Mayor Hieftje « A2Politico: Ann Arbor Politics Grilled To Perfection

April 30, 2010

The Politics of Surpluses: Fudging the Numbers

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

Rate this posting

Rating: 5.0/5 (11 votes cast)

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

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

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

Layoffs

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Water — $9.3 million

Sewer — $44.7 million

Street Repair Millage Fund Balance — $19.4 million

Stormsewer — $5.2 million

Solid Waste — $8.9 million

Fleet Surplus — $7.5 million

IT — $4 million

Project Management — $1.5 million

Central Stores — $1.6 million

Total unrestricted fund surpluses: $102,100,000

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

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

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

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

Popularity: 46% [?]

Comments (13)

April 25, 2010

The Politics of Propositions: When Every Scheme Sounds Like a Winner

Rate this posting

Rating: 5.0/5 (6 votes cast)

When Google rode into town promising to create 1,000 jobs by 2011, Mayor and Council responded to the racy proposition by taking over $2 million dollars from the city’s already stretched General Fund and creating a new fund called the Economic Development Fund. It should have been called the Rob Peter to Give Away Money to Paul Fund. With the magical appearance of money in the Economic Development Fund, Council took taxpayer money and paid to give Google 400 parking spaces. That crazy arrangement is due to expire in December 2010. I call it crazy for any number of reasons not the least among which is that Google created about 20 percent of the total jobs the company promised, yet still took (and was given) 100 percent of the free parking spaces promised. For every one job created by Google, Ann Arbor taxpayers funded two (yes, two) parking spaces.

Now, money from the Economic Development Fund aka the General Fund is being used on the Fuller Parking Garage project. Our tax dollars are being used to pay a consultant to design a parking garage for the University of Michigan.

In Ann Arbor, our current Mayor and Council simply don’t evaluate business propositions with any modicum of business sense. They will entertain just about any proposition, and give away more money than is practicable in order to smooth the way for the smooth-talking types who come before Council and want their way with the group. The current rumor that it’s tough for those Willy Loman types, developers who ride into town, architectural plans in their travel bags, is pure nonsense and bunkum—developers Newcombe Clark and Jeff Helminski included. Clark recently launched a bid to unseat Fifth Ward Council member Carsten Hohnke because Hohnke sent a note to be read by Fifth Ward Council colleague Mike Anglin that made it clear that Hohnke did not favor Clark’s Moravian project.

One has to wonder why Newcombe didn’t run for Mayor. It was Mayor Hieftje, after all, who sank any chance Clark and partner Jeff Helminski had for their Planned Unit Development (PUD) petition to be approved. Hieftje voted against the PUD petition, while Carsten merely sent a note to the meeting and missed the vote. For that matter, why doesn’t Clark move to Ward Three and take on Council member Chris Taylor? Taylor voted for the PUD, but in taking out Taylor, Clark could live la vida loca and spend his days making the life of the other Third Ward Council member, Steve Kunselman, a towering inferno.

It’s my supposition that sometime during the years when Helminski and Clark accumulated their multiple small parcels in the Germantown neighborhood, someone, somewhere, led the two to believe that the P.U.D. was in the B.A.G. All they would have to do was jump through a few hoops at the Planning Commission (which eventually recommended that the Moravian PUD be approved) then, on the Commission’s recommendation, Council would approve the PUD, just as they did for the Near North project. It’s no secret that there are those on Council who believe that the neighborhoods adjoining downtown are fair game for denser development, despite what the residents, zoning laws and various city master plans might say. However, there arose a Third Ward Council member in August of 2009 who knew not Joseph, Jeff or Newcombe. Steve Kunselman voted against the PUD. I can only venture a guess and that former Third Ward Council member Leigh Greden would have heeded the advice of former Second Ward Council member Joan Lowenstein, when she stood before Council and told members not to give in to the “sulkers,” and approve the Moravian PUD.

Since 2000, some 41 development projects have been approved by City Council, developments totaling close to 4,000,000 square feet of new development in our city. Those projects include the 2003 City Council approval of a 633,000 square foot fantasy-land at the corner of Broadway and Wall Street, called the Broadway Village PUD Site Plan. The Broadway Village was supposed to include 7 buildings, 196 units of residential space, and over 760 parking spaces. It’s currently a 7.3 acre eyesore that has enjoyed seven years worth of site plan extensions thanks, one imagines, to the political donations and connections of developer Peter Allen. There are other communities that pull site plan permissions after six months if the developer hasn’t secured funding and broken ground. I have to imagine that Allen, the Broadway Village developer, will petition Council in October of 2010 for another extension. I also have to imagine that funding for the project will not be any more forthcoming in October of 2010 than it was in 2003, when the project was first approved.

It makes no sense to allow Peter Allen to squat at the corner of Broadway and Maiden Lane as he waits for the banks to see the light and finance his development, or at least make sure he gets his developer’s fees before the project goes belly-up, and Ann Arbor is left holding the bag.

So, why can’t developers get their projects built in Ann Arbor? Well, for starters, since 2000 our Mayor and City Council have fallen over and again for the same story: nice project, grandiose financing scheme. Over and again, planning staff have advised the Planning Commission that the individual projects were viable, and Planning Commission has advised Council to say yes to the proposition. Over and again, the developers were unable to begin construction. Not once, not twice, but 40 times since 2000. In fact, the number of development projects that have been approved since 2000 exponentially outnumbers the number of projects turned down by City Council, including as the Moravian.

In going door-to-door, I’ve heard over and again from voters that they want to see the zoning laws applied fairly and uniformly. They want to see PUD projects in near downtown neighborhoods discouraged, and density concentrated within the boundaries of the Downtown Development Authority. After all, one voter pointed out, that’s how the Greenbelt millage was sold.

Well, no. That’s not how the Greenbelt millage was sold.

In 2003, not a single piece of Greenbelt millage campaign literature linked the Greenbelt campaign to increasing density within the city of Ann Arbor. Chapter 42 of the City Charter that deals with the implementation of the Greenbelt millage says nothing about downtown density as a reason to repurpose the then land acquisition millage money. Elected officials, Greenbelt Advisory Committee members and city staff have “repurposed” the intention behind the Greenbelt millage passage to suit their political belief that we must increase density in downtown Ann Arbor. However, the Greenbelt millage was sold and presented to voters this way:

From Chapter 42 of the Charter: Uncoordinated development in the areas around Ann Arbor has affected and may continue to adversely affect the quality of life in Ann Arbor leading to fragmented open space and wildlife habitat; loss of productive farmland and forestland; destruction of rural beauty which is part of the natural historic character of the Ann Arbor community; decline in water quality and the loss of wetlands; increased auto dependency, fuel consumption, traffic congestion and air pollution; relocation of jobs to peripheral area; excessive public costs for roads and utility infrastructure, new and extensions, to dispersed development.

Now, almost 10 years and $22 million dollars later, a map of the Greenbelt millage purchases shows 1,782 acres “saved” from development.

Greenbelt

What should be obvious from the map is that the total amount of land acquired within the boundary is miniscule. The 30 year 0.5 mill tax for and acquisition is anticipated to raise between $80 million and $100 million dollars from Ann Arbor taxpayers. Even doubling or tripling the number of acres will not substantially increase the total land mass, or create anything close to a “green belt” around Ann Arbor. What we will have done is to have preserved multiple small parcels of open space and farmland in outlying townships. Meanwhile, the opportunity for a Greenway languishes, brought back from the dead every two years, like Lazarus, by politicos who pledge to support a Greenway for the city.

While the Mayor claimed in a January 2010 AnnArbor.com post this is a “golden” time to swoop in and pay less than the $12,000 per acre on average that has been paid for the rights purchased, Ginny Trocchio one of two people who manage the Greenbelt millage program, was quoted in an April 14, 2010 AnnArborChronicle.com post as refuting the notion. Trocchio is quoted thusly, “The market has changed dramatically since the millage passed. Land values have dropped sharply, but landowner expectations remain higher than the actual market price— that’s an issue in trying to negotiate deals.” The dilemma makes sense, in fact. Chances are good that land rich, cash poor landowners need money now more than ever.

The most recent example of this propensity to accept propositions sits at 2502-2568 Packard. The 91,700 fantasy-land was to be called Georgetown Commons. Even with the TIF (tax increment financing) sweetheart deal from Council that would have given tax dollars to the developer, the Titanic development scheme sank after hitting the icebergs of financing, debt and unpaid taxes. The property is valued at $4.6 million, based on its 2010 state equalized value. Developer Craig Schubiner paid $6.1 million for it in 2001, according to city documents.

After creating a 6.4 acre disaster by letting Craig Schubiner talk them into a TIF financing package, City Council created the Georgetown Mall Citizen’s Committee which held a meeting at 6 p.m. April 22nd in a 6th floor conference room at City Hall. Citizens will come together and figure out how to clean up the mess created by Council’s short-lived love affair with the Georgetown Commons developer.

So what’s the answer to this decade-long string of failed development? It’s simple: no more tax increment financing (TIF) giveaways to private developers, no more public-private partnerships where our tax money is used to subsidize private development projects, or mitigate the risks, as First Ward Council member Sandi Smith once said, of private development in Ann Arbor. Those public-private partnerships are breeding grounds for what President Obama’s chief economic advisor Dr. Lawrence Summers, referred to as “crony capitalism.” The public good is subverted for the sake of private gain. Public policy is replaced with back room dealing. An excellent example of crony capitalism is the convention center RFP process, a sham procedure designed to give us a predetermined outcome. A few politicos, including the Mayor, City Administrator and former Chamber of Commerce leader decided quietly among themselves as early as 2008 that Ann Arbor’s downtown needed a convention center.

As elected officials, and as a community, we’re going to have to apply significantly more business acumen, vision and skepticism when developers come forward with plans such as the Broadway Village and Georgetown Commons. Yes, it’s a great bullet point for a political résumé to bring in and break ground at such a project, but when the projects fail, as those two have, our community as a whole suffers tremendously. The closed Georgetown Mall has spurred an increase in crime in the neighborhood around the area.

If Ann Arbor is to become a community in which development investments are approved, financed and built (a critical three-step process), we’re going to have to reshape the way in which projects are taken through the planning process, and by whom. We’ll have to carefully analyze and study the successes and the failures of the past decade to identify patterns, people and issues where Ann Arbor’s staff, appointed and elected officials can do a better job helping those who want to invest in our community do so equitably and, ultimately, in the best interests of the taxpayers.

Popularity: 44% [?]

Comments (11)

April 8, 2010

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

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

Rate this posting

Rating: 4.9/5 (9 votes cast)

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

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

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

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

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

Evidently, the lost officers had simply evaporated.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Popularity: 54% [?]

Comments (14)

April 6, 2010

The Politics of Development: If You Think It’s About Urban Density and Affordable Living, Think Again

Filed under: boards and commissions, city council, developers — Tags: American Federation of Teachers, Avalon Housing, Concentrate Media, Germantown Historic District Committee, Issue Media Group, Jeff Helminski, Jeff Myers, Joan Lowenstein, Kelly McBride, Main Street Area Association, Mayor Hieftje, Near North, Newcombe Clark, Rebecca Lopez Kriss, Stephen J. A. Ward, The Moravian, Tracy Gosson — A2 Politico @ 2:10 pm

Rate this posting

Rating: 5.0/5 (8 votes cast)

There have been political battles involving The Moravian since B.C. 60. Seriously. Hapsburgs figure prominently in this history, as does Milan Kundera.

Here in Ann Arbor, The Moravian PUD went down in flames early this morning with very few of the young professionals (YPs) and students in attendance whom developers Jeff Helminski and Newcombe Clark had rallied together in a pre-Council meeting Happy Hour. Evidently, when it was time for their flash mob politicos to speak in support of The Moravian they got email alerts so that they didn’t have to sit around listening to other people blather on. Concentrate Media’s editor Jeff Myers spoke passionately in favor of the project. Developer Newcombe Clark, until recently, was Myers’s colleague at Concentrate Media. Myers cajoled Council members to realize that the development would bring mixed-use development to a neighborhood that desperately needed a shot of development botox. Concentrate Media, of course, is owned by Issue Media Group. IMG’s business model, according to Tracy Gosson, who works for IMG is to feed at the public trough then cover “local” government. Gosson is quoted in a piece published in Janaury 2010 in the Baltimore City Paper as saying, “…[P]artnering with government—or any other organization that wants to help fund IMG e-zines…—is her media outlet’s business model. ‘Government, a lot of the time, are partners of ours,’ Gosson explains in a Jan. 18 phone conversation, referring to Detroit-based Issue Media Group (IMG).”

Of course, IMG’s business model, and Concentrate Media’s coverage of “local” Ann Arbor issues, such as development projects like The Moravian, present potential conflicts of interest. Stephen J. A. Ward, founding director of the Center for Journalism Ethics at School of Journalism and Mass Communication at the University of Wisconsin-Madison, was recently quoted in the Baltimore City Paper as explaining that IMG’s public-financing model “is a problem if the publication is pretending to do journalism….And it’s a problem for the writers—they have to ask themselves ‘How independent can we be?’”

Kelly McBride, the Poynter Institute’s Ethics Group Leader, says of the IMG/Concentrate business model “…Simply going to a government official and saying, ‘Hey, we need money,’ that creates a quid pro quo. Who knows what the unspoken expectations are?”

Rebecca Lopez Kriss spoke in favor of the project. If you don’t know who she is, you’re over 25, and not a member of the Chamber of Commerce. You’re also not in the loop about the Germantown Historic District Committee. Kriss was appointed to that group by the Mayor and Council. In her comments in favor of the Moravian, she suggested that Council members who voted against the project could proudly call themselves political creationists, for surely a vote against the Moravian was a vote against the inevitable evolution of the New Order of things as determined by those 25-30 year olds who earn $35,000-$50,000 per year, who want “affordable” 1-2 bedroom housing to fall from the sky like manna and, statistically, are the least reliable voters in local elections. Turns out Kriss bit the hand of the creationist who appointed her to the Germantown Historic District Commission. Mayor Hieftje voted against awarding the Moravian the PUD status the project needed to move forward.

Gen Y political flash mobs, and politically connected developers be damned. The Boomers and the Germantown residents had the final say: No PUD.

If the above description paints an ugly picture, it’s meant to. It was an ugly, adversarial confrontation stoked by the developers who used naive young professionals (YPs), drunk on their own importance to the economic development and economic success of our city, to stand up in public and make fools of themselves for the most part through sheer ignorance of the facts regarding the development in favor of which they spoke so passionately. They wanted Council to approve the PUD for the Moravian because YPs need “affordable” 1-bedroom housing. Alas, The Moravian offers, primarily, 3-4 bedroom apartments with shared common areas (i.e. student housing). The developers and Planning Commission members refused to release to the public the exact rents that would be charged. However, the YPs came one after the other, something like a scene from a George Romero movie, and swore the project was the Holy Grail of “affordable housing.” The YPs were fed up with “shitty” housing stock (to quote a lithe, blonde, young woman who forgot, momentarily, that she wasn’t in Cafe Habana with her cuddies sipping margaritas). There were those who lectured Council on how much the Moravian would contribute to the property tax base. No matter that the last several similar developments, including Zaragon Place, received tax assessment reductions from the city after the completion of their projects. The Near North project got a $500,000 present of tax dollars from the Downtown Development Authority after the project’s approval just because, well, Avalon Housing and the private developer went to the DDA and asked for money. The Near North project sits outside the DDA’s area of operation.

Where does that line for free money start?

I can tell you that I will work to end such tax dollar giveaways. Avalon Housing and the Near North private developer should expect their $500,000 DDA taxpayer-funded gift re-examined for its legality and, if found to be made illegally, revoked, should I be elected.

These YPs, evidently, had no idea that The Moravian project is not about urban density or lofty ideals. The development is about the dirty, pretty money that Newcombe Clark and Jeff Helminski have spent, and stand to gain from their “clever” (to quote the President of a local bank who spoke in favor of the project) accumulation of several small parcels. No matter that Ann Arbor zoning ordinances expressly forbid the accumulation of multiple smaller parcels, combined, then used to build apartment buildings 38 times larger than the nearest single family house. For over three hours, those in Council chambers listened as many impassioned people (several of whom had never set foot in Council chambers before) said the same thing over and over: Ann Arbor needs much more affordable housing stock. Many of those YPers and students who spoke on the subject mistakenly said that The Moravian was a project that would have expanded the affordable housing stock. In truth, by knocking down the existing houses, The Moravian project would result in a net loss of affordable housing stock rather than a net gain.

Go figure. Please.

The YPers had anecdotes: Their friends, they said, are leaving Ann Arbor. Their friends, they said, would love to live in Ann Arbor, but have to live in Ypsi because they just can’t find places to live in like, yep, The Moravian. Long-time Main Street business owners (Newcombe Clark served on the Board of the Main Street Area Association) came forward to support the Moravian. Over and again employers told stories about how their employees needed “affordable housing.” It was the largest single dose of paternalism I’ve swallowed in quite some time. If these Main Street employers want their employees to be able to live in Ann Arbor, perhaps the employers should pay a wage commensurate with the cost of living in Ann Arbor. Then again, paying a 25-year-old bartender $65,000 per year is not a business model that would work for our local Main Street eateries.

A U of M Professor, snugly tucked away in her Burns Park house, far from the proposed development, talked about the housing needs of her post-docs with a level of concern that I can only hope gets a write up in The Chronicle of Higher Education. Post-doc, for those who’ve never been one, or known one, is the academic equivalent of an indentured servant. Our pro-Moravian Prof., told Council she has a tough time recruiting post-docs because of (if you work in Academe try not to guffaw, please) the housing situation in Ann Arbor. For those who don’t work in Academe, let me explain. There are exponentially more students with doctorates (post-docs) than post-doc positions; it’s a research prof’s market. That’s why post-docs get paid peanuts and work like beasts of burden. Lack of affordable housing is not the main concern of, say, officials at the American Federation of Teachers, who are working to improve the lives of the several hundred thousand post-docs in the United States, including those who work for our pro-Moravian prof. Low pay and outlandish professional exploitation are the main concerns, and have been for the past 30 years as the number of post-docs has proliferated.

Joan Lowenstein, former Second Ward Council member and Newcombe Clark’s colleague on the Board of the Downtown Development Authority, stepped forward to urge Council not to give in to the “sulkers” who just want their own way, and who would stand between The Moravian and its PUD. It was a masterful performance full of contempt for those who are just, plain, spoiled sports about behemoth developments plopped down in the middle of quiet neighborhoods not zoned for behemoth developments. I have a feeling that had The Moravian been slated to go up next to Lowenstein’s house and on her block, we would have been treated to an armed insurrection in addition to plenty of sulking.

All in all, thanks to city planning staff, not to mention the members of the Planning Commission who recommended the PUD be approved, but who clearly didn’t read the city’s own PUD rules carefully enough, hours and hours of precious time were wasted on pleading the merits of a meritless PUD petition. Second Ward Council member Tony Derezinski voted in favor of the PUD based on the fact that the “professionals” had approved it. It should be noted that the work of those same professionals was methodically decimated by neighbors with city maps, planning experts, lawyers, and engineers employed by the Germantown Neighborhood Association.

I would argue that The Moravian debacle is proof positive that the “professionals” on the city staff and Planning Commission are few and far between. The Moravian Mess demonstrates quite clearly that a decade of giving away board and commission appointments at cocktail parties, and as plums to political supporters and donors, is wrecking havoc on the landscape of Ann Arbor. The seven members of the Planning Commission who voted to recommend that Council approve The Moravian PUD caused hours of Council’s time to be wasted in a fruitless public hearing, and on political posturing.

Ann Arbor needs more affordable housing stock. Absolutely. Does Ann Arbor “need” to do whatever it can to retain young professionals? Yes and no. It’s Gen X and Boomer employers who need to pay their Gen Y workers $35,000-$45,000 per year. These business owners want to push Ann Arbor into planning and public policy decisions that will benefit their businesses need to hire young workers, and pay them wages that result in a growing population that desperately needs “affordable” housing. Michigan is a “sticky state,” as I wrote in a previous entry titled “The Politics of Demographics: Why All the Hand-Wringing and Fuss Over Gen Y?”:

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.

I almost went before the City Council at the public hearing last night and announced that I support the fantasy Moravian as talked about by those many young professionals who came before Council. That’s The Moravian with “affordable” rents around $800 for a 1-bedroom (at Zaragon Place, the rent per bedroom is $1,100) that really is a development aimed at young professionals.

However, the truth isn’t so pretty. This April 6, 2010 piece in The Michigan Daily throws down with the recent developments, including 4 Eleven Lofts, Zaragon Place and The Courtyards, purportedly built for “young professionals” as “over-priced luxury student housing.” The Manager of 4 Eleven Lofts was quoted in another Michigan Daily piece about the saturated rental market as saying, “As of the end of 2008, we had leased 4 Eleven Lofts to approximately 45 percent for the 2009-10 term, but by the end of 2009 we have already reached 65 percent occupancy for 2010-11.”

This May 2009 piece posted to the Concentrate Media web site, in fact, makes the absurd claim that Zaragon Place is for both students and young professionals. In April of 2010, Rick Pearlman, president of Zaragon Incorporated made clear the building’s target audience in an interview with The Daily: “It’s obvious. When you go around you see that most of (the student housing) is very old, very tried.” Local developer Peter Allen concurred, “The developers of these two developments know the campus. And they think they know the student values. So it was not a big leap of feasibility to think Zaragon and 4 Eleven Lofts would work here,” Allen said of the Chicago-based developers Zaragon Incorporated and Joseph Freed and Associates, who built Zaragon Place and 4 Eleven Lofts, respectively.

And The Moravian? More student housing. Glorified and expensive dorm rooms for students whose parents will pay the rents demanded of them for as long as their kids are enrolled at U of M. These developments are not about a vision of downtown density, or a vision for the landscape of the City of Ann Arbor. They are private dorms built in the middle of our downtown for a transient population. The Moravian is a private dorm whose developers want built in the middle of an established neighborhood for the simple reason that they bought up the parcels and want to recoup their investments.

It’s time for us all to have honest discussions about a long-term vision for the development of our downtown areas.

What I will never support is the use of PUDs to build high-rise student housing in our neighborhoods, or vote for a PUD to allow out-sized developments to “leak” outside the established boundaries of our downtown.

I fully support downtown development and density coupled with truly affordable housing—the need that was presented by those dozens of 25-35 year-old women and men who want to live within walking distance of jobs, restaurants and (some day) shopping. I wish they would run for office and vote with the same dedication they post to Facebook and Twitter. If they did, they might be better able to see through snow jobs like The Moravian, and into a future where our elected officials aren’t constantly seduced by the quick development buck, and who will demand professional work from both city planning staff, and appoint professionals to the Planning Commission who will never send clearly flawed planning decisions to Council to waste the time of elected officials and citizens, alike.

Popularity: 66% [?]

Comments (35)

March 18, 2010

The Politics of Outsourcing: Why Pay More to Recycle Ann Arbor? Good Question.

Filed under: Mayor Hieftje, city council, environment, recycling — Tags: Ann Arbor City Council, Carsten Hohnke, Container Recycling Institute, Ecology Center, Environmental Commission, Margie Teall, Mayor Hieftje, Recycle Ann Arbor, recycling, Ryan Stanton, Sue McCormick — A2 Politico @ 6:41 pm

Rate this posting

Rating: 5.0/5 (7 votes cast)

In response to my entry about the City Council move to switch Ann Arbor over to single stream recycling, I had a conversation with a former worker at the city’s material collections facility who pointed out something very important to me: the ideal recycling program contracts and, eventually, becomes unnecessary. Why? Because the ultimate goal is to reduce use of materials.

Reduce. Reuse. Recycle.

In that Holy Trio (at least in my house), it’s pretty easy to forget that “recycle” comes last, not first. Recycling is, for all intents, the last option those committed to environmentalism choose. The first move is to reduce one’s use of materials that can’t be reused. Then, and only then, do we move to the last resort of recycling. It’s a lofty ideal. At our house, we certainly don’t meet the goal of 100 percent diversion of consumed materials from the landfill. We try our best. We have a compost tumbler in the backyard. When they first debuted, we bought one of those nifty City of Ann Arbor compost bins for $25. Those are the same bins that everyone is now going to be required to drop $50 bucks on in order to get leaves picked up. If our neighborhood is any indication, I have to imagine that city staff member Sue McCormick is still sitting on several thousand of the original 10,000 compost bins she spent several million dollars on not too long ago. We’re the only family with one within a two block radius.

As I’ve written before, at our house reduce, reuse, recycle is the religion. Thus, my curiosity was piqued when Fifth Ward’s Carsten Hohnke, one of the sponsors of the resolution to move Ann Arbor to single stream recycling, along with Ward Four’s Margie Teall and Mayor Hieftje, was quoted in a November 6, 2009 post to AnnArbor.com written by Ryan Stanton as saying:

This is a smart step forward for us and for our solid waste program. I feel convinced that we’ll see a significant increase in the amount of waste that we’re diverting from landfills and therefore the cost that we incur in taking waste to landfills.

The other exciting part of this is that we’ll have an opportunity to generate additional revenue from a greater volume in the recycling stream and to provide additional services to neighboring municipalities and help spread recycling beyond Ann Arbor.

Increasing the amount of waste diverted from the landfill, however, does not qualify as an increase in recycling. According to the Container Recycling Institute’s 2009 survey which examines single stream recycling: “It is important to understand that diversion from disposal is not recycling. Collection is not recycling. A product is not recycled until it is made into another product.”

Thus, expanding our recycling program on the basis that the investment will result in more materials simply being diverted from the landfill is actually no environmental gain, according to researchers at the Container Recycling Institute. So why the frenzy to throw away millions to divert more tons from the landfill? A look at the following chart from the City’s web site will provide you with an easy explanation as to why city staff pushed single stream recycling, and one of the several reasons why the city’s members of the Environmental Commission, City Council, Recycle Ann Arbor and the director of the Ecology Center pushed the single stream change-over.

Compost

According to the chart above, the total number of tons of material put into our landfill has actually risen since 2004, and total number of tons recycled has stagnated since 2002. Let me put this another way, the total number of tons hauled by Recycle Ann Arbor hasn’t increased substantially since 1998.

However, there is one area where we have seen a dramatic increase with respect to recycling: the amount of money taxpayers are spending to pay Recycle Ann Arbor to haul our recyclables has skyrocked since 2004, when the City of Ann Arbor granted the non-profit a 10-year contract to haul our materials. That merit-based contract called for the City to pay Recycle Ann Arbor $766,000, according to minutes from the December 15, 2003 City Council meeting.

This interesting pitch for the use of Recycle Ann Arbor versus our city’s own staff, or a for profit hauling service, to collect our recycling comes from the Recycle Ann Arbor 2005 Annual Report:

Ann Arbor can take pride in its approach to recycling – nonprofit Recycle Ann Arbor started its curbside recycling program 28 years ago and still operates the program today under contract to the City of Ann Arbor. In 2004, the City of Ann Arbor granted Recycle Ann Arbor a ten-year contract that will enable Recycle Ann Arbor to continue providing quality recycling services to the Ann Arbor community.

Many communities hope to save money and streamline the collection process by bundling waste collection and recycling services. Instead, they create a monopoly situation where waste haulers control not only the collection of waste and recyclables, but also the material recycling facilities, allowing them to dramatically increase their rates.

Recycle Ann Arbor realizes that waste hauling companies see little difference between fees for trash services andfees for recycling services. In addition to increased fees, recycling efforts suffer. Waste hauling companies are profit driven, and more concerned with their bottom line and keeping their investors happy, than with the quality of their recycling efforts. The typical profit margin for land filling is ten times more than for recycling, making it in the best interest of any commercial waste hauler not to concentrate on recycling efforts.

Ann Arbor taxpayers foot the bill for the trucks, fuel, and repairs of Recycle Ann’s Arbor’s collection vehicles, purchased for $225,000 each in 2004. Despite the eloquent argument made above against bidding out the contract to for profit hauling companies, or the City of Ann Arbor using its own city-owned recycling vehicles and city staff to haul recycling, Recycle Ann Arbor’s Annual Report pegs for profit hauling companies as “profit driven.” What’s clear from the information that follows is that recycling in Ann Arbor and Recycle Ann Arbor have become equally “profit driven” and the same kind of hauling monopoly the Recycle Ann Arbor Annual Report referenced above urges Ann Arbor citizens to avoid.

Look again at the chart above at the number of tons recycled.

By 2008, the cost to taxpayers to have Recycle Ann Arbor haul virtually the same number of tons of material to the MRF that the company hauled in 2003, had risen from $766,000 to a whopping $1.6 million dollars. City Council approved the payment of $1.8 million dollars to Recycle Ann Arbor for fiscal year 2010. The November 2009 resolution to move to single-stream recycling includes the following information from city staff to justify the expenditure and support the resolution by the politicos:

Whereas, Implementation of upgrades to the Material Recovery Facility (MRF) to accept single stream recycling provides a number of benefits to the City, including a cleaner community, greater operating efficiencies, overall increases in recycling and rewards to City’s residents for recycling

The following net savings are anticipated as a result of these changes in the recycling program.

·       $30,000.00 annual savings in recycling dumpster collection

·      $450,000.00 annual savings in curbside recycling (RAA contract)

·      $450,000.00 annual revenues from merchant MRF users

The 2010 $1.8 million dollar allocation to Recycle Ann Arbor obviously doesn’t support the alleged $450,000 savings touted by the three city staff who prepared (Tom McMurtrie, Systems Planning Unit), reviewed (Sue McCormick, Public Services Administrator) and approved (City Administrator Roger Fraser) the resolution presented to Council at the November 2009 meeting at which Council member Carsten Hohnke touted the “savings” taxpayers would realize by switching to single stream recycling.

Here’s the real kicker. It costs less to pay city workers to pick up the garbage, even with the generous pay and benefit packages provided to them, than it costs to contract with Recycle Ann Arbor to drive the city-owned and maintained trucks to pick up our recycling. This is the same pay and benefit package lamented by the City Administrator, Mayor and Council members as a major source of the city’s financial problems. In fiscal year 2009, actual salary and benefits to city employees for residential garbage collection was $738,093. In 2011, budgeted salary and benefits for city employees for residential garbage pick-up is $789,271.

In 2009, Recycle Ann Arbor spent $809,090 on salaries and benefits for its collection workers, and has budgeted $865,682 for the 2011 fiscal year. In 2009, for the City of Ann Arbor to contract with Recycle Ann Arbor to provide drivers to collect multi- and single-family recycling, the contract labor was $1,580,794 to run eight recycling trucks. The City of Ann Arbor spent $1,171,020 to run 10 city trucks to collect multi- and single-family solid waste.

Now, with the blessing, backing, pushing and shoving of the Environmental Commission, Mayor and Council, we’ve entered into a contract that will require taxpayers to continue to overpay for recycling services. To add insult to injury, Mayor and Council just voted to waste millions to implement single stream recycling in the hopes that it will become the fantasy savings/profit center as pitched by staff to Council, then by Carsten Hohnke to the public through the Press in November 2009.

The solution to this financial and managerial mess is obvious.

We need elected officials who are absolutely intolerant of conflicts of interest, who read the contracts they vote to approve, and who are prepared to closely question the financial information and pie-in-the-sky promises pitched to them by city staff. The Recycle Ann Arbor contract amended by City Council on March 15, 2010 was not attached to the Council agenda, or provided in the Council packet. Recycling services provided to our city by Recycle Ann Arbor need to be bid out to for profit haulers, or brought in-house, where taxpayers will save hundreds of thousands of dollars. The Recycle Ann Arbor drivers could, in theory, apply for the city jobs that would be created.

Is there any way to get out of the ill-advised Recycle Ann Arbor contract Council just entered into? There may be. I’ll write about how and why in my next entry.

Popularity: 52% [?]

Comments (11)

March 15, 2010

The Politics of Garbage: Single-Stream Recycling Stinks For More Reasons Than You Think

Filed under: environment, money, recycling — Tags: Ann Arbor Ecology Center, Ann Arbor Materials Recovery Facility, Calvert's Roll-off Container Services, Carsten Hohnke, conflicts of interest, Container Recycling Institute, Margie Teall, Mayor Hieftje, Meslissa Uerling, Michael Garfield, Planning Commission, recycling, Reuse Center — A2 Politico @ 12:19 pm

Rate this posting

Rating: 5.0/5 (12 votes cast)

A2P Notes: Looking for the back story? I wrote about single stream recycling first on January 28, 2010. To read that entry titled “The Politics of Unscrambling Eggs: Hieftje, Hohnke and Teall Push $6.4 Million For Environmentally Regressive Single Stream Recycling,” click here.

It has often been disturbing to follow the money, connections and political threads that run through our city, and from city government out into the larger community. We live in a small town, and it’s sometimes too easy to justify ethically questionable contracts, relationships, and reciprocities. I wrote here on February 18th that businesses owned by a current member of the Planning Commission and a current member of the Downtown Development Authority were awarded contracts for city work, and then the initial contract was amended by Council on February 16th to increase the original allocation by $100,000.

In the Council resolution, the names of the businesses never appeared anywhere, neither was it made public that the city was awarding contracts to members of the boards. If this information had been made clear to Council and the public, it might have raised questions (at least for me it would have). Furthermore, nowhere in the Council Board packet did information about the bidding process, or whether or not the work had been bid out competitively appear, either. The several hundred thousand dollar prize was quietly awarded to the companies of two politically-connected individuals (or so it appears).

With the details not disclosed when staff requested the funds from Council, the transparency of the bidding, awarding and allocation processes skirt dangerously close to cronyism—much too close for my tastes.

Then we have single-stream recycling. It’s an absolutely ecologically regressive move as documented by numerous studies, including a 35 page 2009 survey (tip o’ the keyboard to Steve Bean) by the Container Recycling Institute. The survey concludes: “In summary, with increased processing costs and lost revenues in total far exceeding collection savings in most instances (and zero under alternating-week collection), overall single-stream recycling does not show the cost advantage that was originally anticipated. As well, the expected increases in capture rate are also not apparent. Overall, dual-stream recycling still appears to be more advantageous.”

The presentation to Council in support of the resolution put forth by Mayor Hieftje, Fifth Ward Council member Carsten Hohnke and Fourth Ward Council member Margie Teall to allocate funds for the $6.5 million dollar move to single-stream recycling was prepared for city staff by a consultant who will receive a $100,000 sole source contract to help in the transition to the single stream program. Here’s another fact you may not know: At present only about 35 percent of the material processed at the Ann Arbor Materials Recovery Facility (MRF) is actually collected in Ann Arbor. The remaining 65 percent of materials come from the rest of Washtenaw County, Windsor, Toledo, Livingston, Oakland, and Wayne Counties. However, Ann Arbor taxpayers bear the sole tax burden for the entire proposed expansion of the facility to allow single-stream recycling.

The push to move to single-stream recycling isn’t just coming from outside consultants who stand to gain six-figure sole source contracts. It’s being pushed by politicians up for re-election who stand to gain politically. It’s also being pushed by city staff members under the misconception that recycling success is measured simply by increasing the percentage of materials diverted from our own landfill. This is from the Container Recycling Institute 2009 survey: “It is important to understand that diversion from disposal is not recycling. Collection is not recycling. A product is not recycled until it is made into another product.”

Pressure to make the switch to single-stream recycling is also coming from the Ann Arbor Ecology Center and the center’s Executive Director, Michael Garfield.

I last wrote about Garfield here.

Is there a problem with Garfield and the Ecology Center lobbying for the switch to single-stream recycling, and for Council to award the contract for the work to Recycle Ann Arbor? Other than the fact that he is lobbying for an ecologically regressive multi-million dollar expenditure? There are several reasons, not the least among which is that Garfield has a conflict of interest and stands to gain financially from the arrangement.

The connection between the Ecology Center and Recycle Ann Arbor is revealed in tax documents, in specific Schedule O of the Recycle Ann Arbor’s 2008 990 tax return. In that schedule, we read the following disclosures:

Classes of members of stockholders: “The Ecology Center, a nonprofit corporation is the sole member of Recycle Ann Arbor and, as outlined in RAA bylaws, has the right to appoint a majority of the members of RAA’s Board of Directors.”

Election of Officers and their Rights: “Ecology Center has the right to appoint a majority of the members of the RAA’s Board of Directors.”

Decisions Subject to Board Approval: “Decisions made by the RAA Board are subject to approval by the Board of the Ecology Center.”

Michael Garfield is the Vice Chair of Recycle Ann Arbor’s Board of Directors, and the 2008 income tax return filed by Recycle Ann Arbor indicates that he was paid $67,986 by the Ecology Center for his work there, as well as for an average of 5 hours of work per week on behalf of Recycle Ann Arbor.

In 2007, Recycle Ann Arbor, under the de facto control of the Ecology Center, lost $54,016 dollars. In 2008, Recycle Ann Arbor lost $468,911 dollars, almost entirely on loses associated with the operation of the Reuse Center. Despite the financial loses, the CEO of Recycle Ann Arbor, Melinda (tip o’ the keyboard to Steve Bean) Uerling, received a 20 percent raise in her compensation in 2007 and again in 2008 to bring her total yearly compensation up to $98,377 per year. In 2008, Garfield received a 21 percent increase in his pay from the Ecology Center, despite the fact that Recycle Ann Arbor lost close to half a million dollars.

It is quite clear that Recycle Ann Arbor needs to land the contract from the city, and quite clear that the Ecology Center stands to gain from an expansion of the city’s recycling program.

On March 13th, Garfield blasted out an email titled: “Take Action: Support Single Stream Recycling!” In his email Garfield writes:

Some of you have been recycling in Ann Arbor for almost 40 years, and after sorting one recyclable from another all this time, it might seem wrong to put it all in one cart. After all, we’ve been telling you how important it is to sort your papers separately from your containers. (Some of you may even remember when we sorted green glass from brown glass from tin cans, and so on!) Less than ten years ago, the Ecology Center opposed single-stream collection programs.

But times have changed, and new sorting technology at the materials recovery facility —what we call Single Stream 2.0—makes the extra sorting at the household unnecessary, without compromising the quality of the recyclables.

He is, in essence, lobbying for a contract to be awarded to a company under his control (Recycle Ann Arbor), but making it appear in his email that the Ecology Center simply favors single stream recycling. Garfield does not support his heralding of what he refers to as “Single Stream 2.0″ with any objective studies or data. Furthermore, Garfield does not make clear that the Ecology Center stands to gain financially from the city’s move to single-stream recycling. His claim that the quality of the recyclables is not compromised by the move from dual to single-stream recycling is in direct conflict with the findings of the Container Recycling Institute’s 2009 study, among many others.

The Council resolution in favor of amending the existing contract with Recycle Ann Arbor to be voted on tonight doesn’t include the actual contract. It includes a summary. This is a glaring omission, because the city’s check register shows that payments to Recycle Ann Arbor have risen steadily. According to the city check registers, the city wrote $1,483,381.14 in checks to Recycle Ann Arbor in fiscal year 2008. The total for fiscal year 2009 was $1,866,777.79. For the first seven months of this fiscal year the city has paid Recycle Ann Arbor $1,028,660.80.

In his email to Ecology Center members, Michael Garfield is trying to sell single-stream recycling as a benefit to Ann Arbor, its environment and its people. This is misleading, 65 percent of the materials processed in our city’s Materials Recovery Facility come from outside our own city. How does it benefit Ann Arbor taxpayers to expand our recycling facility to suit the needs of, say, Saline?

Unfortunately, the change over to single-stream recycling looks more like a move to continue to over-pay for services, such as those provided by Calvert’s Roll-off Container Services, a company purchased by Recycle Ann Arbor is 2007. It is a move that will suit the political aspirations of those involved, rather than an objectively studied and well-researched policy decision. It’s the work of a Green Machine interested in financial and political gain, rather than sound environmental stewardship.

The switch-over should be halted.

Popularity: 68% [?]

Comments (53)

February 25, 2010

The Politics of Management: Paying More For Less

Filed under: Mayor Hieftje, city council, money — Tags: City of Ann Arbor Employees' Retirement System, Mayor Hieftje, Roger Fraser — A2 Politico @ 10:38 pm

Rate this posting

Rating: 5.0/5 (3 votes cast)

Most people who live in Ann Arbor don’t have the time or the inclination to get overly involved in the minutia of city government. People are busy spending their days getting done what they need to get done to get the bills paid. Politics isn’t a passion for many, and the thought of running for an elected office probably never crosses the minds of most folks. After all, there are about 10 million people in Michigan, but only about 1,500 mayors. There are just 40 Michigan state senators.

I was at synagogue last Friday and overheard the spouse of a candidate for County Commissioner ask my partner why on earth I wanted to run for mayor. Good question. Why, indeed? Our roads are some of the worst in the entire state. The Stadium bridges are, literally, falling down. The budget is a constant source of heartburn to anyone with the time to read through the behemoth (a tip: you’ll get more information by studying the city’s audited financial statements). Who wants to work to clean up that kind of a mess? Me. Why? Because while there is a mess to clean up, I see that there is also incredible potential and opportunity to make Ann Arbor an even better place for all of us to call home. I am committed to living, working and raising a family here. What better reason to share my decades of management, marketing and finance experience, step up, and accept the challenge of public service?

A police officer whom I spoke with recently made a point of telling me about the two surveys of staff morale that found our 750 city employees in desperate need of some serious pep talks, and maybe even a few anti-depressants. We have employees who feel under-appreciated, and are inclined to jump ship. They work under constant threat of layoff. Studies make clear that layoffs do not actually save money, because overall productivity decreases. The top performers who survive a layoff won’t necessarily feel obligated to soldier on. A 2000 study by Roderick Iverson and Jacqueline Pullman from the University of Melbourne, and a 2003 study by Sarah Moore, Leon Grunberg, and Edward Greenberg from the University of Colorado at Boulder, both confirmed that employees were far more likely to quit jobs in environments of repeated downsizing. The likelihood that an employee will quit actually increases the more layoffs he or she “survives,” the CU-Boulder study found.

The City Administrator Roger Fraser recently gave a presentation to Mayor and Council members in which he presented the following graph:

Layoffs

Between 2002 and 2010, Ann Arbor has reduced its work force through layoff, early retirement and attrition by about 30 people per year. This graph purports two facts.

First, that the overall reduction has resulted in $25 million dollars in “savings.”

The second fact is that the number of consultants (contracted services) and temps has remained “flat.”

No one on Council asked to have the terms “savings” and “flat” defined. Should they have? The City Administrator’s financial data should be presumed to be accurate. However, we have to remember that since 2003, Roger Fraser has inflated General Fund deficits in every budget. With the exception of 2009, when the actual numbers have come in, our General Fund has actually finished with modest surpluses. This is a very important fact that would give anyone with experience in budgeting and finance ample reason to question Mr. Fraser very closely when presented with financial data such as the data in the graph above.

How would one go about verifying Fraser’s data? The City files income tax returns just as you and I do. In those returns, are several bits of information that allow us to check Mr. Fraser’s work.

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

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

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

According to the City’s IRS tax returns, Ann Arbor employs 201 fewer people than in 2000, but spending on wages has increased. In fact, in 2009 we paid about the same to employ 1,029 people as we did to employ 1,159 people in 2002.

We’re paying more for less. We’re getting less for more.

The City Administrator’s data raise many more questions than they answer, and the data are certainly not of the quality necessary to make informed decisions concerning closing projected budget gaps. Mayor and Council have a legal and fiduciary obligation to hold the City Administrator accountable in the performance of his job. Repeatedly presenting incomplete and contradicting financial data to bolster claims of savings that are suspect, at best, is cause for serious concern, close questioning and, potentially, some very frank discussions between Mayor, Council and the City Administrator.

It is clear to me that, as any good manager knows, profitability is not achieved through a long-term strategy of layoffs. Why not? Employee morale and productivity drop, as documented in many studies, including the two I referred to above. Over the last decade, Council members and Mayor have run for re-election based on their support of a fiscal strategy that encompassed the systematic decimation of Ann Arbor’s human capital—our police, firefighters, customer service workers, foresters, planners, even our dog catcher is gone. It’s clear from the IRS data that the cost of government has not been reduced by the layoffs, nor has there been any marked increase in the efficiency of city government; we’ve paid millions for consultants and contract workers to supplement the work of our remaining city staff.

It should be clear that further layoffs are not the answer to the fiscal problems facing our city. The answer is to reverse the damage done and rebuild our human capital.

The City’s department managers must be forced to cut out the junk food from the City’s fiscal diet. This means sharply reducing the amounts approved for contract labor and consultants. For instance, Ann Arbor employs both a landscape architect and a forester, yet Council recently approved several hundred thousand dollars worth of contracts for companies to do landscape architecture and forestry work for the City. Our City Attorney’s office has eight full-time attorneys (tip o’ the keyboard to Rick) on staff, yet that office has asked Council to approve close to $400,000 in contracts for outsourced legal work over the past 18 months. In 2009, Ann Arbor spent over $1 million dollars on consultants.

There’s much more we can do to sort out the fiscal mess that has been created over the past half a dozen years.

The real work will start, and the real savings will be realized, when we reconfigure the City of Ann Arbor Employees’ Retirement System for future retirees—a crucial task put off for a decade, much like the reconstruction of the Stadium bridges, and a good part of the reason our city budget is crumbling, much like our streets.

So what’s it going to take to get our labor unions and non-unionized employees to buy into a complete restructuring of their retiree benefit programs? How are we going to get retirees to pay, for instance, 10 percent of their yearly $7 million dollar health insurance premiums, and to implement a change in benefits to those who retire before 65? How will we ask for an even larger contribution for health insurance premiums from early retired city employees who’re employed full-time elsewhere? How are we going to get employees to agree to accept a change to the age at which they may retire?

For starters, it’s going to new elected leadership at City Hall who is prepared to ask them to do it.

Popularity: 37% [?]

Comments (14)

February 15, 2010

The Politics of Grandstanding: The Three Percent Solution Resolution

Filed under: city council, money, politics — Tags: Budget and Labor Committee, Marcia Higgins, Margie Teall, Mayor Hieftje, Mike Anglin, Roger Fraser, Stephen Kunselman, Stephen Postema, Stephen Rapundalo — A2 Politico @ 3:30 pm

Rate this posting

Rating: 5.0/5 (4 votes cast)

Between 2004 and 2009, Fourth Ward Council member Marcia Higgins, Mayor Hieftje, Fourth Ward Council member Margie Teall, and Second Ward’s Stephen Rapundalo voted, as Chair and members, respectively, of the City Council’s Budget and Labor Committee to give City Administrator Roger Fraser the following salary increases, lump sum payments and cash-outs:

In December 2004, Fraser received a 3 percent raise of his $133,000 salary retroactive to July 2004. ($3,990)

In December 2005, he received a 3 percent raise retroactive to July 2005 and 10 extra vacation days, which can be exchanged for cash. ($4,109)

In February 2007, he received a one-time payment of $8,479, plus a life insurance policy worth twice his salary.

In November 2007, the City Council approved a lump sum payment of $4,361 and five extra vacation days.

In October 2008, the council approved giving Fraser another lump sum payment of $3,634 and the ability to cash out 150 hours of vacation, sick or personal time.

This past November 2009, Fraser’s contract was revised again to include a clause that allows him to cash out an additional 120 hours of paid time off before June 30, 2010.

Since 2004, Council members Higgins and Rapundalo have voted to raise Mr. Fraser’s salary by $8,099 dollars, and given him lump sum payments equal to $16,744 dollars. That’s a total of $24,843 in cash. They then added the option for Mr. Fraser to cash-out 275 hours (6.8 weeks) of paid vacation, sick and personal time, worth over $18,800. In total, then, Mayor Hieftje and Council members Teall, Higgins and Rapundalo voted to give our City Administrator raises, lump sum payments and cash-outs equal to $43,643. This amounts to a 35 percent increase in his initial $133,000 salary. Ironically, this is exactly the same percentage that overhead has grown in our city’s budget since 2006. In my experience, outside of Wall Street, an employee under whose management overhead costs increase by 35 percent ($34 million dollars) does not get rewarded with a pay package increase equal to 35 percent of her/his starting base salary.

Council members Rapundalo and Higgins are now co-sponsoring a resolution that, according to a piece posted to AnnArbor.com, “…asks that the base salary of both Fraser and City Attorney Stephen Postema be reduced by 3 percent, starting July 1. It also asks that the base salaries of all other non-union employees be reduced by 3 percent.” A draft of the resolution also asks that the remaining two council members who did not voluntarily reduce their own pay by three percent this year do so—Fifth Ward’s Mike Anglin, and third Ward’s Stephen Kunselman.

On the surface, their resolution appears sensible and equitable, even responsible. However, upon closer scrutiny it is quite the opposite. It is neither a resolution worth supporting, nor a resolution that treats the city’s 765 employees equitably. The proposed three percent reduction in Mr. Fraser’s salary leaves him with a net 32 percent increase in his pay since 2004. Further the Higgins-Rapundalo resolution links their proposed three percent reduction to the proposal that all of the city’s non-unionized employees to accept a lifetime three percent pay reduction. The Higgins-Rapundalo resolution penalizes the lowest paid city employees and protects pay gains given to the highest paid city employees over the course of the past five years.

Council members Higgins and Rapundalo agreed to a voluntary three percent pay reduction. However, Council members Higgins and Rapundalo would do well to remember that they were caught via FOIAed emails published in a piece in the Ann Arbor News rigging the vote for the three percent pay raise they voted to accept in 2007. Mayor Hieftje and Council would do well to remember that their voluntary pay cut is, in essence, a one-time give back. The give back being asked of current unionized, as well as non-unionized employees is for the rest of their tenure as employees of the City of Ann Arbor.

It’s time to stop political grandstanding that accomplishes little than further angering already demoralized city staff and union members. It’s time to get down to the hard work of rolling back the $34 million dollars in overhead increases that Council members Higgins and Rapundalo allowed to slip past them unquestioned, over the past four years. Council needs to direct the City Administrator and CFO to devise a plan to reduce staffing costs that is truly equitable and reflects a commitment to tie compensation directly to performance and the fiscal health of the City.

The current Higgins-Rapundalo proposed resolution reflects precious little understanding of pay equity, and sends the message that our City Council cares little about the lowest paid city employees, and instead intends to protect tens of thousands of dollars in raises they’ve awarded to those highest paid city managers.

It’s good politics and terribly regressive leadership. In short, once again, it’s business as usual.

Popularity: 29% [?]

Comments (5)

February 8, 2010

The Politics of Priorities: Firefighters, Police or Capital Improvements?

Filed under: money — Tags: A2Politico, AnnArbor.com, Budget Impact, Downtown Development Authority, Economic Development Fund, Eli Cooper, Fuller Intermodal Trasportation Station, Mayor Hieftje, Patricia Lesko, Roger Fraser, Securities and Exchange Commission — A2 Politico @ 10:13 pm

Rate this posting

Rating: 5.0/5 (11 votes cast)

On Sunday February 7, 2010, citizens read in AnnArbor.com that our City’s General Fund is projected to come up $5.2 million dollars short due to falling property tax revenue. The bulk of the cuts proposed to close the fiscal gap will impact public safety. City officials informed taxpayers that, “On the chopping block are 20 positions in the Fire Department and 17 in the Police Department.”

Cutting emergency and other citizen services is an absolutely unacceptable and unnecessary solution to closing this projected gap in the budget. We should also remember that since 2003 City Administrator Roger Fraser has repeatedly predicted there will be losses in the General Fund, and when the actual numbers have come in, the city’s General Fund has registered surpluses. The only exception was 2009, when Fraser projected a $10.4 million dollar General Fund deficit related to the early retirement of 27 police officers, and the cost of the police/courts building. That projected loss was inflated by $2 million dollars. Such consistent inflation of losses brings into question the budgeting processes used, as well as the fiscal assumptions relied upon by the City Administrator when making budget predictions. This is a serious issue that needs to be resolved. Projecting loses

I have over 20 years of experience in finance as the CEO of a national higher education publishing group headquartered in Ann Arbor. I’ve studied the City’s budget, its audited financial statements, as well the Budget Impact document released to City Council members on Friday February 5th. There’s an obvious alternative to cutting services in order to close that budget gap.

Cut Capital Improvement Projects NOT Police and Firefighters

The City’s Economic Development Fund is slated to contribute over $5 million dollars for the Fuller Intermodal Trasportation Station (FITS). Thus far, the only source of revenue for the Economic Development Fund has been a $2.1 million dollar transfer from the General Fund. The City’s General Fund pays for our emergency services. FITS was described in the Ann Arbor Observer by the city’s Transportation Director, Eli Cooper, and by the Mayor, as a gamble. I’m not a gambling woman when the safety of our citizens and the jobs of our police and firefighters are on the line. At the moment, FITS is a proposed 1,000 car parking garage for U of M, bus stop, and parking for a few bikes. Our city doesn’t have the cash on hand to partner with the University on the FITS project. It’s irresponsible to lay off police and firefighters so that millions can be diverted from the General Fund to the Economic Development Fund to pay for a parking garage for U of M employees and visitors. The remaining money in the Economic Development Fund should be transferred back to the General Fund.

When the current administration approved the police/court facility bonds in 2008, Ann Arborites were assured the projected expenditure wouldn’t impact the delivery of services. Today, thanks to the city’s inability to sell a parcel of land included in the project’s financing package, the project faces a $3 million dollar shortfall. In 2009, Ann Arbor lost 27 police officers through $6.7 million dollar early retirement offer—some of our most experienced police officers. It’s time to economize significantly, wherever possible, on the design, finishes and furnishings of the police/court facility, and to look for additional savings on that project. In addition, the downtown library underground garage project should be suspended. It represents an absolutely unnecessary capital expenditure.

In the recently released 2008-2013 Capital Improvements Plan, the plan calls for cuts to improvements in parks, street repair and the sanitary sewer system, and a $5 million dollar increase to alternative transportation, the FITS project. It’s called robbing Peter to built the FITS for the University of Michigan.

We have 187 miles of roads that are classified as in poor condition. The Stadium bridges are, literally, falling down. Because the repairs of the bridges were put off, our city lost $750,000 in federal funding, and now must use its road repair money on the bridge.

Here’s how we can clean up this mistake.

I’m in favor of halting the Library Lot underground parking garage project. According to officials from the SEC, those Library Lot bonds may be repurposed. We could, then, use half of the Library Lot bonds to reconstruct the Stadium bridges. We could then invest the remaining bond money in Treasury bills for the mandatory five year waiting period before the bonds could be repaid early. There will be a penalty for early repayment ($4-$8 million dollars). The Downtown Development Authority has $14 million dollars, collectively, in its Parking and DDA Funds. The penalty not covered by the interest earned over the five years the bond money was invested in T-bills, would be made up by taking the money from the DDA’s funds. Taxpayers would save, approximately, $50 million dollars over 30 years.

The Stadium bridges would be reconstructed. Our street millage money would, then, be freed up to repair our crumbling streets.

Popularity: 39% [?]

Comments (17)

February 4, 2010

The Politics of Financial Football: Throwing The Hail Mary Pass in the First Quarter

Filed under: campaigns, money — Tags: AnnArbor.com, Christopher Taylor, Leigh Greden, Marcia Higgins, Mayor Hieftje, Mike Anglin, Roger Fraser, Sabra Briere, Stephen Rapundalo, Steve Kunselman, Tom Crawford — A2 Politico @ 11:55 am

Rate this posting

Rating: 5.0/5 (6 votes cast)

On February 2, 2010, the day I declared to run for mayor, AnnArbor.com posted this piece: “Roger Fraser tells Ann Arbor City Council to set aside politics to make budget decisions.” The City Administrator is quoted in the piece as saying to Mayor and Council:

“I understand that these are politically difficult things to talk about,” Fraser said. “I understand that we have elections every year. I understand that six of you are up for election this year. But I also understand that we’ve got some major issues that need to be resolved in terms of our budget, and something’s got to give.”

Well, yes. Something’s got to give. Rather, someone’s got to give: the taxpayer. Roger Fraser is pushing to have Council members put a city income tax on the ballot. At the January 19, 2010 Budget Committee meeting, Fraser suggested to the members of the Committee, First Ward’s Sabra Briere, Fifth Ward’s Mike Anglin, Second Ward’s Stephen Rapundalo, Fourth Ward’s Marcia Higgins and Third Ward’s Christopher Taylor, that they had an obligation to float the question of a city income tax.

The Mayor, in attendance, thus making the meeting a quorum, and subject to Open Meetings Act requirements, had this interesting tidbit to add. Whether the question was floated on the August primary ballot or on the November general election ballot would have little impact on how soon any city income tax could be implemented. Well, yes. That’s true. However, we know that in Ann Arbor, mayor and council races are decided in August, in the primary, not in the November general election.

Former Third Ward council member Leigh Greden, who ran opposed, and Second Ward’s Stephen Rapundalo who ran unopposed, tempted the tax gods by coming out in favor of a city income tax during the 2009 primary season. This video comes from AnnArbor.com, and was shot before the August 4, 2009 primary. Note that Roger Fraser says there are 75,000 people who commute into Ann Arbor daily. On January 31, 2010, the Mayor was quoted in AnnArbor.com as saying, “…Ann Arbor has an estimated 70,000 daily commuters.” These numbers come from the July 2009 Plante Moran Income Tx Feasibility Study. In that study, on page 26, the authors document that there are 20,000 commuters who come to work at U of M. The study then concludes there are 54,000 additional people who commute into the City. There is, however, no source for where that number comes from. Furthermore, the study concludes between 2011 and 2015, Ann Arbor will add 4,000 jobs for people to commute to. Between 2006 and 2009, Ann Arbor added a total of 600 jobs.

Roger Fraser estimates that a city income tax could “could raise $7.6 million a year in additional revenue for the city,” according to AnnArbor.com. Of course, there was a July 2009 study to support the idea of putting a city income tax to a vote. In that study by Plante & Moran, the authors write, “Using growth rate assumptions made by City personnel, we projected revenue that would be generated from the current property tax system over the next five years….The analysis has been developed using the best available information concerning financial and demographic trends and conditions. As mentioned above, each model was developed using certain key assumptions and should not be evaluated without a thorough understanding of those assumptions. The assumptions and the accompanying rationale are documented in later sections of this report….”

Here’s where we all need to sit up and pay very close attention: “All assumptions are the responsibility of the City of Ann Arbors’ management based on their best judgment at the time of the study. It is possible that the forecasted results may not be achieved because events and circumstances frequently do not occur as expected.”

In other words, Roger Fraser’s revenue estimate is not even an estimate. It’s a prognostication in the grand tradition of prognosticators. Plante and Moran predict that the assumptions of growth made by city staff, and on which the study is based, “frequently do not occur as predicted.”

If that doesn’t give you a cold grue, it should. The Plante and Moran study begins with a caveat that explains, quite clearly, that a city income tax is not the panacea for the budget woes of Ann Arbor. In fact, the move to a city income tax could end up providing Ann Arbor less revenue than the current property tax model. And there we’d be, still, facing the alternatives the City Administrator often presents to the people of Ann Arbor through City Council: freeze to death or burn to death. Sell parkland, raise taxes, cut services, or increase water and sewer fees.

Mayor Hieftje took himself off of the Budget Committee. Margie Teall stepped down, as well. However, their decision to try to distance themselves from the disaster that it the city’s fiscal situation is a day late and several million dollars short.

It’s quite clear that for the past several years, the Budget Committee on which they sat, and Council, simply followed the direction of the City Administrator and CFO without question and without performing the due diligence required. For instance, the City Charter mandates monthly statements be delivered to the Budget Committee that summarize the City’s financial position. They were never requested or delivered. Yet, the Mayor and his hand-picked Budget Committee crafted policy, recommended program and service cuts, and made recommendations for the expenditure of over $1.5 billion in tax dollars and fees over the past five years without ever knowing exactly how much money the City had in any given month.

Thanks to the urging of Third Ward’s Steve Kunselman, city staff will be producing monthly reports. According to the AnnArborchronicle.com, this is what long-time Budget Committee Chair, Fourth Ward’s Marcia Higgins, had to say when it was suggested that the monthly reports be delivered directly to all Council members.

“In discussing how the monthly report should be disseminated, Roger Fraser suggested that it be sent directly to all councilmembers. However, Marcia Higgins (Ward 4) weighed in in favor of first having the budget committee review it before disseminating it to other councilmembers. She reasoned that the rest of the council might not understand what they were looking at, and that budget committee members would then be in a position to help others on council.”

Is it any wonder Roger Fraser is pushing, shoving and trying to drop-kick a city income tax? At this same meeting, he suggested that City Council survey voter attitudes – such as the survey conducted by AATA concerning that group’s fantasy of a county-wide millage. The City Administrator called allocating money for such a survey “due diligence.”

Due diligence? I call it a waste of time and taxpayer money. Those are marketing surveys designed to find out how to best phrase the ballot question so that the voters will support the measure.

There are three steps that must be taken before we can ever entertain the notion of a city income tax:

1. As I wrote in an earlier entry (“The Politics of Cooking the Books: Ann Arbor as a French Restaurant”), total city revenues are up significantly since 2006. So are total expenses. It’s time to examine every possible opportunity for savings. Overhead is the place to begin. The cost of running City Hall has risen 35 percent since 2006. That is a rate of increase that far outpaces both inflation and the cost of living combined. Over-spending must be checked immediately. There is no moratorium, for instance, on meals out and travel for city staff, while at the same time those same staff bring scenarios to Council and the public to raise revenue by selling parkland and cutting services.

2. All City Council members must be given extensive training in reading and understanding financial statements. It’s no sin to be incapable of understanding a cash flow analysis, and such training would benefit not only the Council members, but the public they serve, as well. It is a sin to vote on the allocation of funds without having first examined and understood the financial situation of the City. All Council members have to know the right questions to ask in order to have the ability to oversee city staff in their use of the tax dollars given them.

3. It’s time for a Mayor who will send Ann Arbor City Administrator Roger Fraser, and CFO Tom Crawford back to sharpen their pencils and to prepare two scenarios: under the auspices of the first, they cut 10 percent of the city’s expenses. Under the second, they cut 20 percent of the city’s expenses.

There’s only one rule: not a single city service may be impacted adversely by the cuts.

Popularity: 30% [?]

Comments (6)

Older Posts »

A2Politico: Ann Arbor Politics Grilled To Perfection

April 30, 2010

The Politics of Surpluses: Fudging the Numbers

April 25, 2010

The Politics of Propositions: When Every Scheme Sounds Like a Winner

April 8, 2010

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

April 6, 2010

The Politics of Development: If You Think It’s About Urban Density and Affordable Living, Think Again

March 18, 2010

The Politics of Outsourcing: Why Pay More to Recycle Ann Arbor? Good Question.

March 15, 2010

The Politics of Garbage: Single-Stream Recycling Stinks For More Reasons Than You Think

February 25, 2010

The Politics of Management: Paying More For Less

February 15, 2010

The Politics of Grandstanding: The Three Percent Solution Resolution

February 8, 2010

The Politics of Priorities: Firefighters, Police or Capital Improvements?

February 4, 2010

The Politics of Financial Football: Throwing The Hail Mary Pass in the First Quarter

Look for new A2P blog entries on Mondays, Wednesdays and Fridays.

A2Politico.com has a Facebook fan page.

The A2Politico Tip Jar Is Open