Hotel/Conference Center Ideas Go Forward

On Thursday evening, the city of Ann Arbor’s committee reviewing proposals for the Library Lot decided to continue consideration of only two of the five proposals remaining. A sixth proposer had formally withdrawn before the interviews.

After the meeting, eight people crammed into an elevator on the sixth floor of city hall, where the committee had met. The eight included The Chronicle, two councilmembers on the committee (Stephen Rapundalo and Margie Teall), along with Alan Haber – who had helped put forward the Community Commons, one of the proposals eliminated by the committee.

As the elevator doors closed us in for the trip down to the lobby, Haber mused that here in the elevator, we had, for a brief moment, a commons.

The committee’s decision had come after two days of public interviews earlier in the week when each proposer was given 30 minutes for a presentation, 30 minutes to respond to questions from the committee, and 30 minutes to respond to questions from the public. The interviews took place on Jan. 19-20 and were followed by a public open house on the evening of Jan. 20.

At the Thursday evening committee meeting, Stephen Rapundalo, the committee’s chair, reported that the request for qualifications sent out by the city to provide consulting services on the remaining proposals – the hotel/conference center proposals by Acquest and Valiant – had resulted in seven responses. The next meeting of the committee will take place on Feb. 16 from 10 a.m.- noon. Letters will be sent to the three proposers whose projects will not be given further consideration by the committee.

Who Attended

The meeting on Thursday evening included members of both the RFP review committee as well as the technical review committee. In attendance were:

• Stephen Rapundalo – Ward 2 representative from city council and chair of the RFP committee
• Margie Teall – Ward 4 representative from city council
• John Splitt – chair of the board of the Ann Arbor Downtown Development Authority
• Sam Offen – citizen at large and member of the city’s park advisory commission
• Eric Mahler – member of the city of Ann Arbor planning commission
• Kevin McDonald – senior assistant city attorney specializing in planning and development issues
• Wendy Rampson – the city’s interim director of planning and development services
• Jayne Miller – the city’s community services area administrator
• Cresson Slotten – a city senior project manager in systems planning
• Alison Heatley – a city senior project engineer
• Mike Pettigrew – deputy treasurer for the city of Ann Arbor
• Jessica Black – supervisor for the city’s parks and recreation customer service unit
• Susan Pollay – executive director of the DDA, which is building the Library Lot underground parking structure

Not in attendance were city administrator Roger Fraser and Matt Kulhanek, fleet and facilities manager with the city.

Process and Proceedings

Process and procedural matters came up in several different ways at the committee meeting.

Evaluation of the Interview Process

In light of the two days worth of interviews the committee had behind them, Stephen Rapundalo asked for some general comments on the process and proceedings.

John Splitt said he was satisfied with the proceedings.

With respect to process, Sam Offen said he thought it went very well. Half an hour was good – more would have been too much, he thought. He said he thought the presenters used their time wisely and that the committee questions went well. The technical committee, he said, had wanted them to ask some questions that perhaps they hadn’t. But everybody who had a question got their question asked, he thought. It was a good opportunity for the public – if it had not provided adequate opportunity, Offen felt, the committee would have heard about it.

Addressing the Committee

During the meeting, a procedural question came up after several members of the review committee had offered their comments on the five proposals.

Alan Haber, who had sponsored the Community Commons proposal, rose and began to address the committee. However, Stephen Rapundalo, who was chairing the proceedings, advised him that the committee was not then entertaining public comments.

Haber replied that he had sent the committee an email just prior to the meeting, and he simply wanted to make sure that they had received it. Based on their comments thus far, Haber said, it didn’t seem like they had received it. Rapundalo assured Haber that the committee had received his email.

Revise the RFP Criteria?

Sam Offen opened the substantive discussion by the committee citing a letter they’d received from Mary Hathaway. The letter, Offen said,  goes back to the development of the request for proposals. It contends that the RFP didn’t get wide enough notice, and was created without sufficient public input. The letter questioned financial return as an inappropriate criterion, and asked the committee to reconsider the RFP criteria.

Margie Teall questioned whether the committee meeting was the right place to revisit the question of criteria. It’s going back to the city council, anyway, she said, adding that she was reluctant to stall the process at this point.

John Splitt said he wanted to see it through – the committee and the proposers have invested a lot of time already. Eric Mahler weighed in, saying that changing the criteria at this point after the proposers have developed their plans would be “wholly unfair.”

Offen acknowledged that it is not the committee’s place to rewrite the criteria. He suggested not changing it themselves, but rather suggested that the two councilmembers – Rapundalo and Teall –  take it up with others on council.

Mahler suggested that they might need a legal opinion. To change the criteria seemed “arbitrary and capricious” to him, and to do that the decision would need to be legally vetted. Senior assistant city attorney Kevin McDonald said he would not be providing legal advice in a public forum, but the request for proposals very clearly says that the city council is the deciding body – the council is not required to choose the best and move forward.

The request for proposals, said McDonald, provides a broad reservation of rights to the council. With respect to the requirement that there be a financial return, he said, this was just one aspect of the criteria. Rapundalo  concurred with McDonald that it was just one of many criteria, but that it was a key one: “You gotta tell us how you’re going to pay for it!” The development of the RFP language, said Rapundalo, had been vetted by the city staff, and looked at closely by two council members [likely Sandi Smith and Marcia Higgins, who had sponsored the council resolution directing staff to develop the RFP] then shared with all of council.

Committee Deliberations on Proposals

In presenting the committee’s deliberations from Thursday, we’ve grouped the majority of the comments proposal-by-proposal – although the bulk of those comments were actually made member-by-member as they gave their observations about each proposal. Separately, we’ve drawn out as separate chunks a few themes of more general interest.

Community Commons

Sam Offen: He said he found it “too amorphous.” As active as the proposers might be, he said, they just didn’t have the experience to pull it off.

Margie Teall: Teall said it was a great idea and that it was proposed by a really passionate group of people. She suggested that she thought it might become a reality and that she would hope that the group would begin to look at other sites in the city for realizing the vision. [Supporters of the site have contended that the Library Lot is the only site where this vision could be realized.]

Wendy Rampson: Rampson said that she could not visualize what you would actually see there.

Mike Pettigrew: Pettigrew characterized the Community Commons as having a donation model of funding – for building and maintaining it. He therefore had concerns about that, saying it was a risk. There was a difference, he said, between the cost of a park and the cost of a parking lot [which is a possibility for the top of the underground garage, if no proposal is eventually accepted by the city council]. That difference had to do with maintenance and revenues, something that John Splitt of the DDA confirmed.

Kevin McDonald: For the Community Commons there would be a completely different process for proceeding, he said – a comment that reflected the general sentiment that what the Community Commons had proposed was not a project, but rather a process for arriving at a project.

Dahlmann

During the interviews, Ben Dahlmann indicated that the features depicted in their proposal would cost between $2.5 million and $5 million. They were prepared to commit to a $2.5 million donation to the city.

John Splitt: From Dahlmann, Splitt said, he’d wanted to know what the $2.5 million would pay for – it was clear that it was a $2.5 million donation with no hard numbers about the specific elements of the park.

Sam Offen: The Dahlmann proposal was interesting, Offen said. He had learned a lot about it, more than he knew before, and he felt it had some merit.

He liked the fact that it had a fixed dollar amount and that Dahlmann was saying, “I’m in with $2.5 million – if it’s going to cost more than $2.5 million, then we’ll talk.” Said Offen: “It’s a reasonable starting point from their perspective.” There was no market analysis – but there was no market analysis from anybody.

Offen at that point introduced one way of framing the alternatives, namely, what is Plan B? He said he felt there was a minimal cost if the park failed. On the other hand, after building a hotel/conference center, failure meant an empty building. Offen allowed that it was a negative way to look at the question. He also acknowledged that there were security and maintenance concerns, but overall he concluded that the Dahlmann proposal had more merit than he originally thought.

Margie Teall: Teall said she would feel more comfortable about the Dahlmann proposal if they were offering to purchase the property, using the vehicle of a conservancy. She did not like the idea that the city would accept the burden of organizing the conservancy.

She noted that there were seven specific detailed features of Dahlmann’s proposal, but there were no numbers for any of it. She described it as feeling like a student presentation from one of Peter Allen’s classes. She said that she felt Dahlmann had not listened very well to the Ann Arbor District Library’s concerns.

[During the interviews, Splitt had asked Ben Dahlmann to characterize their discussions with the Ann Arbor District Library. Dahlmann said that they'd heard from the library that theirs was not the library's favorite proposal – due to concerns about vagrants entering the building. When he looked to the library's director, Josie Parker, to confirm that he was characterizing their conversation accurately, she replied, "You're not." Asked to clarify by Rapundalo, Parker went on to talk about how the downtown library welcomed over 700,000 of all kinds of people to its downtown location every year – seven times the capacity of Michigan Stadium. She said that the library's concern was the resources that were required to program and maintain a space of the size of the Library Lot. The library, she said, had experience in programing and maintaining a large public space, and in their experience, people did not necessarily clean up after themselves.]

Eric Mahler: On the two open-space proposals, Mahler said that only the most extremely well-thought-out open space would work in an urban setting. Of the two open-space proposals, he liked Dahlmann’s better. But he noted that the multitude of features would be difficult to maintain and that he “could not get with that if it can’t cover its costs.”

Stephen Rapundalo: About the Dahlmann proposal, Rapundalo said he learned, like Offen, a lot more about it. He was disappointed that they wouldn’t say what elements in their picture would cost what amount. Was it $2.5 million or $5 million? They were not able to explain the gap. There was not even a semblance of an explanation, he said, and that was a concern.

Rapundalo said that he was very hopeful that the two open-space proposals would take the opportunity to provide more specific cost analysis and that Dahlmann had fallen short. He said it could have been done and that he was surprised and disappointed that Dahlmann hadn’t done that, because he believed they had the capacity to provide that information.

Wendy Rampson: She said that as an urban place, the Dahlmann proposal was delightful to review and that JJR had created a really wonderful design. She expressed concern about the ability of a park to survive with the current edges – there was nothing currently to the west or east to serve such an edge.

Mike Pettigrew: The city’s deputy treasurer liked the $2.5 million donation from Dahlmann but noted that the difference between $2.5 million and $5 million was a big range. He had concerns about ongoing maintenance costs and said he would prefer to see $2.5 million put towards ownership of the parcel, with Dahlmann then taking responsibility for implementing the vision. Teall questioned whether that should be done without a commitment to actually build the park. Pettigrew said he simply felt that it was a “cleaner” approach from a financial point of view.

Jessica Black: About the Dahlmann plan, Black expressed skepticism that the city needed another outdoor ice rink, noting that it was a lot of work to program the space at the city’s Buhr ice rink. Black said she found the idea of having an open-air shelter with restrooms a good one.

Kevin McDonald: He responded to a question from Sam Offen about whether the $2.5 million is tax-deductible. McDonald said he was not going to evaluate whether it was deductible or not. But he said he expected that probably Dahlmann was looking for it to be deductible. About the Dahlmann proposal, McDonald said they were “a specific cost proposal away from a reasonable proposal.”

Jarratt Architecture

John Splitt: Splitt characterized the proposal as “an architect looking for a developer. There’s no meat on the bones.”

Sam Offen: He agreed with someone else who had described it as “all fluff” commitments. He said he was not impressed with their proposal.

Margie Teall: She said it was great architecture, just not in the right place. She said that Jarratt was not ready to build a team and had not considered at all the pedestrian interest – there were few connections from the site to the surrounding area.

Eric Mahler: Mahler described the proposal as “very thin.” However, from a design perspective, he thought it fit in the best of all the proposals.

Stephen Rapundalo: He concurred that there was “not much meat on the bone.” He said he thought that Jarratt could make it happen, and had the experience working with development teams to do so, but described his reaction as “kind of disappointed.” Rapundalo said they appeared to have started with a hotel, and built everything around that. They should have started with the public space and let the building design follow from that. With respect to that principle, Rapundalo said, Valiant came closest.

Wendy Rampson: Rampson said she didn’t see anything that she liked in the proposal. She especially did not like the driveway, which Teall had pointed out as pedestrian un-friendly.

Mike Pettigrew: Pettigrew said the Jarratt Architecture proposal had no financial aspect that he could look at.

Kevin McDonald: He said he would set aside Jarratt, citing capacity issues for doing the pre-development part.

Acquest

John Splitt: The two proposals for hotel/conference centers had some merit, he said, with a potential positive return, but it’s hard to tell what’s there.

Sam Offen: Acquest and Valiant, Offen said, appear to be similar, but they had significant differences. He said he was bothered that Acquest wanted to purchase the air rights to the Library Lot, but did not want to pay anything until a conference center was built on the old YMCA parking lot, at the northwest corner of Fifth and William.

He acknowledged that Acquest was willing to negotiate, but felt that it was a bad starting point for them. [The starting point of the negotiation was something Offen pointed to for Dahlmann as a positive: Here's $2.5 million, if it costs more, we'll talk.]

Margie Teall: Teall said there was no impact analysis or a market study. She had concerns about the expectation that the city would develop a conference center on the site of the old YMCA.

Eric Mahler: Mahler said he liked the design, but that the conference center construction required at the YMCA lot was almost a non-starter. He also questioned whether the lofty statements about environmental benefits had not been thought out at all, and were too vague and off in the distance.

Stephen Rapundalo: He said he had concerns about the design, which he described as somewhat “hulking.” However, his biggest problem with the Acquest proposal, said Rapundalo, was the quid pro quo that it required for development of a conference center on the YMCA lot. That gave him pause, he said, and was a red flag.

Splitt chimed in to say that this could be seen as one possible advantage with respect to the potential “white elephant effect,” namely, if you split the hotel facility off from the conference center, then you might still have a useful piece of real estate. Rapundalo acknowledged that one complaint among real estate developers is that there’s not sufficient floor plate in the existing inventory to support the location of a bigger company headquarters downtown.

Wendy Rampson: She expressed concern that the Acquest proposal, with its blocky design, would possibly change the dynamic along Liberty Street.

Mike Pettigrew: Pettigrew said he did not like the idea of offering to pay X but later pay X + Y. He said he was not sure that it didn’t violate the conditions of the RFP to propose a contingency like that. Mahler chimed in to say that Acquest would have simply been better off if they’d left that contingent part out of the proposal.

Jessica Black: She said she looked at the proposals from a park/event perspective – she oversees special events in the parks. She said that Acquest’s 5,000 square feet of meeting space, which would fit 500-800 people, was still a very large space. She said she received calls quite frequently for 200-300 people spaces.

Kevin McDonald He was most concerned about the “buy in” from the city required for the YMCA lot, which the developer had asked the city to accept on a “mini master plan” level.

Valiant

John Splitt: Grouping the two proposals for hotel/conference centers, Splitt said they have some merit with a potential positive return, but it’s hard to tell what’s there.

Sam Offen: Offen said he was not crazy about the way the Valiant proposal looks. He said it had a lot of good points to it, but the biggest question is that it counts on a demand and need that he just didn’t know was actually there. It’s a big building with a lot of space, and it could end up as a huge white elephant, he feared.

Margie Teall: She described Valiant as having an experienced, well-managed team that did not just have out-of-state members but also had local participation. She said she thought they had a heartfelt commitment, and that of all the proposals they had the best ideas for partnering with the library. Their idea of a joint research facility with a library was fabulous, Teall said. She liked the striking design – and cited a positive reaction of her 16-year-old daughter in support of it. She said she liked the rooftop garden and the floating design, and described the project as imaginative architecture.

Eric Mahler: He stated that he was not crazy about the Valiant proposal. He described it as looking like a tornado had blown through there, with things hanging off the edge. He was concerned about the perception of the building from east and west, which would be a nondescript white column, and from north and south, with the view simply a slab of glass. He worried about the 32,000 square feet of conference center space, which would be there forever. He wondered how they could move forward based on the word of 60 people that the Valiant proposers had interviewed. They needed to do better than that, Mahler said – some of the people interviewed need to step forward and put their face on that.

Stephen Rapundalo: He reported that he didn’t have as much of an allergic reaction to the architectural design as Mahler had – he allowed that it was more bold. Teall, he said, had raised a decent point – in and of itself, the design could be a draw for people downtown. Responding to a point Mahler made about how realistic it was for any proposer to have their financial arrangements lined up, Rapundalo said that Valiant went the farthest towards that. It was not realistic to expect someone in the current economy to have 100% of the financing. He said he did share people’s concerns from the standpoint of an appropriate amount of risk. However, he said he would stop short of dismissing further consideration just because it requires future public contribution.

Wendy Rampson: She described the Valiant proposal as successfully mimicking the roofline of State Street and Main Street, while at the same time providing a visual landmark visible from a greater distance. She liked the idea of taking the conference center right up to the library and how it might overlap with the library’s space needs. She was less enthusiastic about the idea of taking the entrance to the library and putting it on Library Lane. She said that she saw the potential for Fifth Avenue to become a real spine, and for that reason she was not a fan of Library Lane – she was “not wild about it.” But she allowed that it was a decision that’s already been made. She thought that the connections up to Liberty Street were good.

Mike Pettigrew: Pettigrew said that of all the proposals, Valiant’s was the most complete from a financial point of view, noting that the design is growing on him. One concern he had was that the lease payment to the city would be subordinated to the first lender. In response to a question from Teall and Offen about whether that practice was standard, Pettigrew stated that the city had the legal right to be first in line, and that Valiant was proposing that the city sign away a right it already had. And that reflected some amount of risk, he concluded. The second point Pettigrew made as a concern was the $8 million worth of bonds the city was asked to issue.

Kevin McDonald: McDonald said that subordinating the city’s right to first lien adds a certain amount of risk and he wondered what the actual guarantee would be. Regarding the $8 million in bonds, he said, Valiant would likely be looking to finance that through the tax increment financing from the DDA district.

Deliberations of a More General Nature

Some of the commentary was either not tied to a specific proposal, or else provided interest independent of a proposal.

Down Economy: Nonprofits

In connection with the two open-space proposals, there was some skepticism, given the current economic climate, that the community had the capacity to support a downtown centrally located park through a conservancy of some kind. Sam Offen, responding to a remark that Stephen Rapundalo had made during the interviews about the fact that even the Leslie Science Center was struggling, told Rapundalo that Leslie, by the way, is doing fine.

Rapundalo pointed out that Leslie Science Center was still asking for support from the city, to which Offen responded that they were simply trying to hold the city to what it had promised. At that, Jayne Miller, community services area administrator, chimed in: “We didn’t promise anything.” Choosing a somewhat less controversial example, Margie Teall pointed out that even the Michigan Theater is struggling. She also pointed out that with the departure of Pfizer, all nonprofits in the area were struggling.

Demand for Gathering Space

Jessica Black said that the interest she heard now was in having a unique space to stage an event – she saw that in the way that people were using the city’s parks. For example, there were four weddings at the Ann Arbor Farmers Market last year, Liberty Plaza had been used for a “chalk the park” event, and from West Park a live radio show – Radio Free Bacon, had been broadcast.

Infrastructure

Cresson Slotten, a city senior project manager in systems planning, said he saw himself primarily as providing answers to any questions that people might have. Wendy Rampson asked him about sewer loads. He said that the two open-space proposals would not have any significant pull on the water or sewer load. The key, he said, was to use the storm water in an interesting way. He stressed that the parking garage itself had been designed to retain storm water, so from that point of view, none of the proposals should have any effect. He said he had held off on trying to quantify anything until the proposals became less nebulous and the sizes were more clearly known.

Margie Teal and Susan Pollay queried about the installation of new water mains. Alison Heatley, a city senior project engineer, confirmed that the infrastructure on the immediate site was being brought up to the levels needed to provide for more intense development. Heatley did say that any potential problem with the sanitary system would be downstream, but that it could be addressed.

Framing the Question

Kevin McDonald of the city attorney’s office said that the way he would be looking at these proposals was at the level of contingencies and who controls the contingencies. Deputy treasurer Mike Pettigrew said that for his part, the most important consideration for people to ask themselves was how much risk they were willing to accept.

Density: View from the Downtown Development Authority

Susan Pollay, executive director of Ann Arbor DDA, said that she gave heavy weighting to the previous experience of the proposers. She suggested that anyone should be taken off the table who wants to use this as a chance to learn how to do development.

She felt that no thought should be given to any proposal by someone who hasn’t done this kind of thing before. She characterized the parcel as “the hole in the donut” – it was an opportunity to create density, she said. It was important to have Josie Parker of the Ann Arbor District Library at the table, and that there should not be a project built that would “leech off the library” – the project should add something to support the library.

The library, said Pollay – that is a community gathering space. In the 26 years she’d lived in Ann Arbor, Pollay said, the 100,000 people who live here tend to congregate in groups 20 or 30, and not in large gatherings. When they did come together in large throngs, it was at events like the Top of the Park – which she noted took $1.5 million to program for three weeks out of the year.

She concluded that she did not see big gatherings happening. But she noted that there is a need to get together, and in Ann Arbor we get together in smaller groups – people want to brush by each other, she said, like at the sculpture park in front of the People’s Food Co-op, at Fourth and Catherine. She said a good project would not simply take advantage of the 600 people who are going to park their cars in the underground parking garage. So for Pollay, there were only two proposals that came into consideration – the hotel/conference centers, which were proposals that might help activate the library on evenings and weekends.

Density: View from the City

Jayne Miller, the city’s community services area administrator, began by saying: “What do I have to lose?” [Miller is leaving her post with the city in mid-February to take a job with Huron-Clinton Metro Parks.] Miller said there had been five years of effort towards developing a plan for downtown density. And part of that effort, she said, was the greenbelt millage to improve the viability of the plan to increase density. She said she shared the concerns about possible financing of a hotel/conference center, but that was why they needed a consultant and that the consultant would do the due diligence on the finances.

With respect to the ice rink included in Valiant’s proposal, Miller described it as “absolutely ridiculous.” That prompted Sam Offen to ask why. Miller’s one-word initial answer: cost. From 20 years of experience, she said, you don’t make an ice rink facility profitable based on people coming to free skate.

Deliberations on Going Forward

It was Offen who then floated the question of whether the committee was going to limit the number of proposals considered. He expressed concern about ending up with “too firm a plan” that night. There was some discussion about whether to discuss which proposals to bring forward, rather than approach it from the bottom and discuss which proposals to eliminate. In the end the committee decided to put forth their rankings of the various proposals from top to bottom.

Offen’s rankings: Valiant, Acquest, Dahlmann, Jarratt Architecture, Community Commons. Teall’s rankings: Valiant, Acquest, Jarratt Architecture, Dahlmann, Community Commons. Eric Mahler and John Splitt: Valiant and Acquest (tie), Dahlmann, Jarratt Architecture, Community Commons. Rapundalo: Valiant, Acquest, Dahlmann and Jarratt Architecture (tie), Community Commons.

With it clear that Valiant and Acquest were everyone’s top-ranked proposals, Offen raised the question of whether to advance two, rather than three proposals to the next stage. He made an argument for the Dahlmann proposal by saying that it was still very early in the process and that they had a duty to look at something that is different.

Rapundalo questioned Offen’s contention that there was a duty. Why was there a duty, he asked. Said Offen, “Because I represent the citizens of Ann Arbor.” At that Rapundalo replied that the committee had “already knocked those two off once and you agreed!” Offen allowed that yes, he had in some sense changed his mind.

And part of what had changed his mind was a memo that Sabra Briere (Ward 1) had distributed about a conversation she had with Chuck Skelton, president of Hospitality Advisors Consulting Group, in which Skelton had expressed skepticism about the market for a hotel. Offen said he simply felt it would be useful to have a third alternative.

Teall expressed concerns about raising the expectations of proposers who would be advancing to the next page. Mahler told Offen that the consideration he was asking for had already been given. To offer a second bite at the apple, said Mahler, does a disservice to the proposers and the community.

Mahler was not enthusiastic about bringing Acquest along, either, because of the contingency related to the YMCA parking lot. Teall agreed with Mahler on that point. Splitt weighed in saying that he wanted two proposals to go forward. Mahler said one thing that weighed in Acquest’s favor was the permanent residents that would result from the condominium element.

The committee reached a consensus that they would give Acquest and Valiant further consideration.

[Link to city website with downloadable .pdf files of all proposals and other information related to the Library Lot development.]