Protecting Ypsilanti’s community-owned assets from the Emergency Financial Manger… Have we done everything that we can to prepare?

    A little while ago, in an exchange with Jill Morey, the director of the Ypsilanti District Library, the subject came up of what would likely happen to the downtown library building, should an Emergency Financial Manager be appointed to takeover the City of Ypsilanti, and charged with liquidating our communal assets. Thankfully, we were told that, as the library is separate from the City, and owns its own building, we would not be in jeopardy of losing the historic structure. (The YDL board, I suppose, could still choose to sell the building at some point in the future, in an effort to downsize and save money, but it wouldn’t be at the behest of the EFM.) As we’ve mentioned here in the past, though, there are likely other community assets that aren’t so well protected. And it’s a subject that was brought up once again, yesterday, in our thread about the increasingly dirty fight being waged over the city income tax. Here’s the comment, which was left by reader named Mark.

    “Property values are so low because Ypsilanti schools suck so much. The people who can afford to send their children to private schools do. Fixing the schools really help fix this financial problem.”

    I agree with Walt. Ypsi schools do many things well, but have always been under financial threat as a result of the way in which the state school aid formula works. When the Water Street development was proposed, the future demographics of the school district were well known. We knew then, that unless the future City population of school-age children grew, our local school district would become unsustainable. (The City of Ypsilanti School District will have an EFM within two years. Nothing about the City’s “mismanagement” will have anything to do with that event.) This was the primary motivation for many of us who supported the Water Street development – ie. a townhouse development full of young families raising children, repopulating the school district. The intent was to help stabilize the school district, thus eliminating the problem that Walt identified.

    Water Street is a failure — and, as predicted, the school district is in dire straits. Despite the school closings and constant cuts, we once again see that you cannot cut your way to prosperity. The redevelopment of much of Ypsi’s public housing will bring new families into the district, but the damage is done, and the rehabilitated units won’t be on the market soon enough to alter the district’s current trajectory.

    One view of the short term future – two tax increases, a failed school district, and declining property values, provide new incentives for people to not buy homes in Ypsi. Only poor people will be moving into the City, while anyone with any resources moves away. BUT, because of the tax increases, bond holders get paid and we have an adequate public safety department to keep the poor folks in line, and put out the fires in the tenements of our absentee landlords (and our pensioners get paid at least for the next 5 years).

    An alternative view (held by many who opposed Water Street and the last income tax proposal) – Ypsi would become Ann Arbor’s Brooklyn, a “Cool City”, a low cost haven for creative and enterprising folks. This vision does not need a functioning public school district – charter and private schools fill the void (so its failure is relatively unimportant). Nor does this vision need many of the services that growing families need or desire (drive to the township to participate in little league or soccer, let the county provide a rec center etc).

    I see both of these visions as essentially the same. The only difference will be, what part of town you live in.

    As a 25 year home owner of the city I have a different vision. One built around concepts like “Friends of Rutherford pool” and “Friends of the Freighthouse”, “Project Grow”, our neighborhood associations, etc. Our elected officials (in the time remaining before the imposition of emergency measures, whether that is an EFM or measures they take “democratically”) should be doing everything they can to empower the active citizenry. Assets that are likely to be sold off to satisfy debtors under emergency circumstances, that ownership should be transferred to our community non-profit organizations. Perhaps the formation of a community “non-profit corporation” in which living within the city limits makes you an automatic member–could become umbrella an organization that we could begin transfer our assets.

    While the entire comment is worthy of discussion, I’d like, at least for the time being, to focus on that last paragraph, and ask our elected leaders in the audience one more time if we’ve done everything in our power to protect our public parks, publicly owned buildings, and other significant assets, from the threats which will surely arise over the next year, if the tax initiatives on the May ballot do not pass.

    I know that the possibility of an Emergency Financial Manager being imposed on our community is still some time off, but that’s no reason that we shouldn’t start planning now. I know that much work has likely already been done, but I suspect there’s still a great deal that we could do to further empower the citizenry, and put assets in the hands of responsible individuals.

    update: Richard Murphy came through with a list of Ypsi’s property assets.

    Pontiac’s Emergency Manager was pursuing sale of the city’s city hall, police and fire stations, golf course, cemeteries, parking lots, library, and landfill. I’m not sure how many of those have actually been offered for sale yet.

    In Ypsi, the City owns city hall, police & fire, and public works yard; the various parks, the Freighthouse, Senior Center, Parkridge Community Center, and the pool; the old landfill (where the LED billboard is, off the freeway exit); Water Street; a property at the end of Railroad Street; a sliver along South Grove, just south of the public housing there; a few scraps in the industrial park (unbuildable–Paint Creek runs through them); the property at Superior Road & Huron River Drive (an old YCUA pump station site, has been on the market for a few years); and a small lot on East Michigan (also on the market for a few years). I believe the Riverside Arts Center is in the name of the DDA, so also owned by the City indirectly, and I think all of the housing commission’s properties are technically owned by the city. Might be a few vacant residential lots at this point that the County foreclosed on for unpaid taxes and didn’t sell at auction.

    [note: I slightly edited the punctuation in Mark's comment, making it more consistent with the rest of the punctuation on the front page. His original comment, however, remains untouched. So, just follow the link back, if you want to see it in it's original form.]

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      26 Comments

      1. Glen S.
        Posted March 3, 2012 at 1:11 pm | Permalink

        If we ever approach the point where an “Emergency Manager” seems inevitable, I would be all in favor of trying to remove from City ownership as many public assets as possible — using whatever creative means necessary, including a community nonprofit, etc.

        But, at this point, starting to plan for that seems premature, not mention unnecessarily negative, and defeatist.

        Instead, I’d much rather focus time and energy on trying to figure out how to prevent the imposition of and EM from ever happening, in the first place.

        That’s why I’ll be voting “Yes” vote on both measures on May 8.

      2. Posted March 3, 2012 at 2:29 pm | Permalink

        While I’m not an elected official I know there is some talk among the city staff on this subject. One option under consideration is selling all the park land in the city to the county for a nominal price with the understanding (or maybe a contract stating) that the county will maintain the land as parks, and sell it back to the city for the same price.

        I’d be curious to hear is there has been further talk about that or other ideas too. Should we ever get to the point where an EM is assigned to Ypsilanti it will be incredibly important to be prepared to protect ourselves from the inevitable outflow of resources.

        In the meantime I agree with Glen S that never getting to that point is a far better alternative. But of course we must deal with whatever reality presents itself. For now I will be making every effort to ensure that the two proposals pass in May. Voting YES on both will go a long way to keeping Ypsi from the abuse of an EM

      3. Erika
        Posted March 3, 2012 at 2:47 pm | Permalink

        The problem with the idea of the “cool city” is that destabilized, unsafe, dirty, chaotic cities aren’t all that cool. We won’t be Ann Arbor’s Brooklyn, we’ll be it’s Camden, NJ.

        I agree with Glen that it is premature to start assuming that our assets will go to the highest bidder. We have a chance to save ourselves. This city is lean and efficient, it does not suffer from the corruption of other cities. We have an active citizenry. We are not completely broke and desperate because our officials have been actively reducing costs and putting money into savings whenever possible. They tried to stay even further ahead of the rough times with an income tax a few years ago – which showed a lot more foresight than most people have.

        If we get serious about doing what is needed to maintain stability, we can ride out this storm while other cities drown.

        I’m serious about Ypsi’s future, I understand the reality of the situation and I am voting YES on BOTH proposals on May 8th.

      4. Edward
        Posted March 3, 2012 at 4:14 pm | Permalink

        While I appreciate the sentiment, I think it’s fooling not to plan for the worst. If we put off securing our assets until it becomes clear that an EM is about to be imposed upon us, it may be too late. What’s more, if we way too long, the state may step in to prevent us from securing our assets. I’d be inclined to start work now. I suppose, however, that we could wait until May, though, to see how the income tax vote plays out.

      5. Posted March 3, 2012 at 7:51 pm | Permalink

        haha, the coolest thing we ever had was the 555 gallery but the city was requiring a financially impossibe fire supression system to be installed because they were using building codes to pick and choose what types people they wanted in their city. oh, i forgot the 555gallery became the water st debacle. haha

        if new york city, cleveland and many others can do a municipal bond default…ypsi can too. anyone who buys bonds is a sophisticated investor and knows BONDS HAVE RISK JUST LIKE STOCKS!
        anyone buying knows this. municipal is usually less risk, but whoever bought the water st bonds was a dummy and deserves to lose their money. and the new york bankers who ruined the economy can lose once on their investment.

        look at this
        http://www.publicbonds.org/public_fin/default.htm

        city just wants the tax because its EASIER to collect more than to fight the difficult fight.

        theyre hoping for a change in circumstances. if city really belives things are going to improve in ypsi, then DOUBLE DOWN float another bond and let the analysts and investors decide. lets do Motor Wheel River Side Project named Huron Prairie. :)

        i want council to respond IN EXTREME DETAIL why we cant do a municipal bond default, which woud free up just about the same amount of money as the income tax+millage

        and emfs? who says they arent elected? last i checked the governor had to be voted in democratically. its like going up two levels in elected officials when we cant handle our own business.

      6. Posted March 3, 2012 at 8:32 pm | Permalink

        our little $30mil is just a drop in the muni bond default ocean!

        http://online.wsj.com/article/SB10001424052748703409904576174933066991472.html

      7. Josh
        Posted March 4, 2012 at 3:31 am | Permalink

        “This vision does not need a functioning public school district – charter and private schools fill the void (so its failure is relatively unimportant). Nor does this vision need many of the services that growing families need or desire (drive to the township to participate in little league or soccer, let the county provide a rec center etc).”

        this is incorrect. there’s nothing charming about poor schools. there’s no excuse for it.

      8. anonymous
        Posted March 4, 2012 at 8:28 am | Permalink

        What are Emergency Managers selling in other cities? Are they selling City Halls? Are they selling public parks?

        What assets do we as a community actually own? I feel as though I should know that, but I don’t. Do we own the Freighthouse? Or is that technically owned by the Friends of the Freighthouse?

      9. Posted March 4, 2012 at 1:49 pm | Permalink

        I’ve also lived here 25 years as a homeowner and I don’t want our city to default on a debt. We don’t know what will happen in the future and we might want to borrow again. Also, the cascade of lawsuits that would surely result from a default would be a cash-sucking waste of money and resources. Your link illustrated that inevitability. I know that this option has been examined and rejected. I believe we can act now in a responsible way and fix the problem. I don’t want to wait around for an EFM or hope that something changes — I’m a person who is not willing to just go belly up in the face of adversity largely not of our creation. I’m going to vote for both the millage & income tax — I’ll be glad to see EMU picking up a little bit of the burden too, in our landlocked city.

      10. Love, Ypsi
        Posted March 4, 2012 at 2:07 pm | Permalink

        So how are all the small businesses that are struggling as it is in Ypsi going to pay
        1 per cent of their gross and then pay another 1 percent of their paycheck? A new business like the Wurst Bar and their employees might find this hard, to say the least.

      11. Posted March 4, 2012 at 6:31 pm | Permalink

        @anonymous — “What are Emergency Managers selling in other cities?”

        Pontiac’s Emergency Manager was pursuing sale of the city’s city hall, police and fire stations, golf course, cemeteries, parking lots, library, and landfill. I’m not sure how many of those have actually been offered for sale yet.

        In Ypsi, the City owns city hall, police & fire, and public works yard; the various parks, the Freighthouse, Senior Center, Parkridge Community Center, and the pool; the old landfill (where the LED billboard is, off the freeway exit); Water Street; a property at the end of Railroad Street; a sliver along South Grove, just south of the public housing there; a few scraps in the industrial park (unbuildable–Paint Creek runs through them); the property at Superior Road & Huron River Drive (an old YCUA pump station site, has been on the market for a few years); and a small lot on East Michigan (also on the market for a few years). I believe the Riverside Arts Center is in the name of the DDA, so also owned by the City indirectly, and I think all of the housing commission’s properties are technically owned by the city. Might be a few vacant residential lots at this point that the County foreclosed on for unpaid taxes and didn’t sell at auction.

      12. Posted March 4, 2012 at 7:17 pm | Permalink

        Thanks, Murph. That’s just the list I was looking for.

        I wasn’t sure about the Freighthouse. I thought that perhaps it had been transferred to the Friends organization.

      13. Posted March 4, 2012 at 7:32 pm | Permalink

        Murph, are there laws that would prevent us from transferring these assets?

        If there aren’t laws on the books already, I’d be inclined to think that there soon will be, as move cities move toward takeover. I’ve got to believe that people in every other city in Michigan are looking at Pontiac, and considering their alternatives.

      14. Bonnie
        Posted March 4, 2012 at 7:54 pm | Permalink

        Many of the assets people are talking about here- the Freighthouse, the Pool, and even City Hall- have had grant funds used on them, so we’d have to go to the granting agency and ask permission to sell or transfer control, in addition to any other restrictions.

        The City also owns a number of resources it *wants* to sell: 326 E Michigan, a parcel at the NW corner of Huron River Drive and Superior, and of course- Water Street, among others. Having a ban on the City selling property would likely be a bit overkill.

      15. Bonnie
        Posted March 4, 2012 at 7:59 pm | Permalink

        Also, nota bene regarding what Murph said: although I’m not sure about the ownership structure/reversion/etc, all the housing commission properties are listed as being owned by the housing commission, not the City.
        Parkridge Park is half owned by the Ypsi School District and half owned by the Housing Commission- literally half; there’s a line right down the middle. Parkridge Community Center, however, is owned by the City.
        RAC is indeed owned by the DDA.

      16. Megan
        Posted March 4, 2012 at 8:25 pm | Permalink

        Im voting for both. Its about damn time EMU started paying.

      17. Posted March 5, 2012 at 7:58 am | Permalink

        Murph, are there laws that would prevent us from transferring these assets?

        The Home Rule City Act, Act 279 of 1909, Sec. 5 “Prohibited Powers” includes, ” to sell a park, cemetery, or any part of a park or cemetery, except where the park is not required under an official master plan of the city … [unless] approved by a majority of the electors voting on the question at a general or special election held on or after April 1, 1966.”

        Other than that, the only one I know off the top of my head is the City Charter’s “Protected Lands” provision, Sec. 11.03 of the Charter –

        Within six months after the effective date of this Charter, the Planning Commission shall review a list of all real property owned by the City and shall designate certain parcels as protected lands based on the character of the land as parkland, likely parkland or environmentally sensitive land such as wetlands or riverfront.

        Protected lands may not thereafter be sold or disposed of without a vote of the people or the potential for a vote of the people. Land will be considered sold or disposed of when there has been a binding grant of rights in the land for any period of time to any individual or organization which is likely to significantly affect the character or use of the land during the period of the grant or after. A parcel with a market value of $500,000 or more may not be sold or disposed of without a vote of the people. A parcel of protected land with a market value of less than $500,000 may not be sold or disposed of until 45 days after a public hearing before the City Council on the question. There shall be a prominent notice of the public hearing published in a newspaper of general circulation in the City. If petitions with signatures amounting to ten percent of the vote cast for Mayor in the most recent election are filed in the office of the City Clerk requesting a vote of the people on the sale or disposition, the City Council shall either cancel the proposed sale or disposition or schedule a vote of the people. A majority of affirmative votes shall be required to approve the sale or disposition of land.

        IIRC, the Protected Lands list created in 1994 was pretty inclusive — I think City Hall, Police and Fire, Freighthouse, and several of the public parking lots are included. This would mean, perhaps ironically, that it would be a lot harder for the City Council to transfer some of these assets to a “safe” 3rd party holding foundation than it would be for an EM to sell them.

        The downside of squirreling away our assets in some outside organization is that it would likely make certain funding sources harder to use. As Bonnie notes, we’ve used various grant funding for capital improvements on the pool, Freighthouse, , RAC, Senior Center, Parkridge, and Riverside Park in the last decade, and those funds come with certain requirements to maintain the property as a public space for a period of time. (City Hall’s facade renovation was grant funded, but that was 1998, and I think the restriction on the property ended after 10 years?)

        Even where the properties aren’t already encumbered by past grant restrictions, transferring them might make it a lot harder to get future funding for them. The recent grant announcements for the pool and the Riverside-Water Street B2B bridge, for example, are from a state program that explicitly requires that the property in question be part of the community’s Parks & Rec Master Plan–meaning any property eligible for that funding also falls into the Home Rule City Act requirement of a majority vote before we could transfer ownership.

      18. Posted March 5, 2012 at 8:04 am | Permalink

        By way of conclusion, I’ll agree with Erika’s statement above — setting up some safe harbor for our public properties is difficult enough, and comes with enough potential downside, that we should focus on avoiding the worst case scenario.

        Yes, Edward, it’s great to plan ahead — but with what capacity? Our skeleton crew of city employees has their plates over-full with managing immediate needs.

      19. Posted March 5, 2012 at 8:55 am | Permalink

        Murph, I am confused. On the one hand Pontiac EFM is placing assets up for sale that the Home Rule Act seems to require voter approval of. Did the EFM legislation amend the Home Rule Act? It seems that EFM’s can do lots of things that we as a democratically run city would not easily be able to accomplish-such as liquidating municipal assets while ignoring Home Rule restrictions. I have noticed that the city property along the river (part of our public service lot along Huron Street) is for sale. Don’t know how long it has been on the market–but I suspect that like all undeveloped land in the city, there is no current market.

        When the EFM is appointed, and the liquidation of assets begins at auction prices, if we are organized we can purchase our assets (the ones we want to keep) at fire sale prices. Who will bid on the Freight house ? I suspect only those who expect to get it for a song. Why can’t our community non-profit be the organization that swoops in like a vulture and saves the nesting material for our community. (I know poor metaphor).

      20. Posted March 5, 2012 at 9:54 am | Permalink

        @wobblie — The only one of the Pontiac EM’s attempted sales listed that looks like it would require exception from the Home Rule Act are the cemeteries — the article linked to does note the fact that this would require a change in state law.

        The other restriction I mentioned, which covers our city hall and other properties, is in the City Charter, not state law. I know that EM’s can change local laws — I’m not sure offhand if the City’s Charter is included in that.

      21. Bonnie
        Posted March 5, 2012 at 10:32 am | Permalink

        The list of lands currently protected under the City Charter is inclusive, but not specific- for instance, none of them have addresses associated with them, or parcel numbers (old SID numbers or otherwise), or whether all or just a portion of the land in question is protected.

        Further, apart from selling these properties, there’s no mechanism for amending that list- including adding more things to it, making it more specific, etc.

        @wobblie: No portion of the DPS yard is currently for sale. Perhaps you’re thinking of the former farm bureau (2, 4, & 6 W Forest), immediately to its east? That is in private ownership- has been for quite some time.

      22. Glen S.
        Posted March 5, 2012 at 10:44 am | Permalink

        The idea of preparing for an “Emergency Manager” at this point is absurd.

        We are nowhere near that point yet, and we don’t have to be — if we take the appropriate steps to keep the City financially solvent.

        By actively supporting (and voting for) both ballot issues on May 8, we can guarantee that the specter of a State takeover of Ypsilanti disappears for at least the next five years — and probably a lot longer.

        Meanwhile, dozens of other Michigan municipalities will be heading toward the same dilemma, and eventually, the State finally will be forced to fix its broken system of funding local government services.

        But for now, one of our main goals should be to move to the back of the line of struggling municipalities. Not only will this get us out of the “cross-hairs” regarding an EM, it will provide the kind of predictability and stability (in terms of taxes and services) that potential new residents and businesses are looking for.

      23. Art
        Posted March 5, 2012 at 10:46 am | Permalink

        Can our members of City Council, who I know read this site, please weigh in on this? I’d like know what, if anything, is being done to safeguard the senior center, the freighthouse, the Riverside Arts Center, etc. If the income tax doesn’t pass, I don’t want to see my community sold off for scrap.

      24. Art
        Posted March 5, 2012 at 10:49 am | Permalink

        I agree that this conversation may be a bit premature, as the ballot initiative in May could very well pass, but I don’t see the harm in asking the question. Furthermore, I think that it could help motivate people to go out and vote on election day. If nothing else, this conversation is a great reminder of what we have to lose as a community.

      25. Meta
        Posted March 29, 2012 at 2:55 pm | Permalink

        It looks like Public Act 4 will be on the November ballot.

        The Michigan Secretary of State’s (SOS) office has confirmed that the Stand Up for Democracy coalition has turned in 24,151 valid sheets containing 225,885 signatures, exceeding the 161,305 needed to put the law on hold and the referendum on November 2012 ballot.

        http://eclectablog.com/2012/03/mich-secretary-of-state-confirms-225885-signatures-submitted-for-repeal-of-emergency-manager-law.html

      26. Meta
        Posted May 24, 2013 at 9:13 am | Permalink

        You were smart to ask about Ypsi’s assets. It looks like the EM in Detroit is talking about liquidating the DIA’s collection.

        Detroit emergency manager Kevyn Orr is considering whether the multibillion-dollar collection at the Detroit Institute of Arts should be considered city assets that potentially could be sold to cover about $15 billion in debt.

        How much is the art at the DIA worth? Nobody knows exactly, but several billion dollars might well be a low estimate.

        Read more:
        http://www.freep.com/article/20130523/NEWS01/305230154

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