EDITORIAL: Time To End Public Money For Ann Arbor SPARK

ANN ARBOR SPARK officials have refused to provide audited financial statements to the public and elected officials. When Governor Rick Snyder and MEDC CEO Michael Finney headed the organization, the Annual Report claimed that over 12,000 jobs had been created or retained in Washtenaw County over a two year period. That claim was thoroughly debunked by investigative journalists at Lansing and Detroit newspapers. Between 2009 and 2013, the City of Ann Arbor gave Ann Arbor SPARK $5.1 million dollars from its General Fund. Since 2009, Washtenaw County taxpayers have given SPARK over $1 million dollars, as well.

Yet, SPARK officials, including CEO Paul Krutko, stubbornly refused repeated requests to release the non-profit’s audited financial statements. Members of the public and A2Politico.com made Freedom of Information Act requests for the documents, and were told that SPARK, as a semi-private non-profit —it is a 501 (c) 6—was not required to release audited financial statements. When FOIAs were made to the city of Ann Arbor and Washtenaw County, officials could not produce even a single copy of a 990 income tax form for SPARK, despite handing over millions in tax dollars to the entity.

Ann Arbor’s City Administrator, Steve Powers, who sits on SPARK’s Executive Committee, recently refused to hand over SPARK’s audited financial statements to Ward 1 Council member Sumi Kailasapathy. This was a violation of state law. SPARK has repeatedly violated Michigan law which requires the organization to share its financial statements with the public.

Ann Arbor resident, Kai Petainen, who is a member of The Ann Arbor Independent’s Editorial Board, submitted a Freedom of Information Act request for SPARK’s audited financial statements and, incredibly, city officials replied that the documents did not exist. Mr. Petainen then contacted the Michigan Attorney General. AG William Schutte instructed SPARK to release its audited financial statements for the years 2006-2012 to his office, and then handed the audit statements over to Mr. Petainen.

Ann Arbor SPARK has been run as a Good Old Boys (and Girls) Club while using public money to fund 30-40 percent of its operating expenses. When elected officials allocate public money and levy taxes, they must guard the public’s best interests. It’s clear from the fact that the city of Ann Arbor and Washtenaw County possessed no audited financial statements or 990 income tax forms from SPARK that staff and elected officials were remiss in their duties.

We believe it is time to discontinue public funding of Ann Arbor SPARK and for City Council to dissolve the Local District Financing Authority (LDFA). The LDFA was established to capture property tax dollars which would then be given over to SPARK. This includes millions of dollars which would have gone to the Ann Arbor Public Schools. While this money diverted from the AAPS should have, in theory, been refunded to the district by the State of Michigan, AAPS officials could produce no records of any reimbursements.

County voters should demand that the Board of Commissioners stop giving Act 88 Millage funds to Ann Arbor SPARK, as well.

Audited financial statements show that Ann Arbor SPARK has established itself financially. It holds upwards of $20 million dollars in stock and promissory note investments in dozens of companies.

In Ann Arbor, General Fund money given to SPARK could be reallocated to fund beat cops downtown, other local non-profits, and used to pay down the city’s unfunded retiree pension and health care liabilities. The audited financial statements show SPARK is being run as a venture capital fund. Gains from investments of public money made by SPARK are not returned to the public coffers, however, but rather retained by SPARK. The public pours in funds, SPARK creates and retains jobs, in theory. In practice, SPARK, as well as the MEDC that oversees it, have been repeatedly called on the carpet by local and state-wide media for doing a poor job of providing outside verification of actual job creation/retention numbers. Until 2010, SPARK did not provide the required evaluations of its job creation and retention activities to the LDFA Board. Regardless, Ann Arbor City Council repeatedly approved requests for additional money for Ann Arbor SPARK.

Council members Jane Lumm (Ward 2) and Sumi Kailasapathy have been instrumental in pressing the city administrator and CFO to not only produce the audited financial statements as the law requires they do, but to answer questions about what those statements reveal Ann Arbor SPARK has been doing with the public’s millions. We laud these Council members’ efforts to safeguard the public’s money and to push for transparency in government. We urge Council to rescind the ordinance that empowered the LDFA to divert property taxes revenues, and the end of public money for Ann Arbor SPARK.