The “mutually beneficial” committees of the city and the Ann Arbor Downtown Development Authority met on Monday for the second time this month. The committees are charged with re-negotiating the contract under which the DDA manages the city’s parking system.
At the meeting, the committees focused on the question of how the DDA might take on responsibility for enforcement of parking regulations. The DDA would like the ability to manage parking enforcement, so that it can implement an approach to enforcement that complements a demand management pricing strategy and a customer-service approach to downtown. However, the city has identified a number of ways in which it believes the DDA would be constrained in its ability to enforce parking regulations.
At Monday’s meeting, those constraints had accumulated to the point where it became a fair question: Would the DDA still find parking enforcement an attractive proposition, given the constraints? The meeting did not settle the question, with some hope maintained on the DDA side – by Sandi Smith, specifically – that the DDA might play some role in enforcement.
However, if parking enforcement is not something the DDA takes on, it’s not clear what the basis will be for the additional payments the city would like the DDA to make, beyond what is required by the current parking contract. That contract was renewed in 2005. It required a $1 million per year payment by the DDA to the city, with the provision that the city could request $2 million in any given year, and that the total amount did not exceed $10 million from 2005-2015. The city requested $2 million for the first five years, and the DDA agreed unilaterally this past May to make an additional $2 million payment to the city.
When the discussion at Monday’s meeting moved from parking enforcement – which seemed like it had been pushed to the edge, if not completely off the table – to the calculation of a formula for a DDA payment to the city, Susan Pollay, executive director of the DDA, questioned on three separate occasions: Where is the benefit to the downtown in this?
Also at the meeting, the committees got a preview of an outline sketch regarding how the DDA might play an active role in the development of city-owned downtown surface parking lots.
The committees are scheduled to meet next on Sept. 13. Their twice-monthly meeting schedule was adopted starting in July, when it became apparent that the target date of Oct. 31 for a new contract ratified by the respective bodies would not be achieved with a once-monthly schedule.
Mutually Beneficial Background
Members of the council’s committee are Margie Teall (Ward 4), Christopher Taylor (Ward 3) and Carsten Hohnke (Ward 5). Representing the DDA are board members Sandi Smith, Russ Collins, Roger Hewitt and Gary Boren. Smith is also a city councilmember, representing Ward 1.
The committees are working from a term sheet for discussion, which contains four main points. The second item, code enforcement, was eliminated early on from further discussion.
- Parking Enforcement: DDA assumes responsibility for enforcement of parking rules.
- Code Enforcement: DDA assumes responsibility for enforcement of other community standards codes (e.g., sign violations).
- Services: DDA assumes responsibility for various services in the downtown.
- Development: DDA assumes responsibility for development of city-owned downtown surface parking lots.
Most recent Chronicle coverage: “City, DDA Parking Talks Gain Tempo”
DDA Responsibility for Parking Enforcement
Carsten Hohnke had been absent from the last two meetings, so he asked to be brought up to speed, by telling the other committee members that his understanding was that significant headway was made in understanding the parking enforcement issue.
Susan Pollay, executive director of the DDA, confirmed Hohnke’s understanding by saying that she and Sue McCormick, public services area administrator for the city, had been constantly updating “the matrix” – a grid of all the points of entry into the parking system, with associated policy points and recommendations.
Parking Enforcement: No to DDA Referees
Pollay noted that they’d recognized the difficulty in assigning responsibility to the DDA for parking referees. Referees hear appeals of parking tickets. There are two reasons militating against DDA responsibility for the referees, she said. First, half of the cost for the referees is shouldered by the University of Michigan, because the university refers appeals of tickets written by UM Public Safety to the city’s process. That introduces a complication that would require UM participation in the agreement. Second, there is a “productive distance,” Pollay said, in assigning separate entities to handle enforcement and appeals. Currently that separation is maintained by the city’s assignment of enforcement to its community standards officers – who ultimately report to the chief of police – while appeals are handled through the city treasurer’s office – whose referees ultimately report to the city administrator.
All mentions of “parking referees” in the set of recommendations in the matrix are now struck through.
Parking Enforcement: No to DDA Citing Specific MVC Violations
There’s continued interest on the DDA’s part, said Pollay, in managing enforcement. There are also challenges inherent in that. For example, there are a variety of parking infractions [e.g., no parking in handicap zone without appropriate sticker] that require the enforcing entity to have a reporting relationship to the chief of police, which a potential parking enforcement subcontractor like Republic Parking does not have.
The discussion of these kind of infractions at Monday’s meeting did not come immediately with Pollay’s summary. Sue McCormick picked up the topic later, saying there are certain kinds of Michigan Vehicle Code infractions that require a police officer to write the ticket. As an example she gave handicapped parking. Sandi Smith wanted to know if it was not possible to deputize someone to perform that function. Pollay wanted to know what exactly it meant to have a “reporting relationship” with the police chief. McCormick clarified that if Republic Parking did the enforcement, then there would be no direct line of reporting.
Pollay commented that it appeared the DDA might only be able to write tickets for a couple of different kinds of infractions.
Smith observed that if someone was out writing tickets for over-the-limit infractions, it just made sense from an efficiency point of view for that person to be able to write a ticket for a handicapped parking violation. It didn’t make sense to have to call someone else or have someone else cover the same ground.
McCormick pointed out that to a certain extent there would be people covering the same ground – there would be patrols for vehicle impoundment and patrols for community standards violations. In addition, McCormick stressed, the authority to write over-the-limit tickets would not be exclusively granted to the DDA.
Pollay indicated that she would explore how other communities handled enforcement of the MVC infractions to see if there was a model that would provide for the DDA’s contractor to enforce those infractions.
Parking Enforcement: No to DDA Contractor LEIN Access
The lack of a reporting relationship to the chief of police also prevents a subcontractor like Republic Parking from getting access to the Law Enforcement Information Network (LEIN). That would prevent an enforcement officer from getting the history of infractions incurred by a specific vehicle and taking action calibrated to any previous tickets. For example, a fourth unpaid ticket is supposed to result in the towing of the vehicle.
As Sue McCormick had pointed out at the Aug. 9 meeting of the two committees, monitoring for vehicles that should be towed could be handled fairly efficiently with mobile license plate reading equipment that was paid for through a Department of Justice grant, which was accepted by the city council at their June 15, 2009 meeting. So the issue is not really so much about a general inability to enforce the four-unpaid-ticket rule. However, part of the DDA’s interest in taking responsibility for parking enforcement is based on a desire to implement a system of fines that would escalate the cost of a ticket based on prior tickets, or perhaps provide for first-time forgiveness. Without access to LEIN, such a system would not be possible.
Parking Enforcement: No to DDA Enforcement Outside District
An additional challenge is a dispute between the DDA’s legal counsel, Jerry Lax, and Mary Fales in the city attorney’s office over the question of whether the DDA could be granted the authority to enforce parking rules outside of the DDA tax district. Pollay described Lax’s argument as based on two factors: (i) the precedent of the DDA managing parking facilities outside the DDA tax district, and (ii) the latitude provide by the state enabling statute.
On Monday, McCormick identified the outside-the-district issue as leftover from the Aug. 9 meeting and suggested that what needs to happen is for the two attorneys to meet and to “duke it out.” She suggested that Lax needed to contact Fales.
Pollay responded by saying that Lax had done that and that Fales has not responded. What the DDA would like, Pollay said, is for Fales to lay out why she thinks it’s prohibited for the DDA to enforce parking rules outside of its district.
Christopher Taylor interjected that the question is not as simple as inside versus outside the DDA district, but rather it relates to corridors leading to the DDA. [Apparently, it's Fales' legal opinion that corridors leading to the DDA district, but still outside the district, might be fair game for the DDA management of parking enforcement.]
McCormick described the difference in opinion between the two attorneys as involving a fundamentally different view of the law: Lax is looking for prohibitive language and not finding any; Fales is looking for enabling language and not finding it – except perhaps for corridors.
Pollay then pointed to two occasions on which the city council had approved DDA activity outside the DDA tax district. One was the DDA renewal plan, adopted in 2003, which extended the DDA’s charter for another 30 years to 2033. It explicitly contemplates DDA activity outside the district: “In an effort to accomplish its mission, it is understood that the DDA may elect to participate in important projects outside the DDA District.”
A second set of occasions on which the city council had explicitly acknowledged the ability of the DDA to exercise responsibility outside the district, said Pollay, were the parking agreements that had included provision for the DDA to manage specific parking facilities outside the district.
Responding to the precedents cited by Pollay, McCormick said that Fales had specific views about what was unique to those circumstances that made DDA activity possible outside the tax boundary.
Pollay noted that in any case the conversation between the attorneys did not seem to be moving forward.
Parking Enforcement: No to Local Downtown Bank
A topic of conversation from a previous meeting was the idea of re-bidding the contract for processing payments for tickets, so that a local, downtown bank might do the processing. Pollay reported that Joe Morehouse, deputy director of the DDA, had done some background research, and concluded that when the RFP was issued, only two responses had been received, and of those, only one of them had arrangements with the secretary of states of all 50 states. That was a deciding factor in awarding the contract to the Complus Data Innovations Inc., a Tarrytown, N.Y.-based company, because they had the ability to pursue payment in all 50 states. That’s a consideration in a city like Ann Arbor, where a significant percentage of tickets written are to university students who leave the city after a few years.
Some limited discussion unfolded concerning the possibility that Complus might set up a lockbox in Ann Arbor, so that the perception would be conveyed that people are not paying money to an out-of-state firm.
Parking Enforcement: What Do All These Nos Mean?
After discussion of the various challenges that had emerged that are inherent in the DDA’s management of parking enforcement, Carsten Hohnke floated the idea that there might be enough constraints to make it no longer attractive to the DDA to pull parking enforcement “into its fold.”
Sandi Smith was not ready to sign on to the idea that the DDA would give up its pursuit of parking enforcement, saying that she would like to have chief of police Barnett Jones come speak to the committees about how possible communication might work between enforcement personnel contracted by the DDA and the city’s community standards officers.
Roger Hewitt, who arrived at the meeting after the various challenges to DDA enforcement of parking had been discussed in detail, wondered what the DDA was getting out of the “mutually beneficial” arrangement, if parking enforcement were eliminated from it.
Fuller Road Station
Hewitt and McCormick had a brief exchange about Fuller Road Station and how it might fit into a revised parking agreement. [The planned project is a joint city of Ann Arbor/University of Michigan parking structure and bus depot, which might eventually include a train station.] Hewitt felt like it should be included as part of the city’s parking system and covered in the agreement. McCormick saw the city’s share of the parking there simply as sufficient to meet the needs of possible future use in connection with the facility as a transit station.
Hewitt allowed that when it is first built, those parking spaces might well reflect simply a “money in, money out” proposition, but he could imagine that eventually those spaces would generate revenue. He cautioned against the creation of two separate parking authorities.
Russ Collins noted that the topic of a parking authority had arisen at previous meetings. The question, Collins said, is how to add parking enforcement to the DDA’s responsibility and have appropriate levels of cooperation between the city and the DDA.
If the DDA were to assume responsibility for enforcement of parking regulations, then the city wants to ensure that its revenue from fines is not diminished. The other piece of the revenue equation is the DDA’s revenue currently collected from users of the parking system.
One of the principles that is supposed to guide the discussion of the two committees is the idea that the city of Ann Arbor is to be “held harmless” with respect to revenue and costs if the DDA assumes responsibility for parking enforcement. Part of the equation is revenue from parking fines. At Monday’s meeting, Sue McCormick provided a chart of fine revenues broken down by violation code. Expired meter and parking-past-the-allowable-time type violations were easily the highest revenue generators, together accounting for $2.4 million in tickets owed.
Sandi Smith and Susan Pollay both quickly spotted a crucial detail in McCormick’s data set – it was a summary of July 2005 through June 2006. Said Pollay, “This data is four years old!” Smith noted that fine revenues have been declining since then. About the old data, McCormick said, “This is all I got from treasury.” [The city treasurer had given the city council a presentation in November 2009 about more recent parking fine revenues.]
Roger Hewitt wanted to know if there was a proportionate time investment in writing tickets for the top revenue-producing tickets – the answer seemed to be that it was not. Such tickets could be written more efficiently than other types of tickets.
For ballpark purposes, there was a consensus that between $1.5 and $2.5 million could be added to existing parking system revenues for purposes of determining how big a revenue pie was under discussion.
Revenue: Parking System Patrons
Pollay provided pie charts showing how the DDA parking fund revenues were distributed as expenses. For FY 2010, here’s the breakdown:
Ann Arbor DDA Parking Fund Expenses FY 2010 $6,337,237 (35.7%) Direct parking expense (Republic) 441,823 ( 2.5%) Alt transit (go!pass) 2,093,605 (11.8%) Parking maintenance transfer 2,825,901 (15.9%) Rent to city plus street fund to city 1,699,451 ( 9.6%) Down payment on 5th Ave. underground 3,779,516 (21.3%) Bond payments 563,635 ( 3.2%) DDA administration
Fundamentally, the fourth line is the one under discussion by the two committees.
Structure of DDA Payment to City: Mutually Beneficial?
Roger Hewitt introduced the topic of how to structure the DDA’s payment to the city. If it’s specified as a percentage of the net revenue, then it would not amount to much, no matter what the percentage is, he said.
Although she did not raise the issue on Monday, at the Aug. 9 meeting, Sue McCormick had pointed to the basic notion of the city being held harmless and left “whole” as a result of the agreement, which underpinned the entire conversation. A percentage as opposed to a specified sum, she’d said on that occasion, did not leave her feeling “warm and fuzzy about being whole.”
Mutually Beneficial: Rewind to Aug. 9 Meeting
Also on Aug. 9, Collins had also pointed out there’d been an agreement that the DDA would pay $1 million a year to the city. [Collins was alluding to the 2005 parking agreement, which stipulated $1 million per year, or an option for the city to take $2 million in any given year provided that the total amount over 10 years, from 2005-2015 did not exceed $10 million.]
The agreement was “practically invalidated” said Collins, so it’s not really a hold harmless situation. Rather, it’s how the DDA and the city, with the best interest of the citizens in mind, benefits everybody to the best of their ability. The $10 million was paid in five years, Collins said. Because of the city’s dire financial situation, the DDA had paid another $2 million [in May 2010]. So what the DDA is looking to do, said Collins, is find a way to rationalize that kind of payment to the city annually. At the same time, he said, they were looking for a way to benefit the city, the DDA and citizens by changing the way that parking enforcement is done.
As far as “hold harmless,” Collins said, they had a situation where there is a contract and the DDA has now paid an extra $2 million more than required by that contract. They wanted to do the right thing by the city and by the DDA, but mostly they wanted to do right by the citizens by making the right decisions “in these complicated times,” Collins said. Whatever the mechanism of arriving at the price, he said, it had to be in the spirit of doing the right thing for the citizens. That’s what mutually beneficial means, he concluded.
Gary Boren followed up by saying that before the $2 million was discussed, they already knew that revenues due to fines [collected by the city] would be decreasing and revenues due to compliance [fees paid to park, collected by the DDA] would be increasing. That trend was due to various parking technologies. For that reason, Boren said, it didn’t make sense to think in terms of holding harmless with respect to profit levels at any particular point in time.
Collins then returned to the theme of whose interest they were working for – citizens and the community. He spoke of the disconnect between the nature of the dialog and the nature of the press coverage and the nature of merchant organizations’ response to all of this on the one hand, and a DDA board that he felt was trying to work in the best interests of the community on the other hand.
By doing that, he said, the DDA board was “getting hammered” on all sides: by merchants who think the DDA is trying to “screw their customers;” by the city which needs funds; by themselves due to internal political conflicts within the board. It feels like the DDA is trying to do a good thing for the city, but they’re not getting the “attaboys” for trying, he said. Instead, the reaction from the community was “You guys are all nuts!” Either the DDA was nuts, he said, because the DDA had a contract – why didn’t they just insist that it be adhered to? Or the merchants think the DDA is nuts, he said, because they say they don’t “need this stuff anyway.” In this city, “no” is the easiest thing to say, Collins said, and the DDA is trying to say “yes.”
Mutually Beneficial: Fast Forward Return to Aug. 23
On Monday, Smith identified the expenses the DDA would incur for writing tickets as an unknown that would need to be balanced against the $1.5-$2.5 million in ticket revenue from fines.
At that point, Pollay noted that the discussion had already moved to a calculation for a payment, when the whole nature of the mutually beneficial arrangement appeared to be in question. If the DDA were not to take responsibility for parking enforcement, she said, she asked if the city had any suggestions for a mutually beneficial arrangement on which a payment could be based.
Carsten Hohnke pointed to the history of the development of the term sheet as reflective of the city’s position. He did not, he said, have anything in his “back pocket.”
Hewitt forged ahead with the discussion of the payment mechanism, saying that he was in favor of looking at gross revenue and determining some percentage of that. Smith suggested that it might be truer to the theory of “paying rent” if the formula involved a dollar figure per parking space. That would build in a specific ramification for the removal of spaces from the system’s inventory. [The removal of spaces from the system by the city without appropriate accommodation in the parking agreement has been a point of friction with the DDA.]
Pollay returned to her previous point, this time a bit more forcefully: “Where is the benefit to downtown?” she asked. She said she’d heard the calculation, but not the mutually beneficial part.
Collins observed that the two committees were trying to figure out the cost of a parking authority. It would be easier, he said, if the parking authority were not a part of the DDA.
Hewitt said he wanted a structure where the city council is a partner in the system. What he saw, he said, was continuing pressure from the city to get more and more money out of the parking system. That had been the case, Hewitt said, ever since he’d been on the DDA board.
Collins suggested that part of the pressure for more money could be addressed with the contract they were re-negotiating. He suggested that neither the city nor the DDA had been serious about the agreement as a contract.
[This was apparently a reference to the city's failure to adhere to certain terms of the contract, like the DDA's authority to manage "the" parking system in the city, which seems counter to the city's decision to install its own parking meters outside the DDA district. On the DDA's side, it decided not to cite the contract to challenge formally that city decision, in light of the difficult economic times. At a July committee meeting, Hohnke had attributed the city's actions to "institutional amnesia."]
The pressure from the city for more revenue, said Collins, was attributable to the down economy. Hewitt did not completely agree with Collins, saying there had been a lot of pressure from the city five years earlier as well. Collins identified the key issue as trying to understand the value of the parking system.
Picking up on Hewitt’s comments about five years ago, Smith said that five years ago, the city’s financial situation had been presented as dire, due to the “building located diagonally across from us” – an allusion to the police-courts facility, which is nearing the end of its construction and is visible from the DDA board room window, on the other side of Fifth Avenue, one block north. Now the dire situation, she said, is due to the general fund.
Collins said that no organization of any description ever felt like it had enough money.
Christopher Taylor sought to move the discussion back on the track of the payment by noting that the committees agreed on the broad principle of holding the city harmless and of charging the DDA with as much responsibility as possible for parking enforcement. He asked if the next step would be to come up with a formula.
Pollay returned again to her question: How does it benefit the downtown? The goal of the term sheet, she said, had been to establish a mutually beneficial arrangement. However, she said that from the city, with respect to parking enforcement, they’d heard “no, no, no, no” during the committee discussions. She concluded by saying she is still trying to understand how the calculation benefits the downtown.
Hohnke allowed that if parking enforcement is taken off the table, the committees need to talk about what else they might do and to look for “other opportunities for synergy.”
Sue McCormick cautioned that her understanding of the parking enforcement proposal had not been that it was to be “all or nothing.” There is nothing that prohibits the city from going back to look at the “flavor” of how parking is enforced. Even if it’s left out of the discussion of the parking agreement, she said, there are policy decisions about how parking is enforced that can be examined.
Collins stated that what is mutually beneficial is an important issue. He suggested that the city might be responding to the DDA by suggesting there is another way to implement the desired DDA parking enforcement policies other than having the DDA manage enforcement. Perhaps it would turn out that the DDA has input on how existing service is executed.
DDA Does Development
Hewitt drew a parallel between Collins’ concluding sentiments about the DDA having input on an existing mechanism by transitioning to the fourth key point on the term sheet – the DDA having an active role in the development of city-owned surface parking lots downtown.
Collins noted that he knew there is one DDA board member who’d be happy to see parking enforcement taken off the table and to use the purchase of land, which the DDA would then develop, as a mechanism for the DDA to make payments to the city. Collins was alluding to Newcombe Clark. From previous Chronicle coverage “Possible Topic: Should the DDA Develop City-Owned Land“:
The DDA could have said, “Here’s $2 million and we’ll buy two lots,” or one lot – like the Palio’s lot at William and Main, suggested Clark. [The parcel currently serves as a surface parking lot.] Even though the DDA had elected not to do that, and instead decided to renegotiate the parking agreement, Clark said he thought that land purchase was still worth exploring.
Hewitt acknowledged that a land-purchase type approach is another way it could be done, then quipped that the city could simply give the DDA the Kline’s lot, which the DDA had bought in the first place.
DDA Development: Pollay’s Outline
As part of the timeline for the two committees’ summer work plan, Pollay is to deliver a plan for what it would mean for the DDA to take an active role in the development of city-owned surface parking lots. She’s due to present that at the committees’ Sept. 13 meeting. On Monday, she handed around a one-sheet double-sided sketch of an outline for what she was working on.
The outline includes a chunk devoted to visioning with multiple and various parties and the public to develop a comprehensive strategy for downtown. The idea is not to start from scratch, but rather to build on work that the community has done for the last five years.
She cautioned against the idea of “master planning by RFP” for a particular site. When there’s a comprehensive strategy in place – as opposed to the “piecemeal” approach that has been taken previously – then it makes sense to begin talking about a request for proposals (RFP) for some specific site that’s been prioritized, she said.
The process for an RFP for the first site includes drafting of the RFP by the DDA, with revision by a professional consultant who would oversee distribution of the RFP to potentially interested parties. An advisory committee to review the responses to the RFP would be selected by the DDA, with members appointed based on strategic strengths – like project financing experience. The advisory committee would move the project through a process of reviewing the responses, interviewing the proposers, and making a recommendation to the DDA. On approval by the DDA board, the recommendation would be forwarded to the Ann Arbor city council. The city council would either approve the project or give some other direction. If the outcome were approval, the DDA, with the aid of a consultant, would do the negotiations with the developer on a specific agreement and forward the plan to the city council for approval.
The idea, said Pollay, was to put the DDA at the “edge of the sword” so that her organization would “take the heat” from the community.
Taylor said he agreed with the “march towards expertise” that Pollay had outlined for the advisory committee membership. However, he cautioned that this kind of expertise should be added to, rather than replace, the kind of participation that has been typical for such committees.
Next Meeting: Sept. 13
As the meeting concluded, Carsten Hohnke wanted to get an idea of what the agenda for the Sept. 13 meeting would be like. At least three points will be covered:
- How are Michigan Vehicle Code infractions handled in other communties?
- What are meter revenues like for the newly-installed city meters outside the DDA district?
- What does “active role” for the DDA mean in development of downtown city-owned surface parking lots?