You are currently browsing the monthly archive for June 2010.
Yesterday complete streets passed in the MI House by a large margin – MML’s Chris Hackbarth says:
“Hello everyone. The House voted overwhelmingly this afternoon in support of the Complete Streets legislation. Here is the link to an article on today’s action that I just posted to the League’s website.”
Now to take this bipartisan good-for-cities bill to the Senate!
This week the CC is talking about the city’s goals for next year, a topic already covered here at http://planfortc.com/2010/05/22/city-priorities-for-the-next-year-may-23/.
So it’s a good time to discuss the Downtown Development Authority. The CC will soon interview to fill 3 seats on the DDA – that’s an unusual number of openings and could influence the future direction of that board.
Who cares about the future direction of that board? Chances are, you do.
You probably care about what the DDA will do because the DDA has more discretionary funds to spend in the next 5 years than any other city board. And the options for where to spend these funds include some of the highest profile locations in the city.
The downtown district includes what you think of as “downtown” TC, but it also includes Old Town, the Warehouse district, and the waterfront. The downtown district is the only area of the city that captures tax revenues from the property located in it for use within its boundaries. The DDA captures not only city taxes but also revenue from other taxing jurisdictions, which provides an additional 93 cents for each dollar collected from city revenues. Downtown property owners also pay an extra millage that funds DDA operations. As a result the DDA has a current capital budget of $1.6 million.
What could the DDA get done – or help get done – around downtown in the next five years? Projects under consideration include:
• Making the first big investment in the bayfront. http://www.ci.traverse-city.mi.us/images/planning/bayfrontpreliminaryengineering.pdf
• Turning the alley behind the 200 block of Front St into a pedestrian and cafe space http://www.downtowntc.com/userfiles/file/200efront.pdf
• Building the River West parking deck http://www.ci.traverse-city.mi.us/boards/dda/packet20100521.pdf, p 62 of the pdf.
• Building the Pine Street pedestrian bridge from Front St to the Warehouse district.
• Building a tunnel under Grandview Parkway from Hotel Indigo to the Open Space.
The DDA also runs the Farmers Market, Friday Night Live, and has a hand in most of the other events that happen in downtown TC.
It’s crucial that these three seats get filled by residents ready to work hard and be creative about the future of these signature areas of Traverse City. You can get an application at http://www.ci.traverse-city.mi.us/boards/application.pdf. Hope to see you at the interviews!
For your info - a group of citizens led by Margaret Dodd submitted signatures for two petitions to the city this afternoon. The first says:
Petition for an election, on a request to amend the Traverse City Charter, to provide that any decision to build or acquire a power generation facility shall be subject to referendum by the voters, in the manner set forth in the Traverse City Charter.
The second says:
Petition for an election, on a request to amend the Traverse City Charter, to provide that the City Commission shall have the exclusive jurisdiction, power and duty to construct, acquire, expand and operate the light and power system, and to limit the Light & Power Board['s] power to acting in an advisory capacity to the City Commission.
If the signatures are validated and the other parts of the process completed by August 24, these questions will go on the November 2 ballot. Anticipating a lively public discussion between now and then.
Thank you for having me at your annual meeting, and for all that you do for our community. Kevin asked me to come and say a few words, but left it up to me what to talk about. One of the things I find myself doing these days is thinking about what makes this a community. Not just about how we can improve it but also about what our assets are – the things that make this place work as well as it does.
So I wanted to share a thought experiment – about what you do, volunteer. One of the things that newcomers notice about the area is the number of non-profit, charitable, and service organizations we have here. Part of the explanation for that is people like Marshall Persky and Harry Liebzeit, who are “retired” yet members of five different non-profits and a civic board giving them a full “work” week. That is one demographic explanation but there are others as well.
The thought experiment is, how can we quantify the economic value of volunteerism in this region, and what impact does that have on quality of life here?
I started thinking about this because my wife worked at the Inland Seas Education Association and now at the Grand Traverse Conservation District http://gtcd.org/ and I was always struck by the large numbers of volunteers, and by how much of the organization’s work was done by these people. My hypothesis was that this is pretty common around here, and that it might explain any number of things.
Now economics is rightly known as the dismal science, and I’m not saying all or even most of life comes down to money. But the point of the experiment is to try and take something people think about qualitatively – the spirit of service, dedication to for others – and find ways to express it quantitatively.
data
To do an experiment you need to start with some data. So I made some calls, nothing scientific, but let’s just call it an unscientific survey.
I started with Tom Kelly at Inland Seas, because that is where Colleen worked. http://www.schoolship.org/
Inland Seas has a small professional staff that leads a legion of volunteers, which is where most of the capacity is – a typical profile for a non-profit organization in northwest Michigan. Tom confirmed for me a number that I knew was out there – the value that the federal government puts on an hour of volunteer time for purposes of calculating the local match for grants. The number is $20.25 per hour. They call it the value of an hour of volunteer time, but I prefer to think of it as an hour of volunteer effort. Time just runs, whether we do something or not. Effort involves the application of free will and the burning of energy – to me it is the real metric for this type of thing.
Anyway, Inland Seas uses volunteers mostly to run programs on the ship. In 2009 they recorded a total of 9,706 volunteer hours, which at $20.25 an hour plus some professional hours donated at professional rates comes to a total value for volunteer effort of $220,000 for 2009.
Then I talked to Martie Manty at Father Fred. http://www.fatherfredfoundation.com/
Martie said Father Fred also has a small staff and a large group of volunteers that serve 250 of our community’s neediest people a day. An average of 25 volunteers are needed each day to provide the services – many more for special events. In last six months, 213 volunteers have contributed 16,953 hours of service. Double that and multiply by $20.25 and you get $687,000 of volunteer effort in a year.
Anecdotally, Martie told me her youngest volunteer is 5 years old and helped fill Easter baskets last spring. Her oldest is 94, and comes every week to sort clothing.
I talked to Deb Lake from the Traverse City Film Festival and the State Theater. http://www.traversecityfilmfest.org/
The film festival has two paid employees an in a given year 1,200 people volunteer. The State Theater last year had 700 volunteers who put in 66,000 hours running the theater, a value of $1.34 M per year.
the big dogs
Then I went to the big dogs
I talked to the National Cherry Festival, Jennifer Parlette and Tim Hinkley. http://visit.cherryfestival.org/
They told me that 4,527 volunteer shifts make up the festival, for a total of 11,645 volunteer hours. At $20.25 an hour + $475,000 in in-kind contributions from businesses like Elmers, that is a total volunteer value of $711,000.
Finally, I talked to Steve Wade at United Way. http://www.unitedwaynwmi.org/
Steve explained that United Way operates a kind of volunteer clearinghouse. They have agreements with 228 non-profits in the area, who register their volunteer opportunities with his organization.
Last year the clearinghouse recorded a total of 1,723 volunteers contributing 60,200 hours of effort for a value of $1,219,050. On the United Way’s Day of Caring, they did over 100 projects using nearly 1,000 people. This year’s Day of Caring is September 9.
Anecdotally, Steve told me some people say they do not volunteer because they are too busy coaching their kids, or helping out at their church, or working on their local planning commission. Therefore, the actual volunteer rates are underreported, because a lot of volunteers don’t realize that’s what they are.
GVP
So that is 5 organizations – out of the many non-profits, charities, and service clubs here. They represent a total contribution of volunteer effort valued at $4.18 million.
I wonder if you have data like this. I wonder how many organizations do. I wonder if we could get one of those small Rotary grants and hire someone to do a survey of as many of these groups as possible (they all seemed happy to talk about this), and come up with a grand total number for the Traverse City area’s volunteer service hours and the value of that.
Much like gross domestic product, or GDP – the total value of goods and services generated in an economic unit – we could come up with a gross volunteer product, or GVP. We could put it on signs at the edges of metro TC:
Welcome to the Traverse City area
population 88,000
GVP $_____ million
Maybe a few of the many visitors to the region would take note of the sign and say that’s a neat idea and go back to their communities and say we should do that too. Maybe they would do their own survey and calculate their own GVP and put it on their welcome-to-town signs.
Maybe it would spread, and pretty soon our state would be known not only as the Great Lakes State, not only as Pure Michigan, but as the state where our communities measure themselves by the service of their people.
economic impact
Really though, quantifying the economics of volunteerism by using the government’s hourly number understates its true value to a community. To determine its true value, you have to look at it at least two other ways.
For some kinds of organizations, you could look at the economic impact, a sort of multiplier effect. According to the Downtown Traverse City Association, the economic impact of the TC film festival is $6.75 million. So the efforts of those 1,200 volunteers (coupled with the professional staff and the founders) produce $5,625 of economic impact per volunteer.
The National Cherry Festival did an economic impact study using a conservative attendance estimate of 100,000 people and determined a total direct spend of $19.3 million. Add the $711,000 of volunteer contribution to $19.3 million of economic impact and you have a a $20 million community enterprise.
safety net
For other types of organizations, the Red Crosses and the Father Freds, economic impact based on some kind of multiplier is not really the right metric. For these organizations, we are really trying to measure the economic value of a social safety net. That is harder to do.
One way you could try is to start with the premise that the work of social welfare non-profits lessens the burden of government. Therefore, you could look at the unit cost for the government to provide the same services – I will bet you it’s more than $20.25 per hour.
Or – more difficult but also more powerful – we could look at avoided cost. The cost that the community does not have to incur because the work done by groups such as yours prevents the imposition of that cost before it occurs.
This is hard to do, but it is big. What is the avoided social cost when someone gets the support they need to avoid falling into a life of crime or homelessness?
What’s the avoided social cost of a person who does not drown because the Red Cross taught him or her to swim? What’s the avoided cost resulting when a person is saved by someone you trained in CPR? What’s the avoided cost when you help military veterans and their families with re-integration after their return from a theater of conflict?
To steal a phrase from Dr. Lewis Thomas, I can’t hold my mind still long enough to think it through.
time, money, and blood
Quantifying that which resists quantification can sometimes cheapen it. I’m not trying to boil down service to others into dollars – just trying to turn the idea over and look at it a different way, because that’s how we learn something new about the world – by looking at it from as many angles as we can.
Your own website talked about volunteerism in a similar way – as effort. http://www.nwmiredcross.org/ My favorite quote in the description of the Red Cross is this:
“The Red Cross is not a government agency;
it relies on donations of time, money, and blood to do its work.”
Now I know you meant something different by that statement, but I think it’s powerful taken out of context.
Time, money, and blood. That’s what makes a community. What makes it great.
The city’s effort to change how streets are designed, vetted, and reconstructed is showing signs of progress.
The reasons why we need to do this were covered here: http://planfortc.com/2009/12/19/streets-sidewalks-2-news-on-waterfront-sheriff-last-update-of-2009/ and here: http://planfortc.com/2010/02/02/8th-street-feb-3/
The goal of building the streets we want, streets that reflect our master plan and the desires of our neighborhoods, gets put into action next Wednesday evening at a public bus tour, and then on August 4th when the PC reviews the 2010-11 projects.
Below is a portion of the city manager’s letter with the list of streets and the plan for public input. Is this good enough? Let us know what you think.
1. Shawnee Street is proposed to: pave the street with asphalt and install asphalt curbing where necessary to direct storm water runoff.
2. Barlow Street is proposed to: crush existing street surface and repave the street with asphalt. Poor sections of curb and gutter will be replaced along with replacing the catch basins and the sanitary sewers. Poor sections of the existing sidewalk will be replaced. Sidewalk ramps will be replaced if necessary to meet the American Disability Act. The gap in the sidewalk along the west side of the road is not planned due to a steep grade at the edge of the Street;
3. Elmwood Street is proposed to: complete reconstruction of the street at its current dimensions. Poor sections of curb and gutter sections will be replacedas will the sanitary sewers and undersized water main. All waterline service connections will be upgraded with one inch taps. Repairs will be performed on the storm sewer at Elmwood and 3rd Street. Poor sections of sidewalk will be replaced and a new sidewalk will be installed on the east side of the street north of Wayne Street. Some trees will be impacted by the new walk. Sidewalk ramps will be replaced if necessary to meet the American Disability Act. A geometric change is recommended for the intersection of Bay and Elmwood by tightening the dimensions of the intersection.
4. Kelly Street is proposed to: pave the street with asphalt 29 feet in width. Curb and gutter will be added to the Street along with installing a new sanitary sewer. Additional drainage considerations may be required. Sidewalks are not planned due to a significant grade change and/or the likely loss of many mature trees. The street project even without sidewalks will likely impact several trees.
5. Randolph Street is proposed to: complete reconstruction of the street at its current dimensions. Curb and gutter sections in poor condition will be replaced along with sections from Spruce to Elmwood Street will be replaced and all the water line service connections of the storm sewer. Additional drainage considerations may be required. The sanitary sewer will be replaced with galvanized pipes. Poor sections of sidewalk will be replaced and sidewalk ramps will be replaced to meet the American Disability Act;.
On the evening of June 23, starting at 6:30 pm at the Governmental Center, the City Commission, Planning Commission and key City staff will tour by bus, all the selected streets for 2011. A map showing these streets in the City is included with this mailing. You are welcome to listen and partake in the discussion as we make stops at the various streets. The City is very interested in learning from the residents and property owners how the street performs and what improvements they would like to see.
At the August 4, 2010 Planning Commission meeting, the 2011 StreetProjects will be reviewed for consistency with the City Master Plan. The public is invited to attend this meeting or write letters in advance of this meeting so we can learn your views on the anticipated project. Please address letters to the City Planning Commission, 400 Boardman Avenue, Traverse City, Ml 49684.
This week the city commission appointed Harry Burkholder to the Parks and Recreation Commission. An AICP-certified land use planner with degrees from both Western Michigan and Michigan State, Harry lives with his family in the Central Neighborhood. According to Harry:
I am very excited to serve the residents of Traverse City on the Parks and Recreation Commission. I believe a good park system is paramount to our City’s overall quality of life and is an essential component of our local infrastructure – just as important as our roads, sidewalks and other utilities. I look forward to working with the Commission on the redevelopment of the waterfront, exploring the development of more neighborhood parks, and exploring opportunities for recreational programming.
Welcome to Parks and Rec, Harry. We are excited about your ideas and contributions.
TC police & fire annual pension costs, 1990-2010
Your taxes are going up this year. The city commission has not raised taxes, and we have held the line on employee costs by reducing the overall number of city employees – as described here: http://planfortc.com/2010/04/12/city-finances-part-1-april-12/
But your taxes are going up anyway – about 0.38 mills, or about $30 for the average resident. Why? To fund the rising costs of police and fire pensions.
History of police and fire pensions
A little explanation is needed. 40 years ago, against the advice of the city manager at that time, the city commission placed Act 345 on the ballot, and the residents voted it in. Act 345 sets up a special account for police and fire pensions that is outside of the general fund. These pensions are “defined benefit” pensions, meaning the retirees receiving them get a guaranteed amount of benefits from the city – as opposed to the “defined contribution” model where the employee gets a set amount of contribution towards his or her retirement fund. Most people are familiar with defined contribution retirement benefits as the rule in the private sector.
.
Because Act 345 uncoupled the funding of police and fire pensions from the general fund, the cost city taxpayers pay to fund these pensions changes each year independently of any action by the city commission through the budget process. Instead, the amount city taxpayers must put into the fund each year is determined by an actuarial study. The actuarial study looks at the size of the city’s fund, the assumed rate of return on the city’s investments, and the amount of benefits that likely will have to be paid out to support the city’s future obligations to police and fire retirees.
.
Where we are today
In the 1990s, when investors were enjoying double-digit returns, this system was manageable. In the last seven years, however, the cost to city taxpayers has shot up from around $397,000 a year to over $1.2 million per year. (That is the chart at the top of this post.) This $1.2 million pension cost is almost 10% of our entire general fund budget. Plus, the city underfunded this obligation in a recent year, meaning the city had to borrow $207,000 from another account to make up the deficit.
.
Perhaps most concerning, the current $1.2 million cost is based on an assumed return on the city’s investments of 8%. While perhaps a reasonable assumption a decade ago, it’s a very optimistic assumption now, meaning the real cost is likely much more than $1.2 million. Put together the $207,000 we have to make up, the city’s flat revenue projections for the next couple years, and the unrealistic 8% assumption, and the cost of providing these benefits is likely to consume more and more of the city’s revenue base.
.
What can be done?
In terms of changing the structure of Act 345 or undoing decisions made decades ago, not much. The city has reduced the pension “multiplier” (the rate at which paid benefits will increase) for new hires in the union contracts, but that frankly will only reduce the rate at which this obligation grows, it will not reverse the trend.
About the only option we have is to reduce the overall number of employees eligible for these benefits, now and especially in the future. As detailed here previously, Traverse City spends more per capita for police and fire than any comparable city in Michigan, and 51% over the mean for comparable Michigan cities. (see http://planfortc.com/2010/05/03/city-finances-part-2-police-and-fire-may-3/ ) We get excellent departments for this money, but we pay much more for them than anyone else, and because of our pension situation the cost is going to continue escalating if we don’t take action.
So we really have two options, which are not mutually exclusive. One option is to simply reduce the size of the police and fire departments up to – but not beyond – the point where there is a significant, measurable decrease in service.
Another option is to try to save money without any reduction in levels of service by providing some portion of the services through personnel who do not receive Act 345 pensions.
For the police department, this could mean contracting with the County Sheriff for road patrol services or deputies who are assigned to the city, in the way that local townships do. (County employees are on defined contribution pensions like the private sector.) This option is complicated by the County’s refusal to work with us on this point – at least so far.
For the fire department, that means providing more services in the city through a partnership with Metro Fire. This would be a big change in tradition in Traverse City, and would require a lot of study and discussion.
The way forward
Any talk about changing the level of police and fire service in the city, or the ways in which these services are provided, must be entered carefully. It is vital that we protect the safety of our residents, workers, and visitors as a first-tier priority of government.
But we also have to objectively examine the costs that we pay for these services compared to the residents of other communities. And we have to rationally evaluate whether the trends these costs represent are sustainable over the long haul.
The escalation in Traverse City’s police and fire pension costs means we are receiving the same level of service for an ever-increasing cost. As long as the city’s revenues do not keep up with the rate of increase in these pension costs, it also means there is less and less money to provide other services in the city. In other words, we are spending more to receive the same level of police and fire services, but a reduced level of other services. Any way you look at it, this is an issue that requires serious and prompt attention.
The city commission will be reviewing these issues in the next couple months, and we would appreciate your perspective.
Recent Comments