DDA Amends Bylaws, OKs Management Fee

Ann Arbor Downtown Development Authority board meeting (Feb. 3, 2010): The DDA board passed two resolutions at its Wednesday meeting. The first authorized a $45,000 discretionary part of the management fee in Republic Parking’s contract.

The second resolution amended the DDA bylaws. The change eliminates the ability of the executive committee to act on behalf of the board between regular board meetings, and clarifies the role of the executive director in relationship with the board. Efforts to change the bylaws have accumulated over two years worth of history, and still need the approval of the Ann Arbor city council to take effect.

Another main theme of Wednesday’s meeting was finances – from parking revenues to tax increment finance (TIF) capture, to the housing fund.

And in a nod to the Bill Murray film “Groundhog Day,” we note that The Chronicle’s report of the DDA board’s February meeting from last year also featured a big drill as lead art. Both drills are related to the construction of the underground parking garage along Fifth Avenue. The board received updates on that and other construction projects, as well as on planning and development downtown.

DDA Bylaws

The DDA board considered and passed a resolution revising its bylaws, which will now need to be forwarded to Ann Arbor city council and approved by that body in order to take effect. This is the second time in two years that the DDA board has attempted to change its bylaws.

Recent History of Attempt to Change DDA Bylaws

DDA board minutes from October 2007 show a report out from a subcommittee about bylaws changes to come before the full board in the future. The following month, the board discussed but postponed the bylaws changes. The next month, on Dec. 5, 2007, the board approved a set of bylaws changes and forwarded them to the Ann Arbor city council.

However, at its Jan. 7, 2008 meeting, the Ann Arbor city council postponed indefinitely the DDA board’s bylaws changes. [From a parliamentary point of view, the move to "postpone indefinitely" is a way to kill a measure, without actually voting it down.]

In the summer of 2009, as she was finishing her service on the DDA board, Rene Greff sent an email sent to the city council that put the blame for the council’s failure to approve the bylaws changes on then-councilmember Leigh Greden. [The Ward 3 councilmember was defeated in the 2009 August primary by Stephen Kunselman and no longer serves on the city council.] From Greff’s email:

We spent months in committee drafting language that accomplished these goals and this language was passed by our full board and sent to council for approval. Then for purely political reasons Leigh Greden managed to get council to table the resolution by convincing people that it was somehow a power grab by [DDA executive director] Susan Pollay, when in fact, it was in response to a power grab by one of our board members who made an unreasonable and bad judgment call based on his personal agenda, declared that there was no time to inform the executive committee of his request, made a statement to the press in his role as chair committing the DDA to this course of action, and then assured the director that failure to comply immediately with his request would be considered another example of obstructionist behavior.

Following the city council’s refusal to approve the bylaws changes in January 2008, the DDA minutes from March 5, 2008  show that it was Greden who followed up with the DDA board with proposed language changes: “Mr. Collins stated that Council Member Greden has provided proposed language changes to the DDA ByLaws and the revision will be reviewed at the next meeting.”

Impetus Behind the Bylaws Changes

Greff’s email actually alludes to two occasions – without specifying details – when she contends that a board member overstepped their authority in providing direction to the DDA’s executive director:

We were prompted to make this clarification after the second incident of a DDA chair taking it upon himself to instruct the executive director to undertake an expensive project without the consent of the board …

One of those occasions is traceable to a 2007 discussion of the possible installation of security cameras in Ann Arbor’s downtown parking structures. Roger Hewitt was chair of the DDA board at the time. The disagreement between Hewitt and Greff over procedure and board member authority was reported this way in an article by reporter Tom Gantert, published in the July 25, 2007 edition of The Ann Arbor News:

Those decisions were made Wednesday during a sometimes heated DDA meeting, in which Chairman Roger Hewitt and board member Rene Greff argued over Hewitt’s July 13 directive for 24-hour surveillance at the structures. Following a stabbing on the third floor of the Maynard Street parking structure, Hewitt told Republic Parking – which manages the structures – to prepare for around-the-clock surveillance.

Greff accused Hewitt of overstepping his authority by not seeking feedback from other DDA members before directing the change. Hewitt said he conferred with DDA Executive Director Susan Pollay, who told him he didn’t need a vote to make that decision.

In a phone interview this week with The Chronicle, Greff said that the other occasion came a few years earlier, when then-DDA board member Ed Shaffran undertook action to get snow removed from the downtown area – a move Greff said she thought was the right step to take, but which had not been consistent with the right process. [The snow removal is described by Shaffran in a 2006 interview.]

Language Proposed to Address Concerns

In the 2008 draft of the bylaws amendments, the change that was intended to clarify the roles of board members and officers in their relationship with the executive director was the addition of the following section:

Section 7 – Officer Authority. The statements of officer authority in this section represent the full authority of the officers. Except as set forth in this section, officers have no additional authority to act on behalf of the Authority. No officer has the authority to act unilaterally or direct the staff on behalf of the Authority.

That section did not survive in the version of the bylaws approved by the board last Wednesday. Instead, the issue is addressed from the angle of the executive director’s authority. A new section on executive director authorities, which had been added to the 2008 draft, survives in the version approved last week, and also includes the following sentence, which has been added to the current draft:

The Executive Director acts on the authority of the Board of  Directors as set forward in this document.

Also addressed in the 2008 version are the appointment of committee chairs – it’s clarified that if more than one board member volunteers to serve as the chair of a subcommittee, then it’s settled through election, not by decision by the board chair. That, too, survived in the version approved by the board last week.

Also at last week’s meeting, a suggestion was made by board member Gary Boren to clarify the powers of the executive committee. The bylaws had historically been interpreted to mean that the board’s executive committee could act on behalf of the entire board between meetings.

That power has only been used one time in the history of the Ann Arbor DDA. In December 2003, the DDA executive committee voted to approve the city of Ann Arbor’s request for a loan for the purpose of buying the former YMCA property at 350 S. Fifth Ave.

[The city made the move in part to prevent the parcel's acquisition and development by the Ann Arbor Transportation Authority].

Gary Boren said that in discussion with other board members, he’d reached the conclusion that it had never been the intent to give the executive committee that kind of power, and suggested that the language in the bylaws providing that power be struck as follows:

Article V – Executive Committee: The officers of the Board, including Chair, Vice Chair, Treasurer and Recording Secretary shall constitute the executive committee. The last former Chair shall be a non-voting member and the Executive Director shall be a non-voting ex officio member of this committee. The executive committee shall have general supervision of the affairs of the Board of Directors of the Authority between its business meetings, fix the hours and place of meetings, make recommendations to the Board, and shall perform such other duties as specified in these By-Laws or as may be specified by the Board.

Outcome: Boren’s suggestion was accepted as a friendly amendment and the board voted unanimously to adopt the bylaws and to send them to the city council for approval. In response to a request from board member Jennifer Hall to Sandi Smith and Mayor Hieftje for their assistance in getting the item placed on the council’s agenda, Smith indicated she would help.

Republic Parking Administration Fee

The DDA board considered a resolution to award a “bonus” for Republic Parking for administration of the parking system – the “bonus” is a contractual mechanism.

Under contract with the DDA, the system is managed at cost by Republic with an additional $200,000 management fee. The management fee is paid in two parts – $150,000 that is fixed, and $50,000 based on performance criteria. The operations committee brought forward a recommendation to the board that $45,000 be specified as the amount that Republic had earned under the criteria. Roger Hewitt, who chairs the operations committee, pointed to customer surveys that showed improvement.

Describing the performance of Mark Lyons, general manager of Republic Parking, Hewitt said that he was the best operator the DDA had had since Hewitt had been on the board. Within the first year, Lyons had overseen the installation of the new electronic parking meters and that had been implemented “without a hitch,” Hewitt said. He said he would have awarded the entire $50,000 but that staff was recommending $45,000.

John Hieftje, Ann Arbor’s mayor, said that he had described often before why he did not support the awarding of the management fee, and voted against the measure. From last year’s Feb. 4, 2009 DDA board meeting when the annual issue arose:

After hearing praise from around the table for Republic Parking, Hieftje reiterated that he wasn’t saying anything negative about Republic Parking. But he said that this is a bonus to management, and it doesn’t filter down. He pointed out that city employees are also asked to do more and more as a part of their jobs and that in the current economic climate, he didn’t think bonuses were appropriate.

Outcome: The board approved the $45,000 administration fee, with dissent from Hieftje.

DDA Finances

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Public Comment on DDA Finances

Brad Mikus introduced himself as a local accountant, and noted that he had been attending various public meetings in the last few months. [Editor's note: Based on The Chronicle's observations, these include, at least, meetings of the Ann Arbor city council, the DDA operations committee, the city's planning commission and the public art commission.] He thanked the board for videotaping their meetings and having them broadcast on CTN.

He asked the board to focus their attention on some specific aspects of the operations committee report on the DDA’s finances. The first was the apparent disconnect between an increase in revenues compared to the percentage increase in hourly patrons reflected in the parking report. The second point of concern was the large variance between projected parking revenues in the budget compared with the actual revenues collected so far this year. And finally, Mikus told the board that the calculation for the return on capital investment would be useful to include in the report.

Board Deliberations on DDA Finances: TIF and Parking

Roger Hewitt began the discussion of the finance figures by noting that this year had been particularly unusual because bonds have been sold in order to finance the underground parking garage on Fifth Avenue. However, they are using cash reserves to pay for some items in order for the bond money to accrue interest from investments.

The reason that parking revenues had not met budget estimates so far this year, Hewitt said, had to do with the fact that the budgeted numbers reflected a rate increase scenario that had not actually materialized. The DDA board had originally put forward a plan that would have seen somewhat higher and sooner rate increases than the one that was eventually proved by Ann Arbor’s city council.

Mayor John Hieftje suggested that the budget estimates be revised to reflect the parking rate increase that had actually been implemented, not the one that had originally been proposed.

In board discussion, Jennifer Hall drew out the fact that the parking reports don’t indicate the number of monthly permits associated with a particular structure. [This explains, at least in part, the mismatch noted by Mikus between percentage increases in hourly patrons at a structure and percentage increases in revenues at the structures. Percentage revenue increases are not as high as hourly patron increases.]

Board member Newcombe Clark was interested in seeing a breakdown of the tax increment financing (TIF) income from the largest contributors in the district – the larger buildings. Clark was concerned that reassessment, which he felt that many property owners would seek, would result in declines of TIF revenue of greater than the 5% that had already been seen.

In looking at parking and TIF revenue, Hewitt and board chair John Splitt both stressed that the 10-year budget was a more accurate gauge of how things looked.

Board Deliberations on DDA Finances: Housing Fund

During the operations committee report, Leah Gunn commented on the housing fund, noting that the board had had a chance to spend some money and that they had taken it – there was still $1 million in the fund balance. Joan Lowenstein added that it is money that is meant to be spent.

Following up during her report out from the partnerships committee, Sandi Smith, who co-chairs that committee, reported that the award of $400,000 with a possible additional $100,000 for the Near North housing project at the board’s last meeting had generated quite a bit of subsequent discussion in the community. It had prompted her to request a compilation of some statistics about the DDA board’s housing grant activity over the last 10 years.

The fund had been created in 1997, Smith reported, to support the city’s housing goal – to enhance the diversity of the population and housing stock in the downtown area. Really, Smith said, it’s not affordable housing, it’s just housing. Historically, though, it’s been interpreted always as affordable housing, she said.

Smith reported that in the last 10 years, 23 grants had been awarded and that the average amount of those grants had been around $80,000. Of the 23 grants, 11 had gone to one nonprofit – Avalon Housing. A total of $1.1 million from the housing fund had been obligated, Smith said. The breakdown of those dollars: (i) $400,000 for Village Green’s City Apartments project at First & Washington, contingent on issuance of a certificate of occupancy; (ii) $207,000 for the third year of a grant to Avalon; and (iii) $400,000 to $500,000 for Near North.

The annual contribution to the housing fund that the DDA has made historically has been $200,000.

Board member John Mouat wanted to know how much of the DDA’s housing fund had gone to the Ann Arbor Housing Commission. At the board table, Smith looked up the number and reported that Baker Commons, an Ann Arbor Housing Commission property, had received $93,445.

DDA Deliberations on DDA Finances: Delinquent Accounts

Discussing some of the information provided in connection with the Republic Parking performance review – but not among the actual criteria used for evaluation – Jennifer Hall noted that two parking accounts had been late, and that they accounted for 45% of revenues.

Joe Morehouse, deputy executive director of the DDA, told Hall that those accounts now had been paid – it took a couple of personal phone calls, he said. Asked by Hall who the delinquent accounts belonged to, Roger Hewitt said one is a private entity that he would rather not disclose and that the other was a public entity that he would rather not disclose. It emerged in discussion that the public entity was the city of Ann Arbor.

Newcombe Clark expressed his assumption that the DDA assessed late fees for late payments such as these – but the DDA apparently does not assess such fees.

Transportation and Trees

Reporting out for the transportation committee, John Mouatt covered the discussion the committee was starting to have about the Fourth Avenue corridor. [Chronicle coverage: "DDA Floats Idea for Fourth Avenue"]

He also reported that city forester Kerry Gray had attended the last committee meeting to provide information about trees in the downtown area. There were 1,400 trees, 46% of which were small and recently planted. The city’s goal was to broaden the diversity of species in the downtown. Mouatt described the ongoing efforts of the committee to achieve a more pedestrian friendly downtown.

Those efforts included looking at a proposed sandwich sign ordinance – the city council approved that ordinance on its first reading at its Feb. 1, 2010 meeting. At the transportation committee meeting, Keith Orr had noted that such sandwich signs were generally regarded as a positive thing, but also posed a potential hazard.

Commenting on the issue of trees in the downtown, Russ Collins encouraged the transportation committee to think about trees in the context of the downtown area. In Ann Arbor, which is essentially a suburban community, Collins said, it’s easy to think about amenities from the point of view of a suburban community. Instead, he suggested that a downtown reflected a fundamentally different lifestyle than a neighborhood – which had to do with street vitality and extended hours. Residents of Ann Arbor in general, Collins said, had a hard time visualizing how downtown could be and should be different from the neighborhoods.

Something that trees did in the context of an urban center, Collins said, was to cover architectural details that helped make an urban center different, interactive and vital, someplace you can go … “when you’re alone” … and then Collins trailed off. [Editor's note: Despite the resemblance, The Chronicle is confident that Collins is not the tuxedo-ed young gentleman to Petula Clark's left in this BBC video of the "Downtown" song, to which Collins was alluding.]

Gary Boren said he agreed with Collins, except for the idea that it was necessarily the transportation committee’s responsibility to achieve the effective communication of what an urban center could be. Boren noted that the reason the transportation committee wound up dealing with the issue was that walking is transportation, and that street trees are related to the pedestrian experience.

But conveying the distinction between a suburban environment as contrasted with an urban environment, Boren said, was a marketing challenge and that would most naturally fall to the partnerships committee – Collins is one of the two co-chairs of the partnerships committee. Collins responded to Boren’s observation by saying: “Point taken.”

In his remarks, John Hieftje commented that it was a huge challenge to grow trees downtown, and in the neighborhoods some of the street trees now block streetlights, so that it was a complicated business to grow trees. He reminded DDA board members that the city had a plan to plant about 1,000 trees a year and that so far this year they had planted 700.

Jennifer Hall responded by saying that she would like to refocus the discussion on what the transportation committee had been talking about. Trees had come up, she said, because of the role in defining the pedestrian experience which included shade, aesthetics, and visual diversity. Besides trees, the transportation committee had looked at elements like awnings, sandwich boards, vertical plantings and a variety of other elements, she said.

Newcombe Clark commented that the idea of “ripping out parking” on the first floor of the Fourth and William parking deck would have seemed like sacrilege a few years ago. He called it progressive to think about limiting parking and suggested that the move could be “game changing” – independent of what happened to future development of the YMCA lot or at the Library Lot. Those city-owned parcels were not under the DDA’s control, he noted, but the parking structure was more in the DDA’s hands.

Leah Gunn reiterated the point that she’d made before about the possibility of establishing retail incubator space on the ground floor of the Fourth and William parking structure, saying that the board needed to be respectful of merchants who had already made a commitment to the downtown area. At the transportation committee meeting, Gunn had expressed her concern that the DDA might wind up subsidizing commercial enterprises that would be in competition with already established businesses.

Library Lot Update

In his report from the downtown citizens advisory commission, Ray Detter had discussed the development of the Library Lot and the area surrounding it. Sandi Smith picked up on that thread, saying she felt the partnerships committee should look at higher level planning of a four- to five-block area around the Library Lot, and she wanted it put on the agenda.

In his report, Detter also mentioned that they had been visited by Alan Haber and Alice Ralph – the two Ann Arbor residents who had submitted a proposal on behalf of the Committee for the Commons, in response to the city of Ann Arbor’s request for proposals for development of the Library Lot. Detter said the downtown citizens advisory commission did not support the idea of a community commons, but that they also did not necessarily support a hotel/conference center. What they did support was some kind of mixed-used development that integrated with the surrounding area.

When he reported out from the Library Lot RFP advisory committee, John Splitt described the two days of interviews that had been conducted with five of the proposers in January. He reported that two of them, both for hotel/conference centers, would be given further consideration by the committee. [See Chronicle coverage: "Hotel/Conference Center Ideas Go Forward"]

The Library Lot was also part of the update on construction projects from the capital improvements committee, also given by John Splitt. Two holes had been drilled so far for the underground parking garage project, he said. A greater number of large and small rocks than anticipated been encountered in the two holes and the construction team was putting together a “bigger and more powerful drilling rig.”

The Jan. 17 switchover of DTE utilities had gone smoothly, Splitt reported. One of the largest bid packages associated with the project – for concrete – will go out next week, he said. Those bids would be opened in early March.

In the same geographic vicinity as the Library Lot, the Fifth and Division street improvements project will restart in April, with a plan to complete work on Division Street before starting on Fifth Avenue, Splitt said.

415 W. Washington

Also as part of his report out from the downtown citizens advisory commission, Ray Detter reported that Marsha Chamberlain, who is head of the Ann Arbor Art Center, and Ray Fullerton, who serves on the Allen Creek Greenway Conservancy board, had expressed surprise that the topic of the 415 W. Washington parcel was being opened up again.  [Chronicle coverage: "City Restarts 415 W. Washington Process"] Even though they felt it was in some ways a diversion from the Library Lot development, they still supported it. Detter referred to the previous RFP process connected with the 415 W. Washington parcel as a “murky mess.”

John Hieftje reported to the DDA board on the city council’s deliberations on the 415 W. Washington resolution that council had passed on Monday.

Regarding the 415 W. Washington lot and city council’s Monday decision to restart a committee process to explore a vision involving an arts center and greenway park at the location, board member Jennifer Hall noted that it was currently a temporary parking lot – which generated revenues to the city budget. She suggested that the city consider the possibility of putting that money into a specific fund where it would accumulate until such time as it was ready for use.

A2D2 Rezoning

In reporting out from the A2D2 oversight committee on which he serves, Roger Hewitt stated that the last meeting had been canceled and so he had nothing to report.

Later in the meeting, John Hieftje told Hewitt that the A2D2 oversight committee had actually been dissolved. This seemed to come as news to Hewitt, who said simply, “Oh!”

[The A2D2 process was a major rezoning initiative for downtown Ann Arbor, which recently received final approval from city council. Remaining work on the project involves establishing design guidelines. See Chronicle coverage of the Jan. 31, 2010 city council caucus. At its Feb. 1 meeting, the city council established a task force to complete the design guidelines part of the project. The council, at its Jan. 19 meeting, had dissolved the A2D2 oversight committee.]

Courthouse Square

Ray Detter, in his report on the meeting of the downtown citizens advisory commission, said they had focused some conversation on the situation at Courthouse Square –  a senior housing development located at the southwest corner of Huron and Fourth Avenue. Detter said that they had heard from a new tenant at Courthouse Square, who had just moved in – the new tenant said that something needed to be done about the management. [At the February DDA board meeting a year ago, conditions at Courthouse Square were also included in Detter's report.]

Regarding the situation at Courthouse Square, John Hieftje commented that he had spoken with Sandi Smith and Sabra Briere [city councilmembers representing Ward 1] and that they, along with county commissioner and DDA board member Leah Gunn, had met and were well aware of the situation. He said that several inspections had been done of the facility, beyond what would normally be required, and that as far as they understood, the building was up to code.

Thanks

During public commentary at the beginning of the meeting, Deanne Relyea spoke on behalf of the Kerrytown District Association. She thanked the board for grants that they had awarded to the KDA for various activities and projects. She noted that the Kerrytown District Association is the smallest of the merchant associations in downtown Ann Arbor, but that it was a good one. She said that it offered something different from the others, citing the Nash Bash in August and KindleFest in December as examples.

Present: Gary Boren, Newcombe Clark, Jennifer S. Hall, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Joan Lowenstein, John Mouat, Keith Orr.

Absent: Keith Orr.

Next board meeting: Noon on Wednesday, March 3, 2010 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]