Ann Arbor mayor claims DDA ordinance changes could deal $231K blow to city's general fund
City ordinance changes designed to place new limits on the Ann Arbor Downtown Development Authority passed by a 7-3 vote of the City Council at first reading Monday night.
During a two-hour discussion leading up to the vote, Mayor John Hieftje accused Stephen Kunselman, the primary sponsor of the changes, of launching a politically motivated attack on the DDA that could actually hurt the bottom line of both the city and the DDA.
"I'm not sure why we started down this road other than for political reasons," Hieftje said, calling the proposed ordinance changes "ill-considered" and suggesting they could deal at least a $231,000 blow to the city's general fund, which pays for police and fire protection.
John Hieftje
Ryan J. Stanton | AnnArbor.com file photo
That includes $559,000 going back to the city, $196,000 to Washtenaw County, $124,000 to Washtenaw Community College and $52,000 to the Ann Arbor District Library.
Broken down further, the roughly half-million dollars returned to the city's coffers would include $277,000 to the general fund, $72,000 to streets, $53,000 to parks, $69,000 to the Ann Arbor Transportation Authority, $83,000 to solid waste, and $5,000 toward city debt.
But if the city decides to take nearly $1 million away from the DDA, Hieftje said he wouldn't be surprised if the DDA cuts off grants it provides to the city, which would leave the general fund facing a negative situation when all the numbers are tallied.
"I'm concerned this happens exactly when the DDA is trying to rebuild their fund balance, after a considerable expenditure to pay for the new underground parking structure," he said.
The only two council members to join Hieftje in opposing the proposal were Margie Teall, D-4th Ward, and Chuck Warpehoski, D-5th Ward.
Christopher Taylor, D-3rd Ward, was absent.
Marcia Higgins, D-4th Ward, indicated she was voting yes at first reading in order to have more dialogue, but she could vote differently at second reading.
City ordinance changes require two readings.
"I'm not going to sit here and bash the DDA," Kunselman said. "These ordinance amendments are particular to bringing revenue to the city and to the other taxing jurisdictions who need that money just as much as anybody does. To say the DDA knows how to spend public dollars better than Washtenaw County, better than the community college, better than the library, I think is a false argument."
At the start of the meeting, Kunselman noted he put forward a substitute version of the ordinance changes he initially proposed recently. Sumi Kailasapathy, D-1st Ward, is a co-sponsor.
The new version no longer bans the mayor and other elected officials from serving on the DDA's governing board — it just places new restrictions on them.
The ordinance changes would make it so the mayor's appointment to the DDA board is subject to an annual vote of the City Council. If not the mayor, the city administrator would be appointed.
It also would be more difficult for other public officials to get appointed if they're from any of the taxing units that have a portion of their tax revenues captured by the DDA. Except by mutual written agreement, no public officials from any of the taxing units could be appointed.
Additionally, no members of the DDA board could serve more than two terms, or eight years. Warpehoski objected, calling term limits "mandatory inexperience laws."
Stephen Kunselman
Ryan J. Stanton | AnnArbor.com
The DDA's budget shows TIF revenues at $4 million this coming year and $3.8 million in 2014-15, but city officials believe it actually could get as high as $4.8 million. Kunselman argues the DDA doesn't need an extra $1 million in TIF and that's what he's fighting.
Because the DDA hasn't budgeted for the large increases city officials expect from new developments, Kunselman said the refunds wouldn't impact the DDA's budget to any great extent.
Relative to the DDA's budgeted numbers, the changes would reduce the TIF projections for next year by $363,000, and by $74,000 in 2014-15, according to the city's finance staff.
But the reality is that the DDA would be losing out on $931,000 in real cash in the next year, and giving $559,000 of that to the city, Hieftje said.
He fears the DDA could turn around and take back a roughly $508,000 annual grant it gives the city to help pay for the police-courts addition to city hall. Hieftje stressed multiple times Monday night that's a discretionary grant the DDA can rescind at any time if it chooses.
And he said that's not a situation that works out well for the city's general fund, which would have to pick up the $508,000 in annual costs, while getting only $277,000 back from the TIF refund. Doing the math, that's a roughly $231,000 annual loss of revenue for the city's general fund.
DDA Director Susan Pollay stepped to the podium Monday night to report there are a number of capital projects the DDA also might have to put off if it lost revenue.
She said the streetlights on South Main Street — poles and all — have reached the end of their useful life and must be replaced at an estimated cost of $650,000.
"We have hoped that we could begin to pledge some of our dollars to the public services department to see that project done this year," Pollay said. "That unfortunately would have to be tabled."
She also said the city and DDA share an obligation to complete curb ramp replacements downtown and the DDA's ability to help out would be impaired.
Hieftje said the DDA also has set aside $300,000 in its budget to possibly pay for downtown police and that money could go away, too.
"I'm thinking mostly about the bottom line here," he said. "I see some real dangers here for the general fund."
According to a city records, the bulk of the DDA's increased TIF capture is coming from three downtown high-rise projects: 1) Landmark ($358,000 in new tax revenue), 2) Zaragon West ($179,000 in new tax revenue), and 3) The Varsity ($96,000 in new tax revenue).
"In terms of them not having enough money, I find that hard to believe," Kunselman said. "Because just in FY '10, FY '11, their TIF captures were much lower than what's being proposed with this ordinance amendment. In FY '10, they had $3.5 million. In FY '11, they had $3.4 million"
Kunselman said he found it "a little disconcerting" that there's a threat the DDA might take its $508,000 annual grant away from the city.
The DDA is expected to provide a $479,000 grant to AATA for go!passes in the next year, as well $91,000 to pay for enhanced transit service on the No. 5 Packard and No. 4 Washtenaw routes, plus NightRide service after buses stop running late at night. Pollay acknowledged those specific items are unlikely to be affected in the next year since the money is pledged already.
After spending down its housing fund, the DDA has no money budgeted for affordable housing over the next two years, but Pollay said the DDA has been hoping to find more money for that.
"We are just finishing a period of time where a significant amount of construction has taken place and our fund balances are approaching their minimum," Pollay said.
The DDA has budgeted an excess of expenses over revenues in 2013-14 of $1.35 million, which is expected to reduce its TIF fund balance to $840,324.
It also has budgeted an excess of expenses over revenues in 2014-15 of $107,116, which is expected to reduce its TIF fund balance to $733,209.
It was argued the ordinance changes would hurt the DDA's ability to help the city realize redevelopment of city-owned properties along William Street, including the Y Lot.
There have been talks of installing two new elevators in the Fourth and William parking garage, along with a buildout of the first floor for retail or business incubator space, streetscape improvements, and installation of an enlarged sanitary sewer main under the street. City staff members believe the proposed ordinance amendments could stop those projects for the foreseeable future.
Kunselman said he believes the changes he's proposing will be good for the DDA in the long run. He said it's all about restoring public trust and confidence in the DDA.
"Mayor, I've never asked for the dissolution of the DDA, and I'm certainly not about to now," he assured Hieftje at one point.
Council Member Jane Lumm also said she doesn't want to abolish the DDA.
"Having witnessed the impressive results achieved by the DDA over the years after their takeover of the parking system … I've been and remain a strong believer in the benefits of an independent, autonomous DDA advocating for our downtown," she said.
But she said she doesn't believe the city has that now.
"Rather, over the last decade or so, the DDA has evolved from an independent, autonomous body to an extension of City Council, and I don't believe it was or is in the city's best interest," she said.
"I strongly support the governance aspects of this proposal — term limits and some guidelines regarding appointments of public officials to the DDA board," she said.
"I also support the elements of this proposal that define the TIF capture and how much the DDA retains and how much is refunded to original taxing authorities."
Kailasapathy and Kunselman originally wanted to restrict the DDA so it no longer could spend TIF dollars outside the boundaries of the downtown. Lumm was able to get the ordinance language amended Monday night to say some projects in near-downtown neighborhoods, such as affordable housing, still could be funded by TIF dollars if they meet DDA goals.
Council Member Sally Hart Petersen, D-2nd Ward, said she sees a lot of good in what's being proposed — politics aside.
"I think it's going to actually strengthen the DDA in the long-term, and I'd like to be a part of seeing that happen," she said.
Ryan J. Stanton covers government and politics for AnnArbor.com. Reach him at ryanstanton@annarbor.com or 734-623-2529. You also can follow him on Twitter or subscribe to AnnArbor.com's email newsletters.
Comments
Sam S Smith
Sat, Apr 6, 2013 : 12:03 p.m.
"... there's a threat the DDA might take its $508,000 annual grant away from the city." I thought the DDA cared about Ann Arbor... appears this threat proves otherwise?
local guy
Wed, Apr 3, 2013 : 2:04 p.m.
The DDA is way ahead of the game in terms of keeping Ann Arbor vibrant and alive. Council can't do it. When tough decision are before them, they cramp up and are paralyzed. If they drain funds for the DDA, the efforts to keep our town vibrant will be stymied. Those new buildings add to the overall tax base of the City, not just the TIF. We all benefit from what the DDA does to make our downtown more livable and alive with commerce. The Council should step aside and let the DDA do what it's designed to do, and that's not to give Council a blank check. The current structure is working. Don't fix what's not broken.
racerx
Wed, Apr 3, 2013 : 3:28 a.m.
Hip, hip, hooray for Kunselman and the rest of the council who has the guts to finally challenge Hieftje and the DDA. They actually spend money on projects that has nothing to do with downtown? Really? Again, remind me, what does DDA stand for? I would have to agree with Lumm about her comments of what the DDA has done since they took over the parking operations, but curbing $1M and returning to those other entities is a sound and forward thinking proposal. Oh but of course, Hieftje wants to now cry-wolf because there won't be any money for police and fire? Really John?!? Now its an issue? My grandmother had a saying, "he talks out of each side of his neck and lies like a cheap throw rug."
tosviol8or
Tue, Apr 2, 2013 : 11:51 p.m.
G-Man sez: "It should be up to the administration to decide if "excess" funds were received, NOT the politicians that are not directly involved with the DDA and the DDA budget!" demonstrating--again--that he lacks a comprehensive understanding of PA 197. "Politicians" ARE directly involved with the DDA budget. Unless and until the city council approves the DDA's budget, the DDA doesn't HAVE a budget. Just as cities are creatures of the state, DDAs are creatures of the cities that create them. By statute, approval of DDA budgets lies explicitly with the legislative body of the municipality which created the DDA. The statute sets limits on DDA activities. It doesn't preclude municipalities from setting stricter ones.
tosviol8or
Tue, Apr 2, 2013 : 11:36 p.m.
The really fun part of the Detroit DDA is that the $12 million per year is just in SCHOOL TAX that Detroit's DDA was legally bound to stop capturing after it paid off its eligible debt. They got the law amended to keep taking AT LEAST $12 million a year. You can bet they'll sell 30 year bonds to build Ilitch's new playpen, to the tune of $400 million out of the school aid fund. That's money straight out of the "bucket" that funds EVERY SINGLE public school student in the state. That's right, folks: no matter where you live, the amount of money available to fund your schools drops so Detroit can have a hockey rink. That doesn't even consider the non-school taxes that will be spent, too. Elaine Kowall has her panties in a bunch over $200K per year from the zoo, but didn't even blink at voting to allow SIXTY TIMES that to be picked from the coffers of the school aid fund. They aren't really taking the school taxes, though; they're just "repurposing" them.
jcj
Tue, Apr 2, 2013 : 10:54 p.m.
Where is the poll?
Colorado Sun
Tue, Apr 2, 2013 : 10:30 p.m.
The DDA needs to eventually be abolished.
lou glorie
Tue, Apr 2, 2013 : 8:21 p.m.
I hope the council will reconsider the amendment to allow DDA spending outside the downtown. This practice doesn't seem to conform with the enabling legislation and has already resulted in problems in neighborhoods near downtown, as with the "near north" project, in which the DDA was a contributor. Whether or not the DDA was ever necessary in Ann Arbor, I think it has outlived the purpose outlined in Act 197. One of the criteria for establishing (and I think for maintaining) a DDA is "that within such area the general property values are (and have been) deteriorating." This is not exactly the case in Ann Arbor's downtown, is it? The DDA, by its nature is about development downtown. The problem is that the increased valuations do not mean an increase in the tax dollars coming into the city's general fund. The result is that the neighborhoods are paying for the increased services required for downtown residents and businesses. But the DDA koolaid must be mighty tasty. Look at Detroit. Even now with that city's abandonent of neighborhoods (while still collecting taxes from them), Detroit's DDA is prepared to contribute about $12 million a year towards Mike Ilitch's new hockey areana! The sad moral of the tale--that a downtown cannot thrive without thriving neighborhoods--is forever lost on the DDA s and the politicians who support them. Here in Ann Arbor, we've spend millions on "saving" the downtown only to create a sterile environment in which suburbanites can "work, gawk, shop, play." I applaud the efforts of Kunselman and Kailisapathy in trying to rein in the excesses of the DDA, but I hope the council members who supported the amendment to allow spending outside the downtown will reconsider. The DDA doesn't need an even larger area to meddle in. And a note to the mayor regarding his attribution of "political" motivation on the part of Kunselman: of course it's political. By definition, everything
4 Real
Wed, Apr 3, 2013 : 11:52 a.m.
Lou, both you and Kunselman demonstrate a lack understanding of the Ann Arbor form of TIF and taxation and the what the DDA captures. Increase in valuation goes to the City and other taxiing entities. Teall had it right. A rising tide raises all boats.
lou glorie
Tue, Apr 2, 2013 : 8:25 p.m.
...as I was saying...everything pertaining to governance is political.
Classof2014
Tue, Apr 2, 2013 : 5:30 p.m.
I don't trust the mayor, I don't trust the DDA, nor do I trust City Council.
jcj
Tue, Apr 2, 2013 : 10:55 p.m.
Your first post was fine!
Classof2014
Tue, Apr 2, 2013 : 5:31 p.m.
I mean that I think the mayor has been in office too long, and I think that it is time for a new mayor.
Vivienne Armentrout
Tue, Apr 2, 2013 : 5:29 p.m.
Regarding the conflict of interest issue, readers might like to review this coverage of a debate last summer when the subject was brought up. http://annarborchronicle.com/2012/08/02/ward-5-city-council-studying-listening/
Brad
Tue, Apr 2, 2013 : 7:59 p.m.
From that article: "Warpehoski also said he'd recuse himself from votes if it were appropriate to do that – due to his wife's job as director of the getDowntown program." Has that happened yet? And of course he will decide when it's "appropriate"?
Classof2014
Tue, Apr 2, 2013 : 5:29 p.m.
It is time to disband the DDA!!!
demistify
Tue, Apr 2, 2013 : 5:27 p.m.
I find it hard to get excited about tinkering with the shell game that the city government plays with its money, shuffling it around among the Mayor, the Council, and the DDA.
Alan Goldsmith
Tue, Apr 2, 2013 : 3:46 p.m.
" A look at Wapehoski's campaign finance forms, and one sees that AATA/DDA Board members donated money to Warpehoski's campaign a few months ago. These people include John Hieftje, Leah Gunn, Joan Lowenstein, Keith Orr, John Splitt and Jesse Bernstein, among others." Great question Pat. Why doesn't Ann Arbor City Council have an ethics policy for situations like this?
Keith
Wed, Apr 3, 2013 : 5:57 p.m.
I don't how many other errors there are in Pat's commentary. But I can tell you that I endorsed Chuck for policy reasons after a meeting with him. I never made any contributions to the campaign. I had never met him before, and was not told to endorse him by anyone. I questioned him on affordable housing, downtown policies, and human rights issues, as those are the closest to my heart. Not all of his answers were in complete alignment with mine, but his thoughtful process impressed me that he would make a good councilmember. If endorsing someone's policies and temperament disqualifies me from serving in a voluntary position on a city board...well...good luck finding anyone to serve.
Brad
Tue, Apr 2, 2013 : 7:56 p.m.
Because it would interfere with their cronyism policy?
ordmad
Tue, Apr 2, 2013 : 3:45 p.m.
So this is always where it seems to go sideways. We've got facts. I just pointed you to them. The only thing they are missing are vandals and taggers and, sure, that's important. But no one is not sending their kids here (or moving here for that matter) because of that. I lived through Giulanni's quality of life program in NYC and it was warranted because serious crime was way up. Here the facts show it's waaaaay down. And asking the police whether they need more is like asking a kid whether they want candy: the answer is, invariably, yes.
Jack
Tue, Apr 2, 2013 : 4:48 p.m.
It is the firefighters we need more of.
UpperDecker
Tue, Apr 2, 2013 : 3:43 p.m.
Uh oh, it looks like we will be getting a comment update in the near future, things are glitching out here man.
DannnyA
Tue, Apr 2, 2013 : 3:18 p.m.
I don't trust the Mayor, I don't trust the DDA, and I don't trust the City Council (especially Kunselman). This is a old school down-home power struggle in which all sides probably have (some) legitimate argument but the only truth is, Hieftje has been in office a long time and probably just needs to go away at least for a few years.
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 3:09 p.m.
When is city council going to pass a conflict of interest ordnance governing city council and the mayor? Why aren't they even working on it? Perhaps they *are* working on it behind closed doors and they just cannot agree how to, or do not want to curb the apparent conflicts of interest?
CynicA2
Tue, Apr 2, 2013 : 2:54 p.m.
If the Hieftje hates it, it must be GOOD for the rest of us and especially those of us not residing downtown. I would like to see more $ come back into the neighborhoods, where the infrastructure clearly needs more attention than downtown, where millions have been lavished for years. The hell with downtown... and the hell with John Hieftje and his cronies. Will no one rid us of this problematic politico?!
CynicA2
Wed, Apr 3, 2013 : 1:38 p.m.
Not so, Jay. The Dem primary in August is when the Clueless One is re-annointed by his worshippers, few of whom are students, since they are all out of town having their last fling of the summer. The Hieftjeites are relatively few in number, but well organized when it comes to voting in this August primary, and he rarely has effective opposition in the regular election in the fall, so it doesn't matter if the students like him or not, 'cause he's the only candidate in town, so to speak.
Jay Thomas
Tue, Apr 2, 2013 : 4:39 p.m.
That's really up to the students. They tend to deliver the deciding votes and they like a guy like Hieftje (working for the U and all... (D)
cindy1
Tue, Apr 2, 2013 : 2:30 p.m.
I wonder whether Chuck Warpehoski's participation in decisions about the DDA is proper. His wife works for getDowntown! which is funded with federal grant money, AATA funds, City funds and DDA funds. Would the limits on DDA revenues have an impact on his wife's employer? Thanks to Steve K. and Sumi K. for trying to exert a little restraint on the DDA and the amount of money it diverts from other governmental entities.
cindy1
Tue, Apr 2, 2013 : 8:23 p.m.
Ryan, See Jack Eaton's reply to your comment.
Ryan J. Stanton
Tue, Apr 2, 2013 : 4:33 p.m.
I just posted this in reply to another comment .... Just to provide a little background — Chuck Warpehoski made sure to disclose at a meeting last month that his wife is Nancy Shore, who serves as executive director of the getDowntown program, which does receive funding from the DDA. He explained that his wife's salary is funded by a federal Congestion Mitigation and Air Quality Improvement grant and her direct employment is not tied to DDA funding. No council members objected to his participation in voting on this matter, and the city attorney seemed to be saying it was OK. That said, by all means, it's fair game to discuss this.
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 2:28 p.m.
Is the DDA well run and are they a good steward of the public's money? Should they be allocated another $1 million a year for their plans, or do other units of government such as Ann Arbor Public Schools have more urgent needs for their operations to avoid cuts? All excellent questions in light of the following: In a January piece on the DDA in A2Politico it is asserted that: "In July 2012, DDA officials borrowed $1.3 million from Republic Parking officials at 6 percent interest to fund the installation of new automated pay equipment in the city's parking garages." Is this true the DDA borrowed $1.3 million at 6%!? Why so high? Why borrow at all from a vendor when the city is sitting on $207.5 million in idle funds (according to the city's most recent audited financial statement (The 2012 CAFR see: http://tinyurl.com/A2-2012-CAFR)? Of course the fact that the equipment has had "issues" in deployment in other cities is an entirely different issue. If the city can borrow for 5 years at 2%, that means they threw away $52,000 a year or $260,000! Why? See: www.a2politico.com/2013/01/high-overhead-debt-load-push-dda-parking-revenues-98-percent-below-national-average/
lou glorie
Wed, Apr 3, 2013 : 11:55 a.m.
Regarding the DDA borrowing to switch to automated pay equipment: This move is anti worker. What's wrong with having the parking system actually hire and pay human beings rather than paying a (probably) foreign manufacturer to make those horrible auto-pay machines that speak with those broken-robot voices often into the night time void if the wind carresses it just so.... I have found the Republic employees to be very helpful and have never had a problem with back-ups. However when things go awry with an auto-pay, we have cars quickly stacked up and it's not easy to get things moving again. Bad move. Bad DDA for borrowing money to put people out of work.
Patricia Lesko
Tue, Apr 2, 2013 : 2:10 p.m.
"The only two council members to join Hieftje in opposing the proposal were Margie Teall, D-4th Ward, and Chuck Warpehoski, D-5th Ward." Chuck Warpehoski?!? His wife (Nancy Shore) works for the getDowntown program which is funded, in large part, by the DDA Board. Why on EARTH is Chuck Warpehoski voting on anything that has to do with the people who vote on whether his wife has a job or not? This is an immense and clear conflict of interest, and he should know better. Chuck Warpehoski needs to practice the ethical politics he preached as a candidate and refrain from voting on this proposal to curb the power of the DDA. He needs to refrain from all other votes that have anything to do with AATA or the DDA (both of whose Board members vote whether or not to provide the majority of the money that pays Nancy Shore's salary and determines whether she has a job). Otherwise, I think it's fair to assume he is voting with the DDA Board members and John Hieftje in order to protect Nancy Shore's job and the Warpehoski family's income. That's a big step past cronyism and on toward political corruption. This is why City Council needs an ethics policy, and exactly how Hieftje-era uber-cronyism (which Stephen Kunselman spoke against well before he decided to challenge Hieftje in 2014) impacts our city government. A look at Wapehoski's campaign finance forms, and one sees that AATA/DDA Board members donated money to Warpehoski's campaign a few months ago. These people include John Hieftje, Leah Gunn, Joan Lowenstein, Keith Orr, John Splitt and Jesse Bernstein, among others. Warpehoski's wife knows these donations were made by the people who vote whether or not to fund her employment, because her name is listed as his campaign treasurer (she signed the campaign finance forms).
Keith
Wed, Apr 3, 2013 : 2:24 p.m.
I don't where this information came from. Though I endorsed Chuck, I made no donations as claimed. ....Keith Orr
Jack Eaton
Tue, Apr 2, 2013 : 5:20 p.m.
Ryan, While Ms. Shore's salary is funded by a federal grant, it would be pointless to have her run the getDowntown! program if the AATA and DDA did not provide funding to actually run the program. There is little sense to having a director if there is no program. Her program is directly dependent on the DDA's continued willingness to fund getDowntown!. If the Mayor is afraid that limiting the DDA revenue growth will result in retribution, like cuts to the Police Courts debt maintenance, then it shouldn't be too hard to believe that a vote by Mr. Warpehoski might result in retribution against the program his wife runs. Can you recall a majority of the Council ever asking one of its members to refrain from a vote because of a potential conflict of interest?
Jay Thomas
Tue, Apr 2, 2013 : 4:35 p.m.
Didn't the firm of some architect on the DDA receive money from the DDA? The whole thing is like that... one big conflict of interest.
Ryan J. Stanton
Tue, Apr 2, 2013 : 4:32 p.m.
Just to provide a little background — Chuck Warpehoski made sure to disclose at a meeting last month that his wife is Nancy Shore, who serves as executive director of the getDowntown program, which does receive funding from the DDA. He explained that his wife's salary is funded by a federal Congestion Mitigation and Air Quality Improvement grant and her direct employment is not tied to DDA funding. No council members objected to his participation in voting on this matter, and the city attorney seemed to be saying it was OK. That said, by all means, it's fair game to discuss this.
David Cahill
Tue, Apr 2, 2013 : 1:58 p.m.
My guess is that if the proposed ordinance change goes through, and if the DDA then decides not to provide its annual $508,000 grant for the ill-starred courts/police facility, the DDA will be signing its own death warrant. No elected body can put up with such insubordination from a bunch of its own appointees.
Veracity
Tue, Apr 2, 2013 : 2:15 p.m.
David -- The DDA may have no choice, the financials being as poor as they are.
Goofus
Tue, Apr 2, 2013 : 1:57 p.m.
High-Rise Hieftje feeling the heat as his DDA slush fund dries up....
Jaime
Tue, Apr 2, 2013 : 1:56 p.m.
I have never been a fan of the DDA. Not because of what it does but because it allowed the city to abdicate is responsibilities to a unelected board. The fact is that the DDA probably does a better job at making decisions than the city council, and mayor. Maybe we should consider eliminating the city council and mayor and give everything to the DDA to run.
Veracity
Tue, Apr 2, 2013 : 2:13 p.m.
No.... that should never happen. Watch as the DDA becomes insolvent over the next year or two.
annarboral
Tue, Apr 2, 2013 : 1:55 p.m.
The obvious solution to this problem is to eliminate the DDA. This is what I consider a "no brainer".
Veracity
Tue, Apr 2, 2013 : 1:41 p.m.
The DDA staff supported the Mayor's plans which included building the Library Lane underground parking structure so that Valiant Partners could build a luxury hotel on top. Nevertheless, before deciding to build the library parking structure, Mayor Hieftje and Susan Pollay should have calculated the annual cost of servicing the bonds used to finance construction. The $3.6 million cost should have been recognized as larger than could be covered by anticipated revenues from all sources. At that point Mayor Hieftje and Ms. Pollay should have admitted that the underground parking structure was unaffordable and shelved the plans. Instead, we have the situation where excessive bond servicing costs are draining the reserve fund. However, as of the next fiscal year the reserve fund should no longer have funds sufficient to cover the bond servicing costs. When the reserve fund fails to cover bond servicing costs then the DDA will be insolvent. Nobody at City Council stated that the DDA should be eliminated but insolvency may have that effect. The situation will be tragic because it could have been avoided with appropriate financial planning.
lou glorie
Wed, Apr 3, 2013 : 12:03 p.m.
"When the reserve fund fails to cover bond servicing costs then the DDA will be insolvent. " And that's when the people of Ann Arbor-- whose elected representatives have pledged our "good faith and credit" to pay for these bonds--will have to pony-up the money. This is a seriously toxic situation.
Dog Guy
Tue, Apr 2, 2013 : 1:24 p.m.
These ordnance changes would weaken defense of Prince John's inner bailey and keep, the DDA, whence he can catapult treasure where he will.
G-Man
Tue, Apr 2, 2013 : 1:24 p.m.
It's not about NEED, Steve! It's about what the Public Act was created for, to remove blighting influences and foster Public improvements within the DDA District (with the emphasis on PUBLIC improvements). If the DDA is lawfully planning for and funding PUBLIC improvements, then they are entitled to collect the tax increment monies as according to Statute. It's not whether they "need" it........ The sooner you get that, the better off the City will be. If the DDA is taking care of parking, that is likely the largest part of PUBLIC improvements that a DDA can do. Yes, if they are receiving excess funds above and beyond the budget for PUBLIC improvements, they are required to refund the excess to the taxing units that the monies were lawfully obtained from. It should be up to the administration to decide if "excess" funds were received, NOT the politicians that are not directly involved with the DDA and the DDA budget! I hope the Council will review the Public Act as amended to determine if a course of action is needed and allowed. If I was the DDA, this action would likely be enough for me to want to quit.......
lou glorie
Wed, Apr 3, 2013 : 12:17 p.m.
"It's about what the Public Act was created for, to remove blighting influences and foster Public improvements within the DDA District" G-Man Dear G-man, where exactly is the blight downtown? I know certain people have pointed to the Encore Records building and and pronounced it blight, but all that building is guilty of is not maximizing the profit on the plot of land it sits on. Act 197 was originally about real blight. We cry blight whenever a property owner doesn't want to maintain an historic building or make needed repairs, or when a developer thinks s/he can squeeze some dough out of the city for infrastructure that any of us would be on the hook to provide if we were building a house on a vacant lot. This city does not have blight downtown. And it hasn't for a long time. What little blight there ever was, could have been fixed, back in the 70's by making it easier for people to move back downtown. The single-use zoning fad actually was the cause of much of the deterioration of downtown in the 70's. The establishment of the DDA was a "cat-in-the-hat"cure for a zoning problem.
a2grateful
Tue, Apr 2, 2013 : 1:22 p.m.
"Marcia Higgins, D-4th Ward, indicated she was voting yes at first reading in order to have more dialogue, but she could vote differently at second reading. City ordinance changes require two readings." Herein lies foreshadowing of the true vote and story. Last night's approval of first read is prelude to likely defeat of the DDA proposal at next vote. The "new" voices on council do not represent majority. Some "new voices" are status quo mayor supporters. The Hieftje status quo prevails. Who needs mayoral veto power when there is never anything to veto?
Brad
Tue, Apr 2, 2013 : 1:11 p.m.
It's not too late to abort the $360K that we'll soon waste on artwork for a bridge. Even after the voters fairly clearly showed that was not how they wanted to be spending their tax dollars. But that bucket it sacrosanct and they really don't care what we want.
DJBudSonic
Tue, Apr 2, 2013 : 1:02 p.m.
So it has come to outright threats to try to save the DDA? That is all ye voters need to know. If you don't do what the Mayor wants, he will threaten to take away services; and potentially claim the need to raise taxes to fill imaginary holes in the budget. This really has gone too far!
Brad
Tue, Apr 2, 2013 : 12:37 p.m.
Sure glad my councilperson was able to attend the council meeting to vote with the mayor. Again. And are you people in the 5th ward having that "hey - we could've had V. Armentrout!" feeling yet? I know I am.
CynicA2
Tue, Apr 2, 2013 : 3:10 p.m.
Anyone with even a whiff of Hieftje about them choosing to run for council, should be automatically rejected by voters - don't be like Chuck, and feign "independence", when in truth, you are just another Hieftje shill. I voted for Viviene, so my conscious is clear.
DJBudSonic
Tue, Apr 2, 2013 : 1:09 p.m.
I know I am, even though that is not my vote. Next election, there needs to be more voter awareness and 'get out the vote' work done across wards to achieve a council balance that is in the best interests of the whole of the city. We all suffer when wards are underrepresented (you know who) or represented poorly by voting block candidates (everyone knows who).
Carole
Tue, Apr 2, 2013 : 12:27 p.m.
Close the DDA and save tons of funds that can be used to take care of our marvelous city of Ann Arbor. They are not our sole planner, were not elected by the citizens, and are more for themselves than for the citizens. The council was elected to run the city along with staff through the city administrator, etc. Let's get back to the basics in this time of uncertainty of funding.
4 Real
Tue, Apr 2, 2013 : 12:25 p.m.
"I think it's going to actually strengthen the DDA in the long-term, and I'd like to be a part of seeing that happen," Sally said. How Orwellian. The sad thing is she believes it (and Kunselman) who continues to display his ignorance on TIF and taxation in general. Follow him right off the cliff.
1bit
Wed, Apr 3, 2013 : 2:04 a.m.
The DDA has lost its focus over the years. Too much money is part of the problem. The mayor's excessive influence is another part of the problem. The DDA is not the shadow government of A2 because they have more power than that. Their existence and growing strength is a reflection of the ineptitude of the City Council over the years. Hopefully the latter is starting to change.
G-Man
Tue, Apr 2, 2013 : 1:25 p.m.
Right on, Man!
Jack Eaton
Tue, Apr 2, 2013 : 12:13 p.m.
It is important to remember that this resolution will NOT reduce the DDA's revenues. It will only limit how fast the DDA's revenues can increase. While our community college, transit system City and County all struggle to maintain services within their limited budgets, the DDA's budget has increased by about 90%. (I omitted the library, because I believe it does not have the same budget problems these other entities have). If the Council's efforts to restrict the rate of growth in the DDA's revenues results in some sort of retribution, such as an end to the City Hall subsidies, then it will be time to decide whether the DDA should be dissolved. The DDA exists at the pleasure of the Council and needs to work with Council. That little shadow government needs to learn to play well with others.
jcj
Tue, Apr 2, 2013 : 12:08 p.m.
Anyone other than the Mayors cronies STILL think it is not time for him to hit the road?
Kai Petainen
Tue, Apr 2, 2013 : 12:05 p.m.
According to a city records, the bulk of the DDA's increased TIF capture is coming from three downtown high-rise projects: 1) Landmark Landmark should fix the road in front of its building, otherwise they are showing disrespect to the community. The road is a mess. If you build a big building, then have the respect and fix the surrounding roads when you are finished building. The trucks/equipment used to build that building, destroyed the road around the worksite. Make Landmark fix it.
Eep
Tue, Apr 2, 2013 : 12:29 p.m.
My guess would be that they are obligated to fix it, and that they're just waiting for the weather to get warmer. Road repairs in the winter don't work out very well.
PhillyCheeseSteak
Tue, Apr 2, 2013 : 11:55 a.m.
Question - If $559,000 would go back to the city, which in turn allows the DDA to take back its $508,000 annual grant it gives the city, wouldn't the city (us!) be better of by $51,000?
Basic Bob
Tue, Apr 2, 2013 : 1:46 p.m.
The fact that an annual grant exists is proof they have excess money. The mayor's problem seems to be that "his" DDA money is being returned to places he has indirect or no control - streets, parks, buses, garbage, libraries, the county, and WCC. Where the general fund "grant" can be spent freely at the whim of the mayor and council. The DDA is a success story, and it is time the citizens of Ann Arbor are able to share in that success.
Martha Cojelona Gratis
Tue, Apr 2, 2013 : 11:40 a.m.
It really is time for a change up
Veracity
Tue, Apr 2, 2013 : 1:40 p.m.
The DDA staff supported the Mayor's plans which included building the Library Lane underground parking structure so that Valiant Partners could build a luxury hotel on top. Nevertheless, before deciding to build the library parking structure, Mayor Hieftje and Susan Pollay should have calculated the annual cost of servicing the bonds used to finance construction. The $3.6 million cost should have been recognized as larger than could be covered by anticipated revenues from all sources. At that point Mayor Hieftje and Ms. Pollay should have admitted that the underground parking structure was unaffordable and shelved the plans. Instead, we have the situation where excessive bond servicing costs are draining the reserve fund. However, as of the next fiscal year the reserve fund should no longer have funds sufficient to cover the bond servicing costs. When the reserve fund fails to cover bond servicing costs then the DDA will be insolvent. Nobody at City Council stated that the DDA should be eliminated but insolvency may have that effect. The situation will be tragic because it could have been avoided with appropriate financial planning.
Craig Lounsbury
Tue, Apr 2, 2013 : 11:31 a.m.
"But if the city decides to take nearly $1 million away from the DDA, Hieftje said he wouldn't be surprised if the DDA cuts off grants it provides to the city," the old "tail wagging the dog" thing. If an entity created by the city can hold the city hostage its time to kill that entity. I don't know if the mayor has kids but either way its a bad bad thing if a parent is afraid of their kids. How many more cliches am I good for on one cup of coffee?
barefootdave
Tue, Apr 2, 2013 : 11:40 a.m.
The comment you quoted says it all. Inter-government bickering at the cost of services to the public they are supposed to serve. Lead the way Kunselman!
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 11:14 a.m.
This is the first time in a long time that the Mayor has lost a vote at city council. The Mayor of Ann Arbor has the right to veto any act of council or any resolution passed by council, but this mayor has never *once* used his veto power in the 12+ years he has been in office. Since this vote was 7-3, the Mayor could veto it and might prevail. I support this action, but lot of other foolishness and over spending could have been stopped over the past 12+ years if we had instead had a mayor willing to wield this veto power: "Veto Power of Mayor SECTION 4.5. (b) Within seventy-two hours, exclusive of Sundays and holidays, after the adoption of an ordinance, the Clerk shall present it to the Mayor. The Mayor may approve or disapprove. If the Mayor disapproves, the Mayor shall return the ordinance to the Clerk with the objections thereto in writing. The Clerk shall lay the ordinance and the objections of the Mayor before the council at its next regular meeting or at a special meeting called for consideration thereof. If, within thirty days thereafter, at least eight members of the Council vote to readopt the ordinance, it shall become effective without the approval of the Mayor. If the Mayor fails to act within ten days after an ordinance is presented, it shall be deemed to have been approved. The Clerk shall certify on each ordinance and also in the journal the actions taken under this section and the dates thereof." See: http://www-personal.umich.edu/%7Esarhaus/huronpkwy/charter.pdf, page 9.
mr_annarbor
Tue, Apr 2, 2013 : 2:03 p.m.
Hmmmmm. You say, "a majority of aa residents will go reelect him again any time." That sounds like democracy to me. Are you actively working to find and elect a "reasonable opponent."
Judy
Tue, Apr 2, 2013 : 1:26 p.m.
pbehjatnia, I agree but this is true about 99% of the people in public office, they get in and that is it, look at Judge Connor.
pbehjatnia
Tue, Apr 2, 2013 : 12:29 p.m.
he will veto it. he does not care about the city or the people who live and pay taxes here. and it will not be his death knell. a majority of aa residents will go reelect him again any time. unless we finally get a reasonable opponent his reign is indefinite. ugh.
RUKiddingMe
Tue, Apr 2, 2013 : 11:12 a.m.
So we've got a political struggle here between Council and the DDA? The left hand is grappling with the right hand? The very fact that we can have these internal "political" struggles indicates to me that something is seriously wrong with the setup. End the whole concept of the DDA, and while we're at it, let's stop giving money to SPARK until we see what deliverables are being provided. All I'm aware of that they've done is expand staff and set up another office in Ypsi. Draid, drain, drain, DRAIN!!
Alan Goldsmith
Tue, Apr 2, 2013 : 10:51 a.m.
"The DDA is expected to provide a $479,000 grant to AATA for go!passes in the next year..." Does anyone on Council have a family member where this could be a conflict of interest?
Alan Goldsmith
Tue, Apr 2, 2013 : 10:49 a.m.
"DDA Director Susan Pollay stepped to the podium Monday night to report there are a number of capital projects the DDA also might have to put off if it lost revenue." Good! What it Pollay's salary again?
Barzoom
Tue, Apr 2, 2013 : 10:48 a.m.
I agree with Aboriginal. It's time do disband the DDA. Ann Arbor doesn't need an unelected shadow government.
Alan Goldsmith
Tue, Apr 2, 2013 : 10:47 a.m.
"The only two council members to join Hieftje in opposing the proposal were Margie Teall, D-4th Ward, and Chuck Warpehoski, D-5th Ward." We all knew when Warpehoski was running, he's be a dancing rubber stamp for the Mayor when push came to shove. This vote is no surprise. Margie Teall...well at least she showed up for once. Lol. This has nothing to do with politics and everything to do with democracy, fairness managing my tax dollars, something the Mayor is clueless about.
Arboriginal
Tue, Apr 2, 2013 : 10:43 a.m.
That DDA is the BESTEST governing body EVAH! We should envy us!
Arboriginal
Tue, Apr 2, 2013 : 2:35 p.m.
Sarcasm folks. (plus a line from "This is Spinal Tap)
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 10:43 a.m.
"[Mayor Hieftje] fears the DDA could turn around and take back a roughly $508,000 annual grant it gives the city to help pay for the police-courts addition to city hall. Hieftje stressed multiple times Monday night that's a discretionary grant the DDA can rescind at any time if it chooses." When the $50 million Rog Mahal was built, the Mayor repeatedly assured us that it would never be a burden to the general fund and other funds (a/k/a "buckets") would be used to pay for it. Of course, we later learned from a state review commission that the judicial overcrowding in the county courthouse was solely due to a judge and staff that weren't needed so the addition was just wasteful spending and the real plan was to completely remodel the city hall from basement to top floor over time anyway. He also assured us no general fund money went into the 1% for Art fund which then paid for the Huirinal water sculpture in front of city hall, but after investigation, we learned that $50,000 of the cost of the Huirinal did come from the art funds which came from the general fund. The mayor appoints the DDA board and sits on it. If he can't follow through on his commitments and promises and can't control his own political appointees, who is to blame?
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 4:53 p.m.
@Steve Bean: With revenue being static, what cuts do you think the DDA would be forced to make? Maybe they could economize and do things like paying off their 6% loan from Republic Parking (if that is true that they borrowed at 6% and they could save money doing so), or find other ways to save money, such as eliminating official cars for staff if they still have any of those?
Steve Bean
Tue, Apr 2, 2013 : 4:45 p.m.
So you meant lead, not control. Thanks for the clarification. Are you okay with the cuts that the DDA would subsequently make (i.e., the consequences) as a result of maintaining their payments to the city?
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 2:52 p.m.
@Steve Bean: If the Mayor cannot prevent his political appointees from taking back $508,000 a year from the General Fund, causing the city to fall further behind in providing funding for basic services like fire, emergency medical response and police, then he isn't much of a leader. In matters of critical importance to the city the mayor should be able to lead his political appointees to "do the right thing".
Steve Bean
Tue, Apr 2, 2013 : 2:14 p.m.
Do you really want the mayor to control his/her political appointees and be blamed for not doing so?
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 10:32 a.m.
The DDA's current priorities as expressed here, adding elevators and retail to the Williams Street Garage, paying for a sewer improvement to help develop the Y Lot into a tall building, and new street lights on S. Main St. don't even rate a "1" on the list of top 10 priorities I would suggest we ought to be focused on which start with providing basic public services: "#10" fire and emergency medical services that meet national standards, "#9" a police car in front of your door in two minutes to help in an emergency situation, and "#8" roads that are in good repair. The Mayor is fighting for his slush fund to fill his buckets, not for the best interests of the citizens!
Arboriginal
Tue, Apr 2, 2013 : 4:07 p.m.
Dearest Ormad, It took A2PD 45 minutes to respond when a car rear ended me on a busy street. The other car was totaled. That seems like a long time and is not out of the ordinary. I'm all for 2 minutes.
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 3:02 p.m.
@ordmad: Ann Arbor's economic engine is U-M. What parent would send their child to college in a town that was unsafe? It threatens the economic base of our town. We need the facts to determine whether or not our investment in police is sufficient or not. Currently, apparently, no one has those facts despite the fact that the mayor led us into "a little experiment" in cutting police (and fire services), Oh, and crime has risen from the 25 year low and the crime statistics you cite are ignoring many quality of life crimes such as vandalism, which is literally a weekly occurrence in many places downtown now. So what crimes are you counting makes a big difference. FYI, the problem with graffiti is that it creates a perception perception that a city is unsafe. Again, that threatens our economic engine. So, let's get the facts on the table about response times, crime rates and crime solving rates and benchmark them against other college towns that U-M competes with and see whether we need more or less police services. I'm guessing more, based on conversations I've had with members of the police force.
ordmad
Tue, Apr 2, 2013 : 2:49 p.m.
So two minutes sound nice but just because a former mayor said it doesn't make it sensible or achievable. And I'm not sure why we should be adding more police when crime continues to hoover at a 25 year low (see the Observer article this month for a nice discussion). Just doesn't seem like a wise investment unless and until there's a demonstrated need for it and at this point it's unclear where you are finding one.
Major
Tue, Apr 2, 2013 : 2:27 p.m.
Two minutes is most likely not achievable, but the reality is the faster the better. "When seconds count, the police are only minutes away". http://www.self-defense-mind-body-spirit.com/average-police-response-time.html
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 2:22 p.m.
@ordmad: Your other question of how many police would actually be required to provide a decent emergency response in Ann Arbor and how would we benchmark it, is actually an excellent one that I am trying to find out the answer to. I asked the city manager the following question which I am awaiting a reply to: "The current city budget that came into force July 1st 2012 and passed last May 2012 calls for the police department to create and publish monthly key metrics of performance benchmarked against similar cities' response times, crime rates and crime solving statistics. Why hasn't this been accomplished yet (please be as specific as possible what has caused the delay) and when will the public see this data published monthly on the city's website?" "How can you or we know if the city has adequate staffing in the police department without this data?" See my second question posted in the comments at: www.annarbor.com/news/ask-your-questions-about-ann-arbors-city-budget-during-tuesday-live-chat-with-city-administrator/
Stephen Lange Ranzini
Tue, Apr 2, 2013 : 2:16 p.m.
@Ordmad: It was Mayor Lou Belcher's priority when he was Mayor of Ann Arbor. In case you missed his statement, I'll repost it here: "It is time the city government started using "Management by Objective" as our City Councils practiced during my four terms as mayor. Priorities, set by importance, is the only way to operate anything...whether it is a government, a business, a family. For any city, the government's first priority MUST be the health and safety of it's citizens...just ask them. For example, we set the following top objectives: a police car in front of any address in two minutes...a fire truck in four minutes, waste pick up every week with a sanitary disposal methodology, clean water.....etc. We built the sixth and last fire station to meet the four minute response goal and it is ,in my opinion, very bad policy to dismantle the very infrastructure, that supports, what should be a number one priority. When the money runs out you stop on the last priority and , if you have money left...give it back to those who gave it to you. Look, you can help lead the effort for the arts without spending priority tax dollars...we helped create the Summer festival, the Michigan theater,and the Hands on Museum with very little public money and the citizen volunteers took them over and saw to their funding...(doing a heck of a lot better job than the city council could) and we asked the business community to help fund public art (which many did). Let's get back to the important things that government was formed to do.....those things that individuals can not do alone...Lou Belcher" See: http://annarbor.com/news/ann-arbor-officials-discuss-strategies-for-improving-fire-department-without-closing-stations/?cmpid=NL_DH_topheadlines
ordmad
Tue, Apr 2, 2013 : 1:58 p.m.
Can you please tell us where you keep coming up with this 2 minutes from? Maybe it's a standard we should shoot for. Maybe it's nuts. Are their other comparable places with response rates like that? What's the size of their force, etc..... In other words, facts please.
Arboriginal
Tue, Apr 2, 2013 : 10:32 a.m.
Maybe it is time disband the DDA. Their work is done.
A2comments
Tue, Apr 2, 2013 : 10:20 a.m.
Let me see if I have this right. The mayor is objecting to this because it will undo an nice arrangement where various entities and departments are forced to give the DDA money, part of which the DDA then gives back to the city so that the city can spend them out of another bucket... Ok, got it.
Alum
Tue, Apr 2, 2013 : 10:07 a.m.
Finally, someone is putting limits on the autocracy called the DDA.
Brad
Tue, Apr 2, 2013 : 1:43 p.m.
But disbanding them wouldn't be.
G-Man
Tue, Apr 2, 2013 : 1:29 p.m.
It just might be illegal.......