Ann Arbor SPARK « 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 16, 2010

A2Politico Grillin’ The Media: AA.com Gets the Dunce Cap

Filed under: education, journalism — Tags: A2Politico, Ann Arbor Public School District, Ann Arbor School Board, Ann Arbor SPARK, David Brooks, David Jesse, Iris Salters, Laurel Champion, LDFA, Michael Finney, Michigan Education Association, Pam Byrnes, Rebekah Warren, Roger Fraser, Stephen Postema, Teach for America, WISD — A2 Politico @ 8:00 am

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David Jesse is a solid writer. His recent coverage of the Ann Arbor Public School pay frenzy has all of the facts, including a link to to the biggest problem with his piece. There is a link to a spreadsheet that shows quite clearly that there are teachers in the Ann Arbor Public School District who reeled in more than $100K in salary. Before you wring your hands, think about this: the spreadsheet Jesse links to doesn’t have a single name on it. Teachers were identified as “Teacher.” So some “Teacher” in the Ann Arbor Public School District is living large on the public dime. Heck, too many of them are living large, right? Right. This is wrong, right? Before answering, break out your mixology book, whip up a Teacher’s Pet, and let’s have a little chat about your salary envy issues. Here’s another news flash: What the smart kids are talking about when they pass notes about teacher pay is quite different from the focus of David Jesse’s recent piece.

First off, let’s put Jesse’s latest teacher pay frenzy piece into some perspective.

The public school district takes in almost exactly the same amount from each tax dollar that the city takes in from each tax dollar (28 cents). So where is the news headline that exposes that City Attorney Stephen Postema was given a contract by City Council that allows him to moonlight, and earn well over that horrifying $100K threshold? Where are the headlines from the AA.com news hounds that City Administrator Roger Fraser is sitting on a contract that gives him a golden parachute worth $100K? Should he be dismissed from his job? Where’s the spreadsheet that shows how much is being paid to each and every city employee?

Headline: Ann Arbor teachers pulling down $100K. Sigh. Where’s the journalistic beef?

You know what? There are plenty of people living large in Ann Arbor on the public dime. Out of the 700 or so city employees, you can bet your school marm costume that more of them them are living large on the public dime than people employed by the AAPS. Michael Finney’s $250K CEO’s salary over at Ann Arbor SPARK has never been splashed across the headlines at AA.com. Neither has the fact that the LDFA that funds Ann Arbor SPARK has been skimming millions from our public schools. How is funding the LDFA and giving away school dollars for corporate welfare impacting education in Ann Arbor? Of course, nosing into the pay of Michael Finney, and asking pointed questions about the LDFA would make life tough for AnnArbor.com VP Laurel Champion, who sits on the Board at Ann Arbor SPARK.

Next, let’s ask the obvious question: Might there be people teaching in the public schools worth their salt, as it were? How do we know? I’m going to use the M-word: merit. Merit is what the brainy kids are talking about, not teacher pay. In the July/August 2010 issue of The Atlantic, David Brooks writes in a piece titled “Teachers are Fair Game,”

Today, aided by the realization that teacher quality is what matters most, a new cadre of reformers have come on the scene, many of them bred within the ranks of Teach for America. These are stubborn, data-driven types with a low tolerance for bullshit. The reform environment they find themselves in is both softhearted and hardheaded. They put big emphasis on the teaching relationship, but are absolutely Patton-esque when it comes to dismantling anything that interferes with that relationship. This includes union rules that protect bad and mediocre teachers, teacher contracts that prevent us from determining which educators are good and which need help, and state and federal laws that either impede reform or dump money into the ancien régime.

That’s really why David Jesse’s whole over-blown and over-commented on exposé about teacher pay in Ann Arbor is deeply flawed. Here’s what we really need to know: who are the teachers earning over $100K, and why aren’t there mechanisms in place to accurately evaluate whether all teachers in the AAPS deserve to teach our children. Writing about the fact that teachers earn over $100K is bullshit, as Brooks writes, above. Worse still, like a remake of an already bad film, the Ann Arbor News ran a similar teacher pay piece (David Jesse, in fact, is regurgitating his own reporting from 2007), and that story linked to a similar salary spreadsheet. However, that 2007 spreadsheet was worth its weight in gold stars, because it named names. If you have kids in the public schools, go through the list and you’ll see the results of ancien régime union contracts that reward longevity. One of the worst teachers one of my tots ever had is being paid over $70K per year.

I wrote this in a December 2009 post, when the WISD was trawling for a millage “enhancement” — a gravy train that voters refused to approve.

Washtenaw County school districts alone get half a billion dollars from the state and taxpayers each year to educate 47,000 students. Watkins’s nod to TQM buzzwords such as efficiency and effectiveness are the last thing that we need to focus on. Trying to making a bureaucracy efficient and effective is like herding cats. Equity? How can we address issues of equity without a way to measure whether we’re spending our money wisely?

What needs to be overhauled in Michigan (nationally, actually) are the K-12 teacher compensation, retention and evaluation systems. Overhauling how education is funded, and how the money is handed out is an exercise in futility until there are systems in place to make sure that what taxpayers are spending billions of dollars on yearly is well worth the investment. Does an above average paycheck and better benefits automatically mean we get the “best” teachers in the classroom? Does tenure just guarantee that those one-third of teachers who should really have other jobs, according to the U.S. Secretary of Education Duncan, simply stay put and work their way up the “step” scale toward the top? In Ann Arbor, the top of the step pay scale is currently $87,000 per year. I would advocate for a pay scale for K-12 teachers that topped out at $150,000 per year if there were efficient and effective ways to gauge teacher competency and merit. I agree with Duncan that there are, at any given time, one-third of teachers who just should not be in the classroom, but they are, and in Ann Arbor it’s costing us $43,000,000 every year, because each teacher costs about $120,000 in salary and benefits.

Frankly, if you’re hyperventilating about teacher pay, have another Teacher’s Pet and think for a moment about this: newly elected 18th District State Senator Rebekah Warren was supported by the Michigan Education Association. Warren voted against the state’s Race to the Top (RTTT) legislation she explains on her campaign web site because, “They allow state takeovers of struggling school districts; they also decreased the negotiating room for local school districts with their employees by unilaterally instituting cost increases for teacher retirement programs, which puts pressure on salaries at the local level.”

Representative Pam Byrnes, who received $14,890 in contributions from the MEA between 2004-2009, voted in favor of the RTTT legislation, incurring the wrath of the MEA. During that same period, Rebekah Warren received $2,200 from the MEA, but after Warren’s refusal to support the RTTT legislation, she and not Byrnes, earned the MEA’s 2010 endorsement. On July 26, 2010, the MEA gave Warren a helping hand by posting on the MEA Votes section of their web site about the GLEP postcard (I wrote about the GLEP postcard here.)

From the MEA Votes web site:

A couple particularly sickening highlights [from the GLEP postcard]:

- The latest attack piece on Warren takes her to task for missing 54 out of the thousands of votes held during her term in office. The reason for her missing most of those votes — her honeymoon. That’s pretty low.

- Her opponent, Pam Byrnes, has actually missed more votes in this most recent term than Warren! Warren has only missed three votes out of 1,209, while Byrnes has missed 20!

MEA president Iris Salters sent out a January 2010 memo to MEA affiliate presidents (and one presumes legislators, including Byrnes and Warren whom the MEA had given support) that, “MEA’s final decision is that we cannot recommend to our local association presidents that they sign memorandums of understanding that commit their members to implementing the state’s incomplete and flawed Race to the Top plan.”

The ancien régime had spoken. Any politico who ignored the MEA did so, obviously, at their own peril. However, as David Brooks argues, we need to put emphasis on the teaching relationship, and dismantle anything that interferes with that relationship. “This includes union rules that protect bad and mediocre teachers, teacher contracts that prevent us from determining which educators are good and which need help.”

AA.com’s simple-minded piece was meant to whip up those who visit the AnnArbor.com site into an ignorant frenzy about teacher pay (there is lots of revenue from page views when the folks from Chelsea, Brighton, Howell, and Dexter get whipped up into a frenzy about the AAPS pay policies). The RTTT legislation, the MEA’s efforts to torpedo the RTTT legislation, and Obama’s desire to introduce education reforms that, as David Brooks writes, make teachers fair game, make Jesse’s recent regurgitated reporting little more the same rubbernecking at the same teacher pile-up the Ann Arbor News ”exposed” in 2007.

Instead of education reporting that encourages rubbernecking, I want to read about whether the people currently running for the Ann Arbor School Board favor reforms that will help all of us rest easy so that when teachers employed by the AAPS earn $100K, we’ll know that they richly deserve that pay.

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May 28, 2010

The Politics of Economic Development: Let’s End Taxpayer Support of Crony Capitalism & Chart A Better Course

Filed under: economic development, taxes — Tags: 21st Century Jobs Fund, Ann Arbor SPARK, Carsten Hohnke, Downtown Development Authority, Labor & Economic Growth, LDFA, Main Street Area Association, Michigan Department of Energy, Michigan Economic Development Corporation, Ned Staebler, Richard King, Samuel L. Goldwyn — A2 Politico @ 11:51 pm

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The Michigan Economic Development Corporation is taking a beating in the Press. In case you don’t know, the MEDC is a state-funded entity that gives tax credits and tax dollars to venture capital firms, individuals and businesses through a variety of programs aimed at job creation. The results, alas, have been uneven. The MEDC did create in-house jobs for two local politicos — 53rd District House Wanna-be Ned Staebler, and Fifth Ward City Council member Carsten Hohnke.

As if my natural proclivities toward the sensible use of tax money weren’t sufficient, it was revealed in March 2009 that the MEDC had approved giving $9.1 million in tax credits to the business of a convicted embezzler. Mistakes happen, and less than a week after the national media got hold of that bit of news and used it to make MEDC look as though it were run by the Three Stooges, the Michigan Legislature rushed through a bill that called for background checks of applicants who want to live large off of MEDC largesse. Now no crooks needs apply. At least crooks with criminal records. Crooks who haven’t yet been caught, and crooks-in-training are still welcome to fill out the application, go through the process, and take their chances in the MEDC multi-million dollar giveaway sweepstakes.

In November of 2009, I blogged about the tendency of the people at the MEDC and it’s creation, Ann Arbor SPARK, to focus on “promised jobs” when putting out press releases and glossy annual reports. Since the whole point of the billion dollar job creation machine is to create jobs, the jobs damn well better be created, right? Why is focusing on “promised jobs” a problem? Because to quote (with a slight variation) Samuel L. Goldwyn, promised jobs are as good as the paper they’re written on. The latest newspaper piece about Michigan’s billion dollar corporate welfare industry was published on May 23, 2010 in the Detroit Free Press. Titled “Bold experiment produces few jobs,” reporter Katherine Yung writes:

Four years after Michigan launched the 21st Century Jobs Fund to diversify its economy and create jobs, the first of 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.

According to research published in the Free Press, only 1,147 direct jobs had been created, about 33 percent of the jobs promised, according to a report from the MEDC. Free Press reporter Yung writes, “Excluding jobs created by the research projects, most of which are temporary, only 935 direct jobs have been added.”

In 2006, Ann Arbor SPARK received $8 million dollars from the MEDC under the auspices of the $134 million dollar 21st Century Jobs Fund. Between 2006 and 2009, according to a March 2009 presentation to City Council by then LDFA Chair Richard King (the LDFA contracts with SPARK and sends tax dollars to SPARK through a tax increment financing scheme), about 600 direct jobs had been created in Ann Arbor, all of which would have otherwise been created without giving a dime to the LDFA and SPARK. According to information from the Michigan Department of Energy, Labor & Economic Growth, since 2008 Ann Arbor has experienced a net loss of 5 percent of our city’s jobs. Since 2006, the year Ann Arbor SPARK received its $8 million dollar grant from the MEDC, Ann Arbor has lost 9.5 percent of its jobs.

In this election season, local politicos will tout the fact that Ann Arbor’s economy isn’t as bad off as it could be thanks to their valiant efforts. The Detroit Free Press and reporter Yung offer an alternative plot-line. Since 2006, the MEDC has funneled two-thirds of the $137 million dollars spent in 21st Century Fund business loans, and millions in grants to one city in the state of Michigan: Ann Arbor. Since 2006, Ann Arbor’s economy has, in part, been propped up by state tax dollars in the form of loans and grants to local start-up businesses, only handful of which, according to the piece published in the Detroit Free Press, are doing well. State revenue sharing might have fallen by $350,000 per year between 2006 and 2009, but over the same period the MEDC poured millions in tax dollars per year into Ann Arbor via the 21st Century Jobs Creation loan/grant programs.

These are tax dollars that could have gone instead to education, infrastructure (think Stadium Bridges and the state’s crumbling roads) or been spread among the state’s established small and medium-sized businesses to foster expansion. Instead, millions were given in corporate welfare to start-ups in just four industries: advanced manufacturing, alternative energy, life sciences, homeland security and defense. The result was that Ann Arbor came away with a net 9.5 percent loss of jobs in our city, while ex-Pfizer employees and University of Michigan faculty members who launched businesses that were funded through the MEDC “jobs creation” program promised to create new jobs, until their start-ups crashed and burned. Since 2006, local politicos have dined out and run on the successes and expansion of Ann Arbor’s labor market—including those promised jobs. The thousands that have been promised, but have not yet materialized.

On June 3rd, I’ll be speaking to the members of the Main Street Area Association. In preparation for the meeting, I’ve been talking to the Main Street business owners. I wanted to know whether the merchants who own small and medium-sized local businesses think our city is a place that works to foster the expansion and growth of established businesses. The word from Main Street? A resounding “No!” Ann Arbor’s city government, according to many of the Main Street merchants, works against local business. All whom I spoke with pointed to most recent obvious bungle: the extension of enforcement of metered parking. Many also believe the Downtown Development Authority is failing in its mission to support the downtown business district.

So what can be done to make Ann Arbor a more attractive home to existing local small and medium-sized businesses, and a magnet community where existing small and medium-sized businesses would choose to relocate and bring with them actual new jobs?

First, we can reverse the wrong-headed extension of parking meter enforcement before it damages the bottom lines of businesses in Ann Arbor. In Oakland, California, the City Council there extended parking meter enforcement until 8 p.m. in July of 2009. The move was reversed in October of 2009 after a recall effort to oust the entire city council was launched, and 5,000 signatures quickly collected. According to a piece published in the San Francisco Chronicle on October 7, 2009, an Oakland, California council member was quoted as saying, “Clearly, the parking regimen has been very unwelcome. As bad as our budget problems have been, it’s clear this is unacceptable. People don’t like feeling we’re balancing the budget on their backs.”

According to research on local economic development from the World Bank, most local economic growth is generated by small- and medium-sized businesses that are already established in the community, not from throwing money at start-ups, regardless of the industry. What our city government can do in Ann Arbor is to provide a helping hand to these existing local small and medium-sized businesses in the form of advice, support and resources. Ann Arbor doesn’t need to offer tax breaks, or subsidies through the Downtown Development Authority, the city shouldn’t be in the business of floating loans or handing out grants. Rather, local government should focus on making sure that merchants needs are clearly understood, and that our local government works with established small and medium-sized businesses and not against them:

1. For starters, the city needs to survey existing firms to figure out exactly what the challenges are that these local companies face doing business in our city. I got an earful going shop-to-shop, and that’s cathartic for the merchants, but an actual needs-based survey would give us a solid beginning toward a more synergistic relationship between local government and local business.

2. Next, Ann Arbor should implement a program to streamline local bureaucracy. We should begin by reviewing existing regulations and laws, consult with stakeholders and develop necessary remedial plans. A program to minimize the complexity, costs and bureaucracy associated with permit approval processes, for example, will improve the chances for our local small and medium-sized businesses to thrive and grow.

3. Another opportunity to help existing local businesses thrive is to offer technical advice and assistance. This can include broad-based management and marketing programs, to more specialized support. The focus here should be on providing accredited, demand-led, technical assistance that can be paid for on a fee-for-service basis.

4. As opposed to skimming tax dollars from education, and spending the bulk of our economic development money on launching start-ups, almost half of which fail after 5 years, money that has been allocated from the General Fund to SPARK and the LDFA should be spent on recruiting established small and medium-sized businesses to Ann Arbor.

The MEDC isn’t taking the criticism of its lack of results, and failure to create large numbers of actual jobs, quietly. On May 26, 2010, the entity’s 17-member executive committee issued a statement which read, in part:

“We are deeply concerned that the recent surge of unwarranted criticism leveled against the MEDC will undermine Michigan’s efforts and ability to attract business investment,” MEDC’s executive committee said in a statement issued to the Michigan Legislature and the media. “All states are in fierce competition for stable, well-paying jobs – across all sectors and industries. Political in-fighting is a clear warning to business that a state lacks a cohesive climate for economic development and a clear signal to invest elsewhere.”

The state-wide media have finally clued into the fact that the Emperors at the MEDC have no clothes, and are beginning to question whether these tax dollars could be better spent. I’m still waiting for the local media to notice the naked truth about Ann Arbor SPARK, but I have my doubts this will happen any time soon. On May 20, 2010, it was announced that AnnArbor.com Executive VP Laurel Champion was named the Treasurer of the Ann Arbor SPARK Board. On May 23rd, the MLive.com site picked up Yung’s May 23rd Free Press piece and reprinted parts of it on the MLive.com Michigan Job Search page. Interestingly, all mention of the MEDC’s funneling of two-thirds of the 21st Century Jobs Fund money to Ann Arbor start-ups/companies was edited out of the MLive.com piece.

On May 25, 2010, AnnArbor.com’s business reporter Nathan Bomey posted a piece titled, “MEDC says ‘unwarranted criticism’ threatens economic development efforts.” Bomey’s post made no mention of the May 23, 2010 Free Press piece, nor did it link to the May 23rd MLive post.

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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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February 21, 2010

The Politics of Money: Capriccio Economico

Filed under: economic development, money, taxes — Tags: A2Politico, Ann Arbor News, Ann Arbor Public Schools' Orchestra Night, Ann Arbor SPARK, AnnArbor.com, Carsten Hohnke, LDFA SmartZone, Michael Finney’s, Michigan Economic Development Corporation, Ned Staebler, Pioneer High School, Rick Snyder, Skip Simms, Stefanie Murray, Stephen Rapundalo — A2 Politico @ 1:36 pm

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*Capriccio

February 18th was Ann Arbor Public Schools’ Orchestra Night. All of the middle and high school orchestras came together for a music student-a-palooza that began at 7 p.m. and finished with the last note from the Pioneer High School orchestra at 9:30. My middle schooler’s orchestra played the first notes of the evening. The entire week before, he’d been coming home with tales from the practice room that the orchestra teacher was driving the kids like musical mules in a field of flats and sharps. Evidently, she was making them rehearse and practice—making them play the first measures of their opening piece, Capriccio Espagnol, something like 5,000,000 times. Pre-teens somehow suddenly lose the ability to count: they start at 1 and jump from there to 5,000,000.

However, my bassist had not exaggerated a bit. He and his orchestra mates nailed the opening of the piece. In fact, they played the entire piece with a level of technical precision I never expected—there was no fuzzy fingering from the violinists, and nary a missed beat from the basses and cellos. Their orchestra teacher is a young woman who, in my opinion, is one of those teachers. You know the ones. They inspire, push and take a genuine interest in their students. Every school district needs more teachers like her, and to compensate them generously for their devotion to their students, teaching, and the results they get.

Unless you just got back to Ann Arbor from your isolated private island in the Pacific, you know that the AAPS is facing a multi-million dollar deficit. There is a passionate and wide-ranging debate as to why there is a deficit. There is a passionate and wide-ranging debate about how to close the budget gap. District officials floated the idea of privatizing several hundred union jobs. According to a piece posted to AnnArbor.com on February 17th, there are several companies “vying to replace the district’s custodians, maintenance workers and bus drivers, it could save nearly $2.4 million a year.”

I’m going to switch classrooms now. Walk with me.

I was going through the City’s checkbook register, which is now online, and saw a $75,000 withdrawl from the General Fund for Ann Arbor SPARK. I have written about Ann Arbor SPARK several times over the course of the past months. Click here to read my most recent entry about SPARK. Ann Arbor SPARK was created to “incubate” start-up businesses in the Ann Arbor area. It was headed by Republican Gubernatorial candidate Rick Snyder for several years. Our tax dollars don’t fund SPARK directly. That’s what the (Local Development Finance Authority) LDFA is for. Here’s a good description of the LDFA from a January 2009 piece in the now defunct Ann Arbor News, written by Stefanie Murray, “The LDFA is an Ann Arbor City Council-appointed committee that oversees the capture of part of the property taxes from Ann Arbor’s downtown development district. It gives some of that revenue to Spark and is responsible for overseeing how Spark spends it.”

Sounds pretty innocuous, huh? “The capture of part of the property taxes from Ann Arbor’s downtown development district.” No harm. No foul.

Nothing could be further from the truth.

The LDFA was formed to divert taxes from a single sector: public education. It contracts with Ann Arbor SPARK to “provide services.” In fact, the bulk of the money the LDFA diverts from our public schools goes to Ann Arbor SPARK. Second Ward Council member Stephen Rapundalo sits on the LDFA Board. Fifth Ward Council member Carsten Hohnke sits on the SPARK Board. In November 2009, I wrote about the resolution which Rapundalo brought to Council: “Resolution to Amend the Fiscal Year 2010 SmartZone LDFA Budget for Increased Business Accelerator Services.” In my November 2009 post I wrote:

“Ann Arbor SPARK is the public-private boondoggle supported by Mayor and Council with your tax dollars that has created no new jobs that would not otherwise have been created, according to an April 2009 statement before City Council by the Chair of the LDFA, Richard King. And SPARK has done it all for you since July 2006 for a mere $3+ million dollars. 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?”

Both Carsten Hohnke and Stephen Rapundalo voted in favor of giving the LDFA $205,000 additional dollars to pass on the Ann Arbor SPARK. Those were dollars taken from the Ann Arbor Public Schools. Here is a link to a video from the City Council meeting at which Council voted 11-0 to give the LDFA and Spark more tax money. You’ll see Skip Simms from SPARK tell Council that all of SPARK’s “incubator” money comes from the LDFA. All of the LDFA’s money is diverted directly from the Ann Arbor Public Schools. Do you understand the connection now?

According to the city’s budget, in fiscal year 2009, the LDFA SmartZone diverted $1.1 million dollars in property taxes from new development downtown. In fiscal year 2010, that amount increased to a projected $1.27 million dollars, and in 2011, the LDFA expects to divert $1.4 million in property tax dollars from our public schools to give to SPARK.

In this piece, I wrote about the $753,000 in salaries paid to just five employees of SPARK.

Now, we have the Ann Arbor Public Schools poised to cut over 200 union jobs to save $2.4 million dollars. If the Mayor and City Council dissolve the LDFA immediately, and Ann Arbor SPARK is spun off, in 2010-2011 the AAPS will collect an additional projected $2.67 million dollars in tax revenues. That money, along with some good faith bargaining for concessions from the unions involved could save the jobs of hundreds of long-time employees—custodians, maintenance workers and bus drivers in our community.

Public schools, or so said my son’s orchestra teacher, reflect the soul of a community. I agree with her. Right now, our soul is troubled. Business investment is important, but it can’t come at the expense of our own public schools. It’s time to stop diverting property tax dollars away from the public schools, and realize that owners of established small and medium-sized businesses choose to relocate to communities with exceptional schools, and residents choose to stay in communities with exceptional public schools.

Either our public schools can be given back the LDFA’s $2.67 million dollars and retain hundreds of jobs for custodians, bus drivers and maintenance workers, or Mayor and Council can continue to support a failed economic development system under the auspices of which no jobs have been created that wouldn’t have otherwise been created. Mayor and Council can continue to give public school tax dollars to the LDFA to dole out to Ann Arbor SPARK—an organization that paid five of its employees over $753,000 in salaries in 2008.

To me, the choice is clear. The time has come to shape new economic development programs that will give taxpayers objectively verifiable and carefully tracked returns on all tax dollar investments—something that has not been done over the past five years. It’s time to get back to the basics, and for our local politicos to face the music: they’ve diverted millions from our public schools to fund the LDFA and, in turn, Ann Arbor SPARK. Dissolving the LDFA and spinning off Ann Arbor SPARK could, actually, save hundreds of existing jobs in our community, and benefit our public schools.

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January 22, 2010

The Politics of Business: Risk-taking Is For Suckers AKA Taxpayers

Filed under: economic development — Tags: A2Politico, Ann Arbor SPARK, AnnArbor.com, LDFA, Malcom Gladwell, Nathan Bomey, New Yorker, Representative John Dingell — A2 Politico @ 5:27 pm

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I have a tot who is a chef. Seriously. The kid can cook and bake like nobody’s business, and enjoys it. The word from the mouth of the babe is that perhaps we should start saving for tuition at the Le Cordon Bleu, or the Culinary Institute, in New York. I worked in the kitchen of a ritzy country club while in college. Let me share with you industrial kitchen virgins out there that cooking in a high-class joint for a living can be a kick-ass job. Where else will you get paid to watch a 55 year-old pantry worker wrap herself in plastic wrap and sing “Hey Big Spender” in her Catalan accent, and dance around the Sous Chef provocatively? “Da menute jew walked in the yoint….”

I still miss that country club job. If you can take the heat, the industrial kitchen in a ritzy eatery is a great place to work.

My advice to my budding chef is that you go to the local community college for a two-year degree in culinary arts and at the same time knock off the prereqs for a degree in business administration. Then, you transfer to Michigan and finish up a BBA at the B-School. After that, you’re off to make your mark on the culinary world. In addition to being a kick-ass chef, you’ll have the ability to speak intelligently to a banker when you want more money than I’ll probably have to give when you want to open your own “yoint,” where the big spenders will surely come to eat.

Food service is a risky business. The profit margin in that industry is way too small for my tastes. Show me a business with a 40-60 percent profit margin, and now we’re talking organic, free-range turkey. On AnnArbor.com today business reporter Nathan Bomey has a piece that argues Michigan entrepreneurs need to “embrace risk.” I like Bomey’s writing, as a rule, and appreciate the fact that he tackles the usual topics from unusual angles. As luck would have it, Malcom Gladwell has a piece in the Janaury 18, 2010 issue of the New Yorker that, in fact, argues that successful entrepreneurs do not take risks. This comes from Gladwell’s article:

“In a recent study ‘From Predators to Icons,’ the French scholars Michel Villette and Chatherine Vuillermot set out to uncover what successful entrepreneurs have in common. They present case histories of businessmen who built their own empires—ranging from Sam Walton of Wal-Mart, to Bernard Arnault, of the luxury-goods conglomerate L.V.M.H.—and chart what they consider the typical course of a successful entrepreneur’s career. The truly successful businessman, in Villette and Vuillermot’s telling, is anything but a risk-taker. He is a predator, and predators seek to incur the least risk possible while hunting.”

I read Gladwell’s article recently and found myself realizing that I am simply not a predatory entrepreneur. However, the argument of the successful entrepreneur as the limited risk-taker made perfect sense to me. Of course the most successful hunters take the fewest risks! It was a sobering read for me as a business owner, and I am still trying to decide whether it’s too late for me to become a predator in my industry. This gets into the who nature/nuture discussion, however, and that’s a blog entry for another time.

Then, I chanced upon Bomey’s AnnArbor.com piece in which he argues that for the sake of the economy, “…taking risks is essential for Michigan.” Bomey also writes, “A key element of reconstructing Michigan, however, is culture change. Michigan residents are largely averse to risk taking.”

Hell yes we are! We’re midwesterners. Risky business is not the culture of assembly-line workers at any of the Big Three. Our state’s politicians didn’t take risks, but blindly supported a single-industry to the detriment of the state and its residents. Our U.S. senators and representatives have pork-barreled money for the auto industry for decades. They have ignored environmental issues and global warming. In Time magazine, Representative John Dingell was accused of “pandering” to the interests of Michigan’s auto companies. These folks failed to realize that putting all your eggs in one sedan would eventually cause the state’s economy to implode.

Bomey writes, “This generated a culture defined by an incredible work ethic and a suspicion towards entrepreneurialism.”

Let me give you some free advice: those so inclined should be very suspicious of becoming entrepreneurs. According to data from the U.S. Small Business Administration Office of Advocacy, ”Two-thirds of new employer establishments survive at least two years, and 44 percent survive at least four years, according to a new study. These results were similar for different industries.”

Think carefully Padawan Jedi Entrepreneur: Would you take a job where there was a 56 percent chance you wouldn’t earn enough money to feed your kids or pay your mortgage? Yeah, me neither. Well, actually, it turns out I am kind of a risk-taker, but I didn’t choose food service, and my profit margins are pretty close to that free-range, organic turkey I mentioned earlier.

Now let’s talk economic development. The current economic development mantra in Ann Arbor is to fund start-ups. Ann Arbor SPARK and its LDFA master throw taxpayer money at what amounts to some very risky business investments. Neither Ann Arbor SPARK nor Board members on the LDFA have shown that the success rates for taxpayer financed start-ups are any higher than those of non-taxpayer financed start-ups. In other words, 56 percent of start-ups funded with our tax dollars will fail within four years.

Business investment is always a calculated risk—ask any banker or venture capitalist. The losses, one hopes, are offset by the wildly successful businesses that survive. If the Small Business Administration survival numbers for small business are accurate (and we have no reason to believe the SBA is out to exaggerate the numbers—like some local economic development outfits I know), this means that when economic development is focused on start-ups, there will be a return on the investment only 44 percent of the time. Those are not odds I like for taxpayer dollars.

That’s why bankers don’t generally get involved in funding start-ups without secured assets, either someone’s house or a loan guarantee from the U.S. Small Business Administration. Bankers give lines of credit to, and fund the expansion plans of, firmly established businesses. Heck, it’s tough for a start-up to rent office space. Landlords don’t want to sign three-year leases with companies that might fold in less than two years. It’s a brutal world out there for business start-ups because the folks with the money know the odds of start-up successes are under 50 percent.

This is also why Ann Arbor City Council needs to dissolve the LDFA, revoke the entity’s TIF, and return that money to our schools, library and transportation. Council needs to spin off Ann Arbor SPARK. SPARK should go and gamble its own money on start-ups.

Me? I’m all for an economic development plan for Ann Arbor that focuses on attracting and recruiting established small and medium-sized businesses to our city by expanding services, minding our infrastructure, paying real attention to non-motorized/alternative transportation, and offering economic development services through a city-controlled Office of Economic Development.

I don’t agree with Bomey that risk is going to rescue Michigan’s economy. Start-up entrepreneurism isn’t, statistics show us, the silver bullet solution to the economic woes our city and state face. We need to make Michigan and especially Ann Arbor magnets, and do it through offering the caliber of schools, city services, recreational opportunities and infrastructure that will attract established small and medium-sized businesses.

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January 4, 2010

The Politics of Demographics: Why All The Political Hand-Wringing and Fuss Over Gen Y?

Filed under: developers, economic development — Tags: A2Politico, Alex de Parry, Ann Arbor SPARK, Baby Boomer, Carsten Hohnke, Concentrate Media, Gen Xers, LDFA, Mark Ouimet, Mayor Hieftje, Michigan Economic Development Corporation, Microsoft, Millenial (Gen Y), Ned Staebler, Pew Social Trend, Rick Snyder, Steve Ballmer — A2 Politico @ 8:00 am

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Looking for what is called a reliable voter? Look for a white woman aged 70 and above (a Baby Boomer), according to the U.S. Census Bureau. Looking for the least reliable voter on whom a candidate should think twice about wasting time, money and literature, the voter who goes to the polls with the least frequency? Look for a white woman aged 18-20, a so-called, Millenial (Gen Y) voter. Spending power? Gen Y’s spending power pales in comparison to that of the peak age group. According to data from U.S. Bureau of Labor and Statistics, the average Gen Y individual spends $25,000 per year, and has an annual household income barely above that, somewhere around $35,000 per year. The big earners and big spenders? Those are people in the 35-45 year-old age bracket, Gen Xers. They pull down salaries that average $70,000-$80,000 dollars per year and pump into the local economy, on average, double what Gen Y individuals part with in a year.

So why, here in Ann Arbor, have our elected politicos been fibbing, clawing and straining to convince us that we need urban density, light-rail, to all stand on one leg, and bow down to the god Loki to attract and create businesses that will hire and/or retain Gen Y workers? State-level politicos have handed over billions in tax breaks to companies that promise to create so-called “knowledge-based” jobs, such as those 200 or so jobs created by Google here in Ann Arbor, and filled by those “coveted” Gen Y workers. Just to be clear, Google rode into town in 2008 promising to create 1,000 jobs by 2011, but no one talks about that now, especially not the politicians currently running for statewide office. They should be. In fact, state officials should use such failures as casebook studies on the waste of tax subsidies by the state and subsidies from our own local government.

Just to be clearer, according to a blog entry posted by Concentrate Media in October of 2009 written by a Gen Y Googlette, Gen Y “demands” are few:

Monthly rent between $600-$900
Close proximity to work and social scene (walking/biking distance)
Option to live alone affordably
No ‘cookie cutter’ condos – we want places with character
Flooring that has not seen the ravages of six years of lost beer pong tournaments

I was charmed by the last “demand.” Then again, beer pong was never my tournament game of choice.

Gen Yers want to live alone affordably. To begin, that $600 monthly rent is very close to what is paid by those occupying what little low income housing Ann Arbor has to offer. If you’re a Gen Xer sitting in your house, you’re muttering something like, “$900 bucks is a house payment….” It is. Just one little problem, our Gen Y writer casts homeownership thusly: “I alternate between the dream of putting in new kitchen counter-tops and the nightmare of realizing that I could have spent six months wandering Buenos Aires for the price of them.”

So go wander South America, say I. I did my wandering; you should do yours, as well. When you come back, be prepared to live in a cramped apartment or find a roomie, get a job that pays $35-$40K and work your way up the ladder. It’s what the Boomers did. It’s what Gen Xers are doing. It’s what that “coveted” Gen Y generation must be prepared to do. But they’re not, and politicos in Ann Arbor, not to mention in Lansing, are encouraging an entire demographic of young people (currently Gen Y is aged 7-24) in their tragic delusions that society needs to provide them low income housing (with character, and good flooring, no less), the ability to live alone affordably, a “social scene” and a job right out their front doors.

My eldest tot wants to be appointed the president of a company some day, preferably right out of college. I’d like to “discover” a 1957 Thunderbird convertible, red with white interior, in a barn somewhere and get it for $1,000. Alas, some wishes are just that, wishes never to be fulfilled. When the tot works hard and moves up through the ranks, I’m sure the presidency and a corner office will await. When I have a spare $35,000-$45,000, that Thunderbird will be mine. Until then, I drive a more utilitarian vehicle, and the tot continues to dream and scheme.

I encourage the dreams and schemes up to a point, and this I think is where local politicos have lost their hold of reality and are simply grasping at trendy straws and kissing the wrong asses, politically. When the tot waxes on about starting at the top of the corporate ladder, I kindly but firmly point out that, as a rule, one climbs the corporate ladder unless one is prepared to launch one’s own business. Then one must be prepared to work one’s proverbial rear-end off. Thus, when Mayor Hieftje, Council members, and even state-level politicos wring their hands, mewl and puke about retaining and attracting Gen Y workers, I have to admit I am a total loss as to why we want to attract people to our state who vote infrequently, need low income housing, who would rather walk or bike than use public transportation (light rail jumps immediately to mind), and who pump only half the amount yearly into the local and state economy that a worker ten years older does.

Since John Hieftje has pursued his visionless and perverted folly of urban density over the past decade, the population of Ann Arbor has dipped slightly. We’ve lost residents to the surrounding communities of Saline, Dexter and Chelsea. Truth be told, an influx of thousands of Gen Y workers would generate exponentially less overall local spending and tax revenues than, say, an influx of thousands of 35-45 year-old individuals with or without families. Gen Xers would also bring their established businesses with them as they own 26 percent of all businesses in the United States.

So why aren’t local politicos standing on their heads, staying up nights, devising policies, encouraging development, and city projects tailored to attract Gen Xers to a Ann Arbor? Namely why don’t they disband the LDFA and stop skimming millions from our schools for Ann Arbor SPARK? Why don’t they budget to expand parks and recreational facilities and opportunities? Why don’t they spend money to create an excellent infrastructure? Why don ‘t they make it a priority to fund citizen services as opposed to building Temples to judicial dieties and Necropoli for cars? Why not make Ann Arbor a Gen X magnet city?

Well, first off, that would mean cutting off Council members Stephen Rapundalo and Carsten Hohnke from their positions as crony capitalist enablers from their seats on the Boards of the LDFA and Ann Arbor SPARK, respectively. Politicos hate to cut their cronies and political donors off at the public trough.

Here’s a suggestion: Let the few Michigan Gen Yers who want to go to the cities that already have jobs and “scenes” right out the front door—the big cities, Chicago, Milwaukee, Minneapolis, New York, L.A.

Would the local economy collapse? Would Ann Arbor cease to be a “cool” city (whatever the hell that means)? Of course not. Know why?

The truth is that the majority of Michigan’s current Gen Yers won’t just up and leave Michigan if their “demands” remain unmet. Why? There’s one last bit of research you should keep in mind. According to migration research by the Pew Social Trend group, Michigan is the fifth most “stickiest” state in the union. Just behind Wisconsin by a single percentage point, 67.5 percent of people born in Michigan who are 18 years or older have stayed in Michigan. Conversely, only 22 percent of the people currently living in Michigan who are 18 years or older were born in another state. Sticky is where it’s at for demographers. According to the study, “In the Midwest, nearly half of adult residents say they have spent their entire lives in their hometown.” That, my fellow native Michiganians, is a huge home court advantage that local, not to mention state-wide politicians overlook in favor of attracting new people to Michigan, particularly Gen Yers. It’s a losing battle. That demographic is moving South and West, not into the heartland. Gen Xers will relocate to the Midwest for jobs, and do. Make Ann Arbor dual career couple heaven and the Gen Xers will come.

In reality, focusing political policies, time, money and effort on attracting Gen Y is a waste of political capital for any community that hopes to grow its economy reliably and diversely. Having a large pool of workers who earn, on average, $25,000-$30,000 less than the median income in our city will not expand the tax base. An influx of 5,000 Gen Xers who would buy houses would. Having a large pool of Gen Y workers serves employers, such as Google, who make pie-in-the-sky promises of job creation that give small town politicos like ours campaign bullet points and political hard-ons. Such a labor pool serves start-ups, such as those allegedly “incubated” by Ann Arbor SPARK. Ann Arbor SPARK serves up juicy bullet points for political résumés—just look at 52nd District House wanna-be Republican Mark Ouimet, Rick Snyder and Demublican John Hieftje’s campaign literature and campaign finance disclosure forms. Googlesque schemes give people like 53rd District House wanna-be Ned Staebler and his pals—such as Fifth Ward Council member Carsten Hohnke—at the Michigan Economic Development Corporation jobs doling out billions in tax incentives. Tragically for Michigan’s taxpayers, the MEDC has neglected to track actual number of jobs created and actual returns on billions of dollars of taxpayer investments. At MEDC, the idea, my fellow politicos, is simply to spend the tax dollars; not to spend the tax dollars wisely.

It’s the same principle at work in Ann Arbor and Michigan chasing Gen Yers. The point is to simply attract and retain “young people.” Where are the studies that show Gen Yers are the demographic that best for Ann Arbor to chase? Ironically, our Ann Arbor politicos are chasing a demographic group that, in this recession, according to another study done by the Pew Social Trend group, is moving back home with their parents in record numbers. They’re not moving into “work force” housing proposed by developers such as Alex de Parry with his Heritage Row Apartments development proposed for South Fifth Avenue.

Who knows, maybe the tot will graduate from college and immediately replace Steve Ballmer at Microsoft. Maybe I’ll find that Thunderbird, too. Pipe dreams are always fun, but the fact that our Mayor and City Council majority have wasted almost a decade crafting public policy around the pipe dream of meeting the “demands” of Gen Y has cost our city dearly, and will continue to do so as long as they are allowed to remain in office and play out their own Boomer fantasies of moulding Ann Arbor into little Portland or baby Chicago.

It’s time for Ann Arbor to embrace it’s identity as a midwestern college town. There are almost exactly as many 15-24 year-olds in Ann Arbor as 25-45 year-olds. It’s the mid-range of that latter demographic, the Gen Xers, who will come, settle, buy houses, pay taxes and vote. We must educate, encourage, support and nurture our native-born Gen Yers so that they’ll want to return home once they’ve sown their wild oats in Buenos Aires, Portland or Chicago. We should embrace the Gen Yers we have as guests in our state while they attend our universities.

However, our Boomer politicos need to start kissing some Gen X ass if they are serious about fostering the economic viability of our city and the economic rebirth of our state.

Got suggestions on how city government could pucker up for Gen X and their families in Ann Arbor? Let’s hear ‘em!

Here’s my suggestion:

How about a coupon for a free rental at any canoe livery in town tucked in with the summer property tax bills?

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December 18, 2009

The Politics of the One-Two Bitch Slap: Obama’s Economic Advisor Dr. Lawrence Summers Raps Ned Staebler’s Knuckles and Calls MEDC “Crony Capitalism”…Then Rick Snyder Piles On

Filed under: campaigns, money, politicians — Tags: A2Politico, Ann Arbor SPARK, Dr. Lawrence Summers, Governor Granholm, Mark Ouimet, Michigan Economic Development Corporation, Ned Staebler, Pam Byrnes, Rick Snyder — A2 Politico @ 7:00 am

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As I mentioned in a Tweet, I’ve been behind in my reading. I read more periodicals than should be legal, but there you have it. Among those periodicals is The New Yorker. I was reading an October 21st article about President Obama’s economic advisor Dr. Lawrence Summers, when the piece suddenly veered toward Michigan and right into downtown Ann Arbor. The piece described a visit Summers made to Michigan and a meeting with Governor Granholm and her top economic advisor, Ned Staebler. Yep, that Ned Staebler, the one who is currently having holiday parties, cocktail parties, birthday parties, baby naming parties, bar mitvah parties and First Communion parties where attendees come together to deposit their cash and check-filled envelopes in party boy Ned Staebler’s wishing well. If Staebler happens to be shopping at Hiller’s when you’re in the store, move quickly to the nearest exit, as your shopping excursion could turn into a “party,” and you will be expected to pay $200 to be in the same building with the 53rd District House representative wanna-be.

A2Politico, always one to pick up on the current trends, is having a party soon. Sometime after I figure out how to deposit your checks. I digress.

In The New Yorker piece, the author watches as Staebler describes to Dr. Summers an economic development loan program Michigan had just created to help old-line firms make the transition to new-economy industries, like solar-panel production and microchips, and the meeting turned into a plea to the Obama Administration to adopt the program as a federal plan.

“Ned Staebler, one of Granholm’s top economic advisers, explained excitedly that the new assistance program for struggling companies had already approved its first loan even though he hadn’t advertised the program…..”

Pay close attention to the last part of that sentence: “even though he hadn’t advertised the program…..” because Lawrence Summers was listening.

The New Yorker author writes, [Summers], turned to Ned Staebler. Granholm seemed to hold her breath as Summers prepared to deliver his verdict on the new loan program. ’You said you hadn’t really marketed your program at all, and you’ve been able to get a number of people who have been able to take advantage of it without marketing,’ Summers told Staebler. ‘One reaction was ‘Isn’t that terrific? There’s this demand without marketing it.’ But, he added, another way to look at it was that Staebler had started a program of loans in which only ‘the people who are well connected and fortunate enough to know about them are able to take advantage of them.’ Summers said that the Michigan program reminded him of a term used to criticize Asian countries during the financial crisis of the nineties: ‘crony capitalism.’”

I smiled broadly when I read that. Who ever thought little old A2Politico would ever have anything in common with one of the 21st century’s brainiest economists? Turns out we can both recognize crony capitalism when we see it. I’ve been writing about the Den of Crony Capitalism gubernatorial candidate Rick Snyder birthed here in Ann Arbor: Ann Arbor SPARK. Snyder has been criss-crossing the state telling folks that he wants to bring the SPARK model of economic development to Lansing. Maybe he can spread the Bubonic Plague while he’s at it. Turns out Rick Snyder isn’t the only crony capitalist with an Ann Arbor SPARK connection who wants to spread the crony capitalism model far and wide.

Republican Washtenaw County Commissioner Mark Ouimet, a member of the Executive Committee of Ann Arbor SPARK, and a wanna-be for Representative Pam Byrnes’s 52nd District House seat, was recently quoted in the Manchester paper as saying that, “Here in Washtenaw County, our local chambers of commerce and the Ann Arbor SPARK do an amazing job of bringing together job providers, policy makers and local interest groups to insure that all are working together to promote our region and the opportunities that exist for business here. I’ve been honored to hold leadership positions at the chambers and SPARK and can attest to the important need for strong partnership from our legislators in Lansing. I intend to foster that partnership.”

I read that and a cold grue ran through me. Typhoid Mark.

So what do you think I read today? Rick Snyder issued a press release that was a big old bitch slap of the Michigan Economic Development Corporation (MEDC), where Ned Staebler works as a VP, and gives away billions of our tax dollars as “incentives” for a living. Snyder is quoted in the press release as alleging that, “The MEDC has been mismanaged by the current administration….The use of tax incentives should include performance objectives, reportable results, and be transparent to citizens. The state currently gives out $6.3 billion more in tax credits, deductions and incentives than it takes in yearly in tax revenue – more than $30 billion a year in handouts that are supposed to be stimulating our economy. There is little transparency or accountability in what return the state is getting on those investments.”

Before you fist bump Snyder for finally realizing that tax incentives need to be coupled with absolute transparency and iron clad accountability, remember that he instituted none of these nifty reforms while the President of Ann Arbor SPARK, the Washtenaw County economic development entity created in 2005 by the MEDC with Snyder as head crony capitalist. In fact, representatives from Ann Arbor SPARK said just a few days ago that they are not in the business of verifying the results of the economic development money they distribute. A SPARK official claimed to track the actual number of jobs created by the companies funded with our tax dollars would require hiring another employee, and Ann Arbor SPARK had no interest in doing that. The state of Michigan, the SPARK official said, was responsible for tracking those results. Turns out the “state” isn’t doing a very good job of tracking much of anything where the billions of tax credits given out are concerned.

Snyder, the Born Again Economic Tough Love Candidate, says in his press release, “Economic development incentives should be used sparingly and measured against the actual number of targeted jobs created to make the data more reliable and less subjective. The results should be posted online for everyone to see.”

I’d love to say something cheery like, “You GO, Girl!”

However, there’s a political kicker. Snyder tells Michigan voters he’s the man to get the MEDC whipped into shape because, “…Rick has led the MEDC and Michigan toward a healthy business climate before; he can do it again. He’s done it on a local level with Ann Arbor SPARK. Because he’s not a career politician, he has no special interests to pay back. He has one goal: creating jobs and reinventing the state of Michigan.”

No special interests to pay back? What about all his SPARK cronies? The cronies he helped as CEO of SPARK are as numerous as the stars in the sky. When we see Snyder’s campaign finance disclosure forms, I suspect we’ll see that many of those cronies returned his favors. Sndyer claims he can make the MEDC more transparent because he made Ann Arbor SPARK more transparent. He claims he can measure the real number of jobs created through MEDC incentives because he set up a system to do that at Ann Arbor SPARK.

Snyder’s December 17th press release proves that he has either lost touch with reality, has no memory of what went on when he was President of Ann Arbor SPARK, or is as duplicitous a politician as I’ve seen in a good long while.

One of President Obama’s top economist advisors, Lawrence Summers, described the Governor of Michigan’s top economic advisor’s, Ned Staebler, and the MEDC’s “unadvertised” loan program that funnels loans to their friends, as “crony capitalism.” For gubernatorial candidate Rick Snyder to bitch slap the MEDC’s administration for neglecting to track results, and for not instituting mechanisms to improve transparency is little more than a political girl fight complete with hair-pulling and lots of trash-talk.

Just a year ago, when Snyder was a small-town crony capitalist in Ann Arbor, he and his SPARK crew were nailed by auditors for over billing, conflicts of interest and accounting irregularities. Snyder signed off on annual reports that claim the creation of thousands of jobs when just a few hundred actual jobs had been created between 2006-2008. Snyder’s legacy of secrecy, exaggerated claims of job creation (SPARK’s 2008 990 tax form claims SPARK created over 2,000 jobs) is carried on by current SPARK staff.

Rick Snyder still sits on the Executive Committee of Ann Arbor SPARK.

That the MEDC needs some serious whipping into shape to eliminate cronyism and the boondoggle’s waste of billions of tax dollars is a given. Rick Snyder may want us to believe he’s the man for the job. However, he showed us all clearly that he’s not up to the task thanks to his performance as the crony capitalist-in-chief at Ann Arbor SPARK and his continued “leadership” as a member of SPARK’s Executive Committee.

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December 17, 2009

Beehives, Tight Skirts and Salary Gaps Galore: The 50s Alive & Well in A2

Filed under: boards and commissions, economic development, taxes — Tags: Ann Arbor Ecology Center, Ann Arbor SPARK, David Nacht, Jayne Miller, Mayor Hieftje, Michael Finney, Mike Garfield, Paul Ajegba, Sandi Smith — A2 Politico @ 12:40 pm

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On December 15th, I wrote “AATA Treasurer Ted Annis Pushes Increased Fiscal Transparency.” In that piece, I outlined the changes Annis wants to see the Ann Arbor Transportation Authority (AATA) make in order to provide the public with a more robust variety of data about the taxpayer-funded entity’s finances. One of those changes was to publish online the names, titles, and compensation of all AATA personnel beginning in January 2010 with 2009 payroll information. The Chair of AATA’s Board, Paul Ajegba was quoted in a December 17th AnnArbor.com post as saying this in response to Annis’s proposal to make salary data public and posted to AATA’s web site: “Board Chairman Paul Ajegba said he had concerns that posting salary information on the Web site would be ‘not good for morale.’ He said the agency already is transparent because all of that information is available through the Freedom of Information Act.”

First Ward Council member Sandi Smith has a long lost brother, it would appear. The FOIA twins. Both believe that Ann Arbor citizens can damn well file Freedom of Information Act requests for information if they damn well want to know anything about how their hundreds of millions of tax dollars are spent.

For the moment, let’s give Ajegba a pass for the FOIA remark. Let’s zero in on the fact that he believes if AATA employees could find salary data, we might have to give them all scrips for anti-depressants—well not all of them. Ajegba’s comment can mean only one thing: there are salary gaps at AATA that the Chair of the Board would like to keep hidden from view. You remember salary gaps, right? They were those discrepancies in pay between women and men, minorities and whites, that were prevalent from the 1940s-1970s. Same job. Same title. Same qualifications. Women were paid 50 cents on the dollar. Blacks, about the same. White men, after all, had families to support. Women were just hanging around the office water coolers waiting to earn their M.R.S. degrees.

Thanks the corner of Gott (in Himmel) and Miller that Ann Arbor is a bastion of liberality, passionate progressive values and social equality. Give me the tax returns of the Ann Arbor Ecology Center, headed by Mayor Hieftje’s BFF Mike Garfield or Avalon Housing, headed by Jayne Miller’s new BFF Michael Apple, and I’ll bet you my “I Like Ike” button that if the salary information from those non-profits became available to the public, that information might not be good for worker morale at those places either.

Ok, in a minute I’m going to tell you the employer in Ann Arbor where there is the largest salary gap between men and women who hold the same job titles and qualifications. It’s actually an employer in the industry in the United States with one of the longest-standing and largest persistent salary gaps. However, let’s get back to the Eisenhower presidency, crinoline, Caddys with big fins, and Paul Ajegba. If releasing salary information to the public would be “bad for morale” at AATA, maybe what needs to happen is that the AATA Board needs to rectify the salary gaps instead of keeping the gaps a secret. No, that’s logical. Sorry. Sexism and racism are not logical. Pay parity for women and men, minorities and whites? I must be a Commie.

Well, I have to tell you that I don’t have the tax returns for Avalon Housing or The Ecology Center. Yet. I do, however, have the 2008 tax returns for Ann Arbor SPARK (download the 990 here). You remember SPARK, right? The economic development boondoggle where the welfare daddies exaggerate to keep the public money flowing into their coffers. Since I am just that kinda person, (and know that you might be, as well) I looked at the salary data for those manly men and working girls employed by CEO Michael Finney at Ann Arbor SPARK.

It was like having Old Fashioneds with Dwight D. and Mamie. In 2008, for every $1 dollar earned by SPARK’s managing director, a man, the woman with the same title was paid $.54 cents. In fact of the five employees who draw paychecks higher than $100K, three men took 75 percent ($544,930) of the money allocated for salaries, and the two girls (both managing directors) split the remaining 25 percent ($208,552). CEO Michael Finney’s friends on the compensation committee paid him $258,423 in 2008, or 34 percent of the total $753,482 allocated for salaries for staff earning over 100K. Then, in the middle of the worst recession in 70 years, those same pals on the SPARK compensation committee gave Finney a $30,000 bonus. Taxpayers are a generous bunch, especially when they have no idea how their money is being spent. Michael Finney, however, is well aware of the salary gap, because he signed the tax return and, one has to imagine, read it.

As for Finney’s bonus, it couldn’t be linked to revenue gains, because Ann Arbor SPARK revenues dropped from $7.3 million in 2007 to $6.6 million in 2008. Compensation for staff, however, increased from $1.2 million in 2007 to $1.7 million in 2008. Nice work if you can get taxpayers to foot the bill for it.

Hiding behind the skirts of FOIA, as AATA’s Ajegba suggests his Board do to keep employees and the public ignorant, is nothing short of perpetuating a system that allows for the exploitation of workers. Eisenhower’s not president, and the Lilly Ledbetter Fair Pay Act of 2009 was signed by President Barack Obama on January 29, 2009. Michael Finney could use some training in equal pay for equal work, and the girls at Ann Arbor SPARK should take a minute and read about equal pay lawsuits.

If AATA is guilty of the same Old Boy pay differentials, perhaps labor lawyer and AATA Board member David Nacht could look forward to rustling up some business from among the disgruntled AATA staff. In the meantime, Paul Ajegba’s ”concerns” that posting salary information on the Web site would be ‘not good for morale’ should be taken by the other Board members, AATA staff and taxpayers alike that while low morale is not illegal, pay discrimination is, and hiding it is not an option because AATA’s money comes from taxpayers; taxpayers have a right to know and so do the employees.

Oh, and I promised to tell you the Ann Arbor employer with the largest persistent pay gap? It’s the University of Michigan. As an industry, higher education has one of the most pronounced and longest standing pay gaps between men and women and between whites and minorities in the United States.

Imagine what Miss Mary Sue C. would earn if she were a man. At least U of M publishes its salary data each year so everyone can see the ugly truth about racism and sexism and the art of avoiding pay equity. Click here to view the University of Michigan’s 2008 salary spreadsheet.

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December 10, 2009

Rapping Kouncilmember Kunselman’s Knuckles. Krack.

Filed under: boards and commissions, city council — Tags: AATA Board, Ann Arbor SPARK, Bonnie Bona, Christopher Taylor, David Nacht, David Stead, Environmental Commission, Huron River and Impoundment Management Plan, Mayor Hieftje, Michigan Economic Development Corporation, Ned Staebler, Percent For Art Program, Sabra Briere, Stephen Kunselman — A2 Politico @ 11:50 am

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Once upon a midnight dreary, while I pondered weak and weary,
Over many a quaint and curious volume of forgotten lore,
While I nodded, nearly napping, suddenly there came a tapping,
As of some one gently rapping, rapping at my chamber door.
`’Tis some visitor,’ I muttered, `tapping at my chamber door -
Only this, and nothing more.’—”The Raven,” Edgar Allen Poe, published 1845

Mayor Hieftje’s “facilitation” of City Council meetings reached a new low on Monday of this week. If there is a hell for meeting facilitators who consistently allow bad process to get in the way of the actual business of a meeting, John Hieftje will go there on a very, very, slow train that will make hundreds of stops. The train will almost arrive at the station, but will be diverted. Hieftje will descend slowly into madness.

On December 5th, Roger Fraser had warned all of the City Council members that unless they instructed him to do otherwise at the Monday December 7th meeting, he would immediately issue layoff notices to 14 of the city’s firefighters. At the Monday meeting, our Council member little old ladies fretted, worried and picked nits for, literally, hours over changing the Percent for Art Program to the “Half-A-Percent for Art” (until 2012, when the program will revert to the Percent for Art Program). Those micro-managers extraordinaire then spent more time than it took Michelangelo to paint the ceiling of the Sistine Chapel to figure out how the Percent for Art program actually works. Yes, they sat in their little oval and tried to puzzle out how a program worked that all but Kunselman had all voted to implement over 14 months ago, and to which over $1 million dollars in tax money has already been funneled.

Talk about fiddling while Ann Arbor burns. The watch word of the evening was anything except “firefighters.” Our Council members and Mayor wasted endless hours of public time and money to avoid the tower truck in the Council Chambers.

Then, they spent hours wringing their hands over the difference between “adopting” and “accepting” a series of recommendations called the Huron River and Impoundment Management Plan.

This was actually when something interesting happened at the meeting. Third Ward Council member Stephen Kunselman asked how David Stead, the Chair of the HRIMP committee, could possibly hope to lead the group toward a consensus decision about how to best manage the Huron River. Since we know that Mayor and Council have a devil of a time finding people among the city’s 112,000 residents to serve on the city’s boards and commissions, they frequently appoint one person to multiple boards and commissions. David Stead is one of those people. He sits on the Ann Arbor Environmental Commission. You may also remember Stead from such classic films as, “I proposed the resolution to remove the Argo Dam.”

Kunselman spoke up and suggested that, perhaps, David Stead might be biased in his opinions about how to best manage the Huron River in his position as Chair of the HRIMP committee.

The Council School Marms picked up their rulers and closed in on Stevie K.

First up was that bias/conflict of interest expert, and Fifth Ward School Marm, Carsten Hohnke. Hohnke said it was “absolutely inappropriate to suggest the chair [of the HRIMP committee] had a bias.” Hohnke warned councilmembers to be careful about questioning the characters of members of the community who volunteer to serve the city.

Hohnke, after all, has no interest in discussing bias or conflicts of interest unless, of course, he benefits personally.

Carsten Hohnke was appointed to the Ann Arbor SPARK Board this past summer. Know how he got the appointment? If you guessed cronyism, you get a fabulous prize. Later. Hohnke also has a new job at the Michigan Economic Development Corporation in Lansing. Does the MEDC sound familiar? It should. It’s where 53rd District House wanna-be Ned Staebler works as a VP. Staebler’s Inspire Michigan PAC donated to Hohnke’s 2008 City Council campaign. The MEDC job given to Hohnke was never posted to the public. It was a cozy little give-away to Carsten.

The next School Marm up with a ruler was Kunselman’s Third Ward Council colleague Christopher Taylor. Taylor told all present that he felt “like some folks’ integrity had been impugned” based on very little evidence. Taylor said that for Kunselman to imply David Stead had a bias suggested “duplicity and conniving.” Taylor said he’d seen no evidence of that. Bias, of course, does not suggest either duplicity or conniving. Taylor’s deliberate misuse and incorrect definition of the word “bias” to make Kunselman appear as though he were suggesting David Stead was duplicitous and/or conniving was, of course, deliciously duplicitous and conniving behavior on the part of Council member Taylor.

The last School Marm to rap Kunselman over the knuckles for suggesting David Stead might be biased toward, oh, removing the Argo Dam as opposed to keeping it because Stead sponsored a resolution to remove the Argo Dam, was First Ward’s Sabra Briere. She told all present that questions brought before Council needn’t be answered quickly, but they did need to be answered “civilly.” I have to wonder if Sabra Briere was listening during Taylor’s comment when he used the words duplicity and conniving.

In March of 2006, the Ann Arbor Environmental Commission passed a resolution that created the Huron River and Impoundment Management Plan (HRIMP) Committee. The committee was charged with developing recommendations for managing the Huron River. Steve Kunselman was absolutely right to point out the potential conflicts with having David Stead Chair the HRIMP committee. Stead wants the Argo Dam out, and voted at the May 2009 Environmental Commission meeting in favor of removing the dam. The HRIMP committee’s job was to come up with a “committee vision” on best practices to manage the Huron River.

David Stead’s vote to remove the Argo Dam and subsequent chairing of the HRIMP committee is actually the least of the conflicts and biases on which we should focus, however. The appointment by Mayor and Council of the same individuals to multiple boards and commissions in Ann Arbor should attract our undivided attention. The political gene pool has been limited, unnecessarily, by this political ploy. The Mayor uses the strategy to groom his Council candidates of choice, and help them “build” résumés.

Another issue to focus on is our Mayor’s nasty habit of appointing citizens to boards and commissions after receiving campaign donations from them. Law enforcement agencies refer to this as “pay-to-play.” For instance, in 2003 David Nacht was appointed to the AATA Board for a 10-year term after a 2002 campaign donation to Mayor Hieftje. Nacht is not alone, of course, and shouldn’t be perceived as the only example of this pattern.

Yet another issue to focus on is the awarding of city contracts to the companies of individuals appointed to “serve” the city by sitting on boards and commissions. Planning Commissioner (appointed in 2007) Bonnie Bona recently sent out an email to potential customers that used her company’s 2005 Argo Park redesign work as a sample of her company’s design capabilities.

There are knuckles that need to be rapped, but not Steve Kunselman’s for bringing up potential biases or conflicts of interest.

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Older Posts »

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December 18, 2009

The Politics of the One-Two Bitch Slap: Obama’s Economic Advisor Dr. Lawrence Summers Raps Ned Staebler’s Knuckles and Calls MEDC “Crony Capitalism”…Then Rick Snyder Piles On

December 17, 2009

Beehives, Tight Skirts and Salary Gaps Galore: The 50s Alive & Well in A2

December 10, 2009

Rapping Kouncilmember Kunselman’s Knuckles. Krack.

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