Do you remember November 10th’s “FYI” email message from Mayor Hieftje to a select group of his “friends?” I posted an entry here about his broadcast email telling folks about the “challenging times” in which we live. Well, someone responded with questions to Mayor Hieftje about the contents of his FYI message. As our Mayor is wont to do, Hizzoner sent back a reply that, quite simply, is choc-a-block full of inaccuracies and, well, information that can be best described as a fairytale. Karen Sidney, a partner in the accounting firm of Conlin & Sidney, used some everyday math and simple principles of accounting to give us the facts, Ma’am. Just the facts. Check out the Mayor’s fabulous Tales of the City and Sidney’s responses (in italics).
From: “Hieftje, John” <JHieftje@a2gov.org
Date: November 12, 2009 9:55:39 AM GMT-05:00
Subject: RE: FYI: Layoffs – deep cuts in Grand Rapids , Troy and Kalamazoo
Hi xxx:
I don’t know what is being built in these cities other than a large new underground parking structure that is under construction in Grand Rapids. It will be paid for from parking revenues that would not be available if the structure were not built so it will not affect their operating budget.
Karen Sidney (KS): Fees from parking structures are rarely enough to pay the cost of building and operating the structure. For example, a projection provided to the Ann Arbor DDA Board shows parking revenues from the Library lot structure are $800,000 less than the annual bond payments. If you add in the cost of operating the structure, the gap is even bigger. [A2P note: taxpayers are on the hook for bond payments for the $50 million dollar underground parking structure. If parking revenues come up short, taxpayers will have to make up the difference.]
Nearly every city government in Michigan is struggling. Like Grand Rapids and Troy , many have deeper fiscal challenges than we do here in A2. If the UM had not taken the Pfizer property off the tax rolls, our budget would be in fairly good shape despite the recession and the cuts the state has made to our budget. Ann Arbor has always struggled with having so much real estate off the tax rolls. Forty percent of the land in Ann Arbor is non-taxable.
KS: The funding crisis is not the result of the loss of Pfizer taxes. It’s caused by continuing to spend on unnecessary projects after we found out we would lose Pfizer tax revenues.
I certainly understand how people might feel it is inappropriate for a new building to be under construction in these times. Please allow me to explain why the Police and Courts building does not affect the city’s operating budget and some other factors related to the project. As you may recall, a few years ago the County Administrator informed the City that the lease for the District Courts would not be renewed and the city courts needed to move out of the County Court House by the end of 2009. The County wanted to move their Juvenile Courts into the County Court House. The city was able to get the time extended to the end of 2010.
KS: Washtenaw County Administrator Robert Guenzel’s April 17, 2008 letter to the city says that the city should submit a written request to the County Board of Commissioners if they want the Board to reconsider its position on leasing court space. Fifth Ward Council member Mike Anglin introduced a resolution asking the County to reconsider, but City Council members refused to pass the resolution.
The city spent a few years exploring other options but as the search went on it became clear the retrofit of an existing building was not feasible because of the strict security requirements for courtrooms. Back in the spring of 2007 I held up the project for several months trying to work something out with the County and/or find a better solution. No one ever came up with a viable solution other than to build a Courts & Police Building.
KS: It’s more accurate to say the city spent a few years shooting down other proposed options so they could move forward with what they had already decided to do—build a huge new building. Cheaper options were available, such as moving city offices to the City Center building, which probably could have been purchased for the $5 million dollars the city has spent on architect fees.
When city hall was built back in the 1960’s they had intended to build a police station to go with it but never completed the project. The police have been working under poor conditions in the basement ever since. It did not make sense to build a new court house without putting the police station on the same foundation to save costs.
KS: If the Larcom building was not built to accommodate the police, I wonder why it includes a shooting range and a jail? The poor working conditions at Larcom are because Council failed to direct the City Administrator, Roger Fraser, to fix the leaking roof and make other necessary repairs. Fraser managed to redecorate his office, and the IT department got $60,000 in new furniture, but somehow there was no money for roof repairs.
The city currently pays $700,000 per year in rent for space in the County Courthouse and in the City Center Building.
- The new building does not affect the City Operating Budget because the bond payments for the new building will be made up by the rent the city will save when the Courts and other operations are moved out of rented space. Other expenses are made up by the DDA.
KS: Hizzoner has some fuzzy math. Annual bond payments of over $1.8 milliion do not equal $700,000 in annual rent savings plus $500,000 from the DDA. If the DDA had not been arm-twisted into helping to pay for an expensive new building, the Authority could have used the $500,000 to pay for the downtown beat cops that were cut. Hizzoner also fails the mention that the $700,000 in current rent includes operating costs, such as utilities and court security. The annual operating costs for the Wheeler Center are over $400,000.
- The city is bound by state law to provide secure space for the District Court.
KS: The court is in secure space at the county building. State law does not require the city to pay for luxury accommodations.
- The decision to go forward with the new Police/Courts building and the sale of bonds to pay for it was made before the stock market crash, before the foreclosure crisis hit and long before the UM takeover of the Pfizer property that took away 4.75% of the City’s property tax revenue. By the time these things happened, there was no way to back out without losing over $10 million with nothing to show for it and no $700,000 in rent savings to make it up.
KS: Where has Hizzoner been? Michigan’s economy has been in the tank for years. Where did Hizzoner get his figure of $10 million to pay off the bonds? Roger Fraser said it was $6 million. The added cost of the building is $1.5 million per year ($1.1 million difference between bond payments and rent plus $400,000 in annual operating costs).
- Construction prices are down during the recession.
KS: That does not justify spending money we don’t have.
- The project is providing needed stimulus to the local economy and good paying jobs for 150 skilled trade workers at exactly the time it is most needed.
KS: Spending $50 million for 150 temporary jobs is not a good return on investment, especially when most of those skilled trades don’t even live in the city. Why is spending money on temporary construction jobs better than other jobs, like social workers to help the homeless or more police officers?
I know what you mean about health care costs. Kathryn and I pay for our own health care insurance and I can attest the rates keep going up.
KS: So what’s Hizzoner doing about out of control retiree healthcare costs? City workers, including non-unionized workers, can retire at age 50 (earlier for police and fire workers) and get lifetime family healthcare coverage. The city pays even if the retiree gets another job. Ann Arbor taxpayers pay for healthcare for ex-city employees Greg O’Dell, who now directs EMU’s safety department, and Ron Olsen, who now works for the state.
John Hieftje
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Perhaps there would be more money for police officers downtown if TIF funds weren’t used for “development” that would have occurred regardless?
Comment by Janelle Baranowski — November 16, 2009 @ 8:31 pm
All,
The following exchange was with Mayor Hieftje in regard to Parking Fine increases:
—–Original Message—–
Sent: Friday, November 13, 2009
To: Hieftje, John; Smith, Sandi; Briere, Sabra; Rapundalo, Stephen;
Derezinski, Tony; Taylor, Christopher (Council); Higgins, Marcia; Teall,
Margie; Hohnke, Carsten; Anglin, Mike
Subject: Parking Fee Increases
Council Members,
This email is in regard to a proposed Parking Fee Increase proposed
by the Ann Arbor City Manager.
First, one of the new fines the city should impose is on City
Managers who choose to not live in the city of Ann Arbor. I would
propose an annual fine of 1% of the city manager’s base salary.
Second, I am aghast that the council continues to abrogate its
obligation to provide policy direction to city government and instead,
chooses to be lead around by the nose by paid bureaucrats who have
figured out how to game the process by manipulating information fed to
council. I do not want to live in a city where the only efficient
service is the collection of fines. Organized crime has survived for
years by operating extortion rackets which operate on the principle of,
“Give us money, or we make your life miserable.” Is this the city’s
plan? When I see the city using fines and fees to raise significant
revenue, this is what we are coming to. And guess what, once the city
is addicted to the revenue from these sources, it is next to impossible
to undue the damage. People and businesses flee, the city is stuck in a hole with no way of digging itself out.
The problem with the information the city manager is providing to
council is that it is like a leech trying to figure out how much blood
it can safely suck out of its victim without the victim dying (good
leeches don’t kill the host). Why are we looking at what other cities
charge? The claim is that fines are needed to ensure efficient
management of a scarce public resource (no problem so far). It is also
alleged that without fines, turnover in parking spaces will be
insufficient to generate adequate commerce during normal business hours
(here is the problem). The problem is, the city does not measure the
turnover rate. The city demonstrates bad faith by not measuring the
very thing that is claimed to be the justification for having the fines
in the first place. If it is true that things that get measured get
managed and the only thing the city is measuring is the revenue squeezed
out of the population; then we must conclude it is the revenue that is
being managed and not the parking space turnover. What if it turns out
that a small fine is enough to deter parking space cheating or other,
non-money penalties are better? The city has no way of knowing this
since it is not even asking the question. It is the job of council to
ask these questions and from my vantage point, the council has failed in this regard.
Sincerely,
ChuckL
———————————————————————–
From the Mayor:
I appreciate your writing on this issue. I have several concerns about
the proposal myself and like others on council have asked some
questions.
As to your first concern; unfortunately it is against state law to force
employees to live in the city.
In regard to the second: Council does not try to deter staff from
presenting all ideas and this was one of them. Considering options that
are presented to us is a long way from being led by the nose.
There is a solid bank of knowledge regarding the parking system and
turnover is included in that although precise data on meter turnover
rates is not easy to come by. So far as I know, it can only be gauged
through direct observation. As I recall it was about six or seven years
ago when DDA interns were on the street observing meter usage over a
period of many weeks. It was discovered that people working downtown
were using many of the metered spaces and reasoning that it was
easier/cheaper to get a ticket and pay it immediately at the discount
rate than it was to feed the meter. This research led to the last
increase in expired meter tickets and it made a difference.
The goal of the DDA in regard to parking has been clear for many years.
Get people downtown without their cars. Just look at the funding and
effort that goes into the Get Downtown Program. The pedestrian and
cycling improvements that are underway on Fifth and Division are another
good example. If people do drive then try to get them to park in
structures so the metered spaces are left for folks coming down to make
a relatively quick purchase or have a quick lunch.
Several people I have heard from on this issue make the point that it is
easy to avoid a parking ticket. People can take the bus, ride a bike,
walk, pay the meter or park in a structure. The parking structures are
well kept, safe and require only a couple of minutes more walking VS
searching for a space in front of one’s destination.
Having said all that, no one on council would disagree if I said the
promise of increased revenue is a major driver for the City
Administrator. Cities across our state are looking for dollars under
every fallen leaf to avoid laying off more staff. Given that in many
cities the budget shortfalls are much greater I imagine the search is
frantic. Most of us here in A2 just do not understand how bad it is out
there.
I still have concerns about raising the rate for an expired meter but
also about putting a real burden on people who do not pay on time. It
does not seem fair to burden those who miss paying within 30 days with
exorbitant fines.
Thank you for writing and if you would ever like to discuss this or any
other issue please take advantage of my weekly open office hours by
calling my office for an appointment. 794 6161.
John Hieftje
———————————————————————————————————–
Final Response from ChuckL
Dear Mayor Hieftje,
Fining the city manager for not living in the city is not prohibiting
him from living outside the city. The city could argue it is merely
attempting to recover the lost tax revenue the city manager’s salary
could reasonably be expected to generate for the city.
It is laudable that you are concerned with upholding state law when itcomes to not interfering with the city manager’s right to live where he chooses. However, the city’s record of respecting state law in regard to traffic enforcement is less stellar. Ann Arbor’s own James Walker was an expert witness who testified in favor of a late 2006 change in
state law that has the effect of invalidating most speed limit signs in
the city of Ann Arbor. Mr. Walker was stopped and ticketed on Nixon
Road in Ann Arbor and successfully challenged and won his ticket in
court before Judge Judy Creal. However, rather than bringing Ann
Arbor’s enforcement pattern in line with State Law, the city has chosen
to engage in a complex legal battle while it continues to collect costly
fines from motorists who remain in the dark about their rights under
state law. The city’s invocation of Home Rule is a bogus attempt to
circumvent State Law since when there is a conflict between the local
and State, the State prevails. I know all of the above due to the fact
I successfully challenged a speeding ticket using State Law as a
defense; I certainly got no help from the city on this and was
obstructed at every opportunity by city employees in my attempt to have
the city respect State Law.
I would also point out that a study done more than seven years ago in
regard to traffic turnover is not much of an effort; but does raise a
question in my mind. Why does the city not require employers to provide
parking for their employee’s at downtown locations rather than raising
fees on everyone? Using fine and fee revenue to fund city services is a
very slippery slope that will be hard to back out of. My main concern
is that the city is currently realizing about $2.4 million per year from
parking fines and is proposing to raise about $0.9 million more or
roughly a 36% increase in revenue. The ticket fine revenue peeked in
2006 at $3 million and has been declining. Also, this is being proposed
at a time when voters recently rejected a 2 mill increase in property
taxes for the WISD. The increased reliance on fines and fees is moving
the city away from funding its operations based on one’s means or
ability to pay. The temptation to jimmy the rules so as to increase
fines will be an ongoing problem and places city employees who are
involved with enforcement in an ever increasingly no-win situation. The
public perception of its local government will increasingly change from
positive to negative as people will increasingly feel the city is using
any excuse to gouge.
The city’s recent construction splurge and failure to fund this
construction through voter approved millage increases has reduced the
operating monies available for city services that benefit residents.
The residents of Ann Arbor will increasingly see the mean side of their
local government as the government attempts to compensate for lost
operating revenue by increasing fines and fees. This is not the city I
prefer to have. The council’s failure to ask voters for the monies to
pay for the recent construction through a millage increase has short
circuited the democratic process. If voters had approved a millage
increase in order to pay for construction, the projects would have had
public support and local government would have funds for operations that
benefit residents. Citizen support/respect for local government would
remain high. The council has not chosen this route and will now pay the
price in terms of citizen loss of respect for local government.
Sincerely,
ChuckL
Comment by ChuckL — November 18, 2009 @ 9:00 am