FUZZY ACCOUNTING – PAYING FOR THE ROG MAHAL
Karen Sidney
Despite a sinking economy and rising unemployment, the City of Ann Arbor is rushing to build a police/courts building that would more than double the size of the Larcom building. City employees have nicknamed this building the Rog Mahal.
The February 2, 2009 council agenda includes a resolution to hire Lansing based Clark Construction Company to construct the building. This $35.9 million contract is sole sourced to Clark Construction Company. No other companies were allowed an opportunity to beat Clark's proposed guaranteed maximum price. Clark has received bids for about half the work and has selected the low bidder about half the time. None of the selected subs are local companies.
The budget for the project is $47.4 million. Last winter, the public was told $47.4 million included everything, including furnishings. (see page 11 revised schematic design ) Furnishings are not included in the latest budget. Fixing the Larcom roof, audio visual and security equipment and third party commissioning for LEEDS certification also appear to have disappeared from the $47.4 million budget. The proposed contract also requires further reductions in items that may include the green roof and LEEDS gold rating.
Not only is the city rushing to break ground before all the bids are in, they are putting city residents on the hook before all the money is in hand. $3 million of the $47.4 million cost is from sale of First and Washington, but that sale has not closed.
They are also rushing to break ground before the public becomes aware of the financial hole the city is in. City administrator Roger Fraser has stated that general fund expenses need to be cut 10% over fiscal years 2010 and 2011 to balance the budget. One of the suggestions made at the recent council retreat was to reduce the parks mowing cycle from every 2 weeks to every 3 weeks. Another suggestion was to increase city tax revenues by asking voters to approve an income tax.
But the 2010-2011 budget cycle is only the first sign of the financial pain to come. The city's own projections show that 23% in general fund cuts will be needed in the next budget cycle (fiscal years 2012 and 2013). Those projections do not include additional pension contributions that will be required because of the drop in market value of the retirement funds. Including those additional costs raises the required general fund cuts to 30%. In May 2005, the mayor's Blue Ribbon Committee warned council that city retirement benefits were not sustainable. Council and the city administrator mostly ignored the recommendations and traded long term fiscal stability for short term surpluses, which were used for the down payment on the police/courts building.
The public has been told the need for this building is urgent because the county is kicking the courts out. But attached to the end of the 2/2/09 agenda is a letter from county administrator Bob Guenzel to city administrator Roger Fraser asking for a meeting to discuss city/county collaboration.
Roger Fraser and council veterans claim the new building will have no impact on the city budget. But what homeowner thinks their household budget would be unchanged if they doubled the size of their home?