Why Ask Y?

This month our spotlight shines on Fifth Avenue, Ann Arbor. Fifth Avenue connects the YMCA and City Hall and what a mess those two entities have cooked up in recent years. The Y was supposed to be part of a solution to the shocking increase in homelessness locally, which is the direct result of an acute lack of affordable housing. This noble and essential goal, the provision of decent, affordable housing in downtown Ann Arbor, has been subsumed and subverted by mismanagement and an inbred l'll-scratch-yourback-if-you'll-scratch-mine attitude between and betwixt some city and Y officials.

Wh'appened? Very briefly: In the 80s, federal housing subsidies were slashed by 70% turning the focus to state and local government to help the homeless and nearly homeless. Local activists, spearheaded by the Homeless Action Committee, worked liberal Democrats on City Council to supply some affordable housing. In 1988, conservatives finally found an affordable housing project they could support. They joined the liberals in implementing a city-guaranteed $1.6 million bank loan to the Y for the stated purpose of adding 63 new rooms and rehabilitating 37 others for occupancy by low-income individuals and minimum wage earners.

On Nov. 18, 1993, William Blewitt, Executive Director of the Y, notified Ann Arbor City Administrator Al Gatta that the loan that the city had guaranteed was in danger of being defaulted on by the Y and that the city needed to service the loan, making monthly payments starting in just 12 days. The alarm had sounded and the city belatedly awoke. Suddenly, long overdue questions were being asked or revisited like: Is it legal for the city to guarantee a loan for a private body like the Y? Who made this deal with the Y anyway? Why hasn't it been properly monitored? Is the Y truly worthy of city support, perhaps to the tune of $2.3 million (including principal and interest), for the provision of "affordable housing"?

(ll)legality of the Loan Guarantee Early in 1994, then-City Attorney Elizabeth Schwartz reassessed the legality of the loan guarantee. In a confidential memo to City Council and Mayor Ingrid Sheldon dated Feb. 7, 1994, Schwartz concluded that the Michigan Constitution probably bars the loan guarantee and thus wrote, "It is my recommendation that no payments be made to the Y pursuant to the 'guarantee' until this problem is resolved." Schwartz attached a letter from the Michigan Dept. of Treasury dated Feb. 4, 1994 which contained some startling facts. It said Treasury Dept. approval is required prior to the city entering into such an obligation and the city did not seek such approval. And it said, "Had the City of Ann Arbor requested approval of the Department of Treasury prior to making the guarantee, we would have advised them that they were not authorized to make such a guarantee."

Uh-oh. Even lawyers can make mistakes, friends. We know that's hard to swallow. It seems Miller, Canfield, Paddock and Stone were requested to give an opinion on the legality of the loan guarantee and rendered an opinion that it was, which is arguable. What does not seem to be arguable is the requirement for prior State approval of the guarantee and the opinion from the Treasury Dept. that it would not have been granted. Furthermore, an internal city memo says that the City Attorney's office had directed Miller, Canfield to send the necessary documentation to the State Treasurer in Aug., 1989. Uh-oh.

Maybe, just maybe, this whole mess could have been avoided if then-Mayor Jerry Jernigan had heeded a June 2, 1988 missive from the Michigan State Housing Development Authority (MSHDA). The letter, written by Acting Executive Director Dwight Robinson, was in response to a recent letter from Jernigan requesting a MSHDA grant for part of the funding for the Y project. In addition to denying the grant request, Robinson told Jernigan: "... it was necessary to present your Single Room Occupancy (SRO) housing proposal to our Executive Committee for their review and comment ... we were very intrigued by your statement that the City of Ann Arbor might consider some mechanism to secure or guarantee the mortgage. There were some concerns regarding both the legality and enforceability of such a guarantee." [emphasis added.]

What did Mayor Jernigan do with such a warning, in hand when the Y project was just in the conceptual stage? He sought legal advice.

Conflicts of Interest Who was the City Attorney then? R. Bruce Laidlaw. Who was the Y's Board President then? R. Bruce Laidlaw. While Laidlaw did announce the obvious conflict of interest to City Council, he nevertheless was the signer for a private organization in a contract with the city. He sought and accepted Miller, Canfield's opinion on the legality of the loan guarantee, apparently did not notice that Treasury Dept. approval had not been obtained, and advised other Y Board Members that they could rely on the city if the Y had repayment problems.

Another example of possible impropriety: Ingrid Sheldon's husband, Cliff Sheldon, served on the Y Board during Ingrid's time on city council and her first term as mayor (Cliff recently resigned). The mayor has consistently lobbied the council to support the Y with very limited accountability to the city. Whose side is who on? For a deal of such dubious legality and practicality, these conflicts of interest are particularly troubling.

Insufficient Monitoring While some public servants have, at least, the appearance of bending over backward to help the Y, it should also be noted that the Y wanted help even before the current deal. The Y was already in debt and the old Fifth Ave. building was begging for renovation. The loan that was made for building new rooms and rehabbing old ones was also used for remodeling the lobby and adding a new facade to the Fifth Ave. side of the building. The last straw was when Al Gatta finally exercised the city's right to review the Y's budget, finding that the residential program, and thus the city, had the burden of many costs that could be fairly borne by the Y's general programs. For example, all of the loan debt is considered part of the residential program's costs despite the facts listed above about other improvements being made in the building. The Y seems to have made its residential program take an unfair brunt of the Y's total costs because the residential program has the city holding the bag.

YMCA: Decent, Affordable Landlord? While we'd like to reserve judgment on the Y's decency and competence, we have come to the conclusion that the Y is not a suitable partner with the city to help solve the affordable housing crisis. We base this on the following considerations.

Tenant Rights: The Y is attempting to have judicial approval for the proposition they are an innkeeper and not a landlord. This distinction might allow them to throw tenants out without a hearing, without even any notice. In our opinion, this is simply illegal. The Y can't circumvent state laws which provide residents rights of notice and to be heard before being hurled out on the streets. And the city shouldn't work with an organization that proposes to do so. As local Legal Services Director Bob Gillett has written to City Council on this subject: "[N]o notice evictions insult my basic sense of human dignity...the city would be telling its poorest and most vulnerable citizens that they have no legal rights - not even the right to tell their side of the story before they are made homeless."

Affordability: The Y has consistently shown an inability and unwillingness to do the work necessary to obtain financing and grants to support an affordable housing program. This is a critical element distinguishing the Y from two other local groups that work with the city to provide truly affordable housing. While the Y charges a minimum of $325 per month for a tiny room with no cooking facilities, Avalon Housing charges $200 per month for a room that includes use of a common bath and kitchen. New Alternatives charges $250 per month for a similar arrangement. The Y project received support from liberals for the original deal because of the Y's assurances that they would provide housing for minimum wage workers and other low income people. According to H.U.D. standards, a minimum wage worker should be paying about $210 per month, while a Social Security Income recipient should, on average, be paying $150 per month. In their proposals for more city money, the Y still refuses to guarantee that they will provide truly affordable housing.

Accountability: The Y wants minimal accountability to the city for any failure to provide affordable housing. Since the Y is already failing in that department and shows no ready willingness or plan for improvement, Rose & Webersay, without iron-clad guarantees that a legal program will actually provide decent, affordable housing with respect for the rights of the residents, the city should let the Y fly on its own, and support the proven affordable housing providers. It's time to stop scratching the Y's back and to give the assistance to those who really need it.