Karen Kovacs, City Manager of Marquette, Michigan

David Haynes sits down with Karen Kovacs, the new City Manager for Marquette. Kovacs was officially appointed as the Marquette City Manager on May 24, 2021 and took office on June 7. The City Manager is the chief administrator for the city government and has a variety of duties including administering city departments, enforcing all laws and ordinances adopted by the City Commission, recommending an annual budget, implementing the final budget, and advising the Commission.

In this podcast, Karen discusses her background, women in public administration and available resources for women looking to get into that field, the difficulty of finding housing in Marquette and what she's doing to help address this issue, and Marquette's revenue situation and what's being done and being planned to increase revenue.

Transcript

David Haynes:

Good day, everybody. Welcome to another edition of our podcast with Rural Insights. And we're very fortunate to have with us today the new city manager of Marquette, Karen Kovacs. And a lot of you may have read about her and have seen news about her leading the city commission. And so, welcome to our wonderful upper peninsula. And we're glad you're here.

Karen Kovacs:

Thank you.

David Haynes:

Yeah, good. Would you want to tell our listeners a little bit about your background?

Karen Kovacs:

Sure. So my background really started in the finance side of things. I started off as an auditor, and that was down in Detroit. And I actually focused a lot on the auto industry before I ended up on the City of Detroit's audit team, where I was there to help them get caught up. And I enjoyed audit. However, I felt like I was on the wrong side. I wanted to be on the helping side. So I jumped ship and actually went to a consulting firm and served as contract finance director, treasurer, budget managers, controllers for various municipalities downstate, mostly in Oakland County, Wayne County, and then Washtenaw County as well. And I started off in really the financially distressed cities, started off at the City of Pontiac, and went to the City of Allen Park, which were all under emergency management at that time, which really had been my niche for quite some time until I said, "This is getting awfully dark and grim." And I ended up moving over to another client that was a little bit more financially stable. And that was when I started the at the City of Ferndale.

Now, you think that being at a community that has a little bit more money, enough to provide services and then really continue improving, would be easy. You think that'd be easy, right? It was far more difficult because you had money, you had decisions, you had choices. And of course, you have elected bodies who represent your taxpayers, and they have many different opinions. So it was a real challenge. I then moved to a smaller town and actually went to the City of Milan, and actually was then hired directly by the City of Milan and moved into the finance director, treasurer role there, which is very much a rural community. I go from a suburb of Detroit to really a rural community in Washtenaw and Monroe Counties, which are very heavy on the agricultural industry and farming, and really dependent on different things and have different expectations as well. So from there, I then moved into the city administrator role and landed there, especially right in the time for COVID, and their own budgetary issues there, too. And then had this amazing opportunity to come to the City of Marquette. And this is where I am now.

David Haynes:

Wait, I forgot to hit unmute. Where did you go to school?

Karen Kovacs:

I went to school ... I started off at Grand Valley, ended up leaving Grand Valley. And I started in international relations there, actually, and then left to come back home due to some illness, and actually graduated from Oakland University, right where my family was.

David Haynes:

Oh, great. That's a really great background. Well, we just finished celebrating International Women's Day, and International Women's Month, I believe, is in March. More relevant to that, I have been interviewing a lot of municipal managers, public administration managers, men and women in the field. A lot of them are alumni of Michigan University, to sort of ask them what's going on. Talk a little bit about your view of women in the field of public administration. And is it increasing for women in the CEO role that you are holding? Is it steady? Is it declining? What is going on with that area?

Karen Kovacs:

Yeah, that's a really good question. And a really good thing to focus on is that women's involvement in government, it is changing, I believe. They often use, and I dread this term sometimes, but they often use the good old boys club term frequently in government and in some of the real big issues and meetings that we have. And I really try to steer away from that because obviously it's not the good old boys club anymore. It's the good old people's club here. And it's actually involving both men and women. And it's not necessarily about who you know, it's really about what you know. So I think that women are really coming forward and starting to have some key positions in government.

Obviously here in the City of Marquette, our mayor is a female, same thing with Negaunee and Ishpeming. So it's interesting that you're starting to see this more frequently, more often. However, I still think that there's some needed support that we should start seeing for women in these leadership positions, because I think that that's something that hasn't been there. And I think that if we start that now, we can continue that as women in our positions, going down and starting at the university level and trying to recruit more people to this industry, but also women. So I think that is something we desperately need, is more support for our women leaders.

Brenna Musser:

What kind of support [crosstalk 00:05:58] ... Sorry, I'm just going to chime in. What support would you have in mind or think would help with that type of a situation?

Karen Kovacs:

The Michigan Municipal League actually has a program, almost a training program for women in leadership, trying to obtain this goal of being a city manager or a city government leader. And it's called the 1650 Project. And that is a really great resource to start, however, that resource, actually, and that training opportunity starts. And then once you get into that position, if you haven't been through that program, you don't get that. So I'm thinking more ... I didn't go through that program. And when I applied for it, they told me, "Well, you've already attained that goal. Why do you want to be part of this?" And it says it's more for the ... You're continuously learning, but it's also the networking. It's just the basic skills that build your confidence and that just build your knowledge base as well. So I would say really some not just inspirational speakers, obviously those are great, but more along the lines of some technical and networking opportunities,

Brenna Musser:

For sure.

David Haynes:

So just a final note on this. So as our students are in the master's of public administration and in the undergraduate program here and at other universities, both Oakland and, for instance, Grand Valley have very strong program in public administration. Would you be encouraging young women to go into the field to get in and try to reach the high ranks you have? What would be your advice to them?

Karen Kovacs:

I would absolutely encourage that. Our families are changing as well. The family home is changing. So it's been like this for a while, but you are having two working parents. And some of the challenges that you experience at home often become a burden on the women. And I think that we really need to have other resources and change that stigma and that fear, because we do have women that are in college or in the university and thinking that they want a family, but this is an awfully demanding job. How can you hold down a job like this, which goes beyond the eight-hour work week, and be able to have a family?

And I think to trying to have some of that discussion now on things that ... let's say, for example, we share responsibilities between myself and my husband and also our extended family, and also use our network and our friends in order to get some of that other support. My kids actually spend the afternoon at a coworker's house with her children. And it's been a great resource for both me and my coworker because we share responsibilities there and daycare, almost, or childcare opportunities. So having that discussion in the university level and the student level to say, "You can have a family in the future and hold this job down. So don't be afraid of it now. Don't limit yourself now," that would really be something I would seriously push for our younger women and men too.

David Haynes:

Well, thank you. That's really interesting. And I hope our future female public administrators listen to that and get into the field and bring their creativity and their knowledge and et cetera. And by the way, the more in, we might see more solutions to childcare problems, if-

Karen Kovacs:

[crosstalk 00:09:28] yep.

David Haynes:

Yeah. So let's talk about housing. I mean, every city manager, county manager I've talked to in the UP and interviewed has talked the same problem in this, cities' housing availability and costs, affordable housing costs. So first, let me ask the [inaudible 00:09:54] we keep reading how hard it is in Marquette and Houghton and Sault Ste. Marie, all the cities, to find affordable housing. You and your family just moved here. Were you able to find housing within the city? And that's a hard task, from what I hear from everybody,

Karen Kovacs:

David, is my eye twitching, because that was probably some of the most stressful few months that I've ever had, was picking up my family and moving up here, almost sight unseen, in some ways. And I lived out of a hotel for probably two months, wonderful hotel, wonderful experience, met a lot of people, but I didn't have a place to cook. I didn't have a place to really spread out or anything like that. But I had to come back to my office to work, and then also didn't have a place to go home for lunch. So I was eating here. So it was really a struggle for me. And then the housing market was just so tough to get into. And anytime you were interested in a home, you saw something pop up, it was already sold or being negotiated on before I could even call.

So fortunately, I was very, very blessed to have found a home that was actually for sale by owner. And I used relationships and really connected with the seller in order to have an edge. So it was difficult. I unfortunately am not within the city though, because the availability of a home that was the size that I needed for my family, wasn't available or attainable for my price point at that point. So I live right outside the city, less than five minutes. And I do enjoy the amenities of coming into town when my roads are cleared.

So I think that this is an interesting experience for me because I'm coming from downstate. And if you can't find a home within that city that you're working in or within the city that you want to be in, you have vast area around it within 20 minutes to look. And yes, there's still rural areas or townships down there. Let's say, use the City of Milan for an example. You had surrounding townships, York Township, Saline Township, Saline, Augusta, London townships. You had a wide range. You could also even go beyond that and go to Ann Arbor or beyond Ann Arbor, 20 minutes, 30 minutes, and still have an okay drive coming in. You don't get that opportunity here in the UP. You don't. Your area for housing selection is smaller. So things are more in demand and harder to get, just the availability, and let alone the cost to build up here is different as well.

David Haynes:

Yes, I know from my days as president of the university, we would talk all the time about the hundreds of employees that would drive in from Negaunee and Ishpeming to work on campus and at the hospital. It's for all the reasons that you said, and that hasn't changed. You've been leading, along with the city commission, an effort on trying to deal with affordable housing in the city. And I listened in on a public hearing you had with the university about a plan on the hospital property and converting it into housing. And also, I read your plans for dealing with housing and affordable housing in general. Do you want to talk about that work that you've been doing?

Karen Kovacs:

Sure. So there's this unique opportunity, obviously, we're all aware, at that former Marquette General Hospital site. And originally, the NMU foundation had approached us and said that, "This is something we're looking into. This is obviously within a neighborhood. Here's a vision that we would have. What is your city's needs or vision for this as well?" And it was a great opportunity to start that connection between the potential investors and also the city and what's needed in that neighborhood. And that opened up the conversation with the commission as well. And the commission has been identifying some major priorities. Obviously, our strategic plan identifies those priorities, but affordable housing was one of them. And we also know that the ad hoc housing committee report has been accepted with the city commission and is part of an appendix of our community master plan.

And that had some other priorities listed within the housing needs. And some of that talks about the shifting that hap when you open up more availability for housing options, that people that are in maybe older homes within the city, smaller homes within the city, are looking for an upgrade. That has a potential component within this redevelopment of the old hospital site. But also, the commission made it a very strong priority to see if they can work in some affordable housing in the hospital redevelopment. And that is where we're at right now. The commission approved a memorandum of understanding that lays out some of those values and those priorities that the commission would like to see there. And in that is affordable housing.

Now, the definition of that affordable housing is still being worked out for that site. And we still have future conversations planned, but there is a hope and a real push to have that included in that development project. Now, it's ultimately within the NMU's foundation, their process for their RFQ for master developer, but it's also going to be something that's left up to that board to determine. But I feel like there's a strong relationship right now between the NMU foundation and the city that we can have those conversations and be heard. And that was something very important to both parties, I feel. Did that answer your question, David?

David Haynes:

Yes. Yes, it did. That answered it very well. I know Sault Ste. Marie is having some of the same discussions and problems. They're bringing in federal employees. And a lot of them live outside the city, because there's no housing. Along with housing becomes the revenue issue for cities, and its state aid hasn't exactly been wonderful for our cities and counties. It's getting better. I live right downtown Marquette. And services that I get in the city are phenomenal and the taxes are ... I understand everybody would like less taxes, but you got to pay for services. And I often think about that what I pay is worth it for the services that I get, to be honest, in this city and county. Talk a little bit about the revenue as our closing item for us. I know I heard one of the commissioners talk about the issue of we haven't had a property tax increase in X number of years. And just talk in general about city revenue over the next year or two.

Karen Kovacs:

Oh my gosh, you actually covered part of it. The city has not increased their operating millage for quite some time. And even before that, it was very minimal. And that actually speaks volumes of the leaders prior to my prior to the administration that we have right now, but also the previous commissioners, that they were able to do so much with such limited tax revenue and had no need to increase it. However, there wasn't any idea of what would happen in the future when we would end up with some sort of economic downturn or loss of a major taxpayer. So that's where it's brought us to right now. We've experienced some decrease in property tax revenue because of things like the energies plant coming down. Yes, that was well planned for, but we're now seeing the full impact of that.

Also, the fact that the former Marquette General Hospital is now basically an obsolete building. It's still being utilized, but it is much lower value than what it used to have. And we also have some increase in some other future investments with our brownfield projects. So we're at a point where everything's coming together and hitting us all at once. And now we are short on revenue, and costs are just skyrocketing. And in order for us to even maintain the level of service that we have, which I think, as you said it, thank you very much, David, is stellar, we deem to continue to plan for those increases in costs.

Now, the state also is decreasing some of the revenue that we're receiving. Our census numbers have been lower than what we had, and there's some opportunity there to explore that, but that affects our state shared revenue and a few other state revenue sources as well. We also have some crumbling roads that we are all aware of. And yes, that comes from road funding, but the general fund does have to provide some support on that as well. And that comes from tax revenue.

So where we are right now is if there's an immediate need and a possibility, we could potentially increase our operating millage to the full maximum amount allowed through [HEDLY 00:19:32]. And that's a 2.67 mill increase. That is significant, but that would increase the city's overall tax revenue by close to $1.5 million, which would fill a very large hole. Now, we are committed to exploring all options through expenditures and making sure that we are using our tax revenue to the best of its ability. And if there's any way to cut back on expenditures without impacting our services, because it has been made very clear or quite clear from our commission that they don't have a desire to decrease our services, we need to be exploring if we're managing those funds as best as we can. And that's something we do on a daily basis and are committed to doing, to have the minimal impact to our residents.

There are other opportunities for increasing revenue, though. I think you may have heard in our recent discussions. There's also the possibility of exploring an income tax as well. Now that, I understand, is very sensitive, because that impacts our employers quite significantly, especially the key players that we rely on for the success of the city. But that is something that we are also going to start exploring as well. And that will lessen the burden on our property taxpayers, such as our residents, and put it more on our visitors who are also using ... well, visitors such as our workers, employers, and employees, and put that on the people that are still using the clean roads, the smooth roads, the amenities that we still offer, and spreading that burden out amongst others as well. Now, if we could tap into some of that tourism stuff, we would try to do that. But right now, our main focus is those two revenue sources.

David Haynes:

For years, I worked and lived in Grand Rapids area. And for a while, I lived outside of the city and I commuted into the city to my office and paid, if you will, a commuter tax, an income tax. But you're right, I got the advantage of all the roads and using the city. And it was one commuter's way of sharing in the wonderful parts of living in that city. So I could see where the logic comes from. Okay, I don't want to tie you up all day. I promised your staff we wouldn't keep you because if I did, they wouldn't give me another interview in the future. But I want to thank you so much and say welcome to the wonderful UP. We've all heard great things about you. And thank you for this time. And I hope we can do it again in a few months and catch up about what's going on.

Karen Kovacs:

I would love to, please. And I do want to just say that when I came here, I had lots of friends who have spent some time here for work previously and have said the winters are hard, they're beautiful, but the people of Marquette and the UP are really the key players here and that make this a wonderful place to be. And I truly believe that and have experienced that. So I thank you for the warm welcome. And I thank everybody for the warm welcome, because that's what I've been receiving. So I look forward to talking with you again. [crosstalk 00:22:37] Please let me know if there's anything else I can answer.

David Haynes:

Well, thank you so much. I appreciate your time. And Brenna, thank you for putting all this together and helping out. Brenna is a brilliant member of our student research team and one of NMU's soccer stars. So we're glad that she was able to join us. So thank you. And thank you to all our listeners, again, for this new addition to our podcast. Thank you.

Brenna Musser:

Yeah, this was awesome, Karen. Thanks so much for sitting down and talking to us. This is great.

Karen Kovacs:

You go, girl.

Brenna Musser:

Thank you, thank you.