New savings, revenue reflected in Madison Heights budget amendments

Revisions due to early grant payback, EVIP progress

By: Andy Kozlowski | Madison - Park News | Published July 15, 2013

MADISON HEIGHTS — When cities adopt a balanced budget, they do so knowing changes may occur. And when the fiscal year ends, the changes must be recorded.

“The city is required to adopt and maintain a balanced budget, and any amendments that are necessary to accomplish that goal must also be done by City Council,” said Madison Heights City Manager Ben Myers.

Last month, Madison Heights City Council approved budget amendments for the past fiscal year, 2012-13. The city wound up saving money on the repayment of several energy grants. In addition, the city acquired new revenue from the state.

There were three energy grants the city was repaying: A federal Energy Efficiency Conservation Block Grant (EECBG), and two grants through the Michigan Public Services Commission (MPSC). Together, they totaled $355,232.

The EECBG grant had a payback period of six years. Madison Heights was able to pay it off in the second year.

As for the MPSC grants, one grant had a payback period of four years, and the other grant had a payback period of eight years. Madison Heights paid off the four-year grant in one year, and the eight-year grant immediately.

Paying off all three grants early saved the city $27,000. There was no interest on the three grants; rather, the savings came from an early payback incentive.

“They basically gave us a discount to pay it back early,” said Melissa Marsh, deputy city manager of Madison Heights.

The city was able to pay off the grants early because of a sizable one-time “investment distribution” from the Michigan Municipal Risk Management Authority. The MMRMA divvies up excess earnings among its members. Madison Heights joined years ago to lower insurance premiums for city employees.

The Southeast Michigan Regional Energy Office administered all three of the grants. The grants funded a variety of cost-saving energy-efficiency projects.

These projects include new ball-field lighting at Rosie’s Park and Huffman Park; improved air conditioning in City Hall’s computer room; high-efficiency lighting and occupancy sensors in the municipal buildings; fascia and soffit resurfacing at City Hall; a new motor pool roof at the Department of Public Services; garage interlocks to minimize heat escape at the DPS; and minor exterior lighting added to the Police Department.

In addition, work was done on several HVAC units atop the Senior Citizen Center, and the facility was switched over to a system called “demand control ventilation,” which allows for real-time climate control and sends out an alert if something is malfunctioning.

The grant-related work began in 2010 and continued through 2012.

The other major budget amendment was extra state revenue for meeting all three requirements of Gov. Rick Snyder’s Economic Vitality Incentive Program, or EVIP, adding $104,000 to the city’s coffers. 

EVIP replaced state statutory revenue sharing with a pot of money roughly two-thirds the size, and requires cities to meet certain accountability standards in order to qualify for portions of the money.

In fiscal year 2012-13, Madison Heights had already budgeted to meet the first two criteria — a dashboard outlining city revenues and expenses, and an analysis of all service consolidation efforts the city has undertaken to reduce costs. The third requirement was a push for cost-saving employee negotiations: something the city has continually pursued.

“We weren’t sure we’d meet it,” Marsh said, “but we did.”