Council Member: After Vote, SPARK CEO Beckoned Mayoral Candidate Out of Chambers and “Screamed” At Her

by P.D. Lesko

Please note: Kai Petainen is a member of The Ann Arbor Independent’s Editorial Board

ANN ARBOR SPARK CEO Paul Krutko was “angry” and “screaming,” according to a City Council member who heard an exchange between Krutko and Ward 1 Council member Sabra Briere during the June 16 City Council meeting. A member of the public present at the meeting confirmed the Council member’s allegation that the CEO of SPARK was yelling at the Ward 1 Council member loudly enough to be heard clearly in Council Chambers.

At 8:45 p.m. Ward 4 Council member Jack Eaton moved that a request for Council to allocate an additional $75,000 to Ann Arbor SPARK should be tabled. Briere, who is running for mayor, voted—along with five of her colleagues—to table the proposal. Tabling the proposal meant that no debate was permitted.

The tabling—a tool commonly used by parliamentarians—triggered angry outbursts and snide comments from those on Council who didn’t have the votes to stop it. That group  included Mayor Hieftje, Ward 3 Council member Christopher Taylor, Mayor Pro Tempore Margie Teall and Ward 5 Council member Chuck Warpehoski.

Last week, The Ann Arbor Independent reported that Forbes.com writer (and Ann Arbor resident) Kai Petainen had uncovered a detailed report prepared by Michigan Economic Development Corporation (MEDC) head Michael Finney for Gov. Rick Snyder that shows between 2006-2013 Ann Arbor SPARK reported to the MEDC the creation of 711 jobs and interactions with 129 companies.

However, SPARK’s recently released 2013 Annual Report states that the economic development entity helped create or retain 13,024 jobs and worked with 547 companies during the same time period.

Petainen forwarded the MEDC report and SPARK’s Annual Report to members of Council several of whom expressed concern over the discrepancy.

Ward 2 Council member independent Jane Lumm said, “This is about doing our due diligence on behalf of the taxpayers. I don’t think it’s unreasonable to expect in return reporting and metrics. It’s the same thing we ask for from any organization that asks for public money.”

After voting with the majority to table the motion, Council member Briere left the Council Chambers at Krutko’s invitation. It was then that Council members say they heard Krutko upbraiding the Ward 1 Council member in the hallway adjacent to Council Chambers.

“Paul Krutko obviously thinks he can tell a candidate for mayor what to do,” said a Council member familiar with the situation. “SPARK is giving Sabra her marching orders?”

Even though the proposed $75,000 SPARK allocation had been tabled, thus barring debate, during the time reserved for Council members’ comments at the end of the meeting, after Krutko had allegedly dressed her down, Sabra Briere invited him to address Council to “answer her questions.”

Briere also announced that she would bring back the proposal on July 1 and that she would meet with Krutko to facilitate  “reconciliation” of the job creation numbers in the two reports.

Paul Krutko began his 40 minutes of comments to Council by saying: “SPARK is a very complicated organization. We receive funding from a variety of organizations to do a variety of things.” He then said: “I understand that a member of the public made some assertions about a report. That report is the work we do for the State. The information we give to Ann Arbor is about the work we do in Ann Arbor.”

The two reports, however, document loans and investments from the same sources, including the 21st Century Jobs Fund.

Ann Arbor SPARK is answerable to the Michigan Economic Development Corporation (MEDC) on the state level, as well as to a Local District Financing Authority (LDFA) on the local level. The LDFA is answerable to Ann Arbor City Council.

The LDFA has come under pressure from Council members to hire an outside auditor to verify job creation and job retention claims made by Ann Arbor SPARK since 2006.

Gov. Rick Snyder led Ann Arbor SPARK in 2005 when Michael Finney was hired. Finney was promoted to CEO in May 2009, when SPARK released its 2008 Annual Report.

That report alleged that between 2006-2008 Ann Arbor SPARK had created 7,054 new jobs and retained 5,740 jobs. The 2008 LDFA Report available on the City of Ann Arbor’s web site, says that SPARK added “at least 35 new jobs this year.”

SPARK’s 2013 Annual Report, signed by CEO Paul Krutko and Bank of Ann Arbor president Timothy Marshall—the President of SPARK’s Board of Directors—states that the entity has helped create, retain or attract 13,024 “new jobs” since 2006. That works out to 220 fewer jobs than Rick Snyder and Michael Finney claimed were created between 2006-2008.

Ward 2 Council member Sally Hart Petersen is the only City Council member who serves on the LDFA Board. She is also running for mayor. At a recent candidate forum, Council member Petersen told members of the public and media present, “Doing an audit takes money, and I think it is something that the LDFA should actually fund.”

At the June 16 Council meeting, she voted against tabling the proposal to allocate $75,000 to SPARK. When The Ann Arbor Independent asked Petersen about the discrepancy between the job creation numbers in the two reports, she replied via email: “I was not involved in the creation of the reports or the generation of the data reported.”

In his comments, Paul Krutko told Council members: “We have more jobs in the community today than we did in 2008. We have recovered all of the jobs lost during the Great Recession.”

Department of Labor data indicate that in July 2008 Ann Arbor’s labor force stood at 188,888. In April 2014, the labor force was 177,749. The April 2014 unemployment rate (4.8 percent) is slightly higher than it was in April 2008 (4.5 percent).

Ward 3 Council member Stephen Kunselman has referred to SPARK as “crony capitalism.” He said: “We have been asking for information….We have some very pointed questions by my colleagues. We also have some media watchdogs and we are caught in the middle.”

Paul Krutko did not respond to requests for a comment.