Planning, DDA: City Council to Set Course?

Ann Arbor city council meeting (March 18, 2013) Part 1: The two main events of the council’s meeting centered around planning in the downtown area: (1) consideration of a possible moratorium on D1 (downtown core) site plans; and (2) consideration of the site plan for 413 E. Huron, located in a D1 district.

The council decided to conduct a review of D1 zoning, without imposing a moratorium. That cleared the way to consider the 413 E. Huron project, which the council eventually voted to postpone – at roughly 1:30 a.m. Because of the amount of time spent on just those items, they’ll be included in a separate Chronicle report.

Apart from those two items, the council’s agenda still included a planning and land use focus, as well as a downtown theme. An additional theme was the city council’s relationship to two other public bodies – the city planning commission and the board of the Ann Arbor Downtown Development Authority.

In the case of the planning commission, the council for a second time balked at the commission’s recommendation of R3 (townhouse) zoning for a recently annexed parcel on Ellsworth near Stone School Road – planned as the site of Summit Townhomes, which would be a 24-unit development. The council postponed consideration of the Summit Townhomes site plan and the zoning, having previously postponed the zoning. The council also had previously referred the zoning recommendation back to the planning commission for re-review. The council’s second postponement on March 18 came after the commission’s re-affirmation of its original recommended R3 zoning. The council sent no explicit communication to the planning commission requesting action, beyond the implicit message of postponing the vote.

In the case of the DDA board, the council is weighing changes to the city ordinance governing the composition of that body, but postponed those changes for a second time at its March 18 meeting. The more significant of the ordinance changes involves clarifying how the Ann Arbor DDA’s tax increment finance capture is calculated, which has implications for millions of dollars for the DDA, the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library.

Also related to the DDA, early in the council’s meeting an oral report was given on a session of the council’s audit committee – held the previous week to review the DDA’s FY 2012 audit. In the middle portion of the council meeting, councilmembers postponed the ordinance changes. And in the early morning hours of March 19, after the voting agenda was concluded, a member of the audit committee – Sally Petersen (Ward 2) – announced her intention to propose a task force on the DDA.

Related to other boards and commissions, the council confirmed the appointment of a chair for the zoning board of appeals (ZBA): Alex Milshteyn. He replaces Carol Kuhnke, who resigned in December 2012 after being elected judge of the 22nd Circuit Court.

In other business, the council gave approval for the zoning and site plan of The Shoppes at 3600, a proposed retail development on Plymouth Road.

The council also voted to object to the renewal of a liquor license for The Arena, a downtown bar located at Division and Washington streets. The basis for the objection – which will be forwarded to the Michigan Liquor Control Commission for final action – was non-payment of taxes.

The council also gave initial approval to a revision to the city’s sign ordinance. It would essentially maintain current conditions, but provide for certain limited digital signs with a restricted range of changeable elements.

Council communications included a briefing on upcoming changes the council will be asked to consider for the city’s public art ordinance. In other communications, the council will be giving a fire station reconfiguration plan some additional explicit discussion at a future working session – although it appears that the idea has insufficient traction to move forward.

Public commentary at the meeting covered a range of topics, including a call for the council to waive privilege on legal advice that councilmembers had received on the D1 moratorium issue – because they’ve now voted not to enact the moratorium.

DDA-Related Issues

Items related to the Ann Arbor Downtown Development Authority came up at three points during the meeting. During council communications at the start of the meeting, Sumi Kailasapathy (Ward 1) – a member of the council’s audit committee – gave a report from the committee meeting held on March 14. Later, the council voted on DDA ordinance revisions that were on the agenda. And sometime around 1:30 a.m. the topic came up again, during the council communications at the end of the meeting.

This report begins with the agenda item.

DDA: Ordinance Revisions

Before the council for its consideration were several revisions to Chapter 7, a city ordinance governing the Ann Arbor Downtown Development Authority (DDA). The ordinance amendments had been postponed at the council’s March 4, 2013 meeting.

Among the revisions to Chapter 7 that are being considered by the council are: a new prohibition against elected officials serving on the DDA board; term limits on DDA board members; a new requirement that the DDA submit its annual report to the city in early January; and a requirement that all taxes captured by the DDA be spent on projects that directly benefit property in the DDA tax increment finance (TIF) district.

But most significant of the revisions would be those that clarify how the DDA’s TIF tax capture is calculated. The “increment” in a tax increment finance district refers to the difference between the initial value of a property and the value of a property after development. The Ann Arbor DDA captures the taxes – just on that initial increment – of some other taxing authorities in the district. Those are the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library. For FY 2013, the DDA will capture roughly $3.9 million in taxes.

The proposed ordinance revision would clarify existing ordinance language, which includes a paragraph that appears to limit the amount of TIF that can be captured. The limit is defined relative to projections for the valuation of the increment in the TIF plan, which is a foundational document for the DDA.

If the actual rate of growth outpaces the growth rate that’s anticipated in the TIF plan, then at least half the excess amount is supposed to be redistributed to the other taxing authorities in the DDA district.

DDA board members at their March 6, 2013 meeting indicated that they did not think any reason had been given to amend the ordinance. At a meeting of the city council’s audit committee held on March 14, city CFO Tom Crawford indicated that it was the view of many people, including his own, that the ordinance language on TIF calculation was not clear. During that meeting of the audit committee, Crawford indicated that the FY 2012 audit of the DDA did not include a review of Chapter 7 compliance.

What the proposed ordinance revisions clarify is which estimates in the TIF plan are the standard of comparison – the “realistic” projections, not the “optimistic” or “pessimistic” estimates. However, the ordinance revisions as currently formulated do not clarify whether a “cumulative” method of performing the calculations should be used or if a year-to-year method should be used.

Use of the cumulative method has an impact on whether the redistribution of excess TIF is made on a one-time or recurring basis. Under the cumulative method, other taxing authorities in the Ann Arbor DDA TIF district would see a total on the order of $1 million in additional tax revenue, compared to the way the DDA currently calculates the TIF capture. The city of Ann Arbor’s annual share would be more than half of that amount, around $600,000.

Method: Year-to-Year                   
Refunds                                                         
       City       County      WCC       AADL      Total Ref    DDA TIF
FY14   $429,409   $149,392    $94,257   $40,163   $713,221     $3,964,457
FY15    $11,958     $4,160     $2,625    $1,118    $19,862     $4,774,758

===============================

Method: Cumulative                     
Refunds                                                      
       City       County     WCC        AADL      Total Ref    DDA TIF
FY14   $613,919   $213,583   $134,757   $57,421   $1,019,680   $3,657,998
FY15   $635,108   $211,673   $139,195   $58,539   $1,044,515   $3,773,043

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The clarification of the ordinance crucially strikes two paragraphs related to bond and debt payments. One of the two paragraphs was key to the DDA’s current legal position – which is that no redistribution of TIF is required under the ordinance, given the DDA’s financial position. The DDA interprets the stricken paragraphs to mean that no redistribution to other taxing authorities needs to be made, until the total amount of the DDA’s debt payments falls below the amount of its TIF capture. At the DDA board’s March 6 meeting, board member Bob Guenzel alluded to this in the context of remarks on the TIF calculations when he observed that the DDA is “on the hook” for some bond payments.

In the FY 2014 budget, adopted by the DDA board at its Feb. 6, 2013 meeting, about $6.5 million is slated for bond payments and interest. That clearly exceeds the amount of anticipated TIF capture in the FY 2014 budget – about $3.9 million. The DDA is able to make those debt payments because about half of that $6.5 million is covered by revenues from the public parking system. The DDA administers the public parking system under contract with the city of Ann Arbor.

This issue first arose back in the spring of 2011. The context was the year-long hard negotiations between the DDA and the city over terms of a new contract under which the DDA would manage the city’s parking system. The Chapter 7 issue emerged just as the DDA board was set to vote on the parking system contract at its May 2, 2011 meeting.

When the issue was identified by the city’s financial staff, the DDA board postponed voting on the new contract. The period of the postponement was used to analyze whether the DDA’s Chapter 7 obligations could be met – at the same time the DDA was ratifying a new parking system contract, which required the DDA to pay the city of Ann Arbor 17% of gross parking revenues. The DDA manages the city’s parking system under contract with the city.

Initially, the DDA agreed that money was owed to other taxing authorities – not just for that year, but for previous years as well. And the DDA paid a combined roughly $473,000 to the Ann Arbor District Library, Washtenaw Community College and Washtenaw County in 2011. The city of Ann Arbor chose to waive its $712,000 share of the calculated excess.

The Chronicle recently learned that during this timeframe in 2011, the TIF calculation topic was the subject of a meeting attended by representatives of all the taxing authorities in the DDA district, as well as by representatives of the DDA. The outcome of the meeting was an expectation by some in attendance that the DDA would work with the other taxing authorities to arrive at a consensus interpretation of the ordinance. But subsequently, the DDA completely reversed its legal position, and contended that no money should have been returned at all. That decision came at a July 27, 2011 DDA board meeting.

The following spring, during the May 21, 2012 city council budget deliberations, Stephen Kunselman (Ward 3) proposed an amendment to the city’s FY 2013 budget that stipulated specific interpretations of Chapter 7, with a recurring positive impact to the city of Ann Arbor’s general fund of about $200,000 a year. Kunselman wanted to use that general fund money to pay for additional firefighters. That year the budget amendment got support from just two other councilmembers: Jane Lumm (Ward 2) and Mike Anglin (Ward 5).

For a Chronicle op-ed on this topic, see: “Column: Let’s Get DDA TIF Capture Right.”

DDA: Ordinance Revisions – Council Deliberations

On March 18, Stephen Kunselman began deliberations on the ordinance amendments by indicating he’d be asking for an additional postponement. [The ordinance changes are sponsored by Kunselman and Sumi Kailasapathy.] One reason for postponing, he said, is that answers to certain questions are still being sought from the DDA. He also noted that there would be a council work session on the DDA budget. [This is now scheduled for March 25.] There’s a lot of concern about how the amendments he’s proposing would affect the DDA budget and its debt obligations. He wanted to reiterate that his goal was to bring some stability, trust and confidence in the DDA as an institution. His intent is that the DDA budget would remain whole.

Based on figures from the city treasurer’s office, Kunselman noted that using the year-to-year method to calculate the excess TIF capture, the city would receive $429,409 in FY 2014. The DDA’s total TIF capture would be $3.9 million for that year. But for the following year, FY 2015, the DDA’s total capture was anticipated to jump to $4.7 million. That’s due to recently completed projects within the geographic areas of the TIF district, which will increase the tax base.

But in the proposed two-year budget the DDA passed recently [at its Feb. 6, 2013 meeting], the anticipated total TIF capture by the DDA was $3.7 million in FY 2015. What had caught his attention was the $1 million increase between the approved budget amount and the projection for actual TIF capture, Kunselman said. So he wanted to have a good discussion about the cumulative method of calculating the excess TIF. Sample language for a further revision to the TIF ordinance – which would stipulate the cumulative method of calculation – had been forwarded to councilmembers, Kunselman said. The following revision would have the effect of clarifying that a cumulative method of calculation should be used [deleted text indicated with strike-through, and added text in italics]:

If the captured assessed valuation derived from new construction, and increase in value of property newly constructed or existing property improved subsequent thereto, grows at a rate faster is greater than that anticipated in the tax increment plan, at least 50% of such additional amounts shall be divided among the taxing units in relation to their proportion of the current tax levies. If the captured assessed valuation derived from new construction grows at a rate of over is greater than twice that anticipated in the plan, all of such excess amounts over twice that anticipated shall be divided among the taxing units.

Kunselman pointed out that under the cumulative calculations, the approved DDA budget of $3.7 million for FY 2015 could be covered as adopted. So that wouldn’t “hamstring” the DDA in its ability to pay its bills, Kunselman concluded.

Regarding the other amendments to the DDA ordinance that he’s proposing – involving membership, term limits and a report filing requirement – he reminded people that for many years the DDA didn’t file its annual report as required by state law. He pointed out that the state-enabling statute for DDAs contemplated the possibility that the DDA could enter into an agreement with the taxing jurisdictions whose taxes are captured – to share a portion of TIF revenues with one of the jurisdictions. How can you do that if an elected official of one of the taxing authorities is on the DDA board? Kunselman asked. He saw this as an ethical conflict.

Kunselman noted that last year, on Jan. 27, 2012, the Ann Arbor District Library sent a letter to the city, expressing the library’s disappointment that a method of TIF calculation was chosen that would return the smallest amount of TIF possible to the taxing jurisdictions whose taxes are captured by the DDA. Kunselman felt that if the method could be clearly specified in the ordinance, the concern of others can be relieved. Kunselman said he didn’t want to wind up in court with the other taxing authorities on the issue.

Kunselman indicated that he hoped councilmembers could take the initial vote on the proposed amendments at the council’s April 1 meeting.

Mayor John Hieftje expressed concern that the city’s general fund could see a negative impact as a result of the ordinance amendments.

Outcome: The council voted unanimously to postpone the question of revising the DDA ordinance until its April 1, 2013 meeting. Even if the council votes to approve any of the proposed amendments on April 1, a second and final vote would be required to enact the ordinance changes.

DDA: Council Communications – Audit Committee

Early in the meeting during council communications time, Sumi Kailasapathy (Ward 1) gave an update on the audit committee’s session held on March 14. She told the council that the meeting had to be called under Robert’s Rules by members of the committee – because the chair of the committee didn’t see a need for the meeting. By way of background, the chair of the committee is Margie Teall (Ward 4). Under Robert’s Rules – which govern all procedures of the council not otherwise addressed in the council’s own rules – a committee meeting can be called by the chair or by two of its members. In addition to Teall and Kailasapathy, other members of the committee include Stephen Kunselman (Ward 3), Chuck Warpehoski (Ward 5) and Sally Petersen (Ward 2).

Kailasapathy said that she and Kunselman had concerns about the TIF calculations and compliance by the DDA with Chapter 7 of the city’s ordinance. She quoted from the DDA TIF plan, which states that: “The DDA submits an annual audit to the City of Ann Arbor that includes the status of the (tax increment finance) TIF account in compliance with the requirements of Section 15(3) of the State of Michigan Downtown Development Authority Act.” Kailasapathy indicated that the result of the audit committee’s conversation was that compliance with TIF regulations was not tested during the FY 2012 audit. The question arose about why that compliance was not part of the audit’s scope, she said.

She went on to say that she and Kunselman had found mistakes in statements from the FY 2012 audit report, giving as an example what she called a “significant error”: a statement that parking bonds are serviced out of the DDA’s parking fund – when TIF funds are also used to service parking bonds.

Kailasapathy indicated a desire to meet with the auditors to discuss that and other statements – to determine if the report needs to be re-issued. She was also interested in understanding why Chapter 7 compliance is not tested as part of the audit procedure. She indicated she was “alarmed” at the delays in getting financial information from the DDA during the audit committee’s inquiry, which had been attributed to the fact that the DDA’s deputy director, Joe Morehouse – who is directly responsible for the DDA financial records – is on medical leave. Kailasapathy questioned why there was no succession plan to provide for his absence. She stated that the nature of her interest in the DDA was compliance with financial standards and was not about “us versus them.” Her remark about “us versus them” could be understood as an allusion to some of the discussion at the March 14 audit committee meeting.

On that occasion, Sally Petersen (Ward 2) had highlighted the portion of the FY 2012 that described the DDA’s relationship to the city: “The Authority is considered a component unit of the City of Ann Arbor, Michigan and is discretely presented in the City of Ann Arbor’s (the primary government) financial statements.” That had been a good reminder to Petersen that “them is us.”

Kailasapathy concluded her remarks during the early council communications by indicating that her interest is in compliance with legal requirements and fairness to the other taxing jurisdictions, whose taxes are captured through the DDA’s TIF.

DDA: Council Communications – TIF/Parking Fund

The FY 2012 audit report statement – which Kailasapathy referred to as inaccurate – was this:

The parking structure bonds are to be serviced with revenues from the parking fund. The City Hall bonds are to be serviced from future tax increment revenues of the general fund.

The use of not just parking revenue, but also TIF revenue, to pay for parking structure bonds also came up near the end of the meeting during council communications.

Christopher Taylor (Ward 3), alluding to the late hour, said he would like to make clear for that “one member of the public who’s still listening” that the TIF fund has been used for parking-related infrastructure for decades and that use of the TIF fund has been perfectly proper. He thought it was useful to state that fact going forward. The DDA is proud of what it does and, for his part, Taylor felt the DDA should be proud.

Kunselman took the opportunity to make clear that the actual issue at stake was not the use of TIF funds to service parking structure bonds per se, but rather the combination of that practice with a transfer of parking revenue to the city. Under the contract between the city and the DDA, the city receives 17% of public parking system gross revenues. Kunselman said that as he understood the state-enabling statute, a sharing of TIF revenues with one of the taxing jurisdictions required an agreement with the other jurisdictions. The part of Act 197 of 1975 to which Kunselman was referring reads as follows:

The authority may enter into agreements with the taxing jurisdictions and the governing body of the municipality in which the development area is located to share a portion of the captured assessed value of the district.

There’s no agreement among the city and the DDA or the other taxing authorities to share the DDA TIF, Kunselman pointed out. Yet through its parking fund, the DDA is providing money to the city – under the parking contract – and also to the Ann Arbor Transportation Authority, through grants to the getDowntown program. At the March 14 meeting of the council audit committee, Kunselman called this “TIF laundering.” This was “very questionable” in Kunselman’s mind. He noted that the way that DDAs operate is starting to catch the attention of the state legislature. [By way of background, HB 4459, if passed, would exclude from capture taxes levied under the state's enabling legislation on zoological authorities or art institute authorities.]

DDA: Background – TIF/Parking Fund

While Taylor’s characterization of the DDA’s historical use of TIF funds to invest in the city’s parking structures was accurate, much of that history predates the transfers of parking system revenues to the city, which began in earnest in 2005.

That’s the year the DDA agreed to transfer $1 million a year to the city for the next 10 years, with the possibility of transferring up to $2 million in any one year, so long as the total through 2015 did not exceed $10 million. With all $10 million paid in the first five years, the city sought to renegotiate the contract – resulting in an agreement ratified finally in May 2011, which now annually transfers 17% of gross public parking system revenues to the city of Ann Arbor.

The payments to the city from the parking system were made in the context of a consistent narrative, beginning at least around 2003 when the DDA’s TIF plan was renewed, around the notion of self-sufficiency for Ann Arbor’s public parking system. From the 2003 TIF plan:

In 2002, the DDA took over operation of the on-street parking meter system in order to meet the community’s goal of a self-sustaining downtown parking system. The DDA is now working to establish rates and policies that will ensure the long-term viability of the full system while serving the special needs of downtown stakeholders.

From the Nelson\Nygaard study of the Ann Arbor parking system completed in 2007:

The public parking system operations can and should be financially self-sustaining, with no need for tax subsidy.

From the DDA’s “Public Parking & Transportation Demand Management Strategies Plan,” written in April 2010:

The public parking system operations are now and should continue to be financially self-sustaining, with no need for tax subsidy. The users of the system should pay for the system, including operation, maintenance, repair, and eventual additions to the system.

And mayor John Hieftje campaigned for re-election in 2010 in part on a contention that the bonds to be issued for the new Library Lane underground parking garage would be serviced with parking system revenue, not with tax money. [See Chronicle coverage of candidate forums on July 10, 2010 and July 1, 2010.]

However, when the city council voted on Feb. 17, 2009, to approve issuance of the bonds for the new Library Lane underground parking structure, the staff memo had indicated that a combination of parking revenue and TIF capture would be used to pay the bonds:

Debt service on the bonds is expected to be paid from revenues of the City’s public parking system and tax increment revenues collected by the Downtown Development Authority.

From an accounting point of view, the DDA’s financial system was set up to reflect a commitment that all parking system expenses would be covered by parking system revenues. But that entailed allowing the parking fund to show a deficit – with the balance in the other DDA funds (including the TIF fund) keeping the DDA solvent in aggregate. However, deficit fund balances are counter to Michigan’s Uniform Budgeting and Accounting Act. And the result of the FY 2010 audit was that the DDA shifted away from that deficit-funding practice.

The required adjustment to the accounting, to show positive balances for all the funds, meant that the accounting showed clearly that TIF tax capture would be used to help pay for the Library Lane underground parking garage.

At the council’s audit committee meeting on March 14, 2013, the city’s chief financial officer, Tom Crawford, sketched out the general history of the DDA, when it used TIF funds at the beginning of its life to repair and construct parking structures. Then the DDA reached a point where the DDA had decided by policy, Crawford explained, that the TIF funds wouldn’t be used for parking, and that TIF revenue would only be used for economic development and other activities. But around 2008-09, Crawford said, when the underground structure was being planned, that approach “was just not going to work.” So the DDA had changed its policy – which is the DDA’s purview, Crawford said.

About the statement in the FY 2012 audit report, which indicated that only parking revenues are used to pay for parking structure debt, Crawford allowed that “the words could be improved.”

DDA: Council Communications – Task Force

During the council communications at the end of the meeting, audit committee member Sally Petersen (Ward 2) alerted her colleagues on the council that she’d be proposing a task force on the DDA, in order to get better alignment between the city and the DDA. She indicated that Stephen Kunselman (Ward 3) was aware of her desire to form a task force. She felt the task force could run in parallel with consideration of the changes to the DDA ordinance. She described the ordinance changes as tactical, implying that the task force would focus on strategic approaches. The task force proposal would likely come to the council on April 1, she said.

Mayor John Hieftje volunteered that every time the city had asked the DDA to do something, the DDA had helped.

Sumi Kailasapathy (Ward 1) responded to a remark made by Hieftje earlier in the meeting, during the brief deliberations on the ordinance amendments, about his concern that the city’s general fund might be put at risk by the kind of changes she and Kunselman were proposing. She said that for her, it was a matter of making sure that compliance with the state statute was ensured, and that the numbers were right. The first step, she indicated, was to make sure the calculations were correct and that there was compliance with the regulations. After that, the question could be opened about whether money comes back to the city. The city’s motivation should not be to turn the DDA into “a cash cow,” she concluded.

Hieftje told Kailasapathy that he didn’t disagree with what she was saying, but he’d just wanted to make the point that the DDA had been very cooperative.

Summit Townhomes Zoning and Site Plan

At the March 18 meeting, the council was asked to consider the site plan and necessary zoning for the Summit Townhomes project. The property is located at 2081 E. Ellsworth Road.

The developer plans to build 24 attached residential units in four separate buildings, with each building between 80 to 160 feet in length. Each of the 24 units would have a floor area of about 1,300 square feet, and an attached one-car garage. The plan includes two surface parking areas on the east and west sides of the site, each with 12 spaces. To do this, the property needs to be zoned as R3 (townhouse district).

March 18 was the first time the site plan had been before the council. But the R3 zoning for the property, annexed from Pittsfield Township, had been previously considered by the council, and referred to the planning commission for re-review. The planning commission then confirmed its original recommendation for R3 zoning.

In more chronological detail, the zoning item had first appeared on the city council’s Jan. 7, 2013 agenda, when it received initial approval. However, during a public hearing at the council’s Feb. 4, 2013 meeting, about a half dozen people spoke in opposition to the zoning – citing concerns about congestion and overcrowding. So councilmembers voted unanimously to refer the zoning issue back to planning commissioners for another look. The council indicated interest in hearing more detail on drainage issues, and the level of recreational services offered in that general area of the city, as well as information about public safety issues.

At their Feb. 21, 2013 meeting, planning commissioners voted again to recommend that the site be zoned R3 (townhouse district) – the same zoning they had previously recommended at their Nov. 20, 2012 meeting.

The project has been working its way through the city’s approval process for several months. The site plan had been postponed by planning commissioners in June of 2012 and again on Nov. 20, 2012, but was ultimately recommended for approval at the commission’s meeting on Jan. 3, 2013.

Before recommending the site plan, planning commissioners had previously recommended approval of annexation and zoning of the site in 2012. At their June 19, 2012 meeting, commissioners had approved annexing the 2.95-acre site, just east of Stone School Road, from Pittsfield Township into the city of Ann Arbor. The annexation was subsequently authorized by the city council.

Summit Townhomes Zoning, Site Plan: Public Hearings

Thomas Partridge wanted civil rights amendments attached to the rezoning request, as well as for all similar requests, that would ensure access to affordable housing.

Ethel Potts told the council that they’d “wisely” sent the question back to the planning commission for a second look. She said she wouldn’t characterize the commission’s “discussion or lack of discussion.” There are three or four townhouse developments in that area of town, she said, and she didn’t think that part of town needed more townhouses.

Summit Townhomes Zoning, Site Plan: Council Discussion

When the council reached the rezoning item, Marcia Higgins (Ward 4) indicated she wanted to have the city attorney look into a question before voting, so she moved to lay the question on the table. The council voted unanimously to lay the question on the table.

Later in the meeting, when the council reached the agenda item about the site plan, the council took the zoning back up off the table.

Christopher Taylor (Ward 3) led off deliberations by reciting the history of the council’s previous postponement, based on concerns about the already-existing density of the area. He mentioned the council’s decision to refer it back to the planning commission, and the commission’s re-affirmation of the recommended R3 (townhouse) zoning. Taylor stated that he was “unwilling to take that at this time.” So he wanted to postpone the question another 30 days to allow for additional time to reflect on the appropriate zoning for that area – in the context of the city’s master plan and the existing density.

Higgins indicated support for the postponement. She pointed out that it’s the first time the city is applying zoning to this parcel, because the city had just recently annexed the property from the township. There is no pre-existing city zoning. She wanted to see it “a little less dense.”

Sabra Briere (Ward 1), who is the city council’s representative to the planning commission, told the council she would carry the message to the planning commission at its next meeting.

Higgins noted that she didn’t know that there was a particular message to convey to the planning commission, but she encouraged Briere to inform the planning commission that the council had postponed the question and to relate the reason for the postponement.

Stephen Kunselman (Ward 3) said that just because there’s already R3 zoning in the area with several dense townhome developments doesn’t mean it warrants more. At some point, the infrastructure can’t handle it. The traffic on Ellsworth already gets backed up, especially now that Costco has opened, he said. He was looking forward to different zoning. He allowed that R1C might not fit, but said that the topography of the property had to be respected. Townhomes on a hill would require a significant amount of earthmoving – and that has consequences for everybody downhill. As downhill properties he noted Arbor Oaks and Forest Hills. There’s a need to think outside the box, when it goes back to the planning commission, Kunselman concluded. [This remark by Kunselman may have contributed to confusion about expectations for possible planning commission action. According to planning manager Wendy Rampson, who was contacted by The Chronicle later in the week, there has been no direction given to planning staff or the commission to consider the matter further.]

Outcome: The council voted unanimously to postpone the zoning until its April 15, 2013 meeting. The site plan was also similarly postponed, in a separate vote.

Zoning Board of Appeals Chair

On the March 18 agenda was a resolution to appoint a chair for the zoning board of appeals (ZBA): Alex Milshteyn, who already serves on the ZBA. He’s a replacement for Carol Kuhnke, who resigned in December 2012 after being elected judge of the 22nd Circuit Court. The ZBA is somewhat different from most other city boards and commissions, which elect their own chair from within the body. The council appoints the chair of the ZBA.

Sabra Briere (Ward 1), who previously served on the zoning board of appeals, introduced the item. She said she’d enjoyed having the leadership of Carol Kuhnke as chair. Briere was confident that Milshteyn would also be an effective and capable chair of the ZBA.

Outcome: The council voted unanimously to appoint Alex Milshteyn as chair of the ZBA.

The Shoppes at 3600

Before the council for its consideration was the site plan as well as the rezoning for a proposed retail development at 3600 Plymouth Road, just west of US-23 – called The Shoppes at 3600.

The developer hopes to build a 9,490-square foot, one-story retail building, to be constructed in what’s now the parking lot and front yard for a hotel, at an estimated cost of $1 million. The building would have space for several businesses, including a restaurant with a one-lane drive-through window and outdoor seating. An existing shared driveway off of Plymouth Road would be used to access the site. The site plan calls for 33 parking spots and four covered bike parking spots near the entrance.

The March 18 agenda items on the site plan and the rezoning – from R5 (motel-hotel district) to C3 (fringe commercial district) – followed an initial vote of approval for the zoning at the council’s Feb. 19, 2013 meeting. Voting against the rezoning on the initial consideration was Stephen Kunselman (Ward 3).

The planning commission had recommended approval at its Jan. 15, 2013 meeting. The project had been postponed by the commission on Nov. 7, 2012.

The site is located in the same complex as the Holiday Inn North Campus. Responding to some planning commissioner concerns voiced at the November 2012 meeting, the developer had provided an alternative site plan that was reviewed on Jan. 15. But the developer sought approval for the original layout, which was ultimately recommended for approval by the planning commission. The owner is listed as Ann Arbor Farms Hotel Corp., with property being developed by Diverse Development in Holland, Ohio.

The Shoppes at 3600: Public Hearings

Thomas Partridge questioned the idea that the item could appear on the council’s agenda without the sponsorship of a councilmember or the mayor. He called for an amendment to zoning that would ensure access to the property for affordable transportation.

Warren Attarian addressed the council and objected to the site plan. He noted that it’s the first thing you see coming into the city, and there were five shops squeezed into a little more than an acre. The back of the buildings is up against the sidewalk, with no setback, while the front of the buildings is interior to the development. He noted that the planning commission had asked the developer to present an alternate layout, which the developer did. Although the planning staff had determined the alternate plan was feasible, the developer didn’t pursue it. He asked the council not to approve the site plan, venturing that the real problem was trying to squeeze five stores into one acre.

The Shoppes at 3600: Council Deliberations

Jane Lumm (Ward 2) asked city planning manager Wendy Rampson to explain the landscaping requirements. Rampson explained that the site has frontage on M-14, which requires right-of-way buffering. Some mitigation was also required for some landmark trees. There would be trees around the perimeter, Rampson said, as wells as some lilacs and shrubs on Plymouth. She thought that red oaks would be planted along the M-14 on-ramp.

Rampson explained that the back of the building is the north side.

Outcome: The council voted unanimously to approve the rezoning. Later in the meeting, the council voted to approve the site plan over the lone dissent of Stephen Kunselman (Ward 3).

Liquor Licenses

The Ann Arbor city council considered a resolution objecting to the renewal of the liquor license for The Arena – a bar located on the northeast corner of Washington and Fourth in downtown Ann Arbor.

The basis of the objection to the renewal, which needs to be forwarded to the Michigan Liquor Control Commission for final action, was The Arena’s failure to pay a combined $8,755 of 2011 taxes and an additional default judgment. The default judgment was made in the 15th District Court by then-judge Julie Creal in favor of the city for $1,659. It involved non-payment for police services, in connection with outdoor tents for an Oktoberfest event.

A hearing on The Arena’s liquor license renewal was held on March 6, 2013 – presided over by hearing officer Jane Lumm, who represents Ward 2 on the city council. Based on evidence presented by assistant city attorney Bob West, who called city clerk Jackie Beaudry and city treasurer Matt Horning as witnesses, Lumm concluded that the recommendation of non-renewal should be placed on the March 18, 2013 city council agenda.

Also on March 6, a hearing was conducted on the non-renewal of the license for Banfield’s Bar & Grill. Lumm issued a similar verdict on that case, but in the meantime, Banfield’s paid the taxes owed. So Banfield’s was on the agenda with three other establishments that were recommended to have their licenses renewed. The three other establishments recommended for renewal by the council on March 18 – all of which had rectified any issues prior to the March 6 hearings – included Aut Bar, Bagger Dave’s Legendary Burgers & Fries, and Café Zola.

At the council’s March 18 meeting, Lumm introduced the item on objecting to renewal of The Arena’s license. She took the occasion to thank the staff in the city attorney’s office, the building department, fire department, police department, the city clerk’s office and the treasurer’s office. She also thanked her fellow liquor license review committee members, Mike Anglin (Ward 5) and Sumi Kailasapathy (Ward 1).

Outcome: On separate votes, the council recommended renewal of four liquor licenses, and objected to the renewal of The Arena’s license. Based on a subsequent Chronicle visit to The Arena, the owner’s intent is to pay the outstanding bills before the state liquor control commission rules on the license renewal.

Sign Ordinance Amendments

The council was asked to give initial approval to changes in the city’s sign ordinance. If the changes are ratified at a second and final vote, certain kinds of digital signs with specific limitations would be allowed in the city. [.pdf of proposed outdoor advertising ordinance]

But under the ordinance revisions, new billboards – signs with an area greater than 200 square feet – could not be constructed. And existing signs of that size could not have electronic features added to allow for changeable text or images.

The existing sign ordinance does not allow for any changeable text, except for “noncommercial information which requires periodic change” – like time and temperature. So the proposed changes to the ordinance would allow for changeable portions of a sign, subject to the limitation that the changeable portion of the sign not be more than half the area of any sign and no more than 30 square feet per sign and 15 square feet per sign face. Additional limitations would prevent flashing and scrolling – by not allowing changes to content more often than 15 minutes.

The proposed ordinance changes would place a maximum brightness of any illuminated sign, including those that are digital/electronic: 5,000 nits during the day and 100 nits at night, and in no case greater than 0.1 foot-candles above the already existing amount of light at a residential property line. One nit is defined as one candela per square meter. And a candela is about the amount of light produced by a common tallow candle.

By way of comparison, an iPhone 5 display is reported to have a brightness of about 500 nits.

The ordinance revisions come in the context of a moratorium on digital billboards that’s currently in place throughout the city, but is scheduled to expire on April 11, 2013. The city extended the moratorium for an additional 180 days at its Oct. 1, 2012 meeting, after the moratorium was first enacted for 180 days at the council’s April 17, 2012 meeting.

Falling under the moratorium are “billboards commonly referred to as ‘electronic message centers,’ ‘electronic message boards,’ ‘changeable electronic variable message signs,’ or any billboard containing LEDs, LCDs, plasma displays, or any similar technology to project an illuminated image that can be caused to move or change, or to appear to move or change, by a method other than physically removing and replacing the sign or its components, including by digital or electronic input.”

The moratorium resolution passed by the city council acknowledges that such signs are prohibited by the city’s current sign ordinance. From that ordinance, the list of prohibited signs include those that “… incorporate in any manner or are illuminated by any flashing or moving lights other than for conveyance of noncommercial information which requires periodic change.”

Sign Ordinance Amendments: Council Deliberations

Christopher Taylor (Ward 3) recited the history of the moratorium. The proposed revisions essentially preserve the status quo, he said, by allowing no new billboards. The current ordinance allows for up to 30 billboards citywide, and there are currently 28. That meant that the change eliminates the possibility of an additional two billboards. He stressed that existing billboards could continue to exist as nonconforming signs and continue to be repaired and maintained.

Gas station price signs are covered by the ordinance revisions, he said. There are also a number of changes intended to improve clarity.

He noted that the moratorium expires April 11. If the ordinance revision were given initial approval that evening, and final approval on April 1, then the ordinance changes would be enacted before the expiration of the moratorium.

Sally Petersen (Ward 2) asked for some clarification of the ordinance revisions. Are digital signs permitted as long as they’re not scrolling? How big can they be?

City planning manager Wendy Rampson explained that the ordinance revisions dealt with digital components, because it’s become a popular sign form in the industry. The ordinance would allow for a small amount of changeable copy both for on- and off-premise signs. But the amount of the changeable area could not be more than 50% and could not total more than 15 square feet per side. It would allow for different worship services to be displayed at a church, she explained, or gas station price changes. But she pointed out that the ordinance language specified the changeable part couldn’t change more frequently than once every 15 minutes and couldn’t “scroll, explode, dance” – because that’s perceived as a distraction to vehicular traffic.

The ordinance language states:

Changeable copy shall not and shall not appear to flash, undulate, pulse, blink, expand, contract, bounce, rotate, spin, twist, or otherwise move.

Mike Anglin (Ward 5) asked for some illustrations to make clear what the ordinance language meant, saying, “our imaginations aren’t that fertile” and “the words don’t help.” He felt it was entirely too complicated for someone not familiar with the industry.

Margie Teall (Ward 4) wanted to know if the Pioneer High School sign at Stadium and Main would be affected, venturing that the city did not have jurisdiction over the school. Rampson confirmed that was the case, just as the city had no jurisdiction over the signs at the University of Michigan football stadium.

Petersen wanted to know if Anglin was interested in postponing the vote. Anglin didn’t feel a need to postpone – as long as the staff provided the council with the information he’d requested by the time of the second vote. Anglin ventured that the corner of Madison and Main was “beginning to look like Coney Island.”

Chuck Warpehoski (Ward 5) and Jane Lumm (Ward 2) expressed tentative support for the changes – and were content to vote yes at first reading.

Petersen said she was “hard-pressed to support this at first reading.” She felt that the use of signs is an opportunity to impact economic development. She also pointed out the school district and the University of Michigan don’t have to comply and that would result in a lack of uniformity.

Outcome: The council voted to give initial approval of the revisions to the sign ordinance. Dissenting were
Marcia Higgins (Ward 4) and Sally Petersen (Ward 2).

Argo Parking Lease

A resolution on the council’s March 18 consent agenda related to a $3,000 lease to accommodate overflow parking for the Argo canoe livery. The lease had been recommended for approval by the city’s park advisory commission at its Feb. 26, 2013 meeting. The lease of a parking lot at 416 Longshore Drive – with about 40 spaces – will cover Saturdays, Sundays and holidays from May 25 to Sept. 2, 2013, with an option to renew administratively for two successive one-year periods.

City parks staff reported that the overflow parking at this lot had been used during the 2012 season, and they recommended continuing the lease. According to city records, the land is owned by the Stewardship Network.

Items on the consent agenda are voted on as a group by the council, but any of the items can be separated out for separate discussion. Sabra Briere (Ward 1) asked that the item be separated out.

Briere had heard concerns that the lot is not very well-graded and that there’s a lot of runoff. She wondered if there was a way for the city to enforce maintenance of the lot through the lease. Sumedh Bahl, the city’s community services area administrator, told Briere that would have to be negotiated, and had not been a part of the conversation that went into the lease that the council was being asked to approve.

Briere asked for postponement.

Outcome: The council voted unanimously to postpone the parking lot lease.

Communications and Comment

Every city council agenda contains multiple slots for city councilmembers and the city administrator to give updates or make announcements about important issues that are coming before the city council. And every meeting typically includes public commentary on subjects not necessarily on the agenda. Here are some highlights.

Comm/Comm: Fire Department Resource Deployment

At the request of Marcia Higgins (Ward 4) during communications time, city administrator Steve Powers summarized the feedback that had been heard on a proposal made about a year ago to reconfigure fire stations in the city. The proposal called for deploying a total of three out six existing fire stations – instead of five, which is the current deployment. Powers said what was heard at the seven public meetings and on the online A2 Open City Hall was a lot of divided opinion. He indicated that the significant policy question emerging from that discussion related to the responsibility of the fire department for emergency medical response.

Powers characterized the feedback that staff had received as consistent with the council’s discussion at its March 11, 2013 work session. At that session, there seemed to be a clear majority view that the 3-station plan would not go forward. Higgins indicated interest in exploring alternate ideas and wanted an opportunity to ask more questions. [At the work session, she'd mooted the idea of getting a cost analysis for restoring staffing to six stations.] The result of the back-and-forth between Higgins and Powers was an understanding that deployment of fire department resources might be part of the council’s work session on March 25.

Comm/Comm: Transparency

Between 1:30 a.m. and 2 a.m., two people weighed in on the topic of transparency. Mark Koroi recalled the issue that had arisen in 2009 in connection with emails sent between councilmembers during council meetings. Currently, he said the council has a problem with the way it conducts its closed sessions. He told the council more public commentary was needed – an allusion to the fact that the council does not allow public commentary at its work sessions.

[Under Michigan's Open Meetings Act, a gathering of more than a quorum of councilmembers does not necessarily constitute a "meeting" under the statute, which would require that members of the public are allowed to address the body. However, at work sessions, councilmembers engage in deliberations toward decisions, which makes their work sessions meetings under the statute.]

Koroi also mentioned an appeal that’s been filed on the Dream Night Club case. [The city objected to the renewal of the club's liquor license last year – alleging that the establishment was an ongoing nuisance – and the state liquor control commission followed that recommendation.]

John Floyd led off his comments on a lighthearted note, saying that in deciding his NCAA basketball tournament picks, he’d wanted to go with Michigan, but Wisconsin seems like they’re really starting to gel.

On the topic of transparency, he noted that people speak about how important transparency is. With respect to the legal advice that the council had received on the possible moratorium for D1 site plans, he allowed that it makes sense to receive the attorney’s advice in private. Councilmembers had indicated they’d based their vote on that advice. Now that the council had received the advice and voted, he suggested, the council could choose to release the written advice to the public. It’s not about what council is required to do, Floyd said, but rather about what the council may do. [The sentiment expressed by Floyd had been incorporated in The Chronicle's commentary and questions on the city's draft FOIA policy.]

Comm/Comm: Skating Rink

Alan Haber reminded the council of a continuing effort to have a public skating rink on top of the Library Lane underground parking garage, for people to have fun. [Recent Chronicle coverage of this topic includes the Feb. 26, 2013 park advisory commission meeting when public commentary was delivered advocating for a park atop Library Lane, and a more formal discussion at PAC's March 19, 2013 meeting.]

Present: Jane Lumm, Mike Anglin, Margie Teall, Sabra Briere, Sumi Kailasapathy, Sally Petersen, Stephen Kunselman, Marcia Higgins, John Hieftje, Christopher Taylor, Chuck Warpehoski.

Next council meeting: Monday, April 1, 2013 at 7 p.m. in the second-floor council chambers at city hall, 301 E. Huron. [Check Chronicle event listings to confirm date.]

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