

Meanwhile, because our elected officials were not prepared to dig through the city’s audited financial statements, or well-versed enough in finance to understand the statements, over the past half a dozen years, the citizens of Ann Arbor have been bilked out of over $100 million dollars. How? The oldest game in the book: over-charging for services.

Let’s start with water. Water flows to the lowest point, but in Ann Arbor the money poured into the coffers of the Republic of Water, Sewer & Stormwater Management runs right into a consolidated savings account. In that Utility Fund there is a $59.2 million dollar surplus, according to the most recent audited financial statement posted to the city’s web site. In essence, the City of Ann Arbor has over-charged residents $9.9 million dollars per year over the past six years for water and sewer in order to accumulate the surplus of funds—unrestricted funds—funds that are not earmarked for any purpose whatsoever. Sue McCormick, the city’s public services area administrator, has been allowed to amass a $59.2 million stash of our tax dollars.

Yet, on April 13, 2010, Sue McCormick went to Council and announced that Ann Arbor taxpayers need to pay more for water and sewer. Why? Because Ann Arbor has, according to McCormick, the “second lowest rates” in the state.

In an April 13, 2010 AnnArbor.com post reporter Ryan Stanton writes:

“Fraser’s proposed budget for 2010-11 includes rate increases of 3.88 percent for water, 3 percent for wastewater and 2 percent for stormwater. Sue McCormick, the city’s public services area administrator, said the rate increases are needed to maintain adequate revenues and pay for capital improvements within the system. McCormick said some capital improvements already are in progress, and new projects are coming on line that also are driving the increased rates….McCormick handed out a report Monday night showing Ann Arbor’s water and sewer rates were the second lowest when compared to dozens of other communities around the state.”

It was the same kind of ridiculous rationale the City Administrator gave when “revisiting” the parking fines charged to residents. It had been a long five years since the schedule has been examined and Ann Arbor folks were paying lower fines than, say, residents of Portland and Seattle. We darn well should be paying fines lower than those paid by those residents, and it’s about time that we adopted the governmental mantra that if ain’t broke, don’t fix it, and if it is broke, spend the money and fix it as quickly as possible.

Unfortunately, the surplus in the Utility Fund is just the beginning of a long-time unchecked scheme to create phantom deficits, over-charge residents for services, build up surpluses, then spend the surpluses to feed the bureaucracy—as opposed to supporting and expanding existing services.

Here is a list of the various departmental fund surpluses from the city’s most recent audited financial statement:

Water — $9.3 million

Sewer — $44.7 million

Street Repair Millage Fund Balance — $19.4 million

Stormsewer — $5.2 million

Solid Waste — $8.9 million

Fleet Surplus — $7.5 million

IT — $4 million

Project Management — $1.5 million

Central Stores — $1.6 million

Total unrestricted fund surpluses: $102,100,000

That surplus $102,000,000 belongs to the taxpayers. So what can be done?

Our city’s budget needs to be examined closely, and Council must implement policies that keep departments from building up surpluses greater than, say, 10 percent of the department’s annual allocation. The surpluses above are the result of inflated charges the city levies on residents, as well as on its own units. The fleet department charges other departments $160 per hour for labor, and $300 per day to use a city-owned sedan. As a result, the fleet fund has a $7.5 million dollar surplus. Meanwhile, the Fire Department is sitting on fire fighting equipment and trucks that are outdated and need to be replaced now. The Street Repair Millage Fund balance is $19.4 million dollars, and the millage raises almost $9 million additional dollars each year. Meanwhile, Ann Arbor has the third worst roads in all of Michigan, and thanks to delays in repairing our roads will have to pay seven times more money to fix them than if the repairs had been made in a timely manner.

Here’s a news flash that shouldn’t come as a surpise: No city with $102,000,000 million in fund surpluses needs to cut police, fire, privatize its golf courses, stop tending its parks, or start charging residents $3 to drop off recycling. Between 2006-2009, Ann Arbor taxpayers paid $1 billion dollars in taxes, fees and debt to our government. Since 2000, Ann Arbor taxpayers have, collectively, funded our city government to the tune of $2.5 billion dollars in taxes, fees and debt.

The current administration has collaborated with city staff to spend every single dime of that $2.5 billion dollars—and then some. The current proposed budget is a sham and a shame. It represents neither the priorities of the taxpayers, nor an honest representation of our city’s true financial position. Council should direct the City Administrator to return to the General Fund all of the money from the total $102,000,000 million in fund surpluses, where such charge-backs are permissible under the auspices of the Charter, then re-fashion a budget that not only funds existing core services, but deflates the municipal service charge on which the budget is based by at least 20 percent in every department that currently has an accumulated fund surplus.

Popularity: 47% [?]

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April 14, 2010

The Politics of Parking: Revenue Enhancement Versus Turnover, the Cage Match

Filed under: Mayor Hieftje, city council, city services, money, taxes — Tags: A2Politico, AnnArbor.com, AnnArborChronicle.com, Bureau of Labor Statistics, David Jesse, Downtown Development Authority, John Mouat, John Splitt, Main Street Area Association, Matt Horning, Newcombe Clark, Northside Community Center, parking, parking enforcement, parking fines, Rich Rodriguez, Roger Fraser, Sandi Smith, Tina Reed, Tony Lupo, Wines School — A2 Politico @ 5:56 am

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At the Ward 1 meeting, the room at the Northside Community Center was bright, cheery and not nearly filled to the capacity it is when needly neighborhood residents come out twice weekly to pick up food from the pantry located there. On AnnArbor.com, reporters David Jesse and Tina Reed continued on with what I consider some of the most important reporting being done locally. It’s a series titled: “Ann Arbor’s Hidden Poor.” Jesse and Reed have been reporting on the “hidden poor” in Ann Arbor intermittently for several months now. As a rule, their pieces don’t attract the number of comments say, a piece about the real estate woes of U of M coach Rich Rodriguez would, but that could be because people are simply at a loss for words when it comes to realizing that there are, yes, poor people struggling to feed their children, keep their homes, jobs and dignity in one of the most prosperous cities in Michigan.

In the course of walking door-to-door over the past few days in the modest neighborhoods around Wines School, I saw empty houses and talked with residents who were struggling to pay their property taxes thanks to lost jobs. There was an AAPS teacher unsure whether she and her son would be in Ann Arbor next year thanks to cuts proposed in the upcoming AAPS budget. She pieces together a full-time salary from several part-time jobs. The modest neighborhood through which I walked is beloved by its residents, but the edges of the cohesion are beginning to fray.

According to Money Magazine, between 2000-2008, our city lost almost 9.25 percent of its total jobs. Unemployment rose from 7.4 percent in February of 2009, to 8.9 percent in February of 2010, according to labor force data from the Bureau of Labor Statistics. In February of 2007, there were 8,847 people unemployed in Ann Arbor. By February of 2010, that number rose to 16,202 individuals, again according to data from the Bureau of Labor Statistics. There are thousands and thousands of Ann Arbor residents struggling with job loss, job retraining, family income declines, and holding on to their dignity by a thread.

In the 2009 Money Magazine list of the top 100 places to live in the United States, Ann Arbor didn’t crack the top 100. Interestingly, Saline (68), Tecumseh (93) and Plymouth Township (28) did. Compared to the top 10 cities that Money Magazine selected as the best places to live, Ann Arbor fell short in several categories. The median price of a house in Ann Arbor was pegged at $206,707 and the average property tax bill totaled $4,641, a full $1,000 per year higher than in number 1, 2 & 3 cities on the list. Both property crime and personal crime rates were well above those reported, on average, in the top 100 cities that made the list. Ann Arbor has significantly fewer restaurants, bars, movie theaters, libraries than the average reported by the top 100 cities. This last statistic was the most interesting. The median age of a resident in Ann Arbor was listed as 29.2 years old. Within the top 10 towns singled out by the magazine as the best places to live, the media age of residents was between 34.9 years old and 40.9 years old.

All this being said, and with the caveat that I am a data junkie in my day job (higher education policy and publishing), it’s good to remember that magazines publish features such as these to sell advertising, single copies and subscriptions. Issues such as this 2009 list of the top 100 best places to live is meant to appeal to those looking to relocate obviously (in truth, a smaller and smaller percentage of Americans than ever before, according to data from the U.S. Census Bureau).

At an early-April meeting of the First Ward Democrats, I listened as First Ward Council member and Downtown Development Authority Board member Sandi Smith told neighbors in attendance that the proposed extension of downtown parking meter enforcement until 9 p.m. had nothing to do with revenue enhancement; it was all about increasing “turnover” at downtown parking meters. The politically damaging discussion initiated in December of 2009 based squarely on the idea that extending meter enforcement hours was necessary to generate more money, has morphed into a parking “plan” that revolves around seven “strategies” not a single one of which, by some miracle, mentions increasing revenues.

The first stated “strategy”: Downtown curbside public parking should be managed to create turnover at the most convenient, commercial locations so these spaces can be more easily used by a large pool of downtown users.

Just in case you temporarily lost your ability to see through a blizzard of a snow job, increased turnover is meant to lead to enhanced revenue generation. Furthermore, City Council foisted off the dirty job of coming up with the brightly packaged gift of increased turnover to benefit Ann Arborites who want to park at a meter, on the Downtown Development Authority, a Board of political appointees, along with Sandi Smith and Mayor Hieftje (elected officials). Keep in mind that those same two elected officials, as members of the DDA, voted to approve the DDA’s new parking plan that calls for extending parking meter enforcement hours until 9 p.m. to increase “turnover.” On April 19th, Smith and Hieftje will walk into City Hall, and on behalf of the citizens who elected them, evaluate the merits of their own plan which they already approved over at the DDA.

Feeling taken for a ride? You should, but for heaven’s sake don’t park in downtown Ann Arbor. Several of the “strategies” put forth in the DDA’s new report focused on “managing parking” revolve around making it ever so much easier to pay the parking tickets you’ll get. How about paying right at any of the snazzy $15,000 solar-powered parking kiosks where you put your money in to park? In 2008, the city of Baltimore bought 280 of the same kiosks, but paid $8,600 per kiosk.

In December of 2009, Smith brought forth a resolution to City Council to keep the City from dealing parking on the DDA’s turf, as it were. City Administrator Roger Fraser had proposed installing meters in city neighborhoods in the First, Fifth and Third Wards to generate revenues. Smith’s resolution proposed extending downtown meter enforcement from 6 p.m. to 10 p.m., and giving the revenues from the old YMCA lot (Fifth and William) to the city. In exchange, the DDA’s monopolistic control over parking would remain intact.

I wrote about the resolution proposed by Smith in December of 2009 here. On December 21, 2009 I wrote:

There are 1,750 curbside meters. Click here to see a map of DDA meter coverage that includes the Council/DDA fantasy projection (in green) of extending parking meters outside of the DDA area into our neighborhoods. In May of 2009, when Council members and Roger Fraser came up with the bright idea to proliferate parking meters, the Ann Arbor News editorialized that the move “smacked of desperation and poor public policy.” On January 3, 2010, AnnArbor.com editorialized that, “…expanding metered parking hours into the evening to bring in $380,000 a year (and even the DDA is skeptical that much money would be generated) is a risky proposition that could backfire. It could ultimately cost the city more in lost tax revenue if it pushes even just a few more merchants to shut down because of lost business.”

On April 19th, the DDA’s parking report (parking hikes dressed up as a favor to Ann Arbor residents tired of having low-paid restaurant workers, bartenders and diswashers take up the city’s 1,700 parking meters) will be presented to Council for its approval. The AnnArborChronicle.com reports that,

“At the DDA board’s joint transportation and operations committee meeting the previous Wednesday, March 31, 2010, committee members hashed through a number of issues related to the parking report. Those ranged from presentational issues to more substantive questions. Among the presentational issues was the question of whether to include parking rates in the body of the report or put them in an appendix. Putting actual numbers in the body of the report, suggested Newcombe Clark, would make the report immediately dated. Transportation committee chair John Mouat suggested putting the numbers in an appendix. Board chair John Splitt feared that if they did not include the numbers for rates, they would lose control of the discussion: ‘They’re real numbers, why not put them in there?’ The rates will be included in an appendix.”

Is it any wonder the parking rate information is being stashed in the index? Talk of parking rates and money, you see, is so far removed from the DDA’s report on parking so as to make the report appear innocuous, at worst.

In talking with Main Street merchants, it’s pretty clear that they see this proposed meter enforcement extension as an attack on the viability of their businesses. Commenting on behalf of the Main Street Area Association (MSAA) Tony Lupo told the DDA Board that the MSAA had participated in the DDA’s process for soliciting feedback on the parking report. Lupo said that there was overwhelming opposition to extending the meter enforcement hours. However, he allowed that the MSAA understood the context under which extended hours were being considered—the city’s need for revenue.

On April 12th, city staff member Sue McCormick, the city’s public services area administrator, stood before Council and advised them to raise water and sewer rates because Ann Arbor’s $1.40 cost per 1,000 gallons of water and $4.02 cost per 1,000 gallons of wastewater placed the city at second lowest in the state, according to a report McCormick prepared. No matter that Ms. McCormick’s Water and Sewer Fund is already sitting on a multi-million dollar surplus, and that the current budget as proposed has multi-million dollar surpluses built into the allocations proposed for several departments under her direct control:

Stormwater Sewer System — $400,000 budgeted surplus (proposed)
Water Supply System — $2.52 million dollar budgeted surplus (proposed)
Sewage Disposal System — $2.9 million dollar budgeted surplus (proposed)

Our water rates are low, the logic goes among Ann Arbor city staff, so they need to be raised. Our parking fine structure hasn’t been revisited in five years, so went the logic of Roger Fraser and City Treasurer Matt Horning, in November of 2009, so we needed to “revisit” and raise the parking fines (after I questioned in an A2Politico entry the logic behind the need to “revisit” parking fines and the validity of the data in Fraser and Horning’s “study” presented to support their proposal, the idea was dropped). Now, parking “turnover” has suddenly become a problem, so we need to revisit the enforcement hours of metered parking. This kind of logic employed by city staff, and the DDA Board members, unchecked and unquestioned by City Council, simply leads to public policy decisions formulated and based on the supposition that the taxpayers exist to support city government above all else.

Some city has to have low parking fine rates and water charges, right? Evidently, according to our city staff, it sure as heck can’t be Ann Arbor. They need their accumulated and budgeted surpluses and additional revenue from parking.

The DDA’s sham report should be recognized for what it is: a power grab and snow job based on the purely anecdotal stories of DDA Board members like Smith who tell us because the mix of businesses as changed over the past 25 years from retail to restaurant, more blue collar workers are parking at the meters long-term for “free.” Purportedly, the idea behind extended enforcement hours is to move more people who are parking at meters long-term after 6 p.m. into the structures.

It won’t happen. Why?

Since Smith brings up parking meter use from 25 years ago (1984), I thought I might dig up a little data from the era. Data from a 1987 (Ann Arbor had 102,000 residents then) multi-day, observational study done by a University of Michigan researcher found that street occupancy hovered between 95-98 percent day and night. Furthermore, (and interestingly) the study concluded that metered parking was not impacted by the availability of off-street (garage) parking. The average stay was 42 minutes at a 2-hour meter. In 1987, the researcher concludes that:

“One of the major goals of on-street parking meters is to provide short-term parking at a short walking distance close to the final trip destination (i.e., for shopping, personal errand, etc.). As the length of stay becomes shorter, more drivers can utilize this premium limited space, which is so vital to bringing patrons to downtown. Tables 5 and 6 indicate that the average stay was of 41.5 minutes (standard diviation. Also, the median of 40.0 minutes was close in magnitude to the mean. Based on this measure, one has to conclude that the meters seem to do what they were designed for, to provide curb, short-term.”

Translation: People will circle like vultures for on street parking even if there are 5,000,000 open spaces in the parking garages. It’s the animal instinct— flight, flight or circle for parking. Garage parking signifies a long-term commitment, like an engagement ring. People don’t use meters long-term. They park near their destination for short term periods. At least they did in 1987. Have 25 years, a different mix of businesses, and 10,000 more residents completely changed the parking behavior of people in A2?

It’s time to stop treating Ann Arbor residents like their cash cows, and accepting city staff/DDA proposed fee increases on the flawed logic that Ann Arbor simply can’t have lower charges for services, hourly parking, parking fines, and fees for services and facilities than other communities. Why can’t we? Evidently, because the City Administrator believes, and City Council supports the policy that the DDA, Sue McCormick and other city staff need not only money for operating expenses, but mad money budget surpluses—tens of millions of tax dollars stuffed into the mattresses that are the DDA, Fleet, Water & Sewer and Solid Waste Funds.

Oh, and can I please see a show of hands from those who have little trouble finding a place to park downtown at meters after 6 p.m., and who are tired of being treated like golden geese?

Mine’s up.

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April 8, 2010

The Politics of Compulsive Gambling: Shooting Snake Eyes With Public Safety

Filed under: Uncategorized, city services, fire, money, police, taxes, unions — Tags: Ann Arbor Airport, Ann Arbor City Council, Budget Committee, Chief Barnett Jones, FBI Uniform Crime Statistics, Fleet Department, Mayor Hieftje, Officer Sam James, Roger Fraser, Sabra Briere — A2 Politico @ 11:58 pm

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I got up, had breakfast and was at the Police Station on Fifth Avenue by 7 a.m. on the dot on Wednesday April 7th. Officer Sam James arrived from the Wheeler Center by 7:15. He showed me around the Fifth Avenue station, or at least what’s left of it as the construction and reconstruction continue apace. Chief Barnett Jones has moved on up to an office on the 6th floor of the Larcom Building. Equipment is stashed in corners, interrogation rooms are still cramped and shabby, crime scene evidence is scattered in secure rooms in city buildings throughout town. The basement is closed off, and the detectives whose offices were down there have long since vacated the Larcom Building. Patrol staff remain at the Fifth Avenue station, and that is why Officer James and I met there for my morning ride around.

In the main office area, where the front desk reception area is, we stopped in front of a large map of the city divided into four quandrants: A (Adam), B (Baker), C (Charlie), D (David). In each of those areas, Ann Arbor police divide up the work of patrolling the 27.7 miles of our city and protecting the 112,000 people who live here. On the morning shift on April 7, 2010, there were exactly seven sworn police officers patrolling our city: 1 double patrol (2 officers in a patrol unit) in the Adam section, and 5 single cars (1 officer in a patrol unit) divided among the other three sections of town. And me. Seven sworn police officers on patrol to answer calls from dispatch, write traffic citations, parking tickets, sort out domestic disturbances, and keep some 17,700 acres of area policed. Our patrol was quiet. The rain spattered the windshield as Officer James pointed out individual homes that had been broken into, or where he had responded to calls from residents. On one street in the Burns Park student section, Officer James said every single house had been broken into. Pairs of old tennis shoes dangled from the telephone wires overhead as we cruised slowly past houses with open windows and, Officer James assured me, open doors.

There is a computer in each patrol car for which the city’s IT department charges the Police Department almost $5,000 per year (the police officers’ union had a devil of a time getting that information from the city that employs them). Officer James was adept at typing in information, and tapping at the touch screen as calls were relayed from dispatch, and he drove through the Charlie section of Ann Arbor, an area that includes the north side of the city where our family lives, as well as Arborland and everything in between. In a typical shift, Sam James will drive 60-70 miles in what amounts to a large loop. He’ll be dispatched to check out tripped home alarms, and look for speeders by flicking the radar on as cars he thinks are going well over the speed limit approach from the opposite direction.

Had something serious been called in, a situation that demands two officers to respond, and had Officer James responded first, he would have had to wait for one of the other single patrols from across town to arrive on the scene before proceeding. It used to be the norm for every patrol car on the road to have two officers assigned to it. Just a few years ago, there were double the number of patrol cars out on the road each day, as well as staffed police sub-stations around town, before the City Administrator, Mayor and Council launched their grand plan to “streamline” city government by gutting our public safety services.

The Mayor and City Administrator recently had one of their clever semantic moments when John Hieftje turned to Roger Fraser at a City Council meeting and asked whether Ann Arbor had ever lost police officers to layoffs. Fraser, ever the straight man, indicated that Ann Arbor had never lost police officers to layoff.

Evidently, the lost officers had simply evaporated.

Actually, many civilian employees of the Department have been lost through lay-offs. The police officer positions have been eliminated through attrition and, most recently, a $6 million dollar early retirement buy-out the City could ill afford. Ann Arbor taxpayers now pay $80,000-$100,000 per year for sworn police officers to catch dogs and write parking tickets. According to the city’s own audited financial statements, in 2002, Ann Arbor taxpayers paid $37.2 million dollars for public safety. In 2009, the budget called for taxpayers to fork over $56.7 million dollars for public safety services provided by dozens fewer police and firefighters.

The City Administrator explained in an April 8, 2010 post to AnnArbor.com, “As we talked with council about this, it was their belief and it’s my belief that we didn’t want a community that was strictly police and fire — that we cherish our parks and we cherish a lot of things that we do. We need still to do code enforcement, we still need to do good planning — we need to do a lot of those things — and so this is an effort in some ways to catch up, because safety services now represents about 52 percent of our total budget. It used to be closer to 40 percent.”

How can the amount necessary to pay for police and fire have gone from 40 percent of the General Fund to 50 percent of the General Fund. Well, first of all, the General Fund is shrinking. If the exact same amount allocated for police and fire in 2009 were allocated in 2010, it would, of course, be a larger percentage of the smaller General Fund. When Mayor and Roger Fraser simply point to percentages as the reason to target police and fire for cuts they assume City Council members will not recognize the the fallacy being presented to them. However, there is a very different reason that the cost of public safety has increased 47 percent from $37.2 million per year in 2002 to $56.7 million dollars per year in 2009.

Here’s a clue. The $50 dollar windshield wiper.

Officer James told me that the windshield wiper on his car had been broken in the course of responding to a call. The City’s Fleet Department then charged the City’s Police Department $50 to put a single wiper on Officer James’s cruiser. When I accused him of exaggerating, he pulled up the official report (thanks to that handy $5,000 per year city IT Department-provided computer in the front seat) listing the damage to his cruiser, and the name of the Fleet Department Supervisor who’d sent along the notice of the $50 price tag for the repair.

I found wiper blade sets for James’s cruiser priced online from $5.95 on Amazon.com, to $17.95 at the Auto Parts Warehouse.

The City Administrator’s newest budget unveiled calls for the elimination of 20 jobs in the police department, 12 more sworn officers and 8 staff. It also calls for the elimination of 20 jobs in the fire department again, also a combination of firefighters and staff. There’s a budget “deficit.” Again. Why? According to a piece posted to AnnArbor.com, the City Administrator blames the budget woes on anything and everything except bloated overhead, such as the $5,000 per year IT Department provided computers, the $4,000 per acre per year cost to mow our parks, and the $50 wiper blade. Ryan Stanton quotes Roger Fraser as explaining:

The city’s reliance on property taxes continues to increase as other forms of revenue — such as state-shared revenue — decrease or remain flat. At the beginning of this decade, the city received more than $14 million annually from the state. By last year, that had dropped to about $10.7 million, then down to $9.1 million this year. Fraser’s budget has that going down to $8.2 million next year.

Compounding the city’s problem, Fraser said, property tax revenue is on a decline driven by a negative inflation rate, a weak real estate market resulting in lower taxable values, and the removal of the former Pfizer property from the city’s tax rolls due to its acquisition by the University of Michigan.

In addition, the city will see increased costs for retiree pensions and health care next year, Fraser said.

It’s crucial to remember that since 2003, Roger Fraser has miscalculated (inflated) General Fund deficits in every budget cycle and the City Council’s Budget Committee, which has included the Mayor and Margie Teall until just this year, didn’t challenge Fraser to present more accurate data. With the exception of 2009, when the actual numbers have come in, our General Fund has actually finished with modest surpluses. This is a very important fact that would give anyone with experience in budgeting and finance ample reason to question Mr. Fraser very closely when presented with financial data. Yesterday evening Mayor Hieftje and the City Administrator presented the 2010-2011 budget and the fait accompli is that Ann Arbor taxpayers will not be spared from service reductions this time around.

Since when have they spared us from service reductions and fee hikes in other budget cycles?

City Council member Sabra Briere, at the request of a First Ward constituent, forwarded that constituent’s email to Roger Fraser enquiring about the number of police officers on patrol. Here is the constituent’s email that Briere forwarded to Fraser:

Today I ran into an old friend who’s on our police force. We had an in-depth discussion of the current situation. The bottom line is that we’re in danger now.

Yesterday, afternoon shift had only six officers on patrol. That is six to cover the whole city. Afternoon shift (2-10) is the busiest one. All the officers just went from call to call to call, often being told to ignore one call because a more important one had come in. If a major crime happened, such as a bank robbery, all six of them would have gone to that scene and would not have been able to respond to anything else that happened. On the warmer days, there is noticeably more activity for the police. It is expected that there will be a crime wave when the good weather is here to stay.

Here is what Mr. Fraser wrote back to Council member Briere:

Thanks, Sabra, for sharing this. As with so many of these reports, there is a fraction of truth that attempts to justify the suppositions. Today, we have the essentially the same number of people on patrol as we previously had. Even several years ago, our officers have had days when they run from call to call, and yet there are also many shifts in which boredom is possible. That is the very nature of the safety business. The good news is that crime rates in our city continue to drop and public safety has not diminished.

You, personally, know the arguments well. We have very few choices as we work to balance services with declining revenues.

Roger Fraser, of course, never mentions numbers and implies the constituent is making “suppositions” that aren’t accurate. A source within the police department gave me the following information directly from the duty rosters:

On any given morning, there are between 6-10 police officers responding to calls from the people who live in Ann Arbor. On the afternoon shift, there are between 6-10 police officers on patrol. On the midnight shift, when most serious crime happens, in Ann Arbor there are 10-12 police officers on patrol.

The Mayor was quoted in the AnnArbor.com piece as saying since 2003 crime is down 15 percent. According to the FBI Uniform Crime Statistics, crime in other towns the same size as Ann Arbor is down more than it is in our town. On March 5th, I wrote about that fact here with links to the statistics:

While comparing Ann Arbor to itself is a somewhat useful exercise, an even more complete picture emerges when we compare Ann Arbor to other communities. First, when you look at the drop reported in the unofficial crime statistics released by our Police Department as compared to FBI data gathered from towns with similar populations, there’s a different and more complete story that emerges. For example, in cities with populations between 100,000 and 249,999, in 2009 arson was down 10.2 percent, whereas in Ann Arbor arson is up by 7.5 percent. Nationwide, in cities the size of Ann Arbor, robbery was down 9.3 percent, but down by 6.5 percent in our city. Rape was down 3.1 percent nation wide, but in Ann Arbor it’s down 1 percent. On the other hand, assaults and motor vehicle theft in Ann Arbor were down significantly more than in other similarly sized cities around the U.S. Wait before you breathe a sigh of relief. When we look by region, Ann Arbor’s drops in crime play out even less impressively. In the Midwest, rape dropped 7.5 percent and motor vehicle theft dropped 21.4 percent. Had Ann Arbor crime rate decreases kept pace with regional drops, we would have had fewer motor vehicle thefts than reported in 2009, and fewer burglaries.

The University of Michigan has 55 sworn officers to patrol its 3,000 acres and 350 buildings. If Roger Fraser’s budget is approved by our City Council members as is, Ann Arbor will go down from 99 sworn officers to 87 sworn officers to patrol 17,700 acres and respond to calls from the city’s 45,000 residences. On any given day in Ann Arbor, 6-12 sworn officers patrol a city that is 27.7 miles in size, and respond to the emergency calls of some 90,000 adults, including the 29,000 of U of M’s 41,000 students who do not live in campus housing. For Roger Fraser to write to Briere that “Today, we have the essentially the same number of people on patrol as we previously had” hides an ugly reality.

Crime is down by 15 percent says the Mayor. So we can afford to lose 12 more police officers. The Michigan Theatre hasn’t burned to the ground yet, so we can afford to lose more firefighters. Hardly.

Our City Council, City Administrator and the Mayor have decimated the ranks of our police and firefighters, and in doing so put the lives and property of 112,000 city residents on the line every day. I actually believe not a single member of City Council knows that, at times, there are only six police officers patrolling our city. I also believe not a single one of them knows that by cutting safety services, they are going to force every single resident, business owner and home owner in our town to pay higher auto, renter, home and business insurance rates which is what happens when public safety service response times go outside of federally mandated guidelines.

To lead the way out of this year’s alleged budget “deficit” the City Administrator, once again, recommends to City Council that they cut police and fire positions. Roger Fraser wrote to Sabra Briere, “we have very few choices as we work to balance services with declining revenues.”

By feeding such tripe to Council members, and by being allowed to decimate the human capital of our city, Roger Fraser has found millions to feed to his burgeoning bureaucracy and coven of consultants. In exchange, the politicos get bullet points for their résumés and web sites such as this old chestnut you may recognize: “The reorganization of City government increased efficiency and saves more than $10 million per year…With more efficient delivery, city services have been preserved.”

Few choices? Hardly. Council members can choose to direct Roger Fraser to justify why the Fleet Department charges $50 to replace a single wiper blade on one of our police cars. At $50 per wiper blade, that would put a $30 oil change performed by the city’s Fleet Department at $400. A brake job done by the Fleet Department would cost as much as a vacation to Europe. Council could direct the Administrator to justify why it costs $5,000 per year for each police cruiser to have a computer tended to by the city’s IT Department. City Council members can choose to direct the City Administrator to reduce by half the $4,000 per acre per year the city charges itself to mow the grass in our parks. They can direct him to return to the General Fund a portion of the the Solid Waste Fund’s $10 million dollar surplus. They can ask the City Administrator why he loaned the money-losing Ann Arbor Airport over $1,000,000 dollars to build hangers for airplanes that can’t land there unless the runway is lengthened.

There are lots of choices that involve sending the City Administrator and CFO back to the drawing board to trim overhead, track down and account for what must surely be $20-$30 million dollars in fund surpluses throughout the various departments of our city, and stop using accounting methods that make it appear as though money-making entities within the city are losing money (such as our golf courses), so as to justify selling off our assets to private companies, and making money-losing entities look as though they are holding their own (such as the Airport) so as to justify additional investments of tax dollars.

That’s just for starters. Odds are there are many more choices than Roger Fraser would like to be directed to make.

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March 29, 2010

The Politics of the Almighty Dollar: Would You Borrow From A2 To Pay For Home Energy Improvements?

Filed under: environment, money, taxes — Tags: AnnArbor.com, Cafe Zola, Dave Phillips, Downtown Development Authority, Earth Island Institute, Liz Brater's, Matt Grocoff, Matt Naud, Pam McCann, Rebekah Warren — A2 Politico @ 2:38 pm

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Matt Grocoff reminds of my friend in Berkeley, Pam McCann. Both are totally committed environmentalists. You may have a few friends like Matt and Pam, as well. Heck, you may even already know Matt and Pam. Both do widely subscribed to web-based media programs aimed at audiences who want to know more about how to live a life with a smaller carbon footprint. Pam’s husband, Dave Phillips, is the Executive Director of the Earth Island Institute. If you’ve ever seen the movie “Free Willy,” you’ve seen the fruits of Dave’s work. He was the guy behind the push to release the killer whale back into the wild. Pam, Dave and Matt are three very interesting and impassioned people who hope to inspire and interest the general public in their own particular flavors of environmentalism. As far as I’m concerned, it’s people like these who help the rest of us along the path toward mindful living.

Matt Grocoff and I bumped into each other on the street outside of Cafe Zola a couple of weeks ago. I’ve been talking to Matt about the PACE program currently under development by Ann Arbor city officials. On February 28, 2010, Representative Rebekah Warren, who’s running for State Senator Liz Brater’s seat, and County Commissioner Jeff Irwin, who’s running for the 53rd House seat vacated by Warren, posted a piece (a guest column) to AnnArbor.com titled, “Michigan must keep PACE on home energy efficiency.” Irwin and Warren write, “Property Assessed Clean Energy (PACE) enabling legislation. Sponsored by Rep. Rebekah Warren, House Bill 5640 will authorize local governments and citizens to engage in a voluntary program to finance energy efficiency improvements through future taxes and the use of special assessments.”

The gist of the program, according to city staff member Matt Naud, who is spearheading the effort, is that Ann Arbor will launch the program with around $4 million dollars and make loans at 5 percent interest to creditworthy homeowners. Sounds pretty straightforward. Here’s how Warren and Irwin explained it in their post:

Here’s how this program would work: (1) a property owner would contact the city or county; (2) an energy audit will identify the highest value energy efficiency improvements; (3) a financing plan will be agreed to between the government and the property owner stipulating the cost of the improvements and the appropriate rate of the special assessment needed to refund the community over time; and (4) the improvements will be made, saving money and reducing pollution immediately.

Matt Grocoff and I had the same reaction to the program as it is currently envisioned by the politicos and by city staff. It’s absolutely vital that as many Ann Arbor residences are included as possible. It’s also highly likely that people who are “creditworthy” enough to qualify for the financing from the City may well not be in need of such a program. Don’t get me wrong: everyone who owns or rents a home should get an energy audit. It’s the best routine examination of your physical surroundings that you’ll ever get. However, it’s the people who can least afford to borrow money against the value of their property who need to be drawn into the circle of environmental mindfulness. Furthermore, according to information from the U.S. Department of Commerce, “The U.S. residential construction market was $363 billion in 2008, down 41% from its high of $620 billion in 2006. The home renovations market was $188 billion in 2008, down 18% percent from 2007. Home energy efficiency renovations market in the U.S. was $21 billion in 2008; down 13% percent from 2007’s $24 billion.”

So, the market is still there for the PACE program, albeit with overall demand that is not as robust as 24 months ago. Should Ann Arbor go ahead with it, provided Representative Warren can get her bill through the Michigan House and then through the Senate?

In talking to Matt Naud, I was impressed by his enthusiasm. However, I was disconcerted that prior to committing staff time, money and resources to the possible implementation of a PACE program, no market research had been conducted to determine if there was actually a need in our community for such a program and, more importantly, if people would be inclined to participate. Not too long ago, the City Administrator was pressuring the City Council’s Budget Committee to agree to fund a market survey to gauge support for a city income tax. It’s clear that Ann Arbor needs to conduct a market survey to gauge whether city staff and city resources should continue to be dedicated to designing and implementing a PACE program. It’s really the only way to know whether the program as it in outlined by Warren in her legislation, and city staff in their planning, would actually be a program residents want, need and would use. Otherwise, it’s nothing but a bullet point on someone’s political résumé, and residents are left (once again) with a useless “environmental program.” We already have solar panels and windmills to nowhere—environmental bullet points—six-figure investments that aren’t connected to the power grid.

Let’s be clear. Residents should make improvements that save energy. We should all brush and floss daily, too. What we should do is sometimes not what we choose to do. That’s where education comes in. Matt Grocoff and I see PACE not just as a loan program, but a program that, if funded, must also have a significant educational component.

In talking to Naud, I asked the obvious questions. I began by asking what would happen if a resident took a loan from the city for the PACE program and then couldn’t repay the money. Naud replied that the city could foreclose on the homeowner’s residence. My heart stopped for a moment. Ann Arbor should never be in the business of foreclosing on residents’ homes simply because they owed $2,500 plus interest for insulating an attic and then, say, fell on hard times. I asked Naud whether Ann Arbor could make grants as opposed to loans, and he suggested I find him $4,000,000.

It would, in fact, be my pleasure to find Mr. Naud $4,000,000 so that grants could be made.

Let’s start with the $10,000,000 surpluses that have been built up in the city’s Fleet Fund and the Solid Waste Fund, respectively. That’s a cool $20,000,000 right there. Let’s take back the millions that have been diverted from the General Fund and poured into the so-called Economic Development Fund. Let’s pull the plug on the Fuller Transportation Station aka the U of M parking garage project and repay to the General Fund whatever is left of the $500,000 in consultants’ fees allocated to that ill-conceived project. How am I doing so far?

Ann Arbor most certainly has $4,000,000 that could be allocated to such an important program in the form of grants. Grants, Grocoff and I both agree, could dramatically increase residential participation across the board demographically. At the moment, the Downtown Development Authority uses our tax dollars to pay for energy audits and improvement made to downtown business owners buildings. Since the program was launched, 90 businesses have participated. Every little bit helps, of course, when we’re talking about energy savings. However, won’t true environmentalism be realized when we do everything possible to encourage residents to participate on a mass scale? When it comes to designing a PACE program for Ann Arbor residents, money should not be a potential road block. What I want to avoid is socio-economic discrimination, and environmental elitism.

So here’s my question to A2 politicos out there. Would you be more willing to participate in the PACE program if it were a loan-based program, or a grant-based program? Conversely, are you disinclined to participate under any circumstances?

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March 26, 2010

The Politics of The Party Line: Out With The Old. In With The True.

Filed under: Mayor Hieftje, city council, city services, money, parks, police, taxes — Tags: Leigh Greden, Plum Market, Roger Fraser, Tom Crawford, Whole Foods — A2 Politico @ 8:12 am

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Be prepared to hear this mantra from certain candidates over the next four months: “We [the city of Ann Arbor] have lost millions of dollars in revenue due to state cuts, the university’s purchase of the Pfizer facility, and massive local property devaluations. As a result, the city must reduce services.”

As I wrote on January 26, 2010, in “The Politics of Cooking the Books: Ann Arbor as a French Restaurant,” Third Ward Council member Leigh Greden ran his unsuccessful re-election campaign based on the premise presented above. Without talking about the actual numbers, though, it’s easy to hear that explanation of why “the city must reduce services,” and simply accept the inevitable: paying more and getting less is just what happens when Pfizer up and closes, and the city loses “millions of dollars in revenue due to state cuts.”

The city’s General Fund is a train wreck.

Property tax revenues are tumbling down like the walls of Jericho.

Housing prices are falling.

Ok. That last one is true. However, overall city revenues are up, up, up. Take a look at the chart below. All the information is from CAFR statements posted to the city’s web site:

Year	Property Tax Revenue	State Shared Revenues	Business-type Activities	Total Revenue	Total Expenses	Total Debt Service
2002	58,095,088	21,877,296	46,978,051	155,479,402	135,016,056	1,029,598
2006	62,017,866	12,604,477	73,539,483	176,649,150	144,522,183	1,539,263
2009	69,994,107	11,102,183	68,882,686	190,244,281	184,811,290	3,229,523

You’ll note that between 2002 and 2009 property tax revenues rose. Now, look right to the “Business-type activites” column. First, you’re thinking, “what are ‘business type activities’ that bring revenue to the city?” Good question, I’m glad you asked. Those activities include: water, sewer, parking, Farmer’s Market, golf courses, airport, stormwater management. and solid waste (i.e. trash and recycling) removal.

As I wrote in the January 26th entry:

Now, those of you who are on a tight budget, perhaps, Krogering more often than you used to, and bypassing Plum Market and Whole Foods, look at the total expenses line. As revenues rose, expenses rose, as well, despite the drop in state revenue sharing. In other words, those in charge of the city’s budget, City Administrator Roger Fraser, City CFO Tom Crawford, not to mention Mayor and City Council who are supposed to oversee the work of city staff, went merrily along and lived large, larger and, by 2009, largest. In other words, the more revenues that could be squeezed out of taxpayers through back-door taxation (raising the rates for those business-type activities), the more Mayor and Council allowed city staff to spend.

It’s really that simple. In business terms, under the current Mayor and City Council’s direction, they allowed the city staff to take the city backwards financially, to raise revenues significantly, and to spend, spend, spend.

Now, let’s throw in the debt service, which has more than tripled, since 2002. It’s clear that by allowing expenses to rise at the same pace as revenues, (referred to as “spending every dime you earn and then some,”) our city had no real money to make debt payments out of revenues.

What would you do at your house? Would you build an underground parking garage and incur more debt? Would you build a new city hall and incur more debt? Would you rein in expenses related to running government, and defer non-essential capital improvements?

Voters have a choice this election season, and it’s a simple one: voters can choose to elect candidates with the education, decades of real-world experience in financial management, and the skills to rein in spending, reduce debt and the back-bone to ask staff to budget so that services are funded first, or accept the political fairytale that the Stadium Bridges were allowed to deteriorate and fall down because Pfizer moved, and the State of Michigan gave Ann Arbor $1.5 million dollars less in revenue sharing between 2006 and 2009.

Our elected leaders are choosing to reduce services at the urging of city staff, as opposed to urging city staff to rein in spending on the cost of operating our city government. In just 4 years, operating expenses in our city rose by $34 million dollars, or 35 percent. At a recent neighborhood gathering, I asked if anyone owned a business, and one woman raised her hand. I asked her what would happen to a business whose overhead rose 5 percent in one year. The woman, a long-time owner of a downtown landmark eatery, replied that such a rise would be cause for immediate action. I then asked what would happen to a business whose overhead rose 35 percent in four years. She answered without hesitation: the business would be at significant risk of going under.

In this election season, we’re going to hear that our city is facing a crisis, that Ann Arbor stands at the edge of a precipice into which many cities in our state have fallen. Our city is facing a crisis, a fiscal and management crisis created over the past decade by elected officials who neglected to apply even the most basic fiscal controls, or adhere to even most basic principals of sound management as they went about shaping policies and spending the billions in tax revenues generated by charging us some of the highest per capita property taxes in our state, then by hiking our fees for services such as solid waste, sewer and water. Ann Arbor isn’t experiencing serial budget “gaps” because we’ve lost less than 1 percent from our annual revenues from reduced state profit sharing, or even because Pfizer left town and took its tax revenues with it.

What’s the real reason our “city must reduce services?” Quite simply, our elected officials have not fulfilled the single most important task charged them by our city’s Charter: they have not held the City Administrator Roger Fraser accountable. Instead, at the urging of a small group consisting of the Mayor and four Council members, year-after-year they voted to reward our City Administrator with generous salary and benefit increases even as he allowed overhead costs to skyrocket out of control. Between 2004 and 2009, Roger Fraser was given a total 35 percent increase in his compensation package. In 2009, the City Administrator was rewarded with the option of cashing out 150 hours of vacation time worth around $7,500. Mayor and Council have rewarded our City Administrator as if the name of our town were AIG instead of Ann Arbor. Now, they are choosing to bridge budget “gaps” by “reducing” city services and rationalizing the cuts as necessity born of a “revenue shortage.”

I’m sure we’ll hear some candidates this election season tell us Ann Arbor is at the edge of a precipice, and that politicos with “experience” can keep Ann Arbor from falling over the edge like Flint, Troy, Kalamazoo and (the perennial scare-fest favorite) Detroit. Audited financial statements linked to above show quite clearly to those with the skill to read and understand them that Ann Arbor is not at the edge of a precipice, but rather that our city has more than enough money to fund services—more than enough money to support our parks, pools, and senior centers, and fill our numerous potholes. Ann Arbor has more than enough money to provide citizens with the services which we should be able to expect in exchange for the taxes we are asked to pay.

Our city is not at the edge of a precipice; we’re at the end of an era. Come August we’ll have a chance to vote to end out-of-control staff spending that has gone virtually unquestioned and unmonitored by Mayor and Council. We’ll have an opportunity to begin a new era in which Mayor and Council perform the single most important and the most basic task the Charter requires them to do: hold the City Administrator accountable for the performance of his job as the chief executive of our town.

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