DDA Discusses Payments to City

Downtown Development Authority board meeting (March 4, 2009): At Wednesday’s monthly board meeting of the Downtown Development Authority, Rene Greff asked the rhetorical question: “Do you want to hook that cart to a controversial horse?” And she was not talking about a new transportation option for downtown. But the “cart” was the idea of transportation demand management. The “horse” was city council’s recent request that the DDA increase its revenues to assure adequate reserve fund balances.

Translation of the analogy in the rhetorical question: “Do you want to leave the (incorrect) impression that the DDA is implementing transportation demand management because the city has asked the DDA to increase revenue?” Greff introduced the horse-and-cart analogy during deliberations on the language of a DDA resolution that responded to the city’s request for the DDA to increase revenues to assure adequate reserve funds. The board passed the resolution on the financial question, along with one forming a four-person committee to begin the discussions on the parking agreement between the DDA and the city.

These were two of nine resolutions passed by the board in just over two hours of deliberations. The remaining seven dealt with an award of $607,000 to Avalon Housing, an associated policy for such affordable housing grants, a commitment of DDA resources for public process on a community vision for the 300 block of South Fifth Avenue, grants to merchant associations to assist businesses, a $25,000 grant to getDowntown for its commuter challenge, time limits on DDA grants, and a policy regarding removal of metered on-street parking spaces.

Formation of Committee for Discussions with City of Ann Arbor on Parking Agreement

At its Jan. 20 meeting, city council passed a resolution asking the DDA to open discussions on the parking agreement between the DDA and the city. Then, at its Feb. 17 meeting, city council asked that the DDA put forward a plan to increase its revenue to ensure adequate reserve funds. These two requests provided the background for the DDA boards’ operations committee meeting on Feb. 24. At Wednesday’s full board meeting, Roger Hewitt, chair of the committee, described that operations committee meeting a week prior as “at times contentious.”

That background was supplemented by the immediate context at the board’s meeting of  a list of questions read forth by Kyle Mazurek, vice-president of government affairs for the Ann Arbor Area Chamber of Commerce, during public commentary at the start of the meeting. His questions were:

• What did the city net from parking meter revenues before the DDA took over management in 2002? What does the DDA net from parking meters with/without “rent” paid to the city?
• Does the city incur disproportionate costs downtown relative to elsewhere in the city? Do you have city estimates for cost and revenues downtown? Even rough numbers would be helpful.
• It is my understanding that the DDA TIF includes $1.5 million in city taxes, and that the city still captures $4 million in taxes from properties located within the DDA (i.e., more than 70% of the total). Are these numbers accurate?
• Can you please provide a list of recent grants or projects undertaken by the DDA on behalf of the city? Can you provide a list of grants for projects undertaken by the DDA on behalf of other governmental agencies whose taxes are captured in the DDA’s TIF (County, Library, WCC)?
• City council approved a resolution at its Feb. 17 meeting expressing concern about the DDA’s finances. Can you provide the Chamber a copy of the city policy regarding minimum/maximum fund balances so we can better understand this concern? Are you aware of a new fund balance policy that the city will institute in the near future?
• It seems that the discussion about extending a revenue stream from the DDA/city parking agreement is being done covertly. Is there a way to make this discussion more public, more transparent? We are all downtown stakeholders and would like to know more about policy choices that affect us – e.g., whether the DDA is being asked and/or is agreeing to raise parking rates even higher than proposed one month ago for the new parking structure.

Emphasis is added above to ease visual scanning. The second item on the list is pertinent to a remark made by Mayor John Hiefte at the most recent Sunday night caucus, when he stated that the parking agreement between the DDA and the city was renegotiated in 2005 due in part to the fact that the DDA area represented a disproportionately greater burden on city services.

The next-to-last item on the list is pertinent to the discussion from the DDA operations committee in which board members and DDA staff had concluded that there was, in fact, no such city policy on minimum/maximum fund balances.

[Editorial aside: The Chronicle parsed Mazurek's points to be implicit statements phrased as questions, more for rhetorical effect than to elicit information and data.]

The board began deliberations by quickly addressing the mechanics of the committee formation: how many and who appoints the members. The draft resolution called for the DDA to form a committee of four and for city council to form its own committee of four. Board member Leah Gunn suggested a change from a committee of four to a committee of three for both bodies. Hieftje, who sits on the DDA board in the slot designated for either the mayor or the city administrator, wanted committees with four members. Board member John Mouat allowed that out of four people only three of them will show up at any given meeting. The board settled on four.

Gunn asked how the members would be selected on the DDA’s side, and Susan Pollay, executive director of the DDA said that it was the board chair, currently Jennifer S. Hall, who made such selections. The actual selection came at the very end of the board’s meeting. The DDA’s committee will consist of Roger Hewitt, Gary Boren, Jennifer Hall, and Rene Greff. Greff will chair the committee.

Greff began the deliberations on the substantive issue of the resolution. She had concerns about the wording. “We need to be honest with ourselves and the community about what’s happening,” she said. She compared the arrangement  between the DDA and the city to that between a homeowner, who’d paid off their mortgage before its term, and a lender. If you doubled up your payments and met the terms of your mortgage in 15 years instead of 30, she said, you wouldn’t say, “Oh, I think I’ll just leave that payment in my budget!” For that reason, she said, it was important not to use the phrasing “extend payments to the city beyond July 1, 2010.”

To be completely aboveboard, Greff suggested, the phrasing needed to be something like “allocate additional dollars.” Hewitt did not consider the suggestion to be a friendly amendment, which resulted in discussion of Greff’s wording change.

Board member Sandi Smith, who is also a member of city council, cautioned against being specific about either the dollar amount or the actual mechanism by which payments from the DDA after 2010 would happen. Whether it’s the parking agreement that needs to be re-opened, or some other mechanism that would result in payments by the DDA to the city, is something that the two four-member committees should figure out, said Smith. She pointed to the language referencing “mutually beneficial financial agreement” as consistent with that. Greff stated that the resolution needed to say more than that. “We already have a mutually beneficial financial agreement,” she said.

In response to Greff, Smith suggested that the resolution could also include a “Whereas” clause, saying that there’s a shortfall anticipated in the city’s budget. Greff pointed out that the resolution should state the consequence of that shortfall: “We’re talking about an anticipated request for additional funds!” Smith allowed that the “Whereas” clause should say that.

From Mouat came the suggestion that the many concerns could be addressed by replacing “extending” with “additional” and striking the phrase “parking agreement.” Board member Leah Gunn echoed Smith’s idea that the two committees should have a wide-ranging discussion, not limited by years or dollar amounts.

Hall felt that the language of the resolution could speak to “finding additional money to find a mutually beneficial financial agreement” without limiting years or dollars.

At this point the board settled on a title that read “Resolution Establishing an Ad Hoc DDA Committee to Begin Discussions with the City Regarding Additional Payments to the City.”

The body was modified to include a “Whereas” clause stating “Whereas the city anticipates it will experience shortfalls in its budget,” and language in a “Resolved” clause to reflect the title, which now read “additional payments.”

Hieftje, saying that he wanted to react to something earlier in discussion, [presumably Greff's remarks about the need for the language to be honest and aboveboard] noted that the city has given formal notice (through the council’s resolution) that it wanted to reopen discussions of the parking agreement. “How much more formal could the city have been?” He said that when asked about the subject, he’d always responded by saying that the city is going to ask for additional money. He said he agreed that it should be a wide-ranging discussion. The city had given the DDA the revenues from metered parking, he said, and the discussions could include taking those reveneus back.

Hall responded to Hieftje’s remarks by saying that she was glad DDA is establishing the committee, noting that the city council had called for a discussion [in its resolution] without saying specifically what that discussion might be. “We’ve had to guess,” she said.

Hieftje was not content to let the matter rest at that, saying that he wanted to go back to his earlier point that there’s been nothing about the city’s position that hasn’t been public. Nothing has been done behind closed doors, he said.

Greff then weighed in saying that the issue was not whether something had been done behind closed doors, but rather that the city council’s  language ["extending payments"] had been “a little bit cute.” Greff noted that an assumption by the city of a $2 million payment by the DDA to the city is built into the city’s budget, but that was not reflected in the request to open discussions. Hieftje responded to Greff by saying that the city had made no effort to hide the $2 million dollar assumption and that he couldn’t understand why anybody would think that’s not the number.

Hall came back around to point out that Hieftje was stating a dollar amount, but there was no dollar amount in the resolution passed by council.

Outcome: Passed unanimously.

DDA Response to City of Ann Arbor Request on DDA Finances

Hewitt framed the issue as one about what the DDA’s fund balances are during the initial construction period for the South Fifth Avenue underground parking garage. Hewitt commented briefly on the parking demand management framework referenced in the draft resolution – a “compromise document” arising from the operations committee meeting a week prior. Hewitt characterized parking demand management as an approach where parking spaces in high demand would have higher fees, and spaces in low demand would have lower fees.

The draft resolution contained a “Resolved” clause on parking demand management that proved to be a main point of contention during board deliberations. The content of the clause was not so much at issue as its status as a “Resolved” clause, as opposed to a “Whereas” clause. Here’s the clause:

Beginning July 1, 2009 the DDA anticipates implementing a range of hourly parking rates on and off-street as a part of any overall parking demand management framework, with the average of these rates as reported to city council on February 17, 2009.

Gunn recounted how at council’s Feb. 19 meeting Tom Crawford, Ann Arbor’s chief financial officer, had expressed concern about the DDA’s fund balances. She said that the city of Ann Arbor had no policy on fund balances and that she thought the DDA’s finances were perfectly healthy. She pointed to an Ann Arbor News article  in the Sunday, March 1 edition that reported on the delay that Village Green’s First and Washington project (City Apartments) was experiencing in getting financing. [It's a project that the DDA is helping to finance, because it includes construction of public parking spaces.] Noting that the DDA doesn’t have to pay Village Green a dime until certificate of occupancy, she didn’t foresee that happening before 2011-2012. Gunn suggested that this scenario be included as an informational attachment in the DDA’s resolution.

Greff  began her remarks by saying that she was troubled by the “Resolved” clause [cf. above]. “Why does it belong in the resolution?” she asked. It bothered her for two reasons, she said. First, the DDA had  implemented a parking increase, and it has nothing to do with the city’s request. Second, she continued, the DDA was not actually ready to implement demand management and that the impact was not yet known –  it might be revenue neutral, positive or negative. She offered as a friendly amendment the suggestion to strike the clause, but said that it probably would not be accepted. “No, it won’t be!” responded Roger Hewitt, who chairs the operations committee and who brought the resolution on the committee’s behalf.

Hewitt objected to the notion that the DDA was not ready to implement parking demand managment, saying that the use of “averages” was a first step, and that it was not being done in response to the city’s request. “We’re doing it already,” he said. In that case, Greff, responded, the clause needed to be reassigned to the list of “Whereas” clauses in the resolution: “Do you want to hook that cart to a controversial horse?”

Sandi Smith supported the idea of moving the clause to a “Whereas.”

Gunn returned to Greff’s contention that the DDA was not ready to implement parking demand managment by pointing out that the operations committee had given updates on parking demand managment efforts that were being launched: AVI cards as payment; E-Park stations and magnetic encoded validation tickets; and valet parking. Greff responded by saying that if the DDA had already done these things, then the statement should not go into the resolution as a “Resolved” but rather as a “Whereas.”

Board member Keith Orr said that he supported the amendment. If parking demand management is already being implemented, then it should go into a “Whereas” clause, he said.

Hall and Smith both agreed that the clause should be in the “Whereas” section.

Gunn called the question and the vote on the call was unanimous.

Outcome: Passed unanimously.

[Editorial aside: It is not fair describe as "behind closed doors" the addition of a city council item after the deadline for publishing the agenda in the newspaper. It's not bizarre that items are introduced in this way. It is, however, worth noting that the resolution by council asking for the DDA's financial plan was added to the agenda in this way, the same day as the council meeting. And in that respect, it made the council's deliberations on the resolution less public and visible in advance than it could have been.]

Grant to Avalon Housing

Michael Appel, executive director of Avalon Housing, addressed the board during public commentary at the start of the meeting. He had complimentary words for the board’s partnership committee and thanked them for considering the recommendation to fund some affordable housing outside the DDA district. “It’s not what most DDAs do,” he said. It shows that the DDA understands how the economy is interlocked with people at every level. The board was considering a resolution authorizing $557,000 for rehabilitation of affordable housing units both inside and outside the DDA district. To the amount already in the draft resolution, there would be a request on introduction of the resolution to the board  for an additional $50,000.

Appel said that if the process was troubling to board members about the addition of a $50,000 request to go along with the $557,000, he hoped it would not delay the main resolution.

When the board considered the resolution, Sandi Smith, who co-chairs the partnerships committee along with Russ Collins, explained that the request for the additional $50,000 was for a property at 211 E. Davis. That 14-unit building brought the total number of affordable housing units supported by the grant to 66 and the dollar amount to $607,000. The rehab work, said Smith, would include upgrades to each unit that included weatherization, and new heating systems.

Hewitt wanted to know if the grant would have a negative impact on the DDA’s ability to support the eventual replacement of the 100 units of affordable housing that formerly stood on the old YMCA lot. “Does approving this jeopardize the 100-units project?” he wanted to know. Jennifer L. Hall, who is housing manager for the city/county office of community development, was on hand to answer Hewitt’s question. Which she did, but not before some light-hearted banter about the two Jennifer Halls (the other being Jennifer S. Hall, who chairs the DDA board) being in the same room at the same time. Hall said that tax-increment financing was the main financing tool, and that depending on the scenario, the amount that the DDA would be asked to contribute was projected to be as little as $400,000 to 500,000, or even as low as $200,000.

Outcome: Passed unanimously.

Policy on Grants for Affordable Housing

Smith said that Avalon’s request for the grant for rehabbing properties renewed a discussion about boundaries. “How far are we willing to go?” she asked. Not all the units supported by the grant that the board had approved were within the the DDA district, but they were all within 1/4 mile of the boundary. The resolution the board considered established  a 1/4-mile radius for which the DDA could provide support for affordable housing.

Greff began deliberations by saying she would be channeling Dave DeVarti. [DeVarti, who was a long-serving DDA board member not reappointed last year by Hieftje, was a staunch advocate of affordable housing.] “Why would we tie our own hands?” asked Greff. She said that if the boundary was left vague, the board would have more flexibility.

John Mouat, who chairs the transportation committee, agreed with Greff, saying that he foresaw the possibility of other projects – not related to affordable housing – warranting support outside of a 1/4-mile radius, such as satellite parking lots.

Hall responded to Mouat and Greff by saying it was important to make clear if they’re likely to say “No” outside of a certain boundary so that people did not develop an expectation and apply for money that would not be forthcoming. She said she didn’t feel the DDA would be limiting itself by limiting the distance. The 1/4-mile limit amounted to walking distance.

Board member Gary Boren took up Greff’s theme by saying, “I’ll channel a little more Dave [DeVarti].” There’s pressure, he said, to push the 100 units of affordable housing, formerly at the old YMCA site, outside of the core. There would be pressure to confine funding to a tighter and tighter core. He concluded by saying he couldn’t support  the resolution.

Orr addressed Boren’s point by saying that the resolution made the case that the DDA is supporting affordable housing near the core and not farther out, thus resisting the pressure to put affordable housing outside the core.

Outcome: Passed with Greff, Boren and Mouat dissenting.

Community Vision for 300 Block of South Fifth Avenue: What Goes on Top?

Smith introduced the resolution, which states support of a process to develop a community vision for the 300 block of South Fifth Avenue. She said that it was prompted by the dialogue about the underground parking garage, which had prompted the frequent question from residents: What goes on top? The idea, said Smith, was to begin a community conversation that was vague, free from preconception, and not steering towards some pre-set notion.

Hieftje said he was happy to begin the discusison and that the reason it hasn’t come before is that it’s not a good economic environment to start a project. People needed to understand, he said, that it would be a few years before that climate would change.

Mouat said it was an interesting urban planning exercise involving potentially a lot of differnt groups. “Are we really prepared to take it on?” he wondered.

John Splitt stressed that the DDA would just be offering resources: “We’re not trying to steer it into any direction; we’re there to help.” Hall said she supported it, and pointed out that the discussion would include the whole block, not just the library lot. “Somebody needs to get out the door,” she said. “It should have been done ages ago.”

Adrian Iraola of Washtenaw Engineering Co., who manages many of the DDA’s projects, expressed his support of the idea, saying that the city staff had been requested to provide information on fire protection for the underground parking garage without a clear understanding about what might go on top of the structure.

Outcome: Approved unanimously.

Grant to getDowntown

The grant to the getDowntown program to support its commuter challenge (which includes initiatives to encourage biking and walking to work) was brought as a resolution from the recently-formed transportation committee. In a “Whereas” clause, the resolution stated that $100,000 had been allocated to support alternative transportation in connection with the construction of the Fifth Avenue underground parking garage.

Roger Hewitt said he was concerned about piecemeal spreading of money around, without accountability about what was being accomplished. He said he wanted to focus comprehensively on questions like the LINK (the purple circulator buses downtown): Does it run frequently enough, and does it serve the people it needs to serve? Hewitt also had questions about the go!pass program, administered by getDowntown, which allows downtown employers to purchase yearly passes for their employees at $5 apiece, with a grant from the DDA making up the actual cost to the Ann Arbor Transportation Authority to provide the rides. About go!pass, Hewitt wondered, “Does that truly encourage people to take alternative transportation, or is it a subsidy of AATA with DDA funds?” Hewitt said he’d rather hold the  $100,000 see if the LINK and go!pass could be improved.

Hall asked why the DDA was limiting itself to $100,ooo. She sid that the DDA had the commuter challenge in the past, but in smaller amounts. She suggested striking the “Whereas” clause about the $100K.

Outcome: Passed with dissent from Hewitt.

At the conclusion of the meeting, when there is an additional time slot for public speakers, Nancy Shore, who is director of the getDowntown program, addressed Hewitt’s concern for accountability. She said that she measured success of the commuter challenge by increased participation in the challenge itself, increases in the total number of sustainable commutes logged during the month, and the anecdotal evidence she heard back from participants about how their personal behavior had changed.

Grants to Merchant Associations

During the public commentary that started the meeting, Maura Thomson, executive director of the Main Street Area Association, spoke in favor of a resolution on the agenda allocating up to $13,000 for each of the four downtown area  assocations of merchants. The resolution called for the money to be spent on a range of items, from graffiti cleanup to marketing and promotions, to travel to the International Downtown Association meeting in Milwaukee (Sept. 11-15, 2009).

Thomson talked about the fact that while the MSAA membership has been growing, its revenue had decreased by 13%, because of a decrease among members paying the highest dues rate. She said that the MSAA was now doing more with less. One way they were getting more for less dollars was through cooperative advertising that directly supported individual merchants. She cited two programs already up and running: one with The Ann Arbor Chronicle [this publication] and another with Ann Arbor Radio. In both programs, ads for individual merchants share a single slot at no extra cost to members. Thomson said that they had plans for similar ad programs with Arborweb, MLive and  Concentrate.

She also plugged a new event sponsored by MSAA: Ann Arbor Restaurant Week. She said the DDA grant would help offset some costs inccurred, which were not in their 2009 budget. The event runs June 14-19.

The board deliberated only briefly on the grants, with Gunn expressing her wish to hear back from attendees of the IDA meeting about what they learned there.

Outcome: Passed unanimously.

Policy on Removal of Metered On-street Parking Spaces

The resolution encourages Ann Arbor city council to set a cost to be assessed when developments require removal of on-street parking spaces associated with parking meters. The cost suggested in the resolution is $45,000. Board deliberations resulted in wording changes that made the use of the funds accumulated less restrictive than constructing other public parking spaces.

Policy on Time Limits for DDA grants

Hewitt introduced the resolution by saying that in developing the 10-year financial plan, there had been a number of grants approved by the board, but not paid out. These grants had stayed on the budget, thus skewing the whole financial picture. The resolution called for all grants to be paid out within the year or the following fiscal year, or else the grant would terminate. The idea was to make fund balances reflect reality, he said. Board deliberations included a suggestion from Boren to simpify the wording to eliminate mention of “within the year,” and just use the “following fiscal year,” saying that mentioning both suggested that there was a two-tiered system, which there isn’t.

Outcome:  Passed unanimously.

Present: Gary Boren, Rene Greff, Jennifer Hall, Roger Hewitt, John Hieftje, Joan Lowenstein, John Mouat, Keith Orr, John Splitt, Sandi Smith, Leah Gunn

Absent: Russ Collins

Next board meeting: noon on Wednesday, April 1 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]