Committee Briefed on Downtown Sidewalks

As the Nov. 8, 2011 general election approaches, the Ann Arbor Downtown Development Authority is considering the implications that a ballot question might have on the DDA’s tax increment finance (TIF) district. The ballot question asks voters to approve a sidewalk repair millage that would levy a new tax of 0.125 mills. A mill is $1 for every $1,000 of a property’s taxable value.

Members of the DDA’s transportation, operations and construction committee were briefed on that and a number of other issues at its regular monthly meeting on Wednesday, Sept. 28. (The committee has a combined function for what were at different times in the past three separate committees.)

The committee was also briefed on: (1) the status of the getDowntown program; (2) a parking communications plan aimed at evening employees; (3) the financial picture for the city’s public parking system; and (4) the results of a parking customer satisfaction survey.

Committee members were somewhat surprised and disappointed to learn that the city council’s policy on the use of proceeds from the proposed sidewalk millage would place restrictions on using millage money inside the boundaries of the DDA’s TIF district.

The city council’s Aug. 4 resolution authorizing ballot language for the proposed 0.125 mill tax places a limitation on the use of funds inside the TIF district, though the wording on the ballot does not include the limitation. The resolution states that inside the DDA district, only those sidewalks adjacent to single- and two-family houses (but not other commercial properties) would be included in a millage-supported sidewalk repair program.

A resolution of intent on the use of the sidewalk millage, which includes the restriction inside the DDA TIF district, was postponed from the council’s Sept. 19 meeting, and will be taken up by the council again on Oct. 3.

At their Wednesday meeting, DDA committee members were also apprised that the getDowntown program, which draws the majority of its funding from the DDA, will not be folded into the DDA as had previously been planned. Instead, the program’s two staff members will remain employees of the Ann Arbor Transportation Authority. The getDowntown program’s status has been a question since the Ann Arbor Area Chamber of Commerce (now the Ann Arbor/Ypsilanti Regional Chamber) two years ago pulled out of the four-way partnership that supported getDowntown. The remaining three partners are the city of Ann Arbor, the DDA and the AATA.

The committee was also briefed on elements of the DDA’s communications plan that’s aimed at downtown evening employees, in connection with possibly extending parking meter enforcement hours past 6 p.m. Other parking-related issues on the committee’s agenda included a structure-by-structure breakdown of the financial performance of the city’s parking garages, as well as an overview of the results of a regular parking system survey used to evaluate Republic Parking, the DDA’s parking contractor.

This report focuses on sidewalks and getDowntown.

Sidewalks

On the Nov. 8 ballot are two questions for Ann Arbor voters. The first is the renewal of an existing street repair millage. The city is asking voters to approve the levy of a 2.0 mill tax for resurfacing and reconstructing streets and bridges. A mill is $1 for every $1,000 of taxable value of a property.

Also on the ballot is a proposal that asks voter to authorize an additional 0.125 mills for sidewalk repair. The sidewalk repair levy would be contingent on the street repair millage also receiving approval. Currently, the city’s ordinance on sidewalk repair places responsibility for maintenance and repair of sidewalks on the owner of the adjacent property. That ordinance would be amended, if the millage is approved.

The city council resolution authorizing the ballot language for the sidewalk millage – approved at the council’s Aug. 4 meeting – directs the city attorney to prepare an ordinance revision, in the event the sidewalk repair millage wins voter approval.

Sidewalks: Restriction on Use in the DDA District

At Wednesday’s meeting, deputy DDA director Joe Morehouse apprised the committee of the policy associated with the proposed sidewalk repair tax levy, which restricts its use inside the DDA district. The staff memo accompanying the city council resolution reads [emphasis added]:

The sidewalk repair millage, if approved, will be used only for the sidewalks adjacent to properties that are on the City’s tax roll, which excludes schools, churches and city owned properties as well as those owned by the University of Michigan. The excluded properties would be responsible for their own sidewalk repairs as they are now. For the first year FY 2013, the estimated net revenue for the sidewalk repairs is $563,000.00 after deductions for the DDA. Properties other than single- and two-family homes within the DDA district will continue to be responsible for their own sidewalk repairs as before.

The Aug. 4 resolution authorizing the ballot language included a separate resolved clause reflecting the restriction mentioned in the staff memo [emphasis added]:

RESOLVED, That the proposed City managed sidewalk trip hazard repair program include the sidewalks adjacent to all properties on the city’s tax roll, but excluding those properties within the DDA district that are not single- and two-family because those properties can benefit from the tax dollars deducted from the proceeds of the new millage and given to the DDA; and …

A resolution of intent on millage expenditures, considered by the council at its Sept. 19 meeting, also reflects the exclusion of some properties in the DDA district from eligibility for sidewalk millage expenditures:

To the extent the 2012 Street and Bridge Resurfacing and Reconstruction and Sidewalk Repair Millage is used for the repair of individual sidewalks slabs, it will be used only for sidewalks adjacent to all properties outside the Downtown Development District against which the City levies property taxes and adjacent to single- and two-family houses within the Downtown Development District against which the City levies property taxes.

A vote on the resolution of intent was postponed by the council until Oct. 3. However, the DDA exclusion drew a query from councilmember Christopher Taylor (Ward 3), who appeared puzzled about the motivation behind the exclusion. From the Sept. 19 Chronicle meeting report:

Taylor then asked what the rationale was for the restrictions on spending within the DDA for properties that are not single- or two-family houses. [Homayoon Pirooz, head of project management for the city] noted that it’s part of the ballot language the council had approved in August. The rationale, he said, was that the DDA receives a share of the street repair millage [through its tax increment finance capture district] so it makes sense for the DDA to cover the costs within its geographic district.

[While the DDA exclusion is not part of the ballot language, it is a part of the city council resolution authorizing the ballot language.]

Sidewalks:  TIF and the Sidewalk Millage

As Pirooz explained to Taylor, the rationale for excluding some properties inside the DDA district from a millage-funded city sidewalk repair program is that the TIF capture inside the DDA’s district would provide a portion of those millage revenues to the DDA.

By way of background, it’s worth noting that not the entire millage is captured. Only the difference between the baseline property value in the district and the increase in property value due to improvements (the “increment” in tax increment finance district) is captured by the DDA’s TIF.

For fiscal year 2012 (the current fiscal year, which started July 1), the valuation of the increment in the DDA district is $137,800,186. So the DDA’s capture is roughly $17,500 (.125*137,800,186/1000). The city of Ann Arbor’s baseline tax revenue inside the district due to the sidewalk repair millage would be around $31,500. So, of the $49,000 the DDA district would generate through the sidewalk millage levy, the DDA would receive about 36% of it.

At one point during Wednesday’s committee meeting, DDA executive director Susan Pollay ventured that it would not be possible to fix every qualifying sidewalk in the DDA district for $17,500.

Sidewalks: Committee Member Discussion

As one measure of the lack of communication between the city and the DDA on this issue, the committee began their meeting on Wednesday under the impression that the ballot language was still an open question. [Ballots are already being mailed to those voters who've requested to vote absentee.]

John Mouat said he felt it was “pretty outrageous” that the council proceeded with that policy without talking to the DDA. It doesn’t seem unreasonable to be “a little peeved” about it, he said. Roger Hewitt indicated agreement with Mouat, but said he couldn’t say he was surprised about the lack of communication.

Leah Gunn summed up the policy by noting that there are commercial property owners who will have to pay the tax, but won’t get the benefit of the millage.

DDA executive director Susan Pollay raised a question about University of Michigan property mentioned in the staff memo – there’s a lot of UM property in the DDA TIF district. [UM does not pay property taxes, so there are no taxes from the UM for the DDA's TIF district to capture.] Pollay noted that the city’s right-of-way extends well past sidewalks next to UM property in many instances.

Bob Guenzel wondered if there were an implicit obligation that the DDA would incur to repair the sidewalks in the DDA district that are not single- or two-family houses. Guenzel clarified with Morehouse that it would still be a commercial property owner’s responsibility to keep up the sidewalk.

Sidewalks: Liability, Open Questions

Pollay indicated that she had a meeting scheduled with city staff so that she could get a better understanding what the city’s expects of the DDA.

For example, she said, she wanted to know if the city was assigning trip-and-fall liability to the DDA. Gunn ventured that liability would end up being decided in a court case.

Nader Nassif, a local attorney and newest member of the DDA board, said it was not his specialty, but ventured that most slip and falls for sidewalks come under the “open and obvious danger” rule. [On that doctrine, the open and obvious character of a situation can be used to argue that the situation itself serves as adequate warning to a reasonable person that a danger is present and can reasonably be expected to protect himself against it.]

Joan Lowenstein mentioned a rule-of-thumb that there needs to be more than a 2-inch height differential in order to create liability. But she said there’d been a recent change in the law, and she hadn’t kept up with it.

Lowenstein summarized her understanding by saying that if a sidewalk is unsafe, the city is ultimately responsible. But if the city points it out to the property owner, then it’s clearly the property owner’s responsibility. [That is consistent with the city's current approach: Property owners are required by ordinance to maintain and repair sidewalks abutting their property, and the city has systematically pointed out sidewalk problems to property owners.]

Sidewalks: Two-Inch Rule

The two-inch rule to which Lowenstein referred is under consideration by the state legislature. A bill passed by the state House of Representatives in the summer of 2011 clarifies that the presumed governmental immunity extends explicitly to cities and not just counties. The Michigan Supreme Court, in Robinson v. City of Lansing, had reached the conclusion that the existing rule only applied to sidewalks adjacent to county roads. [.pdf of analysis of the bill including the court case.] The state Senate has approved a similar bill, but neither chamber has yet taken up the other’s bill.

The intent of the legislature is to write a law that would extend the presumption of immunity and the two-inch rule to other municipalities, including cities. The legislation would make it more difficult for a plaintiff to prevail in a lawsuit against a municipality. Ann Arbor city attorney Stephen Postema and assistant city attorney Bob West lobbied the House judiciary committee in favor of the bill.

In relevant part, House Bill 4089 reads, with revisions from an initial version indicated in italics and strikethrough:

(3) In a civil action, a municipal corporation that has a duty to maintain a sidewalk under subsection (1) is presumed to have maintained the sidewalk in reasonable repair. This presumption may only be rebutted by evidence of specific facts showing that the a proximate cause of the injury was 1 of the following:
(a) a vertical discontinuity defect of 2 inches or more in the sidewalk.
(b) a dangerous condition in the sidewalk itself of a particular character other than a vertical discontinuity.

State Rep. Jeff  Irwin (D-District 53), who sits on the House judiciary committee, represents a district that includes most of the city of Ann Arbor. In an interview with The Chronicle in the summer of 2011, shortly after the bill passed the House, Irwin said he supported it after some initial concerns were addressed.

Among those concerns was the initial wording that indicated “the proximate cause” – which was eventually amended to read “a proximate cause.” Irwin said that to show something was “the proximate cause” would require showing not only that it was a proximate cause, but also that there were no other proximate causes – a burden he felt was not appropriate.

A second revision Irwin wanted and achieved was the deletion of the word “specific” in the phrase “specific facts.” He told The Chronicle that the phrase seemed to create two species of facts – specific facts, and other kinds of facts. He did not know what the possible difference was between those two kinds of facts.

getDowntown Program

By way of basic background, the getDowntown program is a partnership among the DDA, the Ann Arbor Transportation Authority and the city of Ann Arbor. The program acts as a commuter consultancy for downtown employees, promoting alternatives to driving a single-occupancy vehicle to work. As part of a three-year funding plan approved in June 2010 for fiscal years 2011-13, the getDowntown program will receive roughly $500,000 each year from the DDA for FY 2012 and FY 2013. The bulk of the funding is to subsidize the cost of rides for holders of a go!pass.

The go!pass is a card that allows employees of downtown businesses to board AATA buses on an unlimited basis without paying a fare on boarding. Their rides are paid by the DDA out of public parking revenue it receives under its contract with the city of Ann Arbor for managing the public parking system. Employers purchase go!passes for their employees for a cost of $10 per year.

getDowntown Program: Finding a Home – DDA

At its July 6, 2011 meeting, the DDA board was briefed on the status of the getDowntown program. At that point, a tentative decision appeared to have been made to absorb the two getDowntown staff members into the DDA. From that meeting report:

… the getDowntown program was previously funded in a four-way partnership with the Ann Arbor Transportation Authority, the city of Ann Arbor, the DDA and the Ann Arbor Area Chamber of Commerce (now the Ann Arbor/Ypsilanti Regional Chamber). In 2009, the chamber essentially withdrew from the partnership, which meant that the getDowntown program needed to find alternate quarters – part of the contribution made by the chamber had been to provide office space. The getDowntown program then moved to offices at 518 E. Washington, with the financial support of the DDA. Brief coverage of the issue is included in The Chronicle’s report on the Dec. 2, 2009 DDA board meeting.

At the Oct. 7, 2009 meeting, Mouat had mentioned the issue as part of his regular monthly committee report to the board. And it came up again at the board’s May 7, 2010 meeting.

A question from DDA board member Leah Gunn clarified that the issue being considered is not the physical location of getDowntown’s offices, but rather the administrative payroll issue: Which organization will formally employ the getDowntown program’s two staff?

Mouat explained that currently the two staff are employees of the AATA. The transportation committee is looking at the possibility of transferring the responsibility to the DDA. Mouat characterized it as a “nice fit” from a funding perspective – both getDowntown and the DDA have a focus on the downtown. The mission of getDowntown is also connected to the planned implementation of transportation demand management in the parking system, Mouat said.

Another advantage is that AATA’s contribution via a federal Congestion Mitigation Air Quality (CMAQ) grant is administratively easier, if getDowntown is separate from the AATA, Mouat said.

The impact on the DDA, Mouat said, would be that deputy DDA director Joe Morehouse would do the books, executive director Susan Pollay would do the employee evaluations, and the two staff would become employees of the DDA.

getDowntown Program: Finding a Home – AATA

But at the Sept. 28 DDA committee meeting, getDowntown director Nancy Shore told committee members that it now appeared that getDowntown staff would remain employees of the AATA.

Shore began by describing how getDowntown had been part of the Ann Arbor chamber for its first 10 years. When that organization had financial difficulties, she said, getDowntown staff were absorbed by the AATA. The advisory board for getDowntown had a 1.5-2 year discussion and had made a decision that getDowntown would become a part of the DDA.

[The getDowntown advisory board incudes: Andrew Brix, energy coordinator for the city of Ann Arbor; Eli Cooper, transportation program manager for the city of Ann Arbor; Susan Pollay, executive director of the DDA; Mary Stasiak, manager of community relations for AATA; and Ken Anderson, community relations coordinator for the AATA.]

Absorption into the DDA would have made getDowntown staff into city employees, Shore told the committee. The DDA would have done the bookkeeping and administered the payroll for getDowntown.

But two months ago, Shore said, with the fluxuation in municipal governments and with the situation with the DDA, a decision was made to maintain the current arrangement, with getDowntown a part of the AATA. As another point in favor of remaining with the AATA, Shore pointed to the possibility of the program’s physical housing on the second floor of the newly reconstructed Blake Transit Center [to be started in the spring of 2102].

getDowntown: Committee Discussion – Program Status

Leah Gunn wanted to know if staying with the AATA would change how Shore did her job: “Are you comfortable with this?” Gunn asked Shore. Shore told Gunn she was comfortable with the arrangement. She said she was trying to keep the program sustainable. For businesses who participate in the go!pass program, it will feel the same, she said. Gunn praised Shore, by telling her that when Shore had come on board at the getDowntown program, she “took it to a whole new level.”

Bob Guenzel confirmed with Shore that it’s currently the AATA that signs checks for the getDowntown program. Shore also confirmed for Guenzel that it was likely that getDowntown could be housed at a newly-reconstructed Blake Transit Center, using second-floor office space.

Gunn noted that the city of Ann Arbor had sold AATA the strip of land that AATA had wanted to facilitate their desired new transit center design. John Mouat asked Shore if she felt comfortable about the longer term at the AATA, on a horizon for, say, five years. Shore noted that the AATA is subject to the same financial constraints as other organizations. She also pointed out that the AATA is looking at a structural reorganization. Shore noted that getDowntown serves as a bridge between the DDA, AATA and the city of Ann Arbor.

Guenzel confirmed with Shore that getDowntown’s advisory board, along with the city of Ann Arbor, is fine with the proposed continuation of getDowntown as part of the AATA. Guenzel got clarification that the DDA board would not be required to take a particular action – the conversation was an informational point.

getDowntown: Committee Discussion – go!pass Status

Shore then gave the committee an update on the go!pass pricing structure. She noted that the price of the pass to employers has been increased from $5 to $10 for an entire year. Shore said negative feedback has been minimal – employers are still getting a year’s worth of transportation for $10. She’s not seeing a dip in participation.

Shore noted that the DDA is a huge reason the go!pass exists, because the rides used under the go!pass system are paid out of revenue from the public parking system – which the DDA manages for the city. [Additional Chronicle reporting on the go!pass price increase from $5 to $10 for employers, and the reduction in the price per ride charged by the AATA: "AATA Reduces Price for go!pass Rides"]

Shore noted that August 2011 had been a record-breaking month. More rides were taken in that month than in the history of the program, including the first year, when go!passes were distributed free. Guenzel scrutinized a point on the handout that spelled out a policy on part-time and volunteer eligibility for go!passes. He wanted to know if that was new. Shore said it’s always existed as part of the policy, but it’s been slightly revised. She said that in order for a position to be considered a contribution to downtown, it made sense to require at least two days a week of work.

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