Mar 08 2009

Police Layoff

Published by under Budget

I was deeply saddened to see Judy McGovern’s column yesterday that broke the news on the proposed layoffs in the Police Department.  During my campaign I asked Police Chief Jones if he could guarantee that when the new building opened he would guarantee that there would not be any layoffs due to budget constraints.  Although that is a tough question, I was pretty certain that his answer would be “No”.   It is ironic that the layoffs are announced not when this new building opened, but now even before they officially break ground. 

I was worried about this eventuality not because my crystal ball on the economy is much clearer than others, but because I have been through more of these business cycles than most of the present council members.  My business sense usually tells me when it is the time to “press on the accelerator”, “time for caution” or “time to step on the brakes”.  For some time now I have been feeling the warning signs that this recesssion is going to get much worse before it gets better.

Municipal finance is the next big crisis we face as a community.  The promises we have made to our City workers, delays in rebuilding our infrastructure, excessive borrowing, an archaeic and punative tax system all are leading us down a path towards total collapse if we do not act soon enough.  This is a time for fundamental change in the way we do business as a City and County.    

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Feb 07 2009

City Council Speech 2/2/2009

Published by under Budget,Ideas Bad

I am sure it will come as no surprise to you that I am here tonight to speak against the proposed police court renovation at Larcom.  I would like to go on record with my concerns about the continuation of this large and mostly unnecessary expenditure. 

Let me preface my remarks with an observation. I don’t think that anyone would argue that the police department needs substantial renovation and improvements for the physical plant due to neglect of past administrations so I will confine my remarks to the money allocated to the court and other additions to Larcom. 

Here are my major concerns:

  1. First, this is not the time to commit residents that are struggling to make their own mortgage payments to a stream of interest payments totaling $26 M over the next 30 years to fix what essentially is not broken.  Nor is this is not the time to commit the DDA to a stream of payments of $15M over the next 30 years that will not benefit the downtown merchants.  

  1. Next, the $47M expenditure for bricks and mortar forces the City and County to unnecessarily duplicate expenditures for court security, IT, transportation and administrative services in perpetuity.  Future administrations, more focused on Regionalization will view the lost opportunity to combine all the Court services as a single unit as a bigger financial boondoggle than the early retirements granted to our City employees.

  1. Additionally, why do you think  the construction manager is lobbying heavily to convince the City to abandon the pursuit of LEED Gold certification? It is because they know they cannot bring the building in under budget with green building practices in the equation.

  1. Lastly, City policy on Debt Management as outlined in the Adopted Budget 2009  for Limited Tax General Obligation debt stipulates that these bonds should be considered only when constraints preclude the practice of voter approved general obligation bonds.  What precluded the favored General Obligation bonds in this instance except the convenience of not having to obtain voter approval?   

   

You have the opportunity now to do the right thing and abandon this dangerous course and revisit the County’s offer to cooperate in “reengineering” government in Washtenaw County and use the cost saving to try to lower the tax burden of our residents and businesses.        

  

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Jan 20 2009

A New Era Dawns

Published by under Politics

For the first time in a long while I feel proud to be an American again!  There are many daunting challenges that face our new president but I really believe that with his wisdom and energy, Americans are more than up to the challenge.  Our country has been so divided on so many issues and now we have a leader that can seemingly pull us together and help us find ways to live peacefully with our differences.  It is not going to be easy.  We dug a huge financial hole that we must climb out of now as we lost our way and succumbed to the idea that we could all get rich quickly.  Our parents and grandparents knew better, but these are lessons than we seem destined to have learn the hard way.

Whether Barack Obama is a successful leader will depend in part on how each of us does our part to help.  He cannot do it by himself.  In his Inaugural Address in 1961 John F.  Kennedy implored us all “To ask not what your country can do for you, but what you can do for your country.” President Kennedy then want on to say “My fellow cirtizens of the world, ask not what America can do for you, but what together we can do for the freedom of man.”  Unfortunately, this is even more true today than it was in 1961.

The world is indeed a much “smaller” place than it was in 1961!  We are clearly more dependent on each other than ever before.  The Buddhist concept of “Karma” and the interconnectedness of everything is becoming more and more apparent even to us rugged individualist Westerners.  Tomorrow morning when they are still cleaning up the confetti  in Washington DC, when we wake up and look in the mirror you will see the only person that can really make a lasting difference.  Please help Barack Obama as the leader of the greatest country in the world, show the rest of the world that from now on it is not about “I ” but “We”.  What a wonderful world it will be.  God Bless America!

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Jan 18 2009

Uni-Gov idea from Paul Dimond

Published by under Ideas Good,Politics

In today’s “Other Voice’s” column in the Ann Arbor News, Sunday, January 19, 2009 pg A10,  Paul Dimond is “spot on” when he proposes that the current economic downturn is an excellent opportunity for us to reinvent local government by eliminating unnecessary duplication of government activity at the County and City level.  Mr. Dimond proposes that we eliminate “all non-school local jurisdictions throughout Washtenaw County and  substitute a Uni-Gov with an elected full-time, strong Mayor chairing a part-time council elected from 10 geographic districts.

The name given to the idea of combined governmental units is “Regionalization”.  Up to this point the due to political turf wars, only lip-service has been given to isolated instances where the City and County could combine services such as police and fire.  To my knowledge the only functioning combined County and City unit is the Office Of Community Development.

Before we start wasting time exploring a City Income Tax, a financial band-aid in my opinion, why not first take a step “back and and up” and  look at the entire County from 30,000 feet (were I spent much of my career) and we will see that that arbitrary political boundaries we have grown accustomed to are not carved in stone.

As we retool our economy to a post-auto centric model, why not take the time and re-engineer our local governmental model into a 21st century model that the supports our businesses and citizens in a manner that is more productive and one that eliminates the us against them mentality of the myriad fiefdoms that have their roots in almost irrelevant past centuries.

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Jan 16 2009

A City Income Tax? You have to be kidding!

Published by under Ideas Bad

Does anybody really think this is a good idea.  Why don’t we start trying to find ways to cut expenses first? We may be forced to soon but first we need radical overhauls in the way we continue to spend money!

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Jan 15 2009

Conference Center Downtown

Published by under Development,Ideas Bad,Politics

I am amazed that the idea of a conference center downtown keeps surfacing.  Rumor has it that the City and some other other influential people originally had their eyes on the the land at Huron Hills as a spot for a 400 person conference center.  The City even went so far as to have the land appraised.  When the town banded together and stopped the sale of the Huron Hills property, the focus shifted to the land above the newly approved underground parking structure on 5th Street next to the AA Public Library.  It seems to me that there are much better places to put a conference center if there is really a need for one.  Out near Briarwood Mall might be the best place.  If we as a City decide to build one it should be a joint effort on the part of the City, The State, The County and The University.   We need to start broadening our perspective and stop committing taxpayer funds to “Build It and They Will Come” concepts that could eventually cost the taxpayer more money.

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Oct 15 2008

“700 Billion Bailout, Last Gasp of Urban Sprawl” Christopher B. Leinberger

Published by under Development,Your Ann Arbor

 

Ann Arbor, October 10, 2008.  Speaking at the Global Urban Symposium, GUS, on the topic of “Macro-Sustainability and Walkable Urbanism,” Christopher B. Leinberger, University of Michigan professor and noted author of “The Option of Urbanism, Investing in  a New American Dream  declared that urban sprawl caused by unsustainable real estate practices (“Drive till You Qualify”) and government subsidies through agencies such as Fannie Mae, FHA and the gasoline taxes have been a major factor in the collapse in home prices, the sub-prime crisis and ultimately the global financial meltdown.

Leinberger identified two types of urban environments; Drivable Suburbanism and Walkable Urbanism.  As transportation systems drive development, Drivable Suburbanism (Think Brady Bunch) is automobile centric while Walkable Urbanism (Think Seinfeld and Sex in the City) demands a more balanced transportation plan including readily available public transit and non-motorized transportation.  Consequently, Walkable Urbanism is a much more complex (time and money translate to expensive) problem for cities to solve as the infrastructure and neighborhoods are already established. Making space for increased density creates a need for change which many communities are not ready to accept.  Brian Swett of Boston Properties a development firm in Boston, MA offered a good example when he stated that the newly opened Mandarin Hotel in Boston took 13 years to get through the permit and building process.

Leinberger elaborates on just how bad the housing market can get in an article he authored for Atlantic magazine, entitled “The Next Slum”, March 2008.   Most of the loss of property values will occur in the fringe areas in overdeveloped Drivable Suburban markets such as Las Vegas, Los Angeles, Sacramento and parts of Florida.  Ground Zero in the property value decline will be fringe areas without rail transit and no functional city core. 

The news is not all bad however. As smart cities successfully make the shift to more balanced transportation systems and increased population densities, property values can rapidly increase as buyers are willing to pay a premium for Walkable Urban real estate.  Washington D.C. for instance has transformed a former Low Cost Housing Project into a planned walkable community.  Remarkably, in just five years land values per square foot increased from $10 per square foot in the former rundown crack cocaine neighborhood fraught with all the social decay that is endemic in blighted neighborhoods to a thriving walkable neighborhood with a new major league baseball stadium and a new expanded Metro station.  The entire 97,000 sq foot development (two football fields) was just sold for a $69 million profit for the Metro Authority at land prices that were approaching $712 per sq foot 70 times the original values.   

Conclusion: Walkable Urbanism equal Sustainability equal Profit! 

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Oct 07 2008

Speech to City Council 10-6-2008 Brownfield Tax Credits

Published by under Development

Good Evening Mayor Hieftje and Council,

My name is Stewart Nelson and I live at 2975 Hickory Lane in Ward 2. 

      I am here this evening to offer my thanks to Councilmember Rapundalo for his work behind the scenes to modify the developer’s plans for 601 Forest. This new plan has been labeled a good compromise between what was wanted by the developer, the city, and neighborhood groups and seems to put aside the developer’s threat of litigation against the city. 

      While I applaud the gesture on the part of the developer, I suspect that his change of plans had more to do with lack of funding options due to a faulty business plan or uncertainty in the credit markets than a sudden increase in his civic pride.  You must be cognizant of that fact when you debate the issue of the builder’s request for Brownfield tax credits later this month.  I am opposed to granting tax credits to a project that probably would not be funded without them. 

      Brownfield tax credits are incentives for developers to redevelop contaminated, abandoned, blighted properties, rather than building out in the cornfields.  That certainly is not the situation on the corner of South University and Forest Ave.   While it may appear that Brownfield tax credits can generate money out of thin air producing the ultimate Win-Win situation that simply is not always the case.  Brownfield credits are only Win-Win when the alternative is the property will not otherwise attract investors or developers.  If other investors could be attracted to the property without Brownfield tax credits, the situation is truly a Win-Win situation with the City and School System the winners.   

      From speaking with other developers and lenders, I feel that in a more favorable lending environment, and a firm commitment by the City to work diligently with qualified developers the entire parcel or individual parcels could be developed with a project or projects that better fit the character and scale of the neighborhood. This plan would provide a much needed economic lift to the South University Corridor and to the City while not diverting revenue from our schools to undercapitalized developers.   

      I encourage you to vote no to the developer’s request for Brownfield credits and I encourage the public to attend the public hearing scheduled for 6:00 pm on October 13th at Larcom.    

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Oct 07 2008

Caucus Speech during Public Hearing Time 10-5-2008

Published by under Politics

I would like to speak tonight to the possible impact of the mortgage crisis on municipal finance.  In case you have been off the planet for the past two weeks, you no doubt have your fill of the details of the meltdown on Wall Street in the residential mortgage and commercial credit market and the potential ramifications for Main Street (you and I) and our economy.  As U.S. credit markets ground to a halt last week and the resulting shockwave blasted through world financial capitals it became apparent that:

·        A U.S. and maybe a global recession is unavoidable.

·        Businesses are already cutting back capital projects and payrolls.What you may not have noticed is that 80-90% of the municipal bond sales were suspended due to uncertainty in the market. In my forty years as an investor, this is only the second time that I can remember such an event taking place.  Closer to home, in the first nine months of the year 1103 homes were foreclosed on in Washtenaw County compared to 741 in 2007.   Simply put a bad economy is now turning into a terrible economy and the end is not in sight yet.  This  uncertainty in the credit markets convey some negative implications for Ann Arbor, Washtenaw County and the State of Michigan:

1.     The cost of municipal borrowing will certainly increase and with large capital projects already budgeted for 2009-2010 we can expect some nasty surprises in finance costs.   

2.     We also can predict large stock and bond losses in our pension and VEBA plans.   These losses should be made up within the next budget cycle or we run the risk of dropping below recommended funding ratios.  How many CDO’s are in our retirement portfolios?  The City Bank law suit implies at least some.    

3.     Lastly, there is an increased chance of lower revenue sharing with the state as the state’s ability to borrow disappears and lower tax revenues force further budgetary concessions. At the risk of sounding like Chicken Little, as a student of the financial markets I have some suggestions for your consideration:

1.     Like every prudent business is currently doing we should ”hunker down” and examine every expense for necessity.   

2.     Increase the targets on the unallocated reserve for the General Fund to 12-15% from 8-12%.  

3.     Adopt a budget stabilization reserve of 1%. 

4.     Monitor budgets more closely with at least a semi-annual review and possibly monthly review.  You can ignore your personal brokerage account statements as they arrive to put off learning the bad news, but please don’t put your “heads in the sand” and hope and pray that we as a city are going to be immune to the economic “hurricane” that is certainly heading our way.  There is still time to prepare.   Clearly these are extraordinary times.  Please don’t just assume it will be business as usual for the next two years. 

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Aug 27 2008

Do we need a Conference Center downtown Ann Arbor?

Published by under Development,Your Ann Arbor

The Planning Commission tabled the A2D2 code amendments in May 2008 to consider public comments.  Since then, the A2D2 Steering Committee and the Planning Commission have met several times with staff to revise the proposal. 

The revised amendments are now available for review (see below). 

Changes to the May 2008 draft amendments include:

  • The zoning for the north side of East Huron between Division and State has been changed from D2 (Interface) to D1 (Core). 
  • Properties on North Division/East Ann and North Fifth Avenue that are currently zoned office and located in the Old Fourth Ward Historic District are proposed to remain as O zoning.  For the remainder of the block containing City Hall, the properties are proposed to be zoned D1.
  • Street frontage designations for several blocks have been changed to better reflect the current front setback pattern along the block. 
  • Revised side and rear setback requirements for properties abutting residential zoning districts have been added. 
  • The requirement for active uses at street level has been revised to apply to a smaller group of retail streets and include customer lobbies for banks.
  • The massing standards for several character overlay districts have been revised in allow larger tower diagonals.
  • The requirement for design review has been separated from this draft.

The Planning Commission has scheduled a public hearing and action on the amendments for Thursday, September 4 at 7:00 pm in Council Chamber (2nd floor, City Hall).  At that meeting, the Commission will consider making a recommendation on the amendments to City Council. We need to make our voices heard at this meeting. 

 

I am concerned about several permitted uses of land in the Core Downtown areas designated a D1 and the Interface Areas designated as D2.  (You might have other concerns like Adult Entertainment.  Hmmm?) These uses are all listed on page 7 of the revised amendments.  My major concern is a Conference Center.  I strongly believe that a large Conference Center in the City Core will negatively affect  our City permanently for the residents.  We need to discuss this use more.  A significant number of questions should be answered before we move forward such as, how large will the Center be, who will pay for the construction and operation, what other structures like hotels and parking structurse will be required among others? I don’t know any Conference Centers in the U.S. that are profitable.  Most require some form of public subsidy. All require separate parking garages.  

 

My recommendation is that we pull this use out of the amendments before it goes to City Council and then schedule a series of public hearings to decide whether our community wants a Conference Center at all.  

 

Once Planning Commission has made a recommendation on the code changes, they will be forwarded to City Council for public hearing and action. Please plan to attend this important meeting.  If you cannot attend you can e-mail comments on the proposed changes to A2D2Feedback@a2gov.org or send them to me. 

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