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The Transfiguration of Ann Arbor (II.)

May 7, 2024

Twin Challenges

As it has arrived in the 21st Century, the City of Ann Arbor has experienced two challenges that combine to constrict its choices. They are the growth of the University of Michigan and the restriction of annexation for City expansion.

The University of Michigan

The University of Michigan (Ann Arbor campus) is both the City’s treasure and its biggest problem.

Employee zip codes for UM (click to view)

It provides employment to the area (though according to MLive, “Of UM’s 51,000-plus total Ann Arbor employees, fewer than 19,000, or 36%, live in ZIP codes that touch the city”. Presumably that is 48103, 48104, 48105, and 48108. It must surely bring business to a whole variety of vendors. And of course there is UM football, which provides a bonanza to the hospitality industry every fall.

Certainly UM brings status to Ann Arbor. It is a globally recognized university. And UM research has supported numerous business startups. This is well supported on campus.

Some of us might see the contribution to Ann Arbor culture as its greatest boon. It houses and produces a great many theater and musical events, a real embellishment to living in this City.

But these benefits do not directly contribute to City government. While UM pays utility fees and cooperates with transit and fire protection, it pays no property taxes, not even the PILOT (payment in lieu of taxes) that some large universities give to their host cities.

Land, the Limited Resource

Because UM continues to grow, and because so many of its activities are within the City boundaries, it is an active competitor for scarce land parcels, often outbidding for-profit (and taxable) entities. Ann Arbor City Administration (as reported by MLive) has begun to speak about this openly.

By the city’s count, the city is now losing $2.4 million annually in tax revenue due to university land acquisitions since 2000 and cumulatively UM’s growing footprint has cost the city more than $25 million in that timeframe.

Meanwhile, UM continues to plan for expansion and growth. There is now the beginning of a Campus Plan 2050. At present, the landscapes are tentative and several versions are being considered.

This is especially a problem for the City of Ann Arbor because its boundaries are more or less fixed. Note that the boundary almost exactly matches the freeway ring. (Click on figure for better magnification.) The few white spaces are township islands. None of the rest of this area is available for annexation.

If this were a city in a different state, the population pressures and demand for land area would result in annexation of the more rural edges of the city. In fact, this is how Ann Arbor City became as large as it is, incorporating portions of Ann Arbor Township, Pittsfield Township, and Scio Township. But in 1968 there was a revolt of township governments, who were seeing their tax base disappear. A law was passed that requires all annexations to go before the Boundary Commission. If a township objects to an annexation, it usually does not succeed.

The Student Housing Problem

So here is the problem. Just as UM has occupied more and more of the land area of the City of Ann Arbor, so also it has increased enrollment steadily. Since the land supply within the City is inelastic because of the limits on annexation, this has created a very hot market both for buildable land and for student housing. So as Ann Arbor neighborhoods became more and more alarmed at the construction of dedicated (proprietary) student housing, the demand became greater. But the UM has not increased their on-campus supply of housing for many years, until just recently they began to take notice of this need. (The 2050 campus plan makes this an explicit goal.)

As this article in MLive makes clear, the weight of this student enrollment pressure is threatening the very culture of Ann Arbor, as neighborhoods are encroached upon and families are priced out because of the cost of land.

Proposed 17-story development on 711 Church Street

The consequence has been a discouragingly common approval of over-sized developments in spite of vehement objections by nearby residents. The approval (May 6, 2024) of a new tower on 711 Church Street is not really a surprise. Is this inevitable? Does this represent good practice from a city planning viewpoint? That is one question before all parties interested in the future of the City.

Categories: Basis, civic finance, Sustainability

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Stormy Weather: Ann Arbor is Facing Another Utilities Lawsuit

October 27, 2021

In a previous post, In Deep: Ann Arbor’s Water Troubles, we reported on a class-action lawsuit pending against the City of Ann Arbor in regard to water rate. That suit, which was housed in our local Circuit Court, petered out after Judge Archie Brown denied the motion for class certification. As we noted at the time (July 2021), a flaw in this suit was that it focused on water fees and water reserve funds, and only glancingly dealt with the more obvious case of Ann Arbor’s stormwater fee structure. In our Addendum to that post, we outline some of the issues with the stormwater fee (which I am now simply calling a tax).

Now the same law firm (Kickham Hanley) has filed a completely new suit, this time in the Court of Appeals (taking the action out of our local Circuit Court; they explain why they are able to do this). The new suit, Platt Convenience, Inc. v. City of Ann Arbor, is a straightforward complaint that the Headlee Amendment to the Michigan Constitution has been violated. Their case is so simple and factually based to demonstrate this that they state at the outset, that

PURSUANT TO MCR 7.206(E) AND MCR 2.112(M), PLAINTIFF STATES THAT IT DOES NOT BELIEVE THERE ARE ANY FACTUAL QUESTIONS THAT ARE ANTICIPATED TO REQUIRE RESOLUTION BY THE COURT AND PLAINTIFF DOES NOT ANTICIPATE THE NEED FOR DISCOVERY AND THE DEVELOPMENT OF A FACTUAL RECORD.

This is in contrast to the previous suit, which involved extensive discovery (questions for the City to answer), many of which were batted away by the City’s hired lawyers. What the plaintiffs are doing is asking the judges to read their case, and decide on the basis of what is presented. Presumably the defendant (the City) will produce a defense, but that is all the action expected.

The Headlee Amendment and its implications were explained at some length in our previous post. Here is an excerpt:

Here in Michigan, as in many other locations, the tax revolt led by California’s Proposition 13 (1978) resulted in an amendment to the Michigan Constitution (the Headlee Amendment [1978]) that limited taxation by local governments. The intent was to protect citizens from new taxes unless they voted for them. It has several sections but the take-home message is: no new taxes without a vote!  This has severely limited municipalities (cities, townships, counties) in Michigan because the only available source of new revenue has been voter-approved property tax millages.

But municipalities also offer services that can legally be supported by fees. A fee is not considered a tax. It is simply the price of receiving the service. It is not, however, supposed to exceed the cost of providing the service. When is a fee a tax? When it is meant as a revenue source, not merely a compensation for the service.

What Kickham Hanley does with this new Class Action Complaint  is to focus efficiently on all the evidence (and the exhibits are almost exclusively the City’s own documents) that Ann Arbor’s stormwater fee is in fact a tax, and thus is illegal under the Michigan Constitution. These arguments follow the precepts laid down in the Bolt Decision, the Supreme Court decision that is taken to be the definitive word on this issue. It presents a case regarding a simple question:

Is the Stormwater Charge imposed and collected by the City of Ann Arbor, which has been assessed against Plaintiff and the putative class, a disguised tax in violation of the Headlee Amendment?

We will not try to reiterate their arguments and evidence here. Interested parties should read the brief, which is quite detailed and is 50 pages in length.  Brief in Support of Stormwater Charge Complaint October 22 2021 In addition to points on which Ann Arbor’s stormwater fee structure violates Headlee, the brief reviews a number of recent similar lawsuits. It seems a lot of Michigan municipalities run afoul of Headlee as defined by Bolt, and they usually lose. From my reading, Ann Arbor is likely to lose too.

One of the many failures under Bolt that the brief cites is that the stormwater fee is not voluntary. A utility fee is supposed to be voluntary, in that you can limit your usage of the utility. With the fee essentially being assessed against a quality of your parcel, there is no limitation available other than the minuscule amounts that a rain garden or rain barrel bring you. And the penalty for not paying is that the amount gets assessed as a lien against your property. That is a pretty good show of muscle. It almost looks like what the taxman might do.

UPDATE: (July 2022) As reported by MLive, the Court of Appeals has issued an order in this case. Evidently the City attempted to claim that this was just the same old case that had already been denied class status in Circuit Court, but this Court denied that. The plaintiff’s counsel asked the Court to rule on the case directly, but that was also denied. The case has now been sent back to Washtenaw County’s Circuit Court, where the Chief Judge is directed to appoint a Special Master (MLive reports that it will be Patrick Conlin), who will gather facts (both parties will issue lists for discovery) and produce a report. The parties then have an opportunity to object to the report. There are no fixed deadlines for the report to be completed, only for action after the report has been filed. Depending on how busy the Circuit Court is, this is likely to be several more months. (Note that Judge Archie Brown, who presided over the previous case, is retiring.)

 

Categories: civic finance

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Disruption, Dysfunction, and Dismay: Ann Arbor’s Governmental Power Struggle (1)

August 1, 2021

This is a chaotic and potentially hazardous time in Ann Arbor. The next posts will attempt to set recent events into context. They should be read after first reading Rescuing Ann Arbor’s Budget.

Disruption

Disruption is a favored concept in the business of technology. “Disruptive technology is an innovation that significantly alters the way that consumers, industries, or businesses operate. A disruptive technology sweeps away the systems or habits it replaces because it has attributes that are recognizably superior.” (Investopedia) One well-known disruptive technology that has changed our politics is Facebook and other social media. Mark Zuckerberg, in earlier days, made his motto “Move fast and break things.” (It was changed in 2014.)

Ann Arbor’s Mayor, Christopher Taylor, has clearly taken this concept to heart. As we discussed in an earlier post about Taylor and disruption, he has been using that word and stressing that concept for many months. “Disruption is not something we do terribly well in Ann Arbor. Business as usual will not be acceptable. Things are going to have to be different.” And as quoted in our previous post, “The old way of running an economy, the old way of doing business, the old way of operating civil society is subject to change…”

It was not always so. In running for re-election (2018), a sunnier Taylor had this to say about Ann Arbor:

I like Ann Arbor the way it is, and it’s changing every day. I think we have a great thing going on here in our community. We are, I believe, going in the right direction. We’re a community that strives to balance character and affordability and demand and vitality. We need to make sure that the development we have in our community is smart and sustainable and that it doesn’t adversely impact residents’ quality of life. Change will come. We just need to make sure that it’s channeled, that it’s change that is good for us all today and tomorrow.

Mayor Taylor in 2017

At the time, Taylor ran on assurances that basic services would be a first priority (important to residents). We would even maintain quality of life. Things began to change after he ran into a hitch in an important achievement, the sale of the Library Lot to Core Spaces. With his 8-3 majority on Council, he easily won approval (April 2017). But a group of citizens stubbornly plowed along to collect signatures on a petition for a ballot issue to prevent the sale. One week after signatures were complete and as the ballot issue looked likely to materialize, Taylor ill-advisedly rushed the completion of the sale contract on a weekend without taking the agreement back to Council as the Charter prescribes. (Only Taylor, City Administrator Howard Lazarus, and City Clerk Jackie Beaudry signed the contract.) This occasioned a lawsuit from two Council members. In addition, the group seeking a win on the ballot filed a lawsuit via Thomas Wieder, a well-known litigator.

Mayor Taylor looks as though he has things on his mind. (February 2020)

But though Taylor himself handily won re-election in the primary election of 2018, he suffered a major blow. Three incumbents were displaced, losing him his Council majority. Then in the November election the citizen’s ballot measure passed, making the Library Lot a public space. This was suffered in disbelief for nearly two months; finally the City settled the two lawsuits (January 2019) and notified the purchaser of the Library Lot that the agreement was off.

One can almost sense that Taylor’s feelings for residents of Ann Arbor may have shifted with these sequential losses. He became noticeably tense and snappish. And he moved decisively to correct this power imbalance. As we reported in our post, Disruption in Ann Arbor: It’s a Promise, he recruited an impressive slate of challengers and backed them up with strong criticism of the incumbents. Money poured in and the challengers received twice as much in donation dollars as the incumbents, in addition to strong social media support from Ned Staebler’s Inspire Michigan PAC. (See our post, Factions, Frictions and Futures: Election Time in Ann Arbor.) The incumbents were overturned and Taylor had his majority back again. The new majority took office in November 2020 and set about undoing many of the actions of the previous Council, especially those in regard to property and development. As we have noted in the past, this is a  new political direction and a major shift in policy from earlier years in Ann Arbor. With the new majority, Taylor is succeeding in moving in that direction rather rapidly, at least in terms of Council decisions (cue the disruption). A March article in the Detroit Free Press highlighted the differences between the remaining incumbents and the new slate. But what it doesn’t quite show is how many 7-4 votes have occurred, many of them overthrowing the decisions previously made by the old majority. The effect has been to make more of Ann Arbor’s valuable land area accessible to developers.

A2Zero and Development

In November 2019, Council passed a resolution calling for the City to become climate neutral by 2030. A plan was to be prepared by Earth Day 2020. The A2Zero plan (April 2020 is still the current version) was finally accepted on June 1, 2020. The Welcome letter is signed by Mayor Christopher Taylor. It is a call to action:

…achieving carbon neutrality within a decade will necessitate that we all work together. It will necessitate collaboration, innovation, and disruption. If we are to achieve our goal,  Ann Arbor 2030 must be vastly different from Ann Arbor 2020.

A close reading of A2Zero is that it is a roadmap to a much denser city. While the premise is to make Ann Arbor carbon-neutral, that means only in terms of carbon dioxide generated within the borders of the City. A major theme is to bring automobile users to live here, and ideally to use non-motorized transportation.

A2Zero provides Christopher Taylor with a popular and credible premise (to address global warming) for making policy to facilitate dense development. The entire strategy as proposed will be incredibly expensive. The proposed overall budget is $1 billion over 10 years. That is 1000 X $1 million, or 10 X $100,000,000. The City general fund revenues for the current fiscal year (as budgeted) amount to $118,316,0321. (See Rescuing Ann Arbor’s Budget.)That is going to take some creative bookkeeping. At one time we would have assumed that our CFO (and then City Administrator) would ensure that good process was followed. However, it appears that this procedural obstacle has been removed with Tom Crawford’s dismissal.

Taylor is indeed succeeding with the strategy of “Move fast and break things.” The dismissal of Tom Crawford clears the way for him to solidify his power base and to accomplish the major rearrangement of our community that he has promised. He is now making some moves to eliminate inconvenient Councilmembers. Students of history will recognize all the classical elements of the palace coup. To some extent, the voters of Ann Arbor may yet exert a weak influence, but he very nearly has his power base secure. He should be smiling again before long.

 

 

 

 

 

Categories: civic finance, politics

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Rescuing Ann Arbor’s Budget

July 30, 2021

The City Budget determines how money may legally be spent. It is a complete accounting of revenues and expenditures for the forthcoming fiscal year. This is really the major work of the City Council and City Administrator. More attention is given to zoning matters and the occasional ordinance change, but the weight of actions lies with expending money according to the Budget.

Note that the General Fund is $118,160, 321. Revenues exactly match these expenditures.

The City Fiscal Year is on a July-July basis. Thus, we are now operating in FY 2022. Yes, the calendar says 2021 but until July of 2022 we are busy spending next year’s budget. (Washtenaw County operates on a calendar year budget, so they are still living in 2021. The Federal Government FY begins October 1, as does the State of Michigan.) Every year, the City Council is required to approve the next year’s budget by the second meeting in May. Here is the FY 2022 budget as approved in May 2021.

This year and last year have been rather confused because the COVID pandemic changed nearly everything. City revenues, which depend in part on parking revenue, were down severely and in the December 2020 Budget planning session  City Administrator Tom Crawford’s summary was, “We’re in turbulent waters.” Projections were that the Budget could be facing a $2.8 million to a $9 million shortfall.

Several months later, the Administrator’s message was still cautious.

In Budgetspeak, this meant that the deficit had to be made up by using reserve funds. We don’t like to do that. The savings are there in case of catastrophe (a worldwide pandemic comes to mind). Note that sentence about long-term stability. That is a budget director telling you “we have to tighten our belts”. The role of a budget director is to make sure that money is always available for its required uses and never to overspend.

Stresses and Strains

There were stresses obvious already in December 2020. From the news report:

The city’s sustainability office has identified a need for $6 million next fiscal year and $11.2 million the following year to work on implementing the A2Zero plan, Horning said. At a bare minimum, if the work was pared down with portions of the A2Zero plan deferred, the office would need $3.2 million next fiscal year and $5 million the following year, he said.

Note the disjunct: Sustainability (e.g. A2Zero) wanted $6 million, but there was already a structural deficit, and then more trouble likely ahead just to keep the boat floating. Here we see a suggestion just to “pare down” A2Zero.  “Council Member Ali Ramlawi, D-5th Ward, said the A2Zero plan council unanimously adopted this year was ambitious and the city has lacked money to fully support it right away.” But Mayor Taylor pushed back. “In my view, the work that is promised or foreseen under A2Zero is really a moral imperative,” Mayor Christopher Taylor said. “It’s imperative that we do this here in Ann Arbor and it’s imperative that we do it in every jurisdiction throughout the country and indeed the world, ultimately.” Taylor is being consistent. In April 2020, as we were in the midst of the first hit of the COVID crisis, he was quoted in the Michigan Daily as saying this:

“All lines of work, all manners of doing things, are open to interrogation. The old way of running an economy, the old way of doing business, the old way of operating civil society is subject to change, subject to reexamination, subject to improvement. As we figure out where we go next, reconstituting as a functioning society with the goal of carbon neutrality will be a part of our recovery.”

This vision is hard to reconcile with the work of running a city with a balanced budget. In fact, it renounces that concept.

American Rescue Plan

Happily for all local governments, the Federal Government enacted a plan to rescue them. As announced by Senator Debbie Stabenow, Ann Arbor is in line to receive $24,182,630. (It will not be coming all at once, but this is a firm promise.) There are some restrictions and some suggestions. You are not to use it to pay yourself bonuses (as one Michigan county did). You are not supposed to use it to pay off debt or to cut taxes or enrich pensions. It is supposed to be used to make our communities stronger, including the repair of failing infrastructure like water utilities and roads. Most attractive is the idea of doing projects that would normally not be affordable, such as new facilities (hello, WasteWater Treatment Plant?).

Accordingly and sensibly, the Ann Arbor City Council passed (by voice vote!) a resolution (June 7, 2021) that asks the City Administrator to prepare a plan to use the money. The resolution, sponsored by CM Ali Ramlawi and CM Elizabeth Nelson, notes a number of outstanding grant requests for Federal funding and some outstanding priorities, such as infrastructure, public health, and making public facilities more resilient against environmental stresses. The Administrator is asked to bring that report to Council by October 2021.

But That was Then

It looks as though the Council will not be getting that report. In a sudden, shocking move, a majority of Council voted to terminate the City Administrator, Tom Crawford. The vote is back on the agenda for reconsideration on August 2. If the move to reconsider the resolution passes, the Council could then re-debate and revote, or it could postpone the action until a subsequent meeting. Certainly this action is proving to be controversial.

If the action stands, Council is rudderless as far as the Budget goes. It will take some months to replace Mr. Crawford, and time is not friendly in this case. Who will be steering the ship? Maritime metaphors abound. We can expect that Taylor will want to take a different tack, as he has vehemently stated this. Will this mean a direct transfer of Rescue Money to A2Zero? As noted, the request for this year and next year was $17 million. The $24 million would address that nicely.

UPDATE: Council voted to terminate Tom Crawford’s appointment as City Administrator on July 20, 2021. A subsequent motion to reconsider on August 2 failed. He has now accepted a settlement.

SECOND UPDATE: Bridge Magazine has a review (August 5, 2021) of issues surrounding the American Rescue Plan.

THIRD UPDATE: Consolidation of power over City funds is continuing with proposals of ballot measures on the November 2021 ballot.

Categories: civic finance

Comments: 1 Comment

In Deep: Ann Arbor’s Water Troubles

January 1, 2021

An Update, July 2021 (scroll down to see it)

 

Ann Arbor’s Plymouth Road water tower

Years of questionable use of utility fees are coming back to bite the City of Ann Arbor and millions of dollars are at stake. How will they be paid and how will this affect the affordability of our water system?

Water is necessary, not only to life, but to human civilization. It is also critical to the success of a city, both as a place of habitation and also to conduct business and industry. Many of us living in Ann Arbor have been accustomed to taking our well-run water system for granted, even though daily life would be unimaginable without it.  Now we may become more aware of the cost and complications of maintaining a water utility that provides clean drinking water and eliminates sewage, while it also exerts environmental controls in order to safeguard the health of surface waters in the Huron River watershed. We are facing a crisis that may affect the affordability and quality of our critical water system.

The Class-action Lawsuit against the City of Ann Arbor

The crisis is this: a class-action lawsuit has been brought against the City which alleges that the City has illegally overcharged the customers of the City for use of its water utilities. The monetary amounts involved are not certain, but are in the tens of millions. The lawsuit, which was filed in August 2020 via a Royal Oak law firm (Kickham Hanley PLLC) with a track record of successful class-action suits, alleges that (a.) utility customers have been overcharged for water and sewer; and (b.) the stormwater utility charges are largely unwarranted and illegal. The remedy suggested is that both the signed plaintiffs (two Ann Arbor residents) and the entire class affected (all utility customers as of six years ago) should be reimbursed, and legal charges (to the attorneys) should be paid. Typically, class-action suits like this are undertaken on a contingency basis, which means the attorneys will be paid their fee only if the suit succeeds. All members of the class (all of us users) can expect to receive a modest sum based on our overpayments. (Don’t plan any extensive vacations.)

Here are the actual court documents.

Original complaint: Hahn-v.-City-of-Ann-Arbor-Plaintiffs-Class-Action-Complaint-and-Jury-Demand

City of Ann Arbor response: City of Ann Arbor response to Hahn

Hahn amended complaint: Ann-Arbor-First-Amended-Complaint-10-29-20

Ann Arbor’s Municipal Water Utilities

Our water system is really three systems, operated mostly in isolation from each other and with a separate financing mechanism. Fees and charges are based on usage to some extent, though Ann Arbor’s fee system has gotten more and more complicated over the years. Here is the sample water bill as displayed on the City’s website.

Note that there are two types of charges for water and sewer: the Customer Charge (fixed) and an amount based on volume usage. Volumes are measured in “Centum Cubic Feet” (CCF), namely 100 cubic feet of water. (Sewer usage is based on the water usage.) The charge is calculated as (CCF x rate). Sewer usage is calculated based on the water used. (What goes in, must come out.)  The fixed customer charge is supposed to pay for administrative costs, and is levied according to the size of the water meter.

A Question of Rates

Some years ago, Ann Arbor introduced a tiered system of rates for residential water use. There are also varied rates for “water only” (irrigation) usage, and different user classes such as multifamily, commercial, etc. (A detailed description of the water fee schedule will have to wait for a different day.) Each year for more than a decade, the rates have been going up consistently, which is causing more and more comment each year. The increase each year is by a relatively modest percentage, but with compounding the rate really goes up over time.

The controversy became more pronounced with the Cost of Service (COS) study launched in 2017.  This was followed by an analysis of rates( Water and Sewer Cost of Service Study) by a consultant (Stantec). The result, as the Stantec study notes, was that costs were transferred from multifamily residential users to single-family users. A particularly high rate was assigned to users in a fourth tier which was thought to represent people who watered their lawns. This angered a number of residents. CM Jane Lumm, who represented a number of them, was instrumental in bringing in a second consultant group to review the rate structure. The Arcadis “alternative analysis”  was presented to Council in March 2019. Meanwhile, overall rates continued to increase. In June 2020, with the COVID crisis afflicting many Ann Arbor residents, CM Lumm successfully offered a resolution that delayed an increase in water rates for the remainder of the year. However, the increase will be made up after the final passage of a resolution on December 21, 2020. The water rates will now increase by 7% as of January 1, 2021 and by 6.5% as of July 1, 2021. Here is a calculation of rates that might affect most homeowners. As this shows, the cumulative rate increase is nearly 14% (13.94 %). So if you are in the third tier (not too atypical for many households), your rate for the highest tier has increased by nearly a dollar per CCF. Let’s suppose you use 20 CCF per quarter. After the two increases, your water bill will have gone up about $8.06 per quarter. (Corrected amounts)

From ORD 20-32 as amended

Stormwater, A Special Case

“Stormwater” refers to the water that enters streets and drains, ultimately finding its way to a river or tributary. It requires management for several reasons, including flooding and water pollution. Typically, pervious surfaces like lawns and wooded areas accept a fair amount of rainfall without flooding. Impervious surfaces like pavement and building structures do not absorb water, and it runs off to cause surface flooding unless captured by underground stormwater systems. The City of Ann Arbor has an extensive stormwater system. While water usage is easy to measure (we all have a meter), individual contribution to stormwater is more difficult. A stormwater rate study  (2018) by Stantec describes the system being used in some detail. It is very complex. This system has also been controversial since it was first put into place in 2007, and the scope has increased to pay for more items. It has gone from being a trivial charge for most homeowners to a substantial one.

The Point is Taxes

Taxes are the lifeblood of government. I can confidently state that this has been true from the beginning of recorded history. Although possibly not recorded, it has also always been true that the people governed would rather avoid them. Yet, we also generally recognize the importance and utility of government. So there is always a tension, or if you like, a negotiation, between the taxing entity and the taxed.

Here in Michigan, as in many other locations, the tax revolt led by California’s Proposition 13 (1978) resulted in an amendment to the Michigan Constitution (the Headlee Amendment [1978]) that limited taxation by local governments. The intent was to protect citizens from new taxes unless they voted for them. It has several sections but the take-home message is: no new taxes without a vote!  This has severely limited municipalities (cities, townships, counties) in Michigan because the only available source of new revenue has been voter-approved property tax millages.

But municipalities also offer services that can legally be supported by fees. A fee is not considered a tax. It is simply the price of receiving the service. It is not, however, supposed to exceed the cost of providing the service. When is a fee a tax? When it is meant as a revenue source, not merely a compensation for the service. This distinction became very important in what is widely referred to as the “Bolt Decision” (a ruling by the Supreme Court of Michigan in the lawsuit, Bolt vs. City of Lansing). There are summaries of this many places but it is worth reading the actual decision because there are some subtleties.  Here is the essence:

  • A fee should serve a regulatory purpose, not a revenue-raising purpose. (This is a little hard to explain. It basically means that the fee is simply the price of using the service.)
  • A fee is voluntary. The user of the service should be able to choose the degree to which they use it. A good example would be that if you don’t want to pay for water, you shut off a lot of taps.
  • A fee should be proportionate to the cost of providing the service. (This is how the “Cost of Service” study gets born.)

The Court’s decision also addresses the question of whether the fee collected benefits the user directly.  Here is a direct quote:

The revenue to be derived from the charge is clearly in excess of the direct and indirect costs of actually using the storm water system over the next thirty years and, being thus disproportionate to the costs of the services provided and the benefits rendered, constitutes a tax.

So why is the distinction between a fee or a tax so important? Because in Michigan, because of the Headlee Amendment, a municipality must obtain the consent of the voters in order to impose a tax.

Arguments to Come

To date, the original complaint and an amended complaint with more detail have been filed. They have many separate instances and arguments to support the claim that Ann Arbor residents and users of the utility system have been overcharged. The City has filed an initial response, most of which is simply a denial of the allegations. The defense of the suit will involve a very fine dissection of many details of the rate structure and of the use the funds have been put to. A critical question is whether the City has been collecting water fees as a source of revenue (to use for purposes other than providing the service).

On December 21, 2020, the same day on which they authorized higher water rates, the Council approved an amendment that increased fees to an outside law firm to defend the City against this lawsuit. They authorized paying it from the water fund.

Next Chapter: an Update

July, 2021: Progress on the lawsuit seems to have stalled out. The plaintiff’s motion to proceed in a class action lawsuit (request for class certification) was denied by Judge Archie Brown on 5/20/2021, and a motion for reconsideration was denied on 7/12/2021. Meanwhile, the Judge also denied (on 5/27/2021) a request to file a Second Amended Complaint.

As noted, Council approved a fee to an outside law firm to defend the suit. Here is the City’s response to the motion for recertification. As you may note, it includes extensive documentation, including material from other lawsuits against municipalities.

City’s Response to Motion for Class Certification

It is not clear where the plaintiffs will go from here. Filing this lawsuit under any condition other than as a class action would not be remunerative.

In our opinion, a fatal flaw in the lawsuit was the emphasis on water fund reserves. The City’s response made a number of pithy comments about this claim. They showed figures to indicate that “the reserves are insufficient, not excessive”.

The plaintiffs chose the wrong hill to die on. Their case could have been very strong if they had confined themselves to the stormwater “fees” (they are, in fact, a tax, as could easily be shown). Class-action lawsuits based on Bolt against a number of other Michigan municipalities have been successful. Jack Eaton, a former Ann Arbor Councilmember who is an attorney, has been following these issues for some time. This is a summary of recent Michigan court cases relevant to the Bolt Decision which he wrote. The summary is worth reading in its (short) entirety, but these are the significant conclusions. Quoting here:

On December 11, 2020, the Michigan Supreme Court issued an order that may impact the current lawsuit against the City of Ann Arbor. The Supreme Court order was short, just one paragraph, but it vacated a Court of Appeals decision that had given some hope to municipalities whose utility charges were being challenged. The Court of Appeals had ruled in the combined case of Binns v Detroit and DAART (Detroit Alliance Against the Rain Tax) v Detroit that the City of Detroit’s drainage charge was a fee rather than a tax under the analysis of the Michigan Supreme Court in Bolt v City of Lansing, 459 Mich 152 (1998).

…Some believed that the Binns and DAART cases provided the Supreme Court a chance to address the impact of the Bolt decision with the hope that the Supreme Court might modify its approach to the fee versus tax analysis. The order vacating the Court of Appeals opinion made clear that the Supreme Court maintains its original approach.

Proportionality

One of the issues discussed in the summary cited here is the issue of proportionality. Are the fees assessed equitably across all parties? Taxes can be levied so that some parties receive a more favorable treatment than others, but fees are supposed to be assessed on the basis of cost of delivery of the service, and should be equally shared by all users. The Ann Arbor stormwater fee system is highly nonproportional. For most individually owned homes, an image obtained by infrared photography is used to declare a certain area to be impervious.  Here is the proposed image-to-impervious area relation as shown by the consultant (PhotoScience Geospatial Solutions). In their presentation to a professional group (2013), they state: “Area is directly related to runoff from a parcel”.  But rather than basing the fee directly on the impervious area, they have proposed a tiered system.

The system for commercial buildings and developments is much more nuanced and complex. Here UDC on stormwater rates are the definitions and provisions as shown in the Unified Development Code of the City of Ann Arbor. These properties are able to reduce charges by demonstrating performance (actual diversion of stormwater). But the homeowner rate structure has no such provisions, short of very minimal credits for rain barrels and rain gardens. Many homeowners in Ann Arbor will tell you how they have carefully placed drainspouts to carry water into lawn areas rather than the street, etc. In fact, impervious area as determined by remote sensing is not a direct measure of stormwater discharge, a core assumption. While water usage is measured by meter readings, these images do not actually predict how much water will be discharged from an individual property. This needs to be measured by direct assessment. Such an assessment is not available to owners of individual houses.

Another defect of this system in terms of proportionality is the tiered system itself. Here are the actual current rates.

 

Note that a taxpayer will be charged the same amount whether at the very bottom (for example, 2,187 SF) or top of a tier (4,175 SF). Further, since these figures are based on an image made at some elevation, it is likely that the resolution is not perfect. It would be perfectly possible to have a reading of [2, 187] instead of [2, 186], which would mean an additional quarterly sum of nearly $25 is due. This is hardly proportionate.

The complaint in Hahn vs. Ann Arbor does address stormwater fees and rightly challenges their use to pay for certain items. But the heavy emphasis on water rates and water customers has hampered their case. We noted that one of the City’s defenses is that they do not actually know who they have billed to over the years. (People come and go, students move in and out, etc.) Property ownership is surely more easily traceable, even historically.

Will the lawsuit be reconfigured, resubmitted, appealed, or dropped? Only time will tell. But there is a good case waiting here for someone to pursue.

Categories: civic finance, Sustainability

Comments: 7 Comments

Ann Arbor’s A2Zero Plan: Estimating the Improbable

May 26, 2020

The logo for the A2Zero campaign

The A2Zero Plan looks to reduce emissions drastically in the next 10 years. But what are the probabilities that this will succeed? A review of some of the contingencies.

The A2Zero Plan, which is scheduled to come before the Ann Arbor City Council on June 1, is a rambling complex of objectives and strategies that ostensibly was devised to meet the requirements of a Council resolution (November 4, 2019) that called (alternately and confusingly) for a “climate neutrality plan” and a “carbon neutrality plan”. In reading it, evidently what Council was trying to achieve was to map out a strategy to reach “net zero”.   This appears to be the operative phrase:

Whereas, Creating a climate neutrality plan is necessary to identify, plan for, budget, and work towards implementing the actions required to achieve community-wide carbon neutrality.

No other principles or directives are found in the resolution. The staff is being directed to figure out (a “draft plan” is actually mentioned) how Ann Arbor can reach “carbon neutrality”, i.e., net zero carbon produced, by 2030. That is all. No mention of sustainability, equity, or anything else. Just “get us to carbon neutrality”.

The Goal: Taking Our Net Emissions to Zero

Although it is not exactly stated, evidently the purpose is to achieve a net zero carbon dioxide balance (or better, CO2 equivalents [CO2-eq]), though that term is used only once in passing in the resolution. The term can be used in different ways, but I’m pretty sure that the net operating energy is the definition here. “Net Zero” installations typically produce much of their own energy onsite using non-emitting technology, and this balances their carbon cost otherwise. A famous example in Ann Arbor is Matt Grocoff’s Netzero House. Presumably a net zero Ann Arbor would reduce emissions and also bend energy generation toward non-emitting technology such as solar energy generation. The Introduction to the Plan says (p.12):

Simply defined, carbon neutrality is reducing the emissions our community puts into the air down to zero, through actions that minimize output and/or by purchasing greenhouse gas emissions offsets.

Precision is important here because the aim is to counter a climate emergency, which Council has declared. The name of the game in climate is GHG (Greenhouse Gas) emissions. But there are many GHG and they have different climatic effects. Therefore a standard has been devised which states all GHG emissions in terms of the effect of CO2. (Explanation of the term and its uses here.) Happily, the Plan does state results in terms of CO2-eq. Note that the units shown in the lead figure are metric tons of CO2-eq. The number does not appear to reach zero by 2030 except for the electricity contributions.

Lead graphic in A2Zero plan showing carbon load reduction

The Main Points

  • Why are we concerned about the output in CO2-eq? Because we have all heard the dire predictions. I reviewed some of them in this post, Climate Change in Ann Arbor: Investing in the Future, where I linked to and quoted the IPCC report of 2018. And then there was this, Ann Arbor and the Climate Crisis: Policy and Outcomes. Along with many others, I have been anguished (for years, actually) about the vision of the future of the Earth and its children – all because we produce too many Greenhouse Gases. Ann Arbor committees and Councils have expressed a hope that we could mitigate this output for years. Success has been elusive. Apparently Council decided it was time to get down to business.
  • Since this is our objective (reduction of GHG), it makes sense that any plan to address it would have a strict accounting of CO2 emissions and how we expect to address them. It is a matter of arithmetic. Count the emissions. Figure out how to subtract the needed amount. The A2Zero plan does have a number of proposed approaches. But unfortunately most of the proposals have low probability of succeeding.
  • The approaches to carbon neutrality used by other institutions fall into several categories, especially low-carbon energy and heat generation, energy efficiency, and green building approaches. The University of Michigan has a task force addressing this goal (see most recent report). Note that the final report from this group, President’s Commission on Carbon Neutrality (PCCN) is due this fall. So far the recommendations are aimed at reducing emission levels.
  • Another method to become “carbon neutral” is to use offsets, meaning that we send money elsewhere to reduce carbon emissions elsewhere in the globe.The spirit of the Council’s directive is, I believe, aimed at reducing emission levels in the City of Ann Arbor. As an environmentally conscious community, we would like to believe that we are doing our best to reduce our own contribution to the CO2-eq burden of the planet. This Plan instead makes liberal use of offsets and other means of essentially shipping our obligation to reduce carbon pollution to other locations, while continuing to add to the emissions with our own activities.
  • The Plan also has many, many proposals aimed at different policy objectives that have little or nothing to do with carbon sparing. While “equity” is a high value and something we should address as a community, it is not related except remotely to addressing CO2 emissions.
  • Just to add to the problems, the actual math in the Plan is defective.  I have no idea how the original database (I assume there was a spreadsheet at some point) looks, but there are so many typos and inconsistencies in this document that it is impossible to analyze. I have sent some detail to the City Council and the Administrator, but here is just one sample: one proposal (Offsets) has two different numbers in the document vs. the summary table. One is 13.2% of the GHG needed and one is 45%. That is not a rounding error. It was my intent (and I built a table) to compare the strategies based on their contribution, but it is impossible with the mangled condition of the report. Numbers do not add up.

State Law, Ann Arbor Regulations, and the Art of the Possible

As noted by the Ann Arbor News, several items are dependent on changes in state law. This
(1) Assumes that state law can be successfully amended to make certain actions impossible under current law possible. They include community solar, building code changes, and community choice aggregation. This seems to be oblivious to the actual steps and political barriers between anything Ann Arbor requests and our majority Republican legislature. Have the drafters of the plan determined which committees will take up a measure, and have they determined that there is a lawmaker who is willing to carry the issue forward?

(2) Assumes that these changes can happen almost instantaneously. Several show timelines that assume state law can change in 2020. Enforcement is to begin in 2021. An example is a proposal to change State building codes to require that all new buildings be built to net zero energy standards. This would likely mean full electrification, among other changes. It would be a substantial change in the way building is done across the State of Michigan.

About dates: Ann Arbor and many others have a fiscal year that begins in July of the preceding year. Thus, though we are currently in the calendar year 2020, our Fiscal Year 2021 (FY21) budget was just approved and in July 2020 we will be transported to the future, or at least to 2021 for the purposes of our civic operations.

Some units (like Washtenaw County) have a calendar year budget. So while the City of Ann Arbor is living in 2021, the County will be comfortingly at home in 2020, until January 2021.  Meanwhile, any agency that lives mostly on Federal funds (like AAATA) uses the Federal fiscal year (beginning in October). So for purposes of Federal grants, we are in 2020 until October.

Effects of Building Code changes

One question that arises from these differences in how dates are used: when the plan says “2020” or 2021″, what does it mean? Will a number for 2021 be as of July 2020, January 2021, July 2021 (midpoint of the calendar year), or December 2021? If we expect to start measuring the outcomes and there will be regular reports, presumably a particular date will be used from year to year. The timeline for “Building Code changes” is a straight-line reduction of emissions, starting in 2021. But that over-simplifies any such course of changes, since even the rate of building new structures is likely to vary. The basis for this estimate is not shown.

Presumed effects of a regional transit system in the Ann Arbor area by 2022.

Other proposals indicate very poor information about the actual status of an issue. There is a blithe assumption that a Regional Transit system will be in place and functioning in 2022. It appears that there was not even a cursory Google search because this story has been all over the place for the last couple of years. We have every detail you could wish in this post, Governance and Transit and Taxes, Oh, My.  If you scroll down to updates 21-25 you will see that the supporters of the RTA tried two separate attempts at revising State law to make a RTA without Macomb County work. The RTA will not be on the ballot this year and possibly never. A lot of reworking in back rooms is probably going on, though maybe not during the pandemic.

Supposing that the RTA does get on the ballot in, say, 2022, it would then have to get the approval of the voters. (There was a prior failure.) The likelihood that anything at all from the RTA will be reducing the carbon load in the next two years is vanishingly small. (Note: the RTA is a functioning authority and has done many good things in the Detroit area. They also collaborated with the AAATA for a Ann Arbor-Detroit bus, sadly discontinued for the pandemic.)

Let’s Rethink

Council asked the Administrator and thus the Office of Sustainability and Innovation for a draft plan. This is indisputably a draft. Like all drafts, it needs a lot of markups. The many errors of estimation and addition do not belong in a finished plan. (The Plan does not show the work used to arrive at these estimations. I assume that there was some. It is impossible to analyze or evaluate without showing how the numbers were derived.) It also needs some project management expertise so that each strategy can be tracked and evaluated over time. I haven’t even begun to address the budgetary implications (the amounts requested would consume nearly our entire City budget over 10 years and are simply infeasible).

I earnestly hope that Council will not be asked to adopt it as a Plan, but will ask the staff to continue fine-tuning the strategies and present them as they are mature and completely calculated with the best information possible. Clearly more work, and more time to do it, are needed.

Categories: civic finance, Sustainability

Comments: 3 Comments

Ann Arbor’s A2Zero Plan: the Challenge

May 21, 2020

On June 1, 2020, Ann Arbor’s City Council is scheduled to consider (for the third time) an expansive proposal that has the capability of significant impact on many aspects of life. It is the A2Zero Plan. There is a public hearing scheduled, and numerous explanatory documents are also attached. (See the Legistar link for that list.) It is time for all of us to pay attention.

This plan was launched by a Council resolution. It had a remarkably short timeline for production of a complex plan, and was amended to allow only ten years to make Ann Arbor “carbon neutral”, that is, to generate no net CO2.  It was a bold statement of support by Council to make Ann Arbor a leader in fighting climate change.

The Sustainability staff (led by Missy Stults, Sustainability and Innovations Manager) gamely pitched in, starting with several surveys, holding large town halls, and other invitations to public comment.

Climate_Voter_Yard_Signs_Final-02

Yard sign made available by the Ann Arbor Climate Partnership, based in the Ecology Center

A version  of A2Zero was presented to Council on April 20, but as reported on MLive, Council simply “received” it (this is an acknowledgement, not an approval) and asked for more information. Rather surprisingly, it reappeared on the agenda at the same time as the annual Budget resolution (May 18). The plan calls for considerable investment (about $1 Billion over 10 years) at a time when the City is facing a considerable revenue shortfall. But it was also the subject of an extensive lobbying campaign by a group based in the Ecology Center which has many nonprofit and institutional signatories. The Ann Arbor Climate Partnership is distributing campaign-style signs. The major point of the campaign appears to be adoption of the A2Zero plan. It is not clear who is paying for the expense of the signs, but donations go directly to the Ecology Center. There were many pleas on social media and doubtless Council was inundated with messages supporting the plan. Who is not for conquering global warming?

After a Council session which went on into midmorning of the next day, the item was postponed to the June 1 Council agenda. There is now also a public hearing scheduled. (This had not been made available earlier.) And there is now an updated version of the Plan (remarkably, this was not made available until hours before the Council meeting on May 18, and few people were aware of it). It can be downloaded from the A2Zero website (not the City website). It has been a real effort to obtain current and meaningful information, in spite of the many documents made available. For example, though consultants were employed in preparing this, to my knowledge those reports are not available, or at least not identified as such.

Interim Summary

In my view, this plan has many flaws, apart from the price tag and the current uncertainty about the City’s financial condition. It needs to be scrapped and reconsidered in its entirety. I will be laying out my analysis and commentary on the plan in a series of blog posts. Here are just a few summary points.

  • On examination, many of the points are not really about climate and CO2 emissions. They are really about rather wispy “sustainability” concepts. We all love sustainability. We’ve heard about it for years. I’ve even preached it. But this is supposed to be a plan targeted to a specific objective, namely reducing our carbon load on the planet.
  • Another major theme is called either “justice” or “equitability”, depending on which version you read. Again, we all love the concept of making our society more equitable, but that should not be what this is about. We are trying to reduce carbon emissions.The insertion of affordable housing (another uncontestable good) is not to the point.
  • And in relation to the first two points, much of the plan seems to be pointed at the objective of obtaining policy directives that have been a subject of debate but are not related to climate change. A prime example is the promotion of “density” via changing the zoning map to allow more intense development of formerly single-family zoned areas. This was also a theme of a Master Plan revision previously proposed and stalled in Council. (See The Master Plan and Ann Arbor Emergent.) That debate should be argued out on its own terms.
  • Where are the genuine metrics on CO2 generation? This is poorly explained and every action in this plan should be oriented to that solution. More about this later.
  • Reading the plan and the explanatory notes in detail reveals a depth of unproven assumptions and extrapolations that are startling to find in a document presumably produced by professional staff. Here is one I found at random.

In the Investment Plan, a City expenditure of $35,000 for emergency kits is balanced by a $210,000 annual savings. The note says “Estimated savings from a FEMA report showing that for every $1 invested in prevention, we save $7 in emergency management and response costs.”  Note that the $210,000 savings, which are used in the budget for the plan, actually do not exist. They are based on an assumption (that prevention and the emergency kits are the same) piled on an assumption (that this extrapolation is more than that but is an actual estimate). Is this the quality of all the budget calculations? Careful reading will be necessary.

  • Some aspects of the plan are not possible under current state law. The plan’s “vision” supposes that this will magically change. Anyone who is familiar with the history of Michigan state politics would not make a leap like this for an important fraction (> 38%) of the CO2 generation.
  • Many aspects of the plan are dependent on actions of entities outside the City or the City’s influence and reach. Some of them should be simply excluded as likely probabilities. For example, a regional transit system is postulated, apparently without the information that it has been defeated politically yet again for the near future and the resolution does not appear likely. (For extensive updates on the Detroit Metro RTA, see this.)
  • The plan seems to assume that as long as we can make sure carbon load is incurred outside our actual City borders, we don’t have to count it. Even if our policies cause carbon emissions in themselves, just keep them outside the borders. An egregious example of this is the proposed Park and Ride expansion. This proposes building a substantial acreage of parking lots outside the City and letting commuters park there and take buses in. But the emissions are not ours! And the parking lots will have a carbon effect by themselves, not included since they are outside our borders.
  • In a similar vein, we are not considering the issue of embodied carbon that buildings represent. In fact, this plan is building-friendly. But a growing recognition of the contribution that buildings (third in the worldwide contribution to carbon emissions) make to our global load has meant that many architectural professionals are now considering this to be of primary importance.
  • Simply put, this is an ineffective plan if the point really is to be a carbon-neutral city. The numbers will not add up if calculated honestly.

I hope to elucidate more of this in detail in future posts. It would be reassuring to believe that our leaders are trying to execute this intelligently and honestly. Unfortunately, it seems that the intent is simply to forge ahead regardless of any impediments. It is being characterized as an “opportunity” in the face of the pandemic and the financial barriers.  We are in essence being issued a challenge. As Missy Stults has said,

“This idea of being okay with failure, or failure positive as we call it, is a total paradigm shift in most situations, but so is climate change,” Stults said. “So, we have to be comfortable with trying something and being okay coming back and saying, ‘You know, that was not as successful as we thought it was going to be.’ The ultimate objective is a safe climate, it’s a high quality of life. Basically, a bunch of things can fail for different reasons, and we have to be okay with that.”
(more…)

Categories: Basis, civic finance, Sustainability

Comments: 14 Comments

The Master Plan and Ann Arbor Emergent

July 6, 2019

Cities are born, live, and die. Like any living thing, they are changing constantly. For most of us who live in one, we don’t see the beginning and the end, only the change. Ann Arbor, of course, is constantly changing. Here is what we said in the post, Ann Arbor Emergent.

Ann Arbor is rushing toward the future.  Each day, each moment, events small and large are shaping the new reality.  There is no possibility of remaining anchored in the past because we are leaving that behind us.  The only question is what shape the future will take and who will frame it.  What will emergent Ann Arbor be like and whose vision will best describe it?

So much of the civic debate about policy in Ann Arbor has been about the direction of change.  It has precisely been about the question of whose vision will guide the city as its new shape emerges.  The two opposing sides in this debate have been given many names, none of them adequately descriptive. Most recently, we defined them as the Powers That Be and the Neighborhoods. In that post (The Primary Struggle for the Future of Ann Arbor), we described the Powers That Be as the “majority”, which is no longer quite appropriate, since seats on Council other than the Mayor shifted from one side to the other in the 2018 election.  That post defined a number of the issues under contention. The Neighborhoods are generally understood to be long-term residents of Ann Arbor, though not all long-term residents agree on many points.

The accusation by the Powers and their supporters, like the self-named YIMBYs, has been that the Neighborhoods are opposed to change. This is wrong on its face (not all change is the same, and long-term residents don’t oppose everything that is change) and in practical reality, since change is constant.  While each decision by Council guides change to some extent, we are now about to experience a potential major shift in focus and purpose to emergence of a future Ann Arbor. Our city is embarking on a new Master Plan, and the consequences are likely to be substantial.  This is a moment when all sides and all citizens can engage at a meaningful level.

Master Plan

The Master Plan is both literally and figuratively the foundation for city planning.  For most cities, it is the projection of the city’s vision of the future, and a map for how to get there.  In Michigan, this process is determined by the Planning Enabling Act  (P.A. 33 of 2008).  As the Act says,

A master plan shall address land use and infrastructure issues and may project 20 years or more into the future. A master plan shall include maps, plats, charts, and descriptive, explanatory, and other related matter and shall show the planning commission’s recommendations for the physical development of the planning jurisdiction.

Historically, the Master Plan has had no statutory authority (it is not a law, merely a suggestion) but has been used to direct policy.  The legal direction for land use is the zoning ordinance and map, which is wrapped around with many restrictions and directions as to how a particular parcel may be used. The zoning map is a to some degree a reflection of the Master Plan that is sometimes subject to change.    We have often seen Council award zoning or approve site plans for developers of projects that do not harmonize with the Master Plan.  And yet the argument that “this is not consistent with the Master Plan” or “this reflects the Master Plan” is often heard in rezoning and planning debates.  My reading of the Planning and Enabling Act is that there is some intent to coordinate these two planning functions in this relatively recent rework of Michigan law.  Specifically,

For a local unit of government that has adopted a zoning ordinance, a zoning plan for various zoning districts controlling the height, area, bulk, location, and use of buildings and premises. The zoning plan shall include an explanation of how the land use categories on the future land use map relate to the districts on the zoning map.

The Zoning Ordinance (now properly called the Unified Development Code) itself becomes very granular.  Each zoning classification has attributes clearly defined, down to physical limits (height, setback, parking requirements, and other), and each parcel has its place.  The truly marvelous Ann Arbor Zoning Map shown on GIS (Geographical Information Service) refers by number to a PDF file showing the zoning classifications for each area.  (Because it is GIS, it has many layers showing many characteristics of this terrain, but we are talking zoning.) Want to know your own zoning and that of your neighbors?  This is the place.

The Ann Arbor zoning reference map as shown on GIS (mapAnnArbor). The individual marked squares are references to zoning maps for specific sections.

Once you have identified the section of the map that interests you, you may enlarge the magnification to study detail.  Or you may simply note the numbered square and go directly to the pdf file that shows a parcel-by-parcel zoning classification.

Zoning map for a portion of the Burns Park neighborhood. The PL is Burns Park school and park. Note the different residential zoning classifications.

Current status

The City of Ann Arbor’s Master Plan is currently a collection of plans, not a single document.  The Land Use Plan (2009) is what we usually think of when citing the Master Plan.  This incorporates several area plans: Lower Town, Central Area (1992), University of Michigan Property, West Stadium Boulevard Commercial Corridor, and also the Northeast Area (2006), South Area (1990), and West Area (1995) plans.  This version of the Land Use Plan was actually a compilation by Planning staff of existing plans.  Some of us who observed this process felt there may have been some changes and omissions in the cut-and-paste. The original area plans were the product of citizen committees and long public sessions and hearings. The residents of the designated areas were the major decision-makers and citizens from elsewhere in the city were not much involved in the specific areas.  The Downtown Plan (2009) was a complete rewrite of the previous plan; “A2D2” was a product of the first wave of serious development push in which height limits and parking requirements were changed drastically.  Likewise, an ambitious Transportation Plan Update (2009) called for serious investment in rail transit via several projects that have not been realized. (A new Transportation Plan Update is now underway, with a consultant and a committee at work. No news yet.)  The PROS Plan is revised by the Parks Commission every five years (the current one is through 2020). And notably, the Treeline Allen Creek Urban Trail was incorporated into the Master Plan in 2017.

All these different plans have been adopted by the Planning Commission as part of the Master Plan, which means that they are policy documents and in theory are all directives for future action.  A “plan”, if adopted by the appropriate body (which is most often the City Council) has some force, though many parts may never be implemented.

There are many other documents listed as “resource documents” that are not part of the Master Plan, although some of them are called “plans”.  Note, for example, the Connecting William Street Plan, which was produced by the DDA as the result of a long public process after the City Council requested that the DDA formulate a plan for use of the block containing the Library Lot.  The final plan got a cold shoulder from the Council, indeed, it was never taken up. (It basically envisioned how each part of the area in question could be developed to the maximum height and density.) In a somewhat questionable move, the Planning Commission placed this rejected plan on its resource list.  If it had been more successful, it too would doubtless be part of the Master Plan.  This story is instructive because it illustrates how the Planning Commission can act autonomously, not merely as an advisory committee to the Council.

Process

After a public hearing on May 21, 2019, the Planning Commission adopted a resolution approving “the allocation of resources to solicit both consultant assistance and internal support of a comprehensive master plan update process, rooted in extensive public engagement”.   The staff report cites quite a few concerns. They are, briefly (but in same order as named in the report)

  • The long periods, some as long as 30 years, since adoption of some sections
  • Possible local effects of global warming
  • The combined volume and number of plans and resource documents, making policy difficult to parse
  • Affordability “a … challenge for the City in supporting a diverse population, a robust workforce, and sustainability goals”
  • Aging of the population
  • Increasing population
  • The number of commuters and transportation challenges this entails.

Somewhat confusingly, the Planning administration had already posted an RFP (request for proposals) seeking a consultant to perform the update. The due date for proposals in answer to RFP 19-06 was set as March 7, 2019, two months before the resolution passed by the Planning Commission.  There is now a committee evaluating the eleven proposals.  Once they have made a recommendation, the contract with the winner will go to Council for approval.

Themes

The RFP provides quite a few clues as to the weight and potential impact of the Master Plan revision. It contains a number of directives to the prospective consultant.

Values

The consultant is asked to begin by developing a set of City values that may be used to evaluate potential consequences of implementation. They are characterized as “high-level evaluation tools (e.g. equity, affordability, sustainability)”.  They are evidently intended to carry real weight. “The City aspires to use such values to help support the shift from aspirations to realizations of community goals.” 

It is expected that a “vision statement” will be part of a plan.  The current Land Use Plan has one which is descriptive of the different systems of the City.  But it also indicates the expected product. “The quality of life in Ann Arbor will be characterized by its diversity, beauty, vibrancy and livability…”  (from the current Plan)

If values such as those named earlier are used to evaluate every scenario in the Plan, it implies a standard that all provisions must match in some form. As an extreme example, does our park system justify itself in terms of equity and affordability?  We have withdrawn a great deal of land from our total city area in search of natural beauty, recreation, and quality of life.  If you think this is far-fetched, you may not know that the City Council of the mid-1980s refused to put the first park millage on the ballot because parks were viewed as “elitist”.

Participation

The RFP laudably puts “civic engagement” near the top.  This is an important step for a master plan affecting the entire community.   It calls for “an innovative, multi-format public engagement process that gathers input from a diverse section of the City, including students, residents, workers/commuters, owners and employers“. However, it also calls for participation of “those who experience the City in varied ways, as … commuters, and potentially aspiring community members“.  This indicates that people who are not currently residing here or who do not own businesses here will have some say over the future development of the City.  This raises a lot of questions, including one about how those participants will be chosen or recruited.

Plan Consolidation

As noted, there are currently 8 plans and 18 resource documents. The desired result will consolidate all this into a single document less than 100 pages in length.  What is wanted is a “unified master plan, that … consolidates the goals of these numerous documents, identifies (and to a large extent reconciles) contradictions within the numerous documents”.

This is something of an earthquake within our current planning structure.  It implies considerable editing and condensation of specific plans, most of which were done with public input and often much thought and compromise in order to accommodate a variety of views.  As we learned with last year’s condensation of our zoning code into the current Unified Development Code, there can be many omissions, deletions, and even errors in such a process.  It is almost impossible for interested citizens and elected representatives to track the extent of such changes.  Just as one illustration of a potential effect, the inclusion of the Connecting William Street project (never accepted by Council) in the resource documents suggests how shading and insertion of material could alter the overall plan.

Refocus Land Use

It is clear that an important goal here is to wipe the slate clean and start over again as far as land use goes.  Currently our land use map is a accretion of decisions made over decades, often hard-fought and hard-won. The zoning map pins down uses in each area and preservation of neighborhood character has been one of the important criteria.  Here is what the RFP says about this:

Identify a future land use plan that addresses the fundamental goals of the City. For example, the plan should identify land use strategies for affordability, sustainability, and a realistic vision for accommodating projected and/or desired population and job growth in the City through 2050 and beyond. This effort will result in a consolidated land use map that uses a single set of land use categories throughout the City, that no longer reflect the subtle distinctions that the current City-by-area land use maps reflect.

And:

…evaluate the current site-specific recommendations from the existing master plan, and eliminate as appropriate. The City seeks to shift from such site-specific recommendations toward character areas, corridors or districts whenever possible, that articulate a character or expectation of how a larger neighborhood might develop, and interact with surrounding areas of the City.

Action Plan

The revised Master Plan is intended to go beyond the usual general vision and set of recommendations.  As indicated in the Planning Enabling Act, a zoning plan will be prepared simultaneously to enact the policies indicated.  (The answers to questions about the RFP specifies that the consultant is to develop the zoning plan.)  Thus, this will be a muscular set of directives ready to go into action.

The document will include a fully prioritized implementation schedule that identifies the highest to lowest priority actions (i.e. ordinance amendment recommendations, further planning recommendations, development review process evaluations/recommendations) for the City to undertake to realize the vision identified in this new Master Plan. (from the RFP)

Where we are at this moment

While the RFP specifies a beginning in July 2019, we are some distance away yet.  The evaluations committee is presumably continuing to evaluate the proposers and their offerings.  Eleven different sets of professionals take a while to sort out.  (I don’t know of any public access to the deliberations of the committee.)  Once they make a determination, a contract will have to be negotiated and will have to be approved by Council.

What Does It All Mean?

It is clear to me and to anyone who is paying attention that this is a major leap toward the objective of upzoning Ann Arbor.  There has been open talk of eliminating single-family zoning. There has been discussion for years of the need for “missing middle” housing (2-3-4 or more units per parcel).  But if the Master Plan is massively redrawn, it could be a push toward even more intensive development.  This is likely to be density, density, and more density.  We’ve been hearing about it long enough.

The objective that is always cited is affordable housing. We’ll have to discuss the likelihood of that outcome at some other time. To date, most new, denser development has been at the high end of the market (i.e. expensive, not affordable).  This is accord with what is happening nationwide.  Developers are in business.  They build to maximize profit from investment. Unless subsidized, they are not going to build “affordable” housing, no matter how you define that.

Ann Arbor will change, no matter what happens. Only in the last year, many new, denser projects have been approved. The whole block on E. Hoover will be a huge apartment complex. At almost every Council meeting, a new development is approved without controversy. The Lockwood proposal for an intrusive senior citizen complex in a single-family zone was defeated partly because of its conflict with the Master Plan.  Density advocates took that hard. But this was an exception.

Our current planning mechanism doesn’t award any obvious winners and losers. There are wins and losses on all sides, and often politics does play a role.  (Doesn’t it in all things?)  What appears to be proposed here is to change the rules so that the outcome is predetermined.

If we who live here want to have a role in determining the face of emergent Ann Arbor, we’ll need to pay attention and participate to the extent possible. The future of the city is in the balance.

 

 

 

Categories: civic finance, Neighborhoods, politics, Regional, Sustainability

Comments: 3 Comments

This Land is – Our Land?

August 31, 2018

This land is your land, this land is my land…This land is made for you and me. — Woody Guthrie

The concept of public land goes back so far that it is practically racial memory. The history of many peoples has been the war over open common land vs. privately held lands. Even today there are wars in some locations (e.g., Africa) between herders and farmers. Perhaps the best documented case of a transition from publicly held to privately held land, enclosure, is in England.  Enclosure led to wealth for those who held the land, and forced many laborers into cities where they formed the basis of the Industrial Revolution.  In this country, the great expanses of land “liberated” from the indigenous peoples who treated them as a common birthright made land ownership available to many common people via the Homestead Act. Property ownership is still one of the best predictors of wealth accumulation and a great majority of people still hope to own their “little bit of heaven”.  But despite this drive, we tend to see public land as ours, held in common. In other words, it is our land, to be used for our benefit.

Public Land in Ann Arbor, Defined

Probably the greatest cause of civic strife in Ann Arbor over the years has been the dispute over public land. What is it? First, it is owned by a public entity, whether that is the public schools (but not a charter school), the University of Michigan, or an authority such as the Ann Arbor Transportation Authority.  But when owned by the City of Ann Arbor, – that is when many of us feel ownership.

Public Land is a zoning category and is shown on maps as PL.  As defined,  “This district is designed to classify publicly owned uses and land and permit the normal principal and incidental uses required to carry out governmental functions and services.”   

It has 10 “permitted uses”.It seems clear that the authors of this classification were thinking about parks right off the top.  Note that sentence in the first use about structures that are not incidental to the use of the land?  The first three items are about parks and open space. Most of the others are about obvious governmental functions, though item (f) might raise some questions. The PL designation is restrictive and creates a barrier to development.

Zoning for two important blocks along William St. Dark red is D1, burnt umber is D2.

Public ownership does not mean PL zoning.  For example, none of the public parking lots in the downtown are PL. They are all zoned D1 (core downtown) or D2 (edge). (The Ann Arbor GIS system contains a very detailed zoning map.)

Two of the most hotly disputed public land holdings in Ann Arbor, the old Y lot and the Library Lot, have never been zoned PL. Note that the Ann Arbor District Library and the Blake Transit Center (and Post Office) are all PL, as is Liberty Plaza.  This means that those parcels could not be developed unless they are rezoned, but no such obstacle exists for the two former parking lots.

Proper Uses of Public Land

So regardless of zoning, what is the proper use of land owned by a public entity? One hopes that it is for a civic purpose, that is, a purpose that will enhance the condition of the civic body, its residents, its businesses, and its private property owners (taxpayers).

And how do we define that civic purpose?  That is the job of the policymakers (City Council and certain boards and authorities).  We have many policy priorities in the City of Ann Arbor, well recognized and discussed over years. They include environmental objectives such as energy conservation, management of storm water, and conservation of open space;  enhancement of business activities (especially in regard to downtown properties), and attention to zoning and planning dictates. Another objective that has become more and more urgent is the provision of affordable housing, both in the sense of subsidized housing for the most vulnerable populations and in so-called “workforce” housing for moderate-income (60%- 100% or sometimes even 120% of median annual wage) people.  And for downtown parcels, parking for automobiles is still desired, though often criticized.

But wait – there is another objective.  Land in Ann Arbor has become so valuable that it is a resource ripe for extraction.  One can actually mine money from it, especially if it is in or near downtown. Given the perennial structural deficit that the City often runs, and the ambitions of the Council majority (and now, our very forward-looking City Administrator), it is irresistible to look for a cash return as well.  The downtown parcels are actually pots of money just sitting there unrealized.

Given the value of downtown parcels, it is a temptation for Council to try to attain all their policy goals and at the same time realize a cash return.  This inevitably sets them up for some awkward gymnastics. Developers may wish to develop downtown, but they also insist on making a profit.  It is called “Return On Investment”.  After all, developing parcels and negotiating with politicians is a lot of work.

Another complication is that there has been a fluctuating policy in which sale of city property was designated to be deposited in the City Affordable Housing Trust Fund.  The history was well reviewed in the Ann Arbor Chronicle. This policy puts a moral and political pressure on the Council to obtain a cash return on the property.  But obtaining cash and also the type of development that they want is truly challenging.

Let’s Do an RFP

The most direct and effective way for Council to obtain policy goals and also a reasonable financial objective is to execute a Request for Proposals.  Typically these invite proposals from developers to fit some predetermined criteria and also invite them to offer their best price.  Also typically, there need to be some guidelines for how the proposals will be reviewed and the City is always free to refuse all offers.  (This actually happened in the case of 415 W. Washington, where an RFP issued in 2008 attracted relatively few bidders, and none of the proposals met the standards of the Council.)

The history of RFPs, as used by the Ann Arbor City Council to dispose of public land, is rather sad.  The first RFP issued for this purpose in recent history was for affordable housing on the lot recently vacated by the old YMCA (we now know this as the old Y lot).  The logic and history behind that RFP were described in an article for the Ann Arbor Observer (the actual published version was edited for length and content but this is the most complete version).  We told some of the story here of the William Street Station, the project that won the bid but was killed within a week of being finalized.

Another RFP was issued ostensibly to find an appropriate developer for the Library Lot, the former parking lot next to the Ann Arbor District Library.  That story is told here and in many posts about the long struggle over the Valiant proposal to develop a hotel and conference center.  (See the page Library Lot Conference Center for a list of posts.)  Ultimately, the Council terminated the RFP and made no awards. Instead, it directed the DDA to take another look, with the evident intention that there should be a comprehensive downtown planning process.   The beginning of this “look” is told here, and the end was the Connecting William Street project, in which the DDA sought to convince us that every surface lot should be built to its highest possible density.   That report was never taken up by Council, though the Planning Commission, under the leadership of Kirk Westphal, placed the report on a list of “resources”.

With these successes behind it, the Council sought to make things simpler.  Both the Y lot and the Library Lot were simply placed with a broker and put up for sale.  But neither Council nor the Ann Arbor public could quite shake the notion that public land should be sold only with some public benefits attached to the deal.  (We reviewed both the history of the Library Lot and its importance in Ann Arbor’s culture and concept of ourself in our post, Core Space and the Soul of Ann Arbor.) Thus, both of these sales became mired in court cases.

But that is a story for later.

NOTE: The “Council majority” referred to here is the Taylor caucus (the “Powers That Be“) that has existed for some years, in succession to the Hieftje caucus. A minority of Council members (the “Neighborhoods“)  have opposed many of the policy directions and substantive decisions. However, the recent primary has apparently changed those ratios.  See The Primary Struggle for the Future of Ann Arbor for details.

UPDATE:  The fate of our downtown public lands is being hotly debated (October 2018).  The immediate cause is Proposal A on the November ballot, which would reserve the Library Lot for use as a public park. This is in direct contradiction with the intent of Mayor Christopher Taylor and allies to have Core Spaces develop the lot. There is a pending court case regarding some hasty contract signing without the approval of Council, in apparent violation of our Charter.  (Here is an account published by the Ann Arbor News.)

Meanwhile, the fur is flying as both sides present their case for the ballot issue. As this account by the News explains, a group has formed to fight the ballot issue and persuade Ann Arbor citizens not to vote for the proposal. Unfortunately, some of the assertions by this group border (in my view) on untruths and certainly push the boundaries of polite discourse.  Recently Mayor Taylor himself has made an open plea to voters which contains hefty doses of hyperbole.

Mary Hathaway, one of the leading lights for the Library Lot park struggle, has responded with a lengthy letter refuting many of Taylor’s points.  She admonishes him for the negative tone of his message and asks where the cheery positive person that she remembers has gone.  And she addresses directly the financial bind the City Council has made for itself, with both the Y lot and the Library Lot in play, and the evident intent to use proceeds from one sale to pay the expenses of re-acquiring the other.

The stakes are indeed high, both monetarily and in terms of credibility of the Mayor, who recently won re-election over a strong opponent (Jack Eaton) but who also lost many of his Council allies.  The fate of the ballot issue will tell us much about the future direction of Ann Arbor, since it likely breaks down so neatly along the fault lines that divide us.

SECOND UPDATE: (December 2019) Proposal A did indeed pass in August 2018, by 53.11% to 46.89%. The howls from the losers are still being heard. Meanwhile, the agreement to sell the space to the Core Spaces developers was cancelled, and the lawsuit brought by Council members over the hasty contract signing was settled.

Mary Hathaway passed away in October 2019 and is much mourned.

A “Center of the City” task force was appointed and has been deliberating about the future of the Library Lot, in accordance with the voters’ wishes.  An item on the December 16 Council agenda would advance some temporary usage plans for the space.

Categories: Basis, civic finance, politics, Sustainability

Comments: 6 Comments

The County Mental Health Millage: Second Thoughts

April 14, 2018

Postcard sent to voters before Nov. 2017 election. (Click for full size)

In November 2017 Washtenaw County voters approved a new county property tax millage by nearly a two-to-one margin (see report in the Ann Arbor News).  Starting this December (2018) the County will collect a 1-mill tax ostensibly intended to support both County mental health and County public safety operations (i.e., the Sheriff).  But for some municipalities who have their own police forces, part of the tax is to be returned to them to use in any way they choose.(We discussed this in detail in Hair on Fire In Ann Arbor.)

The Ann Arbor City Council majority passed a resolution in July 2017 designating their preferences, which leaned strongly toward using the cash for climate change initiatives.  In August, the City Administrator Howard Lazarus issued a  memorandum to detail exactly how those funds would be allocated.  It indicated that proceeds from the millage would be divided so that 20% would go to pedestrian safety, 40% to affordable housing, and 40% for climate change.  In the March 12, 2018 budget presentation, these expenditures were further mapped out.

Budget presentation of March 12, 2018 showing division of millage proceeds

But some citizens are saying “Not so fast”.  At the March meeting, as reported by the Ann Arbor News, several citizens complained that they supported the millage in order to support mental health efforts.  Their feelings could not have been assuaged much by the indication that part of the money will go to support two staff positions (saving the General Fund some money).  Money is fungible, folks.  And there is every indication that the use of this money is going to be a campaign issue.  Already both the 5th Ward Council challenger, Ali Ramlawi, and Jack Eaton, who is running against Mayor Christopher Taylor, have said that they disagreed with the proposed use of the funds, which they each said should go to mental health.  (Eaton is also emphasizing crime prevention.)

Taylor and his caucus argue that Council has been perfectly clear all along about the use of the “rebate” from the millage and that citizens who voted for it understood that the purposes encompassed more than mental health and public safety.  But a new citizens’ group begs to differ.  Citizens for Mental Health & Public Safety (CMHPS) has issued a press release in which they request some rethinking of this special windfall.  They support the millage issue itself and don’t quarrel with the election results.  But they want a refocus, to mental health.  Specifically, to drop the climate change allocation and use that money for mental health purposes. From the press release:

CMHPS members urge the City Council to include the following new actions in its planning and budgeting decisions to remedy this omission.. First, Council members should appropriate 40 percent of current and future revenues from the millage to mental health services. Second, Council members should appoint an advisory group of experts to identify best practices for improved mental health services and related public safety services in time to inform the biennial budget process for fiscal years 2020 and 2021.

And to that argument that the public already knew what they were voting for, CMHPS proceeded ahead of time to gather data.  They had a professional polling organization conduct a telephone poll.  (I received the poll and can report from my own experience that it was not a push poll but seemed to be entirely objectively conducted.)  The poll results support their contention that many of the public voting did not understand that part of the millage proceeds would be diverted into other Ann Arbor-specific objectives. When asked what the priority for spending the money would be, 56% answered “mental health services”.  When asked whether the information that a different use of the cash would have influenced their vote, 45% said it would have made them less likely to support it.

From the findings of the survey conducted by Public Policy Polling April 2-3, 2018

So how did this disconnect occur?  The answer doubtless lies with the way local news is not very well transmitted in Ann Arbor now.  We have a very intermittent local newspaper, which most people read online, if at all.  City Council deliberations and results are followed by a tiny fraction of the electorate.  In this case, probably most people got their information from the campaign material sent out by postcard.  You’ll note that the website itself only mentions mental health in its title.  It is obvious why many voters had the impression that this was a mental health millage and why they didn’t understand that millions of dollars would be diverted to climate change and other inside-Ann Arbor-purposes.

From the postcard.

In an interview, Glenn Nelson, a leader in this effort to redirect Ann Arbor’s “rebate”, stressed that his group still supports the County millage. (And a majority of the taxes collected will go to the purposes stated.) They simply want the money redirected to Ann Arbor used to address mental health and safety issues.  Thus they are fine with pedestrian safety and affordable housing (which often is addressed to serving supportive housing in Ann Arbor; this serves mentally needy clients).  But they want the focus to return to mental health for the remainder of the proceeds.

The Council is in the midst of budget discussions.  These generally conclude mid-May. We might suppose that some mention of this issue will come up with this year (FY2019) budget, though Lazarus said not in his memo of last summer.  Meanwhile, we have electoral campaigns to conduct.  The discussion will continue.

UPDATE:  The Ann Arbor Citizens for Mental Health & Public Safety have come out with an election-time plea (June 2018).  They ask citizens to take the usage of these funds for mental health into mind in supporting candidates in the August primary.

This is something of a bombshell because the dividing line on this issue is rather clearly the incumbents (Taylor caucus) vs. the challengers. (Detailed information on candidate positions.)

 

Categories: civic finance, politics

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