Taxes and the Local Government Quandary

Posted August 15, 2017 by varmentrout
Categories: civic finance, politics, Regional

Got vision? Our City Councilmembers do.  But that takes money.  Can we talk taxes?

Why do people run for office in local government? Various reasons, including personal (political) ambition, an enjoyment of politics as a practice (it has its obsessive qualities and you meet people), sometimes useful connections that might help you in your day job.  But I believe that a common characteristic in budding politicians is that they want to DO SOMETHING.  The aspirational impulse may go many directions.  With me it was land use. (So, immediately, all the BOC of my day was able to deal with was homelessness.)  We have local politicians who have emphasized economic development, transit, and development for population density.  Lately, the attention has turned to economic equity and affordable (i.e., subsidized) housing, and now there is a strong interest rising in solar power as a method of attacking climate change.

The Michigan Difference

It is frustrating, from the viewpoint of a Michigan municipal official, to read about advances in other states.  Here a transit program, there a measure to provide affordable housing, often paid for by a special sales tax, hotel tax, or even ticket surcharge (think UM football games) levied by a city or a county.  Not here. There are only two ways a local government in Michigan can tax its residents and businesses.  One is a tax on real property (real estate) and “personal property” which despite the confusing name is really business property.  However, that tax is slowly being eliminated.

The other option (available only to cities) is a city income tax. According to the Ann Arbor News,  the City Council is considering that again.  If the Council decides to go ahead with this oft-considered option, they will have to put a charter amendment on the ballot.  If the tax is enacted, it will mean that City residents will pay a 1% tax on income (this is rents and retail proceeds as well as wages) and non-residents will pay 0.5%.  In return, property owners will not be obliged to pay the general operating millage (for FY2018, that is 6.0343 mills).  Whether one comes off ahead on this personally depends on personal circumstances. (My best understanding is that retirement income is now taxable, so seniors are not as advantaged as in the past.)  The advantage to the City, and perhaps to many taxpayers, is that we are able to tap the incomes of UM employees and others who live elsewhere and work or do business in Ann Arbor.

Because of limitations in the Michigan constitution, it is very difficult for local government to raise property taxes.  We reviewed that in this post from 2011, which also walks you through details of when and how assessments for property tax are done.  Because of the Headlee Amendment and some other constitutional restrictions, governments are limited as to the total millage they can impose and must go to a vote of the people (a ballot question) to raise a new millage. Tax expenditures become (by design) a zero-sum game.  So local governments are always starved for revenue, especially if they are ambitious.

Invitation to a fundraiser that was posted to Facebook in July 2017

In the face of this frustration, some of our County Commissioners and City Councilmembers have gotten creative.  As we described in Hair on Fire in Ann Arbor, the BOC has established a millage ballot proposal that offers to give certain local governments a “rebate”, to be spent as wished.  This has entered into Ann Arbor City Council politics, with the incumbents who sponsored the resolution that assigned these tax goodies to favored uses (pedestrian safety, affordable housing, and climate change) running for office as the “Sustainable Ann Arbor”, “Progressive” slate on the strength of that resolution.  This device is obviously a response to frustration over the inability to use local tax dollars as they would like.  But in my opinion, both the BOC and these Councilmembers are not just misusing the ballot initiative system, but are being insensitive to the way ordinary taxpayers view local taxes and how they are used.  To be successful, they will have to persuade a majority of Washtenaw County voters that paying an additional 1.0 mill tax is to their benefit.

Taxes are Taxing

Ann Arbor homeowners are very conscious of our local tax system in July. This is the month the big property tax bill is due. To many of us, this is the make-or-break moment. Writing that check by the end of the month (and Ann Arbor has a very big stick to make sure that you do) is a big stress point.  Of course, no one loves taxes, but this is your HOUSE.  And every year, the total goes up.

Most of the property taxes we pay are for local government.  Across the County, the actual rate and amount paid varies widely, especially because of overlapping school districts, library districts, transit authority district, and other authorities. The greatest difference is in the millage that each municipality imposes on its own behalf.  That is the operating millage together with any special millages that voters have approved.  These can be seen by referring to the Apportionment Report from the County Equalization Department. (All figures cited in this post are from County Equalization.) Washtenaw County is really the essential level of government in Michigan, because many programs based on Michigan and even Federal law are delegated to the County to enact (these are called mandated services).  Taxpayers in all of our local units pay the same County millage (currently 6.2432).

Property taxes collected in Washtenaw County as shown in the Apportionment Report (2016). The smaller pie chart is County taxes and is detail of the pink wedge. Note that schools are the largest tax target. AAATA and DDAs are in the “local government” wedge.

Questions About Equity

There are several questions that occur to the taxpayer. One is, “what am I getting for this tax payment“?  That depends. The general expectation for local taxes is that the tax is collected by government so that it can carry out the services we need. Washtenaw County has 27 cities, villages, and townships.  Taxpayers in each of these may live in different school districts, library districts, etc.  In some, voters have chosen a high-service, high-tax government. Many townships are run on a bare-bones model.   So service levels differ, and so do local tax rates.  City residents usually go with the high-cost option. When we want special services (parks, local buses, better roads, etc.) we vote in special millages. In some townships, it is very difficult to pass a library millage or an increase in the township general operating millage.  Cities have a solid waste millage and provide trash pickup; most townships leave it up to the occupant to contract for trash removal.  Cities typically have water utilities (sewer, drinking water). Townships mostly leave it up to occupants to have a well and a septic tank. There are exceptions; the more urban townships like Ypsilanti and Pittsfield contract with the Detroit water authority, and portions of Scio Township and Ann Arbor Township have contracts with the City of Ann Arbor.  In general “you get what you pay for” is the rule. But to feel that you are taxed fairly, you want to see that you get the services you have opted for.

Is It Fair?

The wish to be treated fairly is baked into our bones.  (Experiments with monkeys show they resent being treated less well than the next monkey; they’ll refuse to do the trick if the other monkey gets a grape and they only get a cucumber.)  But part of that is your expectation of the “service” that you are buying.  I want my trash picked up and my drinking water to be clean and readily available.  I’m not fond of potholes either. But I also want to know that my community is being administered rationally and compassionately by officials who have the correct expertise.  In the example of the County, I want to know that public health, environmental health, and mental health are all being tended to by people who know what they are doing, and public safety (policing and judicial system) is important to me even if I never get robbed or a ticket.  So those are “services” I will happily purchase.   I’ll vote for school taxes even though I never had children.  But what really irritates me is if I do my part and others don’t. That is where we come down to the question of an even treatment of taxation.

Local Differences in Taxation

Because voters in local municipalities (that includes cities, villages, and townships) all choose different “packages” and also because the economic picture in each locality differs, there are major differences across the county in how much tax revenue is collected and what individual taxpayers have to pay. The fortunes of each government (and the burden on taxpayers) are determined by two different factors: the millage rate and the taxable value (properly called the ad-valorem) available.  In order to keep local assessors from under-assessing the value of property, the County Equalization Department conducts a detailed study each year and publishes a complete snapshot of local government assessment and taxation.  (All figures we cite here are from the Equalization Report or the Apportionment Report.)  The fortunes of each government depend heavily on the ad-valorem (hence the constant attention to “tax base”).

Let’s stop right here and acknowledge that there are different kinds of taxpayers, including owners of agricultural, industrial, and commercial property.  These are very important to a locality’s tax base but our discussion here focuses mostly on residential taxpayers.  For the taxpayer, the assessed value (SEV) of their house is determined each year by the assessor (assumed to be half the market value), and the taxable value (TV) is determined by a complex formula (see Proposal A) that works to hold down TV for long-term property owners.  For most, it is much lower than the SEV.  The tax due is calculated in this way:

Some localities have such high-value property that they can afford to keep millage rates relatively low and still provide quality services.  Others, with low real estate values, strain to cover all the bases with high millage rates.  This creates a good deal of inequity on a social level across the county.

Tax profiles for three different municipalities. Local millages (including operating and special millages) are shown. Tax calculated on total homestead millage is for house of market value $200,000, assuming TV is exactly half that.

In this example, the owner of a new house of $200,000 market value (TV of $100,000) would pay a drastically different tax bill.  Because it has such a low tax base, the City of Ypsilanti is taxing its residents at the very maximum that its charter allows.  Because most real estate in Ypsilanti is often at a lower valuation, many may not pay that.  However, this tax rate will obviously depress real estate value.

Back to the fairness question: presumably since each of us has chosen to live in a particular community (a free will theory of taxation), the tax assessed there is “fair”. But what about when the tax is being collected for services used by a different locality?  As we explained in our post Regionalism Reconsidered, Michigan has a strong home-rule tradition and culture.  When we pay County taxes, we are paying for a regional benefit.  We must accept that services delivered to our entire region (county) are on our own behalf.  But what few of us expect is that the County will collect taxes specifically to donate to a different municipality.

In the case of the proposed “mental health and public safety” millage, that was a decision made on the floor during debate on the ballot language. In the final language, a change was made so that the “rebate” to municipalities with their own police forces would be made proportionately on the basis of population, not on taxable value.

shall the limitations on the total amount of taxes which may be levied against taxable property within Washtenaw County, Michigan, as provided for by Section 6 of Article IX of the Michigan Constitution of 1963, be increased up to the amount of $1.00 per thousand dollars of taxable valuation (1.0 mills) for a period of eight years, beginning with the December 1, 2018 levy and extending through the 2025 levy, which shall raise in the first year an estimated $15,433,608.00 to be used as follows: 38% shall be allocated to Washtenaw County’s Community Mental Health Department for mental health crisis, stabilization and prevention, and to meet mental health needs in an appropriate setting, thus reducing the burden on the jail and improving care; 38% shall be allocated to the Washtenaw County Sheriff’s Office to ensure continued operations and increased collaboration with the mental health community; and 24% shall be allocated to jurisdictions in the County which maintain their own police force (currently Ann Arbor, Chelsea, Milan, Saline, Ypsilanti, Pittsfield Township and Northfield Township) in proportion to their respective 2016 population values?

(The change was made in order to benefit the City of Ypsilanti.) This has the effect of redistributing County taxes from one municipality to another.  As is seen in the table, most other cities and townships are essentially donating their own tax base (accepting the logic that this is a repayment for local taxes already collected) to others.  For the complete calculations, refer to this spreadsheet.

“Rebate” in first year based on taxable value vs. population.

But the tax is also a redistribution from all the other municipalities in the County to these units receiving a rebate.  Recall that the more rural townships have chosen to tax themselves at very low rates and then offer very minimal services.  For example, Bridgewater Township has a local millage rate of 0.8233. Freedom Township is 0.9501.  The proposed new County millage of 1.0 mills is higher than they choose to tax themselves for all services.  And part of that tax is going to be redistributed to the urban communities.  This may be why (as reported by the Ann Arbor News) the vote to approve the millage was 5-4, with the “out-county” commissioners voting against it.

There was some discussion that this redistribution in favor of the City of Ypsilanti was for “equity” and that small city does indeed have its problems, as shown with the tax situation. Perhaps we need to consider what “equity” means in distributing taxes among County communities, especially if the purpose is not truly regional in nature.  Should the farmers of Bridgewater Township be paying for pedestrian safety in Ann Arbor?  Should Saline and Chelsea be donating tax receipts to Ypsilanti and Northfield Township?  The rebates are not going to individual taxpayers in those different jurisdictions, but rather to their elected bodies, to spend on whatever priorities they determine. Is that fair?

The Muddle

County voters have shown that they are willing to pay taxes for a truly regional service.  For example, in November 2016, the County roads millage passed by 70.94% and the millage to support indigent veterans passed by 73.18%.  But because of this muddle, it will be hard to make the case that this is truly a regional service for parts of the County. Perhaps the votes in the urbanized parts of the County will be enough to pull it off.  But I wish that the BOC had offered us a clean choice with two pared-down millages, one for mental health services and one for the Sheriff.  It should have been possible to make a good regional case for each of those.  This was a bad time to introduce political aims into the process.

Just to confuse things further, should the Ann Arbor City Council decide to place a ballot issue for a city income tax on the November ballot, Ann Arbor voters will be making two different decisions about their tax futures at the same time.  Wonder how that will work out?

ADDENDUM:  The City Administrator has prepared a memo recommending use of the county millage rebate as to how that extra tax revenue from the County millage might be used.  Here is the report by the Ann Arbor News.

UPDATE: The Ann Arbor News has an article about the city income tax that compares the UM position (not our business) with that of MSU re an East Lansing income tax (oppose it, offering a buyout).  According to the article, there will be a special work session of the City Council on September 11 to discuss the tax.

General note: I believe that it is probably too late to place a ballot item onto the November ballot.  (I am having difficulty in finding the due dates for a charter amendment to be placed on the ballot by the Council.)  That would indicate that the next opportunity for an election would be May 2018.  After that, August or November 2018.  There are potential political consequences for all these choices.

 

Vote As Though the Future of Your City Depends On It

Posted August 6, 2017 by varmentrout
Categories: politics

All elections are consequential.  The Ann Arbor City Council (Democratic) Primary on this Tuesday, August 8, 2017 will likely, all hyperbole aside, set the course for the next several years, perhaps decades.  Please vote.  (And I hope you choose the candidates I want you to, but for goodness sakes, vote.)

Obligatory public service announcement: see CivCity’s Ann Arbor Votes page for information.  Here is the City of Ann Arbor’s page on voting absentee.  If you are qualified, you may apply until 4:00 p.m. on Monday and vote in person at City Hall.

If you’ve been living in Ann Arbor for a while and have been awake, you know that the control of the Council agenda has been the subject of a mighty tug of war. (See, for example, our post The Placemaking Agenda and Ann Arbor Politics.)  Now, with the passage of a charter amendment that means all Council members will serve for four years, this is the last odd-year election and perhaps the last chance for a group of scrappy Ann Arbor residents to elect representatives who will actually represent their interests. (Note: this is a “catch-up” election. Those elected will serve for three years and then all terms will be for four years.) It is also a make-or-break election for Ann Arbor’s Mayor Christopher Taylor.  Taylor has lately enjoyed a supermajority of CM who represent his vision (and that of his mentor John Hieftje).  With this 8-vote majority, he is able to pass through almost any measure, leaving the minority (CM Jack Eaton, CM Sumi Kailasapathy, CM Jane Lumm) to present measured opposition in the face of overwhelming odds.

Lately the vibrations (and who knows? we don’t have polls) seem less favorable to Mayor Taylor.  There are some good, substantial candidates opposing his favored incumbents.  He was moved to send out an email to certain voters (not all, and we didn’t get one) with his endorsements.  Here is a rundown:

Council candidates for August 8, 2017. (I) is incumbent. Red = endorsed by C. Taylor. Blue = endorsed by Local in Ann Arbor

Yes, the Mayor did not formally endorse Jaime Magiera, who has been running as a quasi-independent, and we did not make an endorsement in the 3rd Ward race.  (There is no Democratic primary in the Second Ward.)

The Mayor also included an anodyne list of promises, should his slate succeed.  He is for fiscal integrity. He likes quality services, and a quality way of life.  He likes parks.   But these points are perhaps more descriptive.

We also know that Ann Arbor has not yet done enough to prepare for our future — we do not have anywhere near enough affordable housing; particularly in light of the failure in national leadership, our climate change responses need to accelerate, not stagnate; and the City’s costs rise faster than its natural revenue increases, threatening the sustainability of services upon which residents depend.

We share the belief that all successful cities evolve. No one can stop change, but we can and must do everything we can to ensure that Ann Arbor maintains its essential character, the character that drew us all here in the first place. Finding that mix, finding that balance, is what it’s all about.

The Outcomes

So what can we look forward to if Mayor Taylor’s picks are all re-elected?  (If he loses only one vote, he will have to work more collaboratively, and much of this is less certain.)

1. More approval of high-rises everywhere. Are all high-rises bad?  Of course not. They make sense in certain locations and for certain purposes.  We’ve all gotten used to the student housing towers.  But a major issue this year was the Core Spaces sale of the Library Lot. See our post Core Spaces and the Soul of Ann Arbor.  This has been criticized on the basis of aesthetics and use of public land, but also on fiscal integrity and the loss of publicly funded parking spaces.  The behavior of the Council majority in the push to approve this questionable project (there are still legal questions to be resolved and it is taller than any new building in Ann Arbor) has activated many citizens.

2. A serious push to build an Ann Arbor Train Station, on the Fuller Park site if at all possible. This project is in a terminal state right now (it is proceeding without the possibility of further Federal funding, and still no word from the FRA), but don’t give up on it. One way it could be funded would be by selling bonds or seeking private investment. This has been a top priority of Mayor Taylor from the beginning.  See our post Ann Arbor and the Rail Station Gamble.

3. An increase in water and sewer rates. This is underway and goes beyond the yearly increases in water, sewer, and stormwater rates already experienced. There appear to be moves to restructure the rates. (Note that our system probably needs major upgrades if a heavy development surge is to be supported.)  A survey was sent out this summer that sent some strong signals.  Here is just one page from the survey.

From the survey sent out by the City of Ann Arbor in June 2017. Click for better visibility.


4. An effort to find additional tax revenue.  Mayor Taylor has some ambitious goals and we are constantly finding that Council is limited by the Michigan tax structure and our structural deficit (the UM occupies a great deal of what should be our tax base).  The only current possible mechanism is the County millage vote (which has been arranged for a “rebate” to Ann Arbor without strings attached; see our post, Hair on Fire in Ann Arbor).   Another possibility, which has been considered by Council this year, is a city income tax. (Our post, Same Song, Different Verse, laid out some of this.) Taylor’s endorsement message had this curious statement “the City’s costs rise faster than its natural revenue increases, threatening the sustainability of services upon which residents depend”. “Natural” revenue increases?


5. A move to down-zone residential areas so that more dense development is allowed in traditionally single-family neighborhoods. “Down-zoning” would be, for example, changing R1 properties to R3 or R4, making multifamily building more available. (Karen Hart, former Planning Director for the City of Ann Arbor, has pointed out that I have this definition backwards.  What I have described is “up-zoning”.  I regret publishing in haste because of the pressure of the calendar without checking this terminology more carefully.) Neighborhoods near the central core are at most hazard for this. Many of those are R2A or R4C, which has permitted modest infill with 4-unit condominiums in place of a single-family house, for example. See this zoning map for Water Hill.  But denser development will depend on a down-zoning.

Such a move would be consistent with Mayor Taylor’s emphasis on affordable housing.  (It is a matter of faith with many urban planners that denser development would bring affordability, though to date the result has simply been more expensive condominiums.) This change has especially been telegraphed by Chip Smith, who is running on his “expertise” as an urban planner, and there has been commentary on the social media. With an 8-vote majority and with a Taylor-appointed Planning Commission, it would be possible to push through a massive rework of Ann Arbor’s zoning map.  At present those residential zones are a tremendous frustration to those who would like to see dense development.  We are about to run out of downtown.

There is actually a move afoot at the County level to examine the role of single-family zoning in economic segregation, which in turn is based on a Federal program, Affirmatively Furthering Fair Housing.   Here is the County flyer about it.  The premise, on a national level, is that residential zoning has been devised to keep out the economically disadvantaged and racial minorities.  So for “fair housing” we have to get rid of single-family housing.  I don’t see that here.  I live near two public housing facilities, some rental housing, and some historically black (single-family) streets that are holding on.  In my view, single-family housing is simply how many of us would like to live.  But it is a great impediment to development, which in Ann Arbor’s overheated real estate market, is where the money is.

The Future Ahead

In principle, I don’t like to see any faction have the overwhelming power to do as they will.  Some of Mayor Taylor’s agenda may have merit, but it should be argued out at Council and with reasonable citizen participation.  I hope that Tuesday will see some rebalancing of City Council so that we can all deliberate on that future.

UPDATE: In the August primary, one of Mayor Taylor’s majority (Jason Frenzel) was defeated.  Chip Smith and Zach Ackerman were both renominated.  Ackerman will be unopposed on the November ballot, so he will be on Council for the next three years.  Jack Eaton defeated his primary challenger.  The November ballot will have contests in the 2nd, 4th and possibly 5th wards.  Here is the Ann Arbor News report and analysis of the results of the primary: Mayor’s Camp Could Lose “Supermajority” on Ann Arbor City Council.

Hair on Fire in Ann Arbor

Posted July 5, 2017 by varmentrout
Categories: politics

How a resolution passed by the City Council could endanger needed funding for the mentally ill of Washtenaw County.

Those of us of the wonkish persuasion are always serious, often dogged, and probably viewed by others as rather dull in our insistence on correctness and data.  We are not usually the ones to be seen at the front of the crowd, waving a sign around.  But occasionally there comes a moment so potent in its wrongness that we can progress to that state known as “hair on fire”.  This has been characterized as ”in a state of extreme agitation,” one stage above ”wild-eyed” and just below ”freaked out, totally out of control.”  My hair on fire moment came on Friday night (June 30), when I learned (via a tweet from Council member and candidate Chip Smith) that the Council would consider a resolution to reallocate funds from a County millage that has not yet been approved by the Board of Commissioners, has not appeared on the ballot, has not been endorsed by the voters, and in which funds would be used for a different purpose than the millage proposal states.

The resolution (item DC-3) was sponsored by Mayor Christopher Taylor and three of his “faction”, CM Zach Ackerman, CM Chip Smith, and CM Jason Frenzel.  All except for Taylor are up for re-election this fall.  All have primary opponents.  This is an especially consequential election because the winners will serve for a full three years (the City Charter was recently changed to designate four-year terms, but this is staggered to eliminate the odd-year elections). Monday (July 3) came and the Council approved the resolution by what is coming to be the expected balance of votes, 8-3. (In other words, the Taylor faction vs. the Eaton faction; or, if you prefer, the Council Party vs. the Neighborhoods.)  In simplest terms, the resolution states that the City of Ann Arbor will take money collected by the County for mental health purposes and “repurpose” it to pet projects of Taylor and his followers, namely pedestrian safety, affordable housing, and climate change.

ADDENDUM: Here is an excerpt from the resolution.  The resolution refers throughout to a “General Fund Rebate”, which is not indicated by the County ballot language and for which there is no provision.

Resolved, THAT if the Board of Commissioners puts the Millage on the November 2017 ballot, City Council intends to consider a General Fund Rebate Use Policy Resolution, which resolution would in further detail state Council’s intent to use the General Fund Rebate for the duration of the Millage in the following amounts, for the following purposes:

•                     20% to improve Pedestrian Safety (e.g., Enforcement Augmentation, Crosswalk Improvements, RRFBs, Streetlights) (operating & capital)

•                     40% to effect the goals of the Affordable Housing Needs Assessment (a/k/a Washtenaw County Housing Affordability and Economic Equity Analysis) and to increase Workforce Housing (operating & capital) with guidance by the Housing and Human Services Advisory Board

•                     40% to effect the goals of Ann Arbor’s Climate Action Plan (operating & capital)

It is so obviously political posturing that it hardly seems worth mentioning.  Or, it is a sincere difference of opinion on priorities, which is even more concerning.

ADDENDUM: In terms of priorities, the following excerpt from the resolution is puzzling.  Are they encouraging the County to look elsewhere if more money is needed for mental health?

Resolved, THAT mental health services and public safety are fundamental community needs and if the Board of Commissioners determines that there are insufficient resources to sustainably address these needs in a manner that meets community aspiration, City Council encourages them to seek additional funds.

The County Burden

The background to this event and the reasons I find it so outrageous lie in the role that County government plays in Michigan.  As a former County Commissioner, I’m very aware that County government takes care of many housekeeping tasks that affect us all, often without much fanfare.  Most of these are what are known as “mandates”, namely responsibilities decreed by state law.  Ann Arbor residents who don’t get out much are often unaware of County activities, since they are just the machinery that runs in the background.  One good example is community mental health services.  Counties have historically been responsible for all aspects of public health, including environmental health, medical issues (for example, communicable diseases and other general public health hazards), and mental health.  These are truly “global”, or in this case, county-wide services and are utilized at different levels by different localities, but they are all critical to a healthy county community.

Mental health services in Washtenaw County have gone through quite a number of different arrangements.  At one time it was simply a County department.  Then it got picked up by the UM health system as part of Medicaid-funded services.   There was something called the WCHO (Washtenaw County Health Organization) that more or less foundered under some administrative challenges.  (The actual patient contact was through County employees, in CSTS [Community Support and Treatment Services], under contract with the WCHO).  Meanwhile, the State of Michigan has been cutting funding for community mental health services.  In 2016, the Board of Commissioners reached an agreement with the unionized employees of the newly formed Community Mental Health (CMH) by providing some bridge funding from the general fund reserves. But the money problems continue.  As a recent report in the Ann Arbor News notes, the opioid crisis has magnified the problem.  But what doesn’t help is that the State of Michigan is proposing to turn mental health services over to private enterprise, and limit it to Medicaid recipients.

So here is where we are.  We have a number of desperately mentally ill people in our county (many of them in urban areas and some of the same people who populate our homeless shelters).  It is the County’s responsibility to take care of their needs, if anyone will. Who else is there?

‘Home is the place where, when you have to go there,
They have to take you in.’ 
(Robert Frost, “Death of a Hired Man”)

But as the need grows, the money available shrinks.  Thus, the desperate move to try to persuade countywide voters to vote for a millage in these tax-averse times.

Enter the Sheriff

An additional item on the proposed millage would provide money to the Sheriff’s Department for deputy service.  This might seem odd.  We’re talking about mental health, and suddenly you want to pay for more police?  But as the well-respected Sheriff Jerry Clayton made clear to the Commissioners, county deputies are an essential part of the mental health response system.  Who do you call if someone is “acting out” or seems to have suffered some sort of catastrophic collapse?  You call 911.  The dispatchers are likely to send a deputy (or Ann Arbor or other police) if any kind of violence is indicated.  But, as Clayton persuasively made the case, the current system of paying for those deputies is not working very well now.  It relies partly on County general funds (also limited) and on local government funds (for deputies under contract).  Everyone is short. Thus, the County Administrator, Gregory Dill, said in a recent memo (as quoted by the Ann Arbor News)

Moving forward, it is apparent to all stakeholders (Sheriff’s Office, county administration, and contracting partners) that the current financial architecture is not sustainable beyond the proposed contractual agreement through 2021.

The matter of paying for the Sheriff’s deputies has a troubled recent history.  I reviewed it in this post from 2013, which is now out of date. There has been some softening around the edges since Clayton took charge.  But basically, the outsize need for deputies in Ypsilanti Township (who use these deputies as their police force) has unbalanced that budget.  Deputies in general are supposed to respond to calls where needed, but we can’t expect Ypsilanti Township to pay for mental health issues throughout the urban area of the county.  Yet, cities such as Ann Arbor (who have their own police forces) pay for the Sheriff’s services through the County general tax millage, and thus are subsidizing Ypsilanti Township.  This has caused a conflict in the past.  Doubtless, this was what Commissioner Conan Smith was thinking with his comment at an April 21 BOC meeting, as reported by the Ann Arbor News.

Commissioner Conan Smith, D-Ann Arbor, suggested Thursday night there could be fairness issues raised with a countywide tax for public safety, as some urban communities with their own police departments might feel it would disproportionately benefit other communities in the county.

Smith did, however, follow this with another reflection.

Though, Smith said, if it is a countywide tax to support both public safety and mental health, then maybe it would balance out, as the mental health services might be largely going to people in urban communities.

A Calculated Millage Proposal

It seems likely that it was those regional equity calculations that led the BOC (at their Ways & Means meeting of June 7, 2017) to approve (tentatively) a draft ballot language that granted Ann Arbor a piece of the revenue from a mental health funding issue.

Sign displayed on roads in Ann Arbor reconstructed or repaired using the Washtenaw County road millage

They had a model to follow.  The voters of Washtenaw County enthusiastically endorsed a millage intended to fix county roads on November 8, 2016.  This in spite of the fact that roads also have a rural/urban split in taxation.  Rural areas (including villages) of Washtenaw County are serviced by the Washtenaw County Road Commission (WCRC).  That funding comes directly from the State of Michigan.  Cities like Ann Arbor also receive state funding, but on a different line item, and are responsible for their own road work.  So how to pass a millage to fix roads across the county without running into the problem of Ann Arbor paying for roads in Lima Township?  Here is the ballot language adopted:

Shall the limitation on the amount of taxes which may be imposed each year for all purposes on real and tangible personal property in Washtenaw County, Michigan be increased as provided in Section 6, Article IX of the Michigan Constitution and the Board of Commissioners of the County be authorized to levy a tax not to exceed one half of one mill ($0.50 per $1,000 of state taxable valuation) for a period of four (4) years, beginning with the December 1, 2016 tax levy (which will generate estimated revenues of $7,302,408 in the first year), to provide funding to the Washtenaw County Road Commission, Washtenaw County Parks and Recreation Commission, and the various cities, villages, and townships of Washtenaw County to maintain, construct, resurface, reconstruct, or preserve roads, bike lanes, streets, and paths in Washtenaw County?

So, as explained on the WCRC web page, those taxes collected from cities were passed along to the city in question for repair of roads in their own jurisdiction.  But the County kept a leash on those funds.  Notice the wording in the ballot language?  “provide funding…various cities…to maintain, construct, resurface (etc.).  In other words, the taxes collected were clearly going to go to roads.  Further, every road in Ann Arbor that is reconstructed using these County taxes has a sign letting us know that our “taxes are at work”.

Here is the actual text of the language in the tentative mental health item.

Shall the limitations on the total amount of taxes which may be levied against taxable property within Washtenaw County, Michigan, as provided for by Section 6 of Article IX of the Michigan Constitution of 1963, be increased up to the amount of $1.00 per thousand dollars of taxable valuation (1.0 mills) for a period of ten years, 2018 through 2027 inclusive, which shall raise in the first year an estimated $15,433,608.00 which shall be used as follows: 37% of the total millage shall be allocated to the Washtenaw County Community Mental Health Department (whether constituted as an agency or an authority) to be used for mental health crisis, stabilization and prevention efforts and to prevent unnecessary incarceration of individuals with mental health needs; 38% of the total millage shall be allocated to the Washtenaw County Sheriff to ensure continued operations and greater cooperation with the mental health community; and 25% of the total millage shall be allocated to those jurisdictions within the County which maintain their own police force (Ann Arbor, Chelsea, Milan, Saline, Ypsilanti, Pittsfield Township and Northfield Township) at a rate proportionate to their respective taxable values?

There is a major error here.  Notice: the first two items say specifically that mental health is the point of the levy.  But the last item simply allocates a portion of the millage to several local jurisdictions, including Ann Arbor, without a specified use.  It appears on the face of it that this allocation is being made with no strings attached.  It must have been this wording that caused City Councilmembers who have an election looming to race to pick up the goodies like kids at a parade.  The effect is to ask County voters to approve a tax on their property that will partly be translated into a free gift – or, as the Taylor group are wont to call it, a “rebate”- to Ann Arbor and other cities.  But this does not advance a solution to the need, which is mental health funding.  Clearly, the BOC needs to repair this language before final approval.

So some will say (and have said): Why is this bad?  Why can’t Ann Arbor use the money as they see fit?  Several reasons.

  • By rushing this declaration, there has been no time or opportunity to review priorities for the City.  We all like pedestrian safety and affordable housing and decry global warming.  But most budgetary decisions are made with some definite plans specified for how the money will be used.  That is the job of the City Administrator.  Then the Council gets to debate those uses of the money vs. others.  In this case, there is, for example, no actual plan to advance affordable housing, unless it is simply thrown into the huge deficit created by the Housing Commission’s ambitious plans. (This will not help everyone’s wish for affordable workforce housing, a.k.a. lower rents for young professionals.)  Would it simply go into an account to be drawn on later for unknown projects?
  • There is a question whether the County can legally ask voters to approve taxes for unspecified purposes.  There are laws and rules regulating ballot language, and they are pretty strict.  You can’t say “give me money for roads” and then spend the cash on fixing up your IT system.  Just specifying that money will go to various jurisdictions is not likely enough.
  • There are state law limitations on general fund appropriations, with caps on what local governments can assess in a “general ad valorem property tax”   (yes, it’s complicated).  This has been raised as a possible obstacle by a couple of local lawyers, including CM Jack Eaton, who asked this question of the City Administrator during the Council meeting of July 3. “Does the transfer of this county tax from tax levies on Ann Arbor residents with the subsequent pass through to the City have the effect of exceeding the City Charter limit on millage assessed for general government purposes?” ( The answer was that not enough was known about the County measure yet.)

Most of all, this action by the City Council and the unanswered questions it leaves is likely to be destructive to the success of the millage proposal itself.  Will the voters of Ann Arbor approve it?  It is so fuzzy that it would be difficult to explain.  Measures that are too complicated and too poorly explained have a bad history at the ballot box.

But why should the voters in the rest of the County, especially outside the urban area (where neither the mental health services nor the expanded Sheriff’s deputy coverage are locally urgent) – when they are also told that Ann Arbor is going to cream off a substantial fraction of the proceeds for its own purposes, none of which are likely to sound very relevant to those “out-county” voters? After all, the residents of those small western townships and villages are already subsidizing Ypsilanti Township’s deputies and the County mental health services, though they likely use very little of them.  The urban area (especially Ann Arbor and Ypsilanti City and Township) probably is home to most patients with the CMH.  We’d hope that the voters outside the urban area would support needed mental health services county-wide.  But why would they vote to send Ann Arbor a check?

A Possible Resolution

What I’d like to see the BOC do is to separate the public safety piece and the mental health piece into two separate millages.  Each of them could be a smaller amount since the 25% designated as a giveaway could be left out.  This will perhaps make the Sheriff’s needs somewhat more vulnerable, but with a persuasive, well-defined use spelled out for the extra money, I would hope that we would all vote for it.

It seems likely that this will be addressed on July 12.  I hope that our County Commissioners will fix this.  It is important.

UPDATE: Commissioner Conan Smith kindly sent along a memo (Smith memo 06072017) that he had written to the BOC for the discussion on June 7 about the millage ballot item.   It has many recommendations for process, including this:

General Distribution
I believe the distribution should be articulated by policy so that agencies and partners have a reasonable expectation about funding and the Board of Commissioners maintains control of the funds. My preference is that this be described in broad strokes as follows:

  •  37% to the Washtenaw County Community Health
  •  40% to the Washtenaw County Sheriff’s Office
  •  23% to Community Safety Net Grants

And the “Community Safety Net Grants” are defined in this way:

Community Safety Net Grants

  •  Annually available by formula to communities that currently provide their own police subject to the objectives and criteria established by the Board of Commissioners (similar to JAG program funding)
  •  Restricted to public safety and mental health activities
  •  Requiring a “maintenance of effort” from local units to ensure our funds are enhancing, not replacing, locally generated revenue.

Now that makes sense.  I’d like to know who persuaded a majority of the BOC to make the last portion of the millage into a free gift to the City of Ann Arbor.  (Felicia Brabec was not present.)  It is hard not to suspect some political dealing.  I hope Cm Smith will give it another try.

SECOND UPDATE:   Some of the mystery as to the urgent need for cash that evidently precipitated this move can be gleaned from Environmental Commission minutes.  A request was forwarded from the Energy Commission to support their solar program.

Resolved, The Environmental Commission recommends that the City Administrator direct appropriate City staff to work with the Environmental Commission and Energy Commission on identifying potential alternative revenue sources that would generate $1-3 million dollars per year to support community energy and climate programs by August 1st, 2017 for presentation to City Council, and that the Solid Waste Fund support one half of one of these positions for work to improve waste diversion in multi-family rental housing and to expand organics collection;

This is from April minutes but the action date for Council is shown as 7/3/2017, which is when the resolution to take money from a county millage apparently looked like a good Hail Mary pass.

THIRD UPDATE: It appears that Conan Smith was simply playing me with all that additional conversation.  He was apparently the person who suggested the dodge in the first place.  Unfortunately, the BOC approved the language as stated, including the “rebates” to local units.  According to Mary Morgan of CivCity , the vote was 5/4 in favor, with “out-county” commissioners voting against it.

FOURTH UPDATE: Here is the Ann Arbor News report on the BOC vote and the revised millage issue.

FIFTH UPDATE: Here is the Final language – County mental health and public safety millage.

SIXTH UPDATE: The Ann Arbor News has an article on how the tax rebate would be spent

SEVENTH UPDATE:  Several citizens spoke at the August 2, 2017 Ways & Means meeting regarding the millage.  The minutes do not indicate the substance of their remarks.  Minutes indicate that Cmr. Alicia Ping stated she would consult the Attorney General about the language of the ballot proposal.

 

 

 

 

 

 

 

Community, Conversation, and the Ann Arbor Local News Quandary

Posted June 9, 2017 by varmentrout
Categories: Basis, media

Why do we need a local news source?  In the past there were practical reasons for picking up the newspaper.  Schedules for movies and sport events.  Job postings and other classified ads. Reminders for when City Hall would be closed for a part holiday.  Information about upcoming elections or new ordinances that affected daily life.  Most of these have been replaced by simple Internet searches or subscriptions.  (If you haven’t yet signed up for notices from the city, click on this List of Ann Arbor City Notices and choose the items that interest you.  At least go for the newsletters.)

But there is another, less tangible but perhaps more important reason to read local news.  It is to build a sense of community. We are a social species.  We need to know what others in our immediate circle are doing.  If we are to feel that we are part of our city, our neighborhood, or our county, we need news, even if it is of activities that we ourselves will never participate in.  (Or maybe it will open up new possibilities.)  Also, if we are to be meaningful participants in the circle of life around us, we need information.  Otherwise, we are in danger of being isolated within a tiny group of immediate friends and family, adrift in an increasingly worrisome world.

Oh, we used to complain about the Ann Arbor News, back in the days that it was a real printed newspaper.  It arrived on our doorstep seven days a week and got at least a glance over the main stories and the other parts that were of interest (sports, restaurant reviews, comics, whatever).  It could be irritating in many ways, including the political stance.  (The endorsements were reliably Republican.) Some called it The Snooze and there were parody versions “Not The Ann Arbor News“.  But just about everyone read it and we all knew what we knew.  Then it fell apart.  Read the Michigan Daily’s astute recounting of this history, The Twilight of Newspapers in Ann Arbor Today’s online “Ann Arbor News”, a branch of the media company MLive, has more news from elsewhere than Ann Arbor, and often the reporting is limited to court cases, highway accidents, sports, and business openings.  They are now limited to two print issues per week (Thursday and Sunday) and subscription drives are sounding more and more desperate.  A recent email promises “Convenient Print Home Delivery PLUS Unlimited Digital Access!” for 99¢ a week, limited time.  Unlimited digital access?  This is not a publication that can retreat behind a paywall.

What To Do?

Now keeping up with the Ann Arbor community takes more effort.  We made some suggestions last year in Seeking the News About Ann Arbor and Going to the Source for News of Ann Arbor.  It takes effort and paying attention. Sources are scattered and not always very efficient.  (Social media, for example, contain everything from puppy pictures to valuable notices of events.)  There are a number of individuals and organizations who do publish news items, but usually on a one-at-a-time basis and just clicking on all those bookmarks could take all day.  Many offer free subscriptions but that can also fill up your mailbox with more than is easily handled in the daily rush.  (Highly recommended: Mary Morgan’s CivCity newsletter.  Aimed at increasing civic participation and loaded with links and events. She does all the work of tracking down agenda items that you wanted to know about.)

Now there is an adventurous effort to fill in the gaps.  The Ann Magazine  began as a monthly print publication inserted into other local print newspapers.  It is now being produced in print on a quarterly basis and is assuming more of an online character.  They’ve introduced a new idea.  Explained in Welcome to ANNthology, it is a curated compilation of articles from many independent sites, mostly Ann Arbor but also from other Washtenaw County communities.  This comes to your mailbox five days a week – for free! Click here to go to the subscription form.  As the invitation says, “Don’t be overwhelmed – be informed.”

Is this the only and best answer to our “Ann Arbor news desert” problem?  No, but it is the best opportunity to have our community conversation that has come along for a while.  Go ahead and subscribe.  You’ll like it.

ADDENDUM: A recent symposium discussed the occurrence of “news deserts” and one chapter is about Ann Arbor.   The Ann Arbor segment is pages 38-42.

UPDATE: A bright spot on the Ann Arbor news scene has been added with occasional articles by Mary Morgan on Medium.   Here is the most recent one.  It is possible to sign in to Medium and receive many different types of news feeds and essays.  It is also possible to follow Mary Morgan specifically.  With this step, Mary essentially joins the ranks of serious Ann Arbor bloggers.  A good addition to our possibilities.

Ann Arbor and the Rail Station Gamble

Posted May 28, 2017 by varmentrout
Categories: civic finance, politics, Transportation

The leaders (movers, shakers, and Council majority) of Ann Arbor celebrate the notion of Ann Arbor exceptionalism.  This evidently extends to invulnerability in times of uncertainty.  While the nation and even the world wait to see what will unfold with the Trump presidency, we are ready to bet on future Federal dollars to achieve our dream of a new train station.  On June 5, 2017, City Council will be asked to pay an additional $137,026 toward the new station.  (The last vote was in January, to put money into a contingency fund for this purpose.)  This money is intended to allow the City to collect the last part of a planning grant for a new station. Yet, it appears unlikely that Federal funds will be available for actual construction of a station.  And even more significantly, the contracted work may not be finished in time to be reimbursed under the current grant.

A good summary of the situation was provided by Ryan Stanton, writing for MLive.com (Ann Arbor News).   Stanton has been following this issue closely and earlier submitted a FOIA to see the document that the City sent to the Federal Railway Administration (FRA) for review.  All in all, the City of Ann Arbor has qualified for an award in non-transparency with regard to this project. You may remember the famous picture of the email with all lines redacted.  It has released no public documents about the project since September 2016. (All public documents are available on the City’s Ann Arbor Station page.)

Timeline on Ann Arbor City website for grant acceptance

But the project is running up against a brick wall.  The grant funds expire (gone back to the Treasury) as of September 30, 2017 (end of FY 2017). The schedule published on the City web page indicates that the required public hearing and 30 day review of public comments was to take place in December 2016, with final approval of the EA in January.  But the proposal has languished in some void between the FRA and the consultants.  Now it appears increasingly difficult to fit in all the tasks needed before expiration of the grant funds.  That would leave the City liable for all the costs that have been incurred since this phase of the work began.

As the City Administrator, Howard Lazarus, noted in a letter to Council members,

FRA has expressed some concern over the City’s ability to complete the work within the grant funding period. To that end, FRA has authorized a “tapered match” approach, in which the City can access the federal funds first. Staff believes under this structure, we can advance the majority of the PE effort before the end of July. Council should note that the FRA cannot guarantee that invoices sent to them after June 30th will be processed prior to their mid‐September cut‐off for FY17 funds disbursements.

Lazarus is asking Council to approve an amendment to the consultants’ contract that appears to extend their tasks beyond the original contract. One could speculate that some of this is to answer questions from the FRA in their response to the previous submission.  There is a slight pleading quality to Lazarus’ letter to the FRA. (Note: full-size text may be viewed by clicking on these illustrations.)

From Howard Lazarus to FRA Midwest Regional Manager May 26, 2017

An odd note is that the project is not shown in the attached schedule to be completed until October 2017.  How does that reconcile with a September 30 deadline, much less a June 30 deadline?  Yet presumably the City would not pay the consultants in advance of their work.  (The usual approach is that consultants issue invoices as work is done, and the City sends them to the FRA for reimbursement of the grant amount.)  It appears that the City is proposing to make itself responsible for completion of the work past the grant deadline.  All of this seems to be very creative accounting practice.

What’s  the Problem?

We recently alluded to the history of former Mayor John Hieftje’s vision with reference to the grant that was awarded for the first phase of planning a new train station.  Like most Federal grants from those golden days, this ARRA grant of $2.8 million (from the Obama stimulus of 2009) is for 80% of the cost – in this case, for the Environmental Assessment under NEPA, and some preliminary planning and engineering.  It has been the expectation that a future grant for actual construction would follow that same 80% Federal – 20% local rule.  But even 20% of a multimillion dollar building is a big bite for a small city.  So originally, the promise from Mayor Hieftje was that the City would put in NO GENERAL FUNDS.  Instead, the local match was to be picked up by the University of Michigan in a joint project, the Fuller Road Station. (Here is a post in which that promise was made explicitly). That deal fell apart and UM built a parking structure elsewhere.  Ann Arbor had already expended a fair amount of money on early planning, but that work was not accepted as a local match toward the grant, so the money was essentially wasted and new cash from the General Fund had to be invested in order to stay in the running for the grant.  The City has now spent over $1 million just in matching funds for the grant (most of this went to consultants and planners), though much more has been spent that doesn’t apply directly to that grant now.  And now it could be liable for all the sum left (about $750,000), including the 80% Federal match.

Predicting the Future of a New Station

Much of the uncertainty has been in the Federal budget process itself.  As we explained in some detail earlier, transportation funding is complex.  Part of it is based on the Highway Trust Fund – a dedicated source of revenue.  The rest is dependent on the dispensation of Congress, in money from the General Fund or from new sources of revenue.  Much of that was hanging by a thread until recently because all Federal funds were dependent on passage of a continuing resolution – which happily was passed on April 28 and signed by the President.  Here is a summary of transportation funding under that resolution. Note that some important items, namely TIGER grants and New Starts, that were to be eliminated according to the President, were saved in this extension.

Meanwhile, the President, or more accurately, the White House, presented Congress with an Executive Budget. As has always been true of Presidential budgets, this is more a policy document than an actual description of how money will finally be allocated.  Only Congress gets to appropriate money.  But it is important because it shows President Trump’s priorities and thinking.  And those priorities do not include handing money out to little cities.  Here is a revealing summary of the “Infrastructure Initiative”.  From the summary:

The flexibility to use Federal dollars to pay for essentially local infrastructure projects has created an unhealthy dynamic in which State and local governments delay projects in the hope of receiving Federal funds. Overreliance on Federal grants and other Federal funding can create a strong disincentive for non-Federal revenue generation.

Instead, the White House would move to a model in which private investors would enter into partnership with states and local governments to build or improve projects that have a revenue generation capability.  So – toll roads, transit prices high enough to pay a profit, fees for using anything. The Feds would simply facilitate all this.  The idea is so potent that investment funds along these lines have already attracted Saudi investors.

Under the very best of scenarios, Congress will pass a budget for FY 2018, to begin October 1.  All current funding will expire as of September 30.  In the past few years, Congress has failed to pass a budget at all and instead has relied on a series of continuing resolutions, which generally hold most budgets where they began, with a few small changes.  But let’s assume that they make it this time. (After all, one party controls both houses of Congress and the Presidency.)  What are the chances that discretionary spending on transit will be included in the new budget, given the strong leanings by the White House and the tax-cutting mood of Congress?

A Double Gamble

So it appears that the City of Ann Arbor is placing bets on its cards for two outcomes:

  1. That it can recoup all the grant monies for the current project, against a very tough timeline
  2. That this will somehow result in the future in a new train station.

But it also appears that there is a mood of desperation at the possibility of having the effort collapse.  From Lazarus’ letter to Council:

From Howard Lazarus to Ann Arbor City Council

Rather high-stakes cards, and to my risk-averse eyes not a good bet.  Will Council raise, or fold?

 

 

 

 

Core Spaces and The Soul of Ann Arbor

Posted April 16, 2017 by varmentrout
Categories: Basis, Business, Downtown, politics, Sustainability

It seems to have gone on forever.  But really, only for about a decade.  Now here we are, once again deciding on the fate of the Library Lot – that small precious piece of real estate next to the Ann Arbor District Library.

Rendering of proposed Core Spaces building as proposed to Council.

The Ann Arbor City Council will vote on this resolution on April 17, 2017.   It either will or will not award development rights for the Library Lot (retaining ownership of the actual land) to Core Spaces, which describes itself as “a full‐service real estate development, acquisition and management company”, and further identifies its target markets as “educational”, in other words, student-oriented.  The result will be a 17-story building, bigger than anything we could have imagined 10 years ago.

Feelings are running high and the volume of email to Council must be stupendous.  Just to make the drama more intense, because the resolution disposes of city property, it requires 8 of 11 Council votes (counting the Mayor).  Three CM have made their dislike fairly public (Eaton, Kailasapathy, Lumm).  So each one of the remaining 8 can be the one to make or break the deal.  It is generally understood that Mayor Taylor favors it.  Are all the rest committed to support it, in the face of a great deal of public opposition?  Some, especially those who are new to Council or up for re-election, are likely feeling the heat.

Why is this so important to so many?  Its importance (as measured by heat and light generated) is far more than most tall building development projects downtown.  There are many facets to the issue.  But most of all, this decision is symbolic about the direction that Ann Arbor is headed.  In many ways, it is a battle for the soul of Ann Arbor.

What Do We Want To Be?

This article from the Ann Arbor Observer (2005) outlined many issues and described the Calthorpe public process. (Click for link.)

The battle for the future of Ann Arbor has been the underpinning of our politics for over 10 years. One could argue that it began with the election of John Hieftje as Mayor in 2000, or the renewal of the DDA Charter in 2003.  That launched an emphasis on downtown development that has changed not only the appearance of Ann Arbor’s downtown, but its perceived purpose and use. There was also a shift in the objectives for the city as a whole.  We have often thought our city to be rather special, in a community-supportive, casually fun but also fairly intellectual, colorful but not in an overly contrived sort of way. See our post, What Does it Mean to be an Ann Arbor Townie. In other words, a city to serve its citizens and welcome visitors on our own terms.  But in recent years, a new agenda has been espoused by the majority on our City Council.  This is spelled out at length in The Placemaking Agenda and Ann Arbor Politics. Briefly, it is to transform the city into a cradle of entrepreneurship and enterprise, especially by attracting “talent” (young people who can start or sustain high-tech enterprises).  Much of this is based on the concept of the “Creative Class”, as described by the urbanist Richard Florida in his 2002 book.

One could argue that Ann Arbor is doing very well and is succeeding in this talent-seeking strategy.  We are listed over and over again on national lists as in the top 10 for various qualities.  Maps showing economic success usually show our Washtenaw County as standing out.  But interestingly, Richard Florida himself has had something of a change of heart. Florida’s recent book, The New Urban Crisis, recognizes that the type of “success” we have enjoyed has come with a cost to whole swaths of demographics.  As he says in a recent article,

 As techies, professionals, and the rich flowed back into urban cores, the less advantaged members of the working and service classes, as well as some artists and musicians, were being priced out….I found myself confronting the dark side of the urban revival I had once championed and celebrated…As the middle class and its neighborhoods fade, our geography is splintering into small areas of affluence and concentrated advantage, and much larger areas of poverty and concentrated disadvantage.

And a summary from another article :

America today is beset by a New Urban Crisis. If the old urban crisis was defined by the flight of business, jobs, and the middle class to the suburbs, the New Urban Crisis is defined by the back-to-the-city movement of the affluent and the educated—accompanied by rising inequality, deepening economic segregation, and increasingly unaffordable housing.

Sure enough, a graphic from the article shows that Ann Arbor is #11 on his “Urban Crisis Index”.  Do increasing economic inequality, loss of affordability in housing, and racial/class segregation sound familiar?  Washtenaw County paid good money a couple of years ago for a consultant to tell us this about ourselves.  So, Ann Arbor is succeeding as a business proposition.  Is it losing what makes it successful as a place to live?  As a community in the whole?

(Florida will be keynoting this year’s SPARK meeting on April 24.  It’ll be interesting to hear what he says about our local situation.)

The Importance of the Library Lot

So what does the Library Lot have to do with all this? Because the Library Lot belongs to the entire City of Ann Arbor, and thus presumably its public, and because the project is so wildly out of scale with the downtown historic districts that supposedly make our downtown successful, not to mention the residential neighborhood immediately to the south, and because while this is a public asset, the benefit to the Ann Arbor public has not evidently been a consideration. (No public process has been employed to arrive at this use.) For all these reasons, the debate has been more passionate than for other downtown projects.  The Ann Arbor public continue to assert ownership.  For that reason, it stands as a symbol of the decisions to be made about our downtown, and thus our city.

But many other interests have eyed this choice little bit of real estate for particular ends.  The DDA has had a single-minded intent to increase the magnitude of development in the downtown, generally.  A group of influential insiders put forth a plan as early as 2008 to build a hotel and conference center on the lot, with the DDA’s assistance.  The Library Lot Conference Center controversy and battle is recorded in this series of posts.  The effort was finally killed by Council resolution in April, 2011 after a public campaign by concerned citizens.  Meanwhile, the DDA had constructed an underground parking structure in which part of the structure was specifically reinforced to support the intended hotel.

Projection of desired building density (700 F.A.R) for Library Lot in DDA study, 2013. Purple area is unreinforced “plaza”.

Things slowed down for a bit while the Ann Arbor District Library planned to build a new library.  The new building would not have been on the Lot (the current building would first have been demolished) but doubtless the Lot would have been used for staging.  However, that bond proposal was defeated in November, 2012.   The DDA sprang to the task of planning the immediate area in a project called “Connecting William Street”.  They used a pseudo-public approach (online surveys, public meetings) which unsurprisingly arrived at the conclusion that a tall building was needed on the lot.  The plan met with derision in some quarters and the City Council declined to adopt it.  It was added to the “resource documents” for the Planning Commission in March, 2013.

In a memorably feckless act (thank you, CM Kunselman), Council passed a resolution in April 2014 to hire a real estate broker.  They put the Lot up for sale.   Although the resolution cites the Connecting William Street project, no further effort was made to establish what the Ann Arbor public saw as the best use for this site.   Further, it accepted the notion that the reinforced portion of the lot would be used for building.  So here we are.

From page 42, Downtown Development Strategies, Calthorpe Associates, 2005

The Calthorpe process, 2005, is often cited as demonstrating that there was a public process followed for the fate of this parcel.  There was a report on Downtown Development Strategies issued (many recommendations have been ignored).  It does not make a specific recommendation on the Library Lot.  However, it calls for building height to be stepped down toward the residential neighborhoods, especially that last block before William.  And it calls for a Town Square.

ADDENDUM: The Library Lot was briefly, but seriously, considered as a site for a new City Hall, a.k.a Municipal Center, in 2006.  Here is the task force report. Community Security and Public Space 2006 The report specifically notes the importance of “an outdoor gathering place” and put the Library Lot high on the alternatives for a new Municipal Center that would include a public space.

 

It’s Not Just About a Park

Admittedly, the idea of a downtown “Central Park” (or Town Square) has been a major theme of the disputes about the Library Lot.  The Library Green Conservancy has been advocating vigorously for a park on the portion of the lot without special reinforcement, and there was that whole problem with collection of signatures on petitions. The DDA has been trying to put a damper on that idea for years.  (The Connecting William Street exercise did not even acknowledge the possibility.)

It’s Not Just About the Parking

The deal has serious implications to downtown parking.  It would give away a substantial part of this expensive structure to a private enterprise. (Some historical details are here: note we will be paying interest for many years to come.)  There are also legal questions that have not been satisfactorily answered.    Read it here.  Finally, it will reduce access to downtown by its customers. Downtown business organizations have objected.

It’s About Our Downtown, Our City

Our social media and comment pages are flooded with anguished complaints and worries about this project.  It is clear that our citizens do not believe this will enhance our experience of our city and that it will likely damage the downtown.  The comments shown below are from my personal social media feeds (Facebook, Nextdoor) and are unedited but anonymous because I don’t wish to make the writers’ identity the issue.  (Click on the boxes to read at full magnification.)

 

 

 

 

 

Note that these comments are all about quality of life and the viability of our downtown businesses.  There is a concern about the resilience of this part of our community, and of course the Downtown is still the center of town, and a location that affects us all.

If Council does vote to approve this deal, they will be going against the express wishes of a substantial number of their constituents.  Based on comments in the media, it seems that they are dazzled by the cash offer.  A complication is that it will supposedly be an assist to “affordable housing”.  But the benefits in that regard are modest.  (One scenario even has the City paying over a million dollars back in order to obtain more units.)  We have not really had a city-based discussion about what we want in “affordable housing” or what our best means of achieving that are.  It seems imprudent to sell off one of our choicest assets for this purpose, especially since so many questions persist about the effects of the parking on both businesses and city finances.  If our city finances are so challenged (and they do not seem to be) we should be looking at savings or new taxes instead of selling off our real estate.

Or – is Council going to go ahead with this because of the dogma of dense development?  In that case, are they considering the health of our present community?  Or are they aiming for a different one?  If the latter, they’d better consider more carefully the consequences of their actions.  A city is a complex ecosystem.  The Council has a solemn duty here.  I hope that they vote to preserve our community.  It has so much good, still.

ADDENDUM: Here is the Ann Arbor News preview of tonight’s vote. “And the consequences of whichever way the council votes could last for generations.”  Yup.

UPDATE: The Council voted to sell the lot, 8-3.  All the usual suspects voted as anticipated.  Here is what Mayor Taylor had to say about it.  

“I love Ann Arbor the way it is. We are not Chicago or Detroit, and I don’t want to be. ”

 

 

 

 

Making a Federal Case for Ann Arbor Rail

Posted April 3, 2017 by varmentrout
Categories: civic finance, Transportation

As we related in the last post, Ann Arbor has been dreaming of trains for the last decade. We have paid for multiple studies, and detailed plans and reports have been produced. Our Mayor, Christopher Taylor, has named rail travel as a top priority. In a letter sent to many constituents early in January, he stated “Expanded rail service is vitally important to the future of Ann Arbor”. (Here are some further comments reported by the Ann Arbor News.) Now the City Council has just a couple of months before the next Budget is adopted.  How much of the City’s resources should continue to be devoted to this purpose?  After so many years with rail in the future, is it time to relegate these dreams to the past?

For Love of Trains

First of all, this question is not about whether we love trains.  Of course we love trains.  Most of us of any age or travel experience have happy memories to relate.  (I have a sentimental description of my own experiences in this post from 2011.)  Trains are part of the sensibility installed in us from childhood.  Here is a video of a favorite childhood song about trains.  Wouldn’t you like to climb aboard on this train, or at least join in?

Trains are a great mode of travel.  Sit and read (or work) or just look at the scenery. No worries.  Why wouldn’t we want to be able to travel to Detroit without worrying about freeway traffic and parking?  And as a commute, it can’t be beat, especially if that “last mile” problem can be solved.  (Transit from the station to work.)  If you have visited a city with a light rail system, you know how nice it is to travel around an urban area that way.  Just hop on, ride a few minutes, hop off.

For all these reasons, and for several others, the dream has survived since 2006 and has been enthusiastically adopted by many on our Council, and by many citizens.  The rail projects have all been studied and are ready to be implemented, more or less.  But is this possible?  Most of all, can we afford this vision under the present circumstances?

A Very Expensive Wish List

Because consultants have been hired to do studies of our rail wish list, we have some rather good numbers now for how much these projects will cost.  The costs for the Ann Arbor Train Station have been kept rather obscure through the Environmental Review process, as has much other information. A construction estimate was provided via a FOIA by Dave Askins (thanks to a direct response by Howard Lazarus, the City Administrator).  A couple of feasibility studies have been completed for the Connector. The North-South Commuter Rail (aka WALLY) Feasibility Study has recently concluded; here is the Financial Analysis.  The Ann Arbor-Detroit Commuter Rail was folded into the Regional Transit Authority and cost estimates were included in that plan (RMTP) .

From all of these studies, we can compile a total of the full cost of the rail wish list for Ann Arbor.  Note that these figures are not the amount that the City expects to pay.  The Connector, WALLY, and the Ann Arbor-Detroit Commuter Rail are all expected to be cooperative projects and other governmental entities are expected to contribute. (The Ann Arbor Station is an Ann Arbor project alone.)  But in every case, the expectation has been that the main burden of the cost will be borne by the Federal Government.  Often the statement has been made that 80% of the cost will be Federal, and the 20% local matching amount is partly offset in theory by the State of Michigan (MDOT).

Costs for these projects are of two types: Capital (original construction) and Operating (annual cost of operation and maintenance).  Capital costs are a one-time investment, but operating costs are perennial.

Capital costs for four rail projects

Annual operating costs for three rail projects. It is assumed that Amtrak would continue to operate the train station. These are gross costs; offsets for fares and fees not subtracted.

Making Decisions about the City Budget

Most City expenditures are based on fairly accurate estimates, either for existing contracts or from well-fleshed out plans.  Most budgeted items will be spent as described, with a fair certainty that the deliverable will be produced.  There is never quite enough money for all the things we would like to achieve as a community.

The City Administrator, Howard Lazarus, has been making presentations to the Council in advance of the budget.  Capital improvements are suggested for firehouses, streetlights, sidewalks, dams, and signals.  The slide also showed the following amounts ($millions) for FY 2018 and FY 2019. The last column to the right is “FY 2020+”.  Taken all together, the rail items constitute 43% of all capital improvements.  These are General fund expenditures in the City Budget for the next couple of years.

From the slide of 2018 capital improvement costs. Figures at bottom include more items than shown here.

If Council is going to continue to use Ann Arbor city funds (taxes) to pursue these rail projects, it is making a calculated gamble.  We are continuing to put chips on the table in hopes that there will be a big payoff.  And the expectation has been that the deep pockets at the table belong to the Federal government.  That is no longer true.

The Shifting Sands of Federal Funding

With the Trump presidency, predictions are impossible.  One can, however, hear solid hints of what he is thinking.  There are other players in Federal funding, especially many different factions and interests among members of Congress.  Here are a few high points about Federal transportation funding, which has usually been very contentious.

  • The gold standard is outright grants.  In other words, Federal taxes distributed directly to states and localities for use in transportation projects.  This is what we would like for all our projects.  There has been a move in recent years toward encouraging localities to apply for loans instead. The TIFIA program is an example.
  • Pennies were falling from heaven in 2009, with the Obama stimulus program, better known as the American Recovery and Reinvestment Act (ARRA).  This was especially friendly to transit programs and included the high speed rail program (HSIPR)  program that has paid for our preliminary rail station study.  It was not renewed with the new Republican Congress in 2010. All ARRA grants expire at the end of the current fiscal year (September 2017).
  • The main source for transportation grants has been the Federal gas tax, or Highway Trust Fund.  The tax rate has not increased since 1993.  This fund was originally to pay for the Interstate system.  A mass transit fund was added to it in 1982.  The Transportation Act, which is the law that governs how the money is spent, has expired a number of times and been renewed and rewritten.   This is always a big food fight in Congress.  The way the money is allocated changes in each revision.  There are always legislators who would like to get rid of the mass transit and alternative transportation provisions so more money can be spent on roads and bridges.
  • Through some miracle (and our Senator Debbie Stabenow deserves a lot of credit), the Transportation Act actually got revised and renewed in the last Congress.  The name always changes.  The last bill was MAP-21; this one is  the FAST act.
  • An important feature of the Transportation Bill is that items funded by the Highway Trust Fund are not dependent on the Federal Budget because they are not part of the General Fund.  This has kept funding of mass transit programs, for example, very stable.
  • The FAST Act included rail travel for the first time.  BUT it did not attach Highway Trust Fund monies to it.  RAIL IS DEPENDENT ON ALLOCATIONS IN THE FEDERAL BUDGET (the General Fund).
  • Congress has been keeping the Federal Government running by a series of continuing resolutions.  It has not actually passed a budget for a long time.  The current Continuing Resolution expires on April 28, 2017.
  • Meanwhile, President Trump and Congress are trying to conclude negotiations on a variety of bills and spending priorities.  Here is the Budget Blueprint recently published by the White House.

Important Cuts and Immediate Significance

The two most important points affecting grants to local governments for rail in the White House blueprint are the cancellation of TIGER grants and the loss of New Start funding for new projects.  TIGER has been a source of discretionary grants – very competitive (only 1 in 20 grant applications funded) but very essential to localities.  That is the source that Ann Arbor hoped to tap for the new train station.  New Starts have been the method of choice to start a new rail system “fixed guideway program” (which includes Bus Rapid Transit); this would have been the likely source of cash for the Connector or possibly one of the commuter rail systems.   Without these, there is literally no Federal grant program that could realistically pay for our rail programs.

Even if Congress does not follow this blueprint, it must still appropriate funds for any grant program.  With the Continuing Resolution due by April 28 and tax cuts looming on the horizon, this seems unlikely.

The Trillion-Dollar Question

What about the infrastructure program that President Trump has mentioned?  It would not be grants, but rather tax incentives for private investment.  The likely mechanism would be “P3” (Public-Private Partnerships) programs where the locality borrows money from private investors.   A preliminary list of likely projects has been released, but has no force in law.  Many such programs will require a source of revenue, such as fares, tolls, or fees.

ADDENDUM: The Administration’s likely approach is being telegraphed by Elaine Chao, the Transportation Secretary.  In this speech she says,

“Investors say there is ample capital available, waiting to invest in infrastructure projects. So the problem is not money. It’s the delays caused by government permitting processes that hold up projects for years, even decades, making them risky investments. That’s why a critical part of the President’s infrastructure plan will include common-sense regulatory, administrative, organizational and policy changes that will encourage investment and speed project delivery.”

This is a clear call for privatized projects.  What is not clear is what “impediments” are going to be cleared.  Agreement by local governments? Safety regulations? Environmental hazards?  Best not to picture this too fully.

The Gamble

Since it is so unlikely that there will be Federal grants to pay for the wish list of rail projects, what should the City Council do?  One alternative would be to sit tight and wait for developments.  But will they spend substantial funds in the next year on these projects, with all the other priorities? To do so seems to be a triumph of hope over prudence, indeed.  Perhaps there is a good lottery running somewhere.