This week’s Council agenda (April 3, 2023) is very short, but two items – $45 million in water supply revenue bonds (DS-1) and $450,000 expenditure for tree limb cleanup (DC-2) – are worth extra discussion and consideration.
NO DETAILS, NO QUESTIONS
On this week’s agenda, item DS-1 is a notice of intent that the City plans to issue $45,000,000 in water supply revenue bonds.
DS-1 (23-0515) Resolution Authorizing Publication of Notice of Intent to Issue Revenue Bonds and Reimbursement of Certain Expenses ($45,000,000.00) (6 Votes Roll Call)
In recent years, such revenue bonds have typically been issued through the state Drinking Water Revolving Fund (DWRF) program, which offers lower-than-market interest rates and the potential for loan forgiveness. As recently as one year ago (4/4/22), the City issued $6,180,000 in water supply system revenue bonds through the DWRF program, for the purpose of funding the Barton Pump Station Valve Replacement project. It was, at the time, the eighth issuance of such bonds at a below-market interest rate. From the Council action on these bonds in April 2022:
The City shall sell the Bonds to the Authority at par value and at an interest rate of not to exceed two and one-half percent (2.50%) per annum.
The bonds on this week’s agenda are remarkable insofar as they are not issued through the DWRF and will not include subsidy from the state of Michigan.
The last time the City issued water supply revenue bonds outside of the DWRF program was 2008, when $26 million in bonds were issued for the purpose of “the acquisition and construction of extensions and improvements to the City’s Water Supply System.” Interest on those bonds was explained at the time:
The Bonds shall bear interest at a rate or rates to be determined on public sale thereof, but in any event not exceeding the lesser of 6% per annum, or the maximum rate permitted by law
The process of issuing these revenue bonds includes publication of intent and 45 days notice to the community. Agenda item DS-1 is notice that starts a “referendum period.” State law includes a procedure for community members to petition against a proposed revenue bond and trigger a referendum/vote on the issue.
Anyone curious to know more about City finances (including revenue bonds), you can find an explainer here:
The City of Ann Arbor also generates an Annual Comprehensive Financial Report (ACFR), which can be found on the “Financial Reporting” page of the City website:
A direct link to the most recent ACFR (2022) includes information about current, outstanding bonds. See page 94 of the document (page 104 of the PDF):
Legistar includes no details about the plan for $45,000,000 in water supply revenue bonds, such as the interest rate likely to attach to them or why lower-cost DWRF funds might not have been available.
City Council members submitted no questions this week about DS-1 (or anything else on this week’s agenda).
NO VOTE, NO PUBLIC CONSIDERATION
Agenda item DC-2 will ratify $250,000 in spending that has already occurred, and approve an additional $200,000 toward a current contract with Davey Tree Experts Company, to clean up tree and limb debris from storms that occurred a month ago. Total cost: $450,000.
DC-2 (23-0575) Resolution to Ratify an Emergency Best Source Purchase Order with The Davey Tree Experts Company (Davey) for Branch Collection ($250,000) and Increase the Purchase Order Amount ($200,000) for Debris Cleanup related to the February 22 and March 3, 2023 Ice and Snow Storms and To Appropriate the Necessary Funding ($450,000) (8 Votes Required)
Attachments to DC-2 include a purchase order for $250,000 and memo from City staff requesting authorization for it; the documents are dated in that order. See timeline below:
February 27th – City announces plan for branch debris pickup to start March 6th
March 6th – City Council meeting – No action taken by Council
March 8th – $250,000 purchase order submitted to Davey Tree Expert Company (attached to DC-2 on April 3rd agenda)
March 16th – $49,800 payment to “THE DAVEY TREE EXPERT COMPANY” from the Public Works department reported in A2OpenBook:
March 17th – City staff memo (attached to DC-2 on April 3rd agenda) requests authorization for emergency purchase order for $250,000 with Davey Tree Expert Company. From that memo:
“Staff will prepare the appropriate Resolution to appropriate funding and ratify the emergency PO, for City Council consideration and approval at the next available meeting as required by City Code.”
March 20th – City Council meeting – City Administrator alerts Council to $200,000 emergency purchase order – No action taken by Council
There have been two Council meetings (March 6th and March 20th) since the fallen tree limb pickup service was first announced. However, this is the first time any expenses for the service appear on a City Council agenda for a vote. The City charter requires that all expenses in excess of $75,000 must be approved by a vote of City Council. City ordinance allows an exception for emergency purchases— the City Administrator may approve an emergency purchase and he must then inform City Council.
Given the current political landscape, it does not surprise me that Council members had no questions about $45 million in revenue bonds. It also does not surprise me that City Council didn’t bother to question procedure around expenses for tree limb cleanup.
Council consideration of finance and spending should provide transparency and accountability to a community. A public vote of Council is meant to be an opportunity for debate and discussion, so that our elected representatives can provide oversight on behalf of residents and taxpayers. The process of a public vote in a public meeting assumes that our elected leaders consider issues thoughtfully and ask questions. That process also assumes that elected leaders understand and recognize the value of transparency and accountability.