Deliberations on DDA Pave Way for Final Vote

Also: Ann Arbor city council postpones action on 413 E. Huron site plan and sign ordinance revisions; extends suspension of public art spending

Ann Arbor city council meeting (April 1, 2013): The council’s first meeting in April featured some progress on items that have appeared repeatedly on its agenda in the last several weeks.

From left: Jane Lumm (Ward 2), assistant city attorney Mary Fales and Stephen Kunselman (Ward 3).

From left: Jane Lumm (Ward 2), assistant city attorney Mary Fales and Stephen Kunselman (Ward 3). (Photos by the writer.)

After two postponements, the council gave initial approval to a set of changes to the ordinance that establishes the Ann Arbor Downtown Development Authority (DDA). The changes can be divided into those that affect board composition and those that relate to the computation of the DDA’s tax increment finance (TIF) capture.

The tax calculations have implications of roughly $1 million a year for the DDA and the taxing jurisdictions whose taxes are captured by the DDA. Those taxing jurisdictions include the city of Ann Arbor, Washtenaw County, Washtenaw Community College and the Ann Arbor District Library. The vote was 7-3, as mayor John Hieftje, Margie Teall (Ward 4) and Chuck Warpehoski (Ward 5) voted no. Christopher Taylor (Ward 3) was absent. The final vote will likely come at the council’s April 15 meeting. Councilmembers are not obligated to vote the same way the second time around.

The council also wrapped up an issue that has appeared on its agenda for several meetings. At its March 18 meeting, the council had finally decided not to enact a moratorium on site plan applications in D1 (downtown core) zoning districts. Instead, the council had directed the planning commission to conduct a review of D1 zoning. But councilmembers had left open the question of the exact scope of work and the timeframe for its completion by planning commissioners. At the April 1 meeting, the council allowed the commission six months, until Oct. 1, to review the following: the appropriateness of D1 zoning on the north side of Huron Street between Division and South State and the south side of William Street between South Main and Fourth Avenue; the residential premiums; the zoning for the University of Michigan Credit Union parking lot.

Other business was further delayed by the council. At the developer’s request, the council postponed for a second time the 413 E. Huron project, a proposed 14-story, 216-apartment building at the northeast corner of Huron and Division streets. That project will come back before the council at its April 15 meeting. A new public hearing on the 413 E. Huron site plan application was started on April 1 and will continue on April 15.

The council also postponed a second and final vote on changes to the city’s sign ordinance. The changes would prohibit any new billboards, and allow only a limited range of digital signs. That won’t come back before the council until May 6. Several people addressed the council during the public hearing. All of them worked for Adams Outdoor Advertising, and spoke in opposition to the changes. Because of the postponement, the council extended a moratorium on digital sign applications, which has now been in place for a year.

The council also extended a moratorium on spending of monies that have been set aside under the city’s Percent for Art ordinance. A revision to that ordinance, which would likely eliminate the public art set-aside but still allow for aesthetic elements to be built into a project, is expected to be brought forward in the next few weeks. The public art ordinance revisions are being crafted by a council committee that was tasked with that responsibility in December of 2012.

At its April 1 meeting, the council also approved contracts for renovations at the Gallup Park canoe livery, and the Argo and Geddes dams. In addition, the council approved a lease for additional parking in connection with the Argo Cascades.

Other business at the meeting included council approval of the notice to issue bonds for the city’s drinking water system. The council also authorized contracts in connection with street reconstruction and sidewalk repair work for the 2013 season.

DDA Ordinance

Several revisions to Chapter 7, a city ordinance governing the Ann Arbor Downtown Development Authority (DDA), were on the council’s agenda, having been postponed twice previously. The council had postponed voting at its March 18, 2013 and March 4, 2013 meetings. [.pdf of DDA ordinance given initial approval on April 1]

The revisions considered by the council fell roughly into two categories: (1) those involving board composition and policies; and (2) calculation of tax increment finance (TIF) capture in the DDA district.

In the first category are: a new prohibition against non-mayoral elected officials serving on the DDA board except by agreement with the other taxing jurisdictions; term limits on DDA board members; and a new requirement that the DDA submit its annual report to the city in early January.

An amendment to the ordinance changes offered by Jane Lumm (Ward 2) during the meeting was accepted as friendly. It was meant to assure a focus on the DDA’s support of housing. It stipulated that if tax increment financing is used as the financing method for an approved authority project, the project must meet one of the DDA’s adopted plan goals. Among those plan goals is support of housing. Lumm’s change provides the ability of the DDA to make investments in properties not just in the district, but also in neighborhoods near the district.

More significantly, among the proposed revisions to Chapter 7 are changes that are meant to 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 that would otherwise have gone to those other entities.

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. The result of the clarification to the Chapter 7 language would mean about $363,000 less TIF revenue for the DDA in FY 2014 – compared to the $3.933 million shown in the DDA’s adopted budget for that year. For FY 2015, the gap between the DDA’s budget and the projected TIF revenue – using the proposed clarifying change to Chapter 7 – is just $74,000.

However, the total increment in the district on which TIF is computed is expected to show significant growth. And under the proposed clarification of Chapter 7, that growth would result in a return of TIF money to other taxing jurisdictions – that would otherwise be captured by the DDA – totaling $931,000 each year for FY 2014-15. The city of Ann Arbor’s share of that would be roughly $559,000, of which $335,000 would go into the general fund. The city’s general fund includes the transit millage, so about $69,000 of that would be passed through to the Ann Arbor Transportation Authority.

In the Chapter 7 ordinance language, the amount of TIF capture that’s returned to the other taxing jurisdictions is tied to growth in the valuation in the district. Under Chapter 7, 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 returned to the other taxing authorities in the DDA district. In 2011, the DDA for the first time returned excess TIF capture to other authorities, when the existence of the Chapter 7 language was reportedly first noticed. At that time, the DDA made repayments of TIF monies to other authorities of around $400,000, which covered what was owed going back to 2003. When the DDA calculated the amounts owed in 2011, the city of Ann Arbor waived its roughly $700,000 share. Subsequently, the DDA reversed its legal position, contending that it had not needed to return the money it had repaid.

In 2011, the DDA used a year-to-year interpretation of the Chapter 7 language instead of computing the rate of growth against the base year in a cumulative fashion. That is a point that the Chapter 7 revisions would clarify. At the two previous meetings when the council had considered but postponed voting on the ordinance amendments, that specific point had not been addressed. But the substitute ordinance revision offered on April 1 clarified the current language in favor of the cumulative methodology.

The figures below come from the city of Ann Arbor’s financial services staff. Labels are The Chronicle’s.

 FY 13   FY 14  FY 15
 3.957   3.933  3.756  DDA Adopted Budget TIF Revenue
 3.957   4.501  4.613  Projected TIF, DDA View 
 3.957   3.570  3.682  Projected TIF, Clarified Ch. 7
          .568   .857  Budgeted vs Projected, DDA View
         (.363) (.074) Budgeted vs Projected, Clarified Ch. 7

 FY 13   FY 14  FY 15
          .335   .335  City General Fund
          .223   .223  City Non-General Fund
          .559   .559  Total City

          .372   .372  Total AADL, WCC, WC
          .931   .931  Total


These projections do not include the additional tax capture that would result in future years from completion of City Apartments, 624 Church, 618 S. Main, or 413 E. Huron (assuming that it is approved).

DDA Ordinance: Task Force

During council communications time at the start of the meeting, Sally Petersen (Ward 2) reminded her colleagues that she’d announced at the previous meeting  – very late during the evening – that she would be bringing forward a resolution to establish a task force focused on the DDA. She had proposed the group’s specific assignment as conducting a strategic assessment of the priorities for economic development between the DDA and the city. After that, she’d had conversations with the DDA and had changed the scope of that initiative a bit. The focus would not just be the DDA but rather the idea of economic development – which would align the priorities of the city, the DDA and Ann Arbor SPARK. She was working with the city attorney’s office on the language of the resolution, she said, and is hoping to bring that resolution forward on April 15.

DDA Ordinance: Audit Committee Update

During council communications time at the start of the meeting, Sumi Kailasapathy (Ward 1) gave an update on the activities of the council’s audit committee. She said the committee did get answers to its questions via the city’s CFO. The auditor indicated that during the past year’s audit, the auditor did not review the DDA’s TIF capture for compliance with Chapter 7 of the city code. She found that “really troubling” because the DDA’s own 2003 renewal plan states that the TIF account has to be tested for compliance under the state of Michigan’s Downtown Development Authority Act. Secondly, Kailasapathy continued, the auditor’s own report on controls and compliance states that they tested the DDA’s financial statements for compliance – but when specifically asked if it was tested for Chapter 7 compliance, the answer was that it had not been. She indicated that she felt DDA deputy director Joe Morehouse, who handles the DDA’s finances, and city CFO Tom Crawford need to take up this issue. She stated that an audit has high standards, and if compliance with Chapter 7 has not been tested, then it needs to be tested. She ventured that it might be necessary to reissue the financial statements of the DDA.

Margie Teall (Ward 4), who chairs the audit committee, responded to comments made by Kailasapathy at the council’s March 18 meeting, when Kailasapathy noted that Teall had not been being willing to call a meeting. [A previous meeting of the audit committee was called by two of its members – Kailasapathy and Stephen Kunselman (Ward 3) – which is a possibility under Robert's Rules. The other possibility is for a meeting to be called by the chair.] Teall contended she had always been willing to meet. But she was waiting until all the DDA staff could attend. [DDA deputy director Joe Morehouse was on medical leave.] Teall noted that the audit committee would be meeting with the DDA staff the following day, and pointed out that DDA staff had acknowledged the shortcomings, and said they’d be addressing them. Teall indicated that the response from the DDA staff to the questions they been asked was that they’re “on top of that.”

DDA Ordinance: Council Deliberations

Stephen Kunselman (Ward 3) led off the deliberations by saying that the item had appeared a couple of times previously on the council’s agenda and he hoped that this evening the council could finally get some discussion going, and take the initial vote at the first reading.

What he had done in cooperation with Sumi Kailasapathy (Ward 1) – the co-sponsor on the proposed ordinance changes – was to put together a substitute version for the original. The substitute version reflects some changes that had been talked about “out in the community,” Kunselman explained. Some of those included the cumulative methodology for calculating the tax increment finance (TIF) capture.

In addition, the section on board composition is different in the substitute version. Rather than preventing any elected officials from serving on the DDA board, based on discussions with some of the members of the other taxing jurisdictions whose taxes the DDA captures, it had become apparent, Kunselman said, that anything the city was doing should be done in concert with the taxing jurisdictions. He then quoted from the revised substitute ordinance changes:

(1) Except for the Mayor as provided above or by mutual written agreement of the taxing jurisdictions levying taxes that are subject to capture by the authority, no public official of any taxing jurisdiction levying taxes that are subject to capture by the authority shall be eligible for appointment, whether in his or her official capacity or as an individual; and
(2) No member may serve more than 2 consecutive full terms.

Kunselman said he knew there had been a lot of information going around generated by the city staff and by the Ann Arbor DDA board members – talking to various groups to seek support for their position. His perspective on the issue, he said, was to focus on “keeping the DDA’s budget relatively whole, tightening up some of the administrative functions.” He felt it would become apparent that there are some elements of the state law which the Ann Arbor DDA’s financing plan doesn’t follow, but the proposed amendments would bring clarity to that. “We know that there is an issue with the clarity of the TIF methodology,” he said. He noted that the mayor had received a letter from one of the taxing jurisdictions [the Ann Arbor District Library] disagreeing with the method that had been used.

“If we allow these things to occur on our watch, then we are complicit to the fact that we’re ignoring what the law says,” Kunselman said. He then quoted from the state enabling legislation for DDAs:

The plan may provide for the use of part or all of the captured assessed value, but the portion intended to be used by the authority shall be clearly stated in the tax increment financing plan.

Kunselman ventured that everyone had seen the three columns that are included in the Ann Arbor DDAs financing plan – which show projections of growth labeled as pessimistic, realistic, and optimistic. For whatever reason, Kunselman said, the DDA board keeps approving a budget based on the optimistic version of the TIF financing plan. The realistic column is the one that is set in bold typeface, he noted. If it’s not clear, then Kunselman contended that it is not in compliance with the state law. That was his whole point in bringing the amendments forward. His point was to bring confidence back to the DDA. Responding to criticism about what Kunselman was actually trying to accomplish, he spoke directly to mayor John Hieftje: “Mayor, I have never asked for the dissolution of the DDA. And I’m certainly not about to now. I’m just trying to give our DDA institution some clarity, some confidence, and some trust in how it works on our behalf.”

Stephen Kunselman (Ward 3)

Stephen Kunselman (Ward 3).

Sabra Briere (Ward 1) asked for clarification about Kunselman’s effort to put the substitute ordinance amendments before the council for consideration. Hieftje checked with Kailasapathy that it would be acceptable to consider the substitute version. And with that the substitute amendments were before the council.

Hieftje ventured that councilmembers would have several questions for staff. He invited executive director of the Ann Arbor DDA Susan Pollay to the podium. Hieftje noted that the council had only recently received some answers to questions that had been posed by email. He began by reading off some of them from his laptop screen: Will the DDA continue to be able to make grant payments to the city for the courts and police building? Hieftje noted that the Ann Arbor DDA had awarded the city a grant to support the construction of the new Justice Center [aka police/courts building] – and he had seen the paperwork on that. [As a member of the DDA board, Hieftje voted for the $8 million grant, which was to be paid in roughly $0.5 million installments.]

He explained that the amount of the grant worked out to $508,000 a year. Hieftje then recited the history of how Washtenaw County had decided that the city needed to move the 15th District Court out of the county courthouse space. And a new building with a police station had been completed by the city [called the police/courts building, the Justice Center or the municipal center]. Hieftje characterized the situation as “the DDA stepping up to the plate.” Hieftje alluded to the fact that under the state statute, a public building in the downtown area was an eligible DDA project.

About the DDA resolution pledging the $8 million grant to support the construction of the new Justice Center, Hieftje told Pollay: “As I read that, though, that is a grant. And if the DDA felt that they had other uses for those funds, it would be at the discretion of the DDA to move those?” Pollay’s answer: “It is.”

Hieftje moved on to the topic of the other activities: What other aspects of the DDA’s activities would be impacted by the ordinance change? He indicated that the DDA had identified various things. Margie Teall (Ward 4) asked about the impact on affordable housing grants.

Pollay indicated that whether such grants would continue would depend on the budget. She said the DDA was just finishing a period where a significant amount of construction had taken place, and fund balances are approaching their minimum, she said. The housing fund is now at zero, she reported. In the next two-year budget, recently adopted by the board, the DDA is anticipating transferring some additional money into the housing fund. But that depends on revenues, she said, which would determine whether there would be sufficient money to make those housing funds transfers. An upcoming grant is planned for the Village Green City Apartments project, which will have four units of affordable housing – with “affordable” defined as accessible to residents with incomes at 60% of the average median income or below. That grant would exhaust all of the housing fund balance, Pollay said.

Depending on whether the ordinance is enacted, she continued, the housing fund balance could be restored or not. At that point, Jane Lumm (Ward 2) indicated she had emailed everyone a note in the last 15 minutes related to Teall’s question. She was suggesting an amendment to the ordinance changes to address the concern that Teall had expressed. She had sent the amendment at 8:10 p.m., she said. Not all councilmembers had received Lumm’s message. So she sent the message again.

The amendment was eventually accepted later as friendly by Kunselman and Kailasapathy. With italics indicating additions and strike-through indicating deletions compared to the original version, Lumm’s amendment read as follows:

(4) Development Plan Projects: In identifying, approving, and financing possible projects to meet the goals of the plan, the authority shall comply with the following:

If tax increment financing is used as the financing method for an approved authority project, the project must be meet one of the adopted development plan goals specifically allowed under Act 197 and directly benefit properties within the downtown development district or near-downtown neighborhoods.

While Lumm sorted out the email issue, Hieftje followed up with more questions for Pollay.

He confirmed with Pollay that the Library Lane underground parking garage was the largest project that the DDA had ever undertaken. It was anticipated, Hieftje said, that the Library Lane project would have a significant impact on the TIF fund, and on the TIF fund balance as a consequence of that major construction project. But he ventured it was anticipated that in the future there would be additional revenues generated by new developments in the downtown, and that those additional TIF capture revenues would be used to replenish the DDA’s fund balances and prepare for future projects. Pollay confirmed for Hieftje: “That is all correct.” Hieftje added, “That’s the way I remembered it as well.”

Kunselman followed up with a question for the city attorney’s office: How much of the TIF can be kept in savings, if state law requires – and the city’s own Chapter 7 states – that surplus funds should be paid back to the taxing jurisdictions? We’ve heard that there is $2 million worth of TIF money sitting in the DDA’s account, Kunselman said, and we know that $4 million worth of TIF was transferred to the parking fund. It seemed to him that there was a lot of TIF money sitting in an account. He then quoted from the state statute:

The authority shall expend the tax increment revenues received for the development program only pursuant to the tax increment financing plan. Surplus funds shall revert proportionately to the respective taxing bodies.

And the city’s Chapter 7 indicates that if the rate of growth in the tax valuation within the DDA district exceeded a certain rate, then money has to be returned to the taxing jurisdictions, Kunselman said. He reiterated the Ann Arbor District Library’s disagreement with the DDA’s method of calculating the excess TIF capture. He returned to the issue of the three different columns of estimates in the TIF plan – and the DDA’s practice of using the optimistic column as opposed to the realistic column. “Where do we stand on the issue of state law on this issue of surplus?” Kunselman asked the city attorney.

Assistant city attorney Mary Fales indicated that her understanding of the DDA’s position is that there currently is not a surplus – that the funds are encumbered, either in reserves or for actual expenses. If there were a surplus, she continued, it would be applied based on Chapter 7, and distributed according to state law. She understood Kunselman’s intent to clarify the language of the ordinance, as involving the application of a specific element of Appendix C (the realistic approach) and the use of a cumulative method.

Sabra Briere (Ward 1)

Sabra Briere (Ward 1). In the background is Sumi Kailasapathy (Ward 1).

Briere indicated she was not clear about what the word “surplus” means. When the city deals with its budget, she continued, they try to balance anticipated revenues against the anticipated expenditures. But in any given year the city might end up with money that’s transferred into the fund balance. That fund balance is then used perhaps in a subsequent year. When Kunselman talks about surplus dollars, does that refer to the same situation? she asked. Or is he talking about money that falls outside of the “interesting calculation” that is supposed to be done? What she thought of as fund balance had been described by Kunselman as surplus. “What does surplus mean?” she asked.

Fales noted that the state’s DDA statute does not define the word “surplus.” So you would apply normal principles to define it, which would be funds that are not required for immediate expenses or anticipated expenses – because that’s usually what surplus means, Fales told Briere. Briere asked if that meant for a given year or for a longer period – say if someone anticipated that they would be spending funds in three years. Fales said that the report the DDA is required to do is for specific information on an annual basis. On an annual basis, the DDA could identify encumbered funds, she said.

Kailasapathy indicated she felt there was some confusion, because what Kunselman was talking about is fund balance – which is a balance sheet item. But the TIF refund described in Chapter 7 actually has to do with the revenue income level, she explained. So if you take in revenue at a certain level, and if there is excess, then you have to refund some of it. She asked Fales if Fales agreed that this was a point of confusion. She asked Fales to confirm that the refund is actually based on revenue, not on the balance sheet. “I think that’s true,” Fales said.

Sally Petersen (Ward 2) indicated she had a question for DDA board treasurer Roger Hewitt. She recalled a conversation that the two of them had in September 2012 when they had first met. She wanted to make sure that she had the correct assumption in mind. She remembered expressing some concern to Hewitt about TIF being used to pay down the parking garage bonds. “I believe you assured me that at the end of fiscal year 2014-15, that TIF transfers for the parking garage bond payments would no longer happen.”

Hewitt indicated he thought that was correct, but thought it could be a year later than that. After some consultation with Susan Pollay and Joe Morehouse, Hewitt indicated that the TIF transfers to support the parking fund payments would continue past fiscal year 2015 for another year. Petersen asked if that was in the DDA’s three-year or five-year budget. Hewitt indicated that the budget for the DDA is adopted two years at a time. Beyond that, Hewitt said, the DDA uses a 10-year plan, which is a planning document, not a budget document.

Petersen got confirmation that the bonds in question are bonds the city has issued on behalf of the DDA. Hewitt took the opportunity to address the impact of the proposed ordinance change, which would strike one of the paragraphs that describes bond obligations. “The funds that we’re talking about being returned to the city, are only after the debt service has been satisfied,” Hewitt contended. He described the debt service of the DDA as being around $7 million a year. Petersen clarified with Hewitt that the bonds in question are not DDA bonds but rather city bonds. Hewitt allowed that they are city bonds, but the DDA has pledged its revenues to pay the debt service on the bonds.

Petersen indicated that she felt it was debt service on the DDA’s own bonds that is a “disqualifying condition” laid out in the ordinance, not debt service on the city’s bonds. She wanted to know if debt service on the city bonds would count as a disqualifying condition for the refund if the bonds are city bonds versus DDA bonds. City CFO Tom Crawford indicated that the city staff had spent a fair amount of time looking at that provision of the Chapter 7 ordinance: “It’s not very clear, it’s very confusing,” he said. The city’s interpretation is that it was not just restricted to DDA bonds but also included city bonds. Crawford indicated that there are still some DDA bonds that are being paid off and also some bonds that the city has issued on behalf of the DDA. “But it’s not real clear in the language,” he allowed.

Susan Pollay brought the DDA’s outside counsel, Jerry Lax, to the podium. Lax ventured that no one would say anything that provides crystal clarity, but as he understood the state-enabling legislation for DDAs, it specifically authorizes city bonds to be used for the kind of purposes that the DDA fulfills, and specifically authorizes the pledging of DDA funds for the repayment of those bonds. And the statute specifically allows for TIF funds for that purpose, he said. What Chapter 7 provides, Lax continued, is a provision that indicates money is not to be returned to the taxing authorities while there were debt obligations to be paid.

From left: Sabra Briere (Ward 1), Jane Lumm (Ward 2) and assistant city attorneyMary Fales

From left: Sabra Briere (Ward 1), Jane Lumm (Ward 2) and assistant city attorney Mary Fales.

Jane Lumm (Ward 2) admitted to being confused. She quoted out the paragraph about payment into bond reserve funds. It’s not clear exactly what that means, she said. She felt it might be interpreted as just a guide to say: Make sure you pay the debt service. Or it might mean that no refund should be made if the debt service is greater than the TIF capture. She noted that currently the amount paid by the DDA in debt service is far in excess of the TIF revenue, but she pointed out that parking revenues are also used for debt service.

Lumm also observed that the DDA has “flip-flopped” on the question. In 2011, the DDA had made refunds, she noted. But later in 2011, the DDA changed its position and said that it should not have made the refunds, and changed its interpretation of the ordinance.

Lax allowed that it’s understandable why Lumm would raise that point of the DDA changing its position on the ordinance. “Frankly, I think the answer might be a little more simple than it otherwise would appear, which is the initial repayment of monies to other taxing jurisdictions, I think, was simply made erroneously. And I think if you read the entire language of Chapter 7, it’s clear that those did not have to be made.” Lax allowed that there was some confusion about the ordinance language, but he felt there were some things that were moderately clear. One of the things that’s moderately clear is that the state statute does contemplate the use of city bonds to fund DDA projects. He returned to his point that the initial repayments were erroneous. Chapter 7 of the city ordinance is “a touch clearer than people might be suggesting,” Lax contended.

Kunselman asked Lax if the DDA has to put all TIF revenue toward debt. His understanding was that the DDA had put all of its 2012 TIF capture toward payment of parking bonds. Other grants have been paid out of parking revenues. In FY 2011, according to the DDA’s audit, Kunselman continued, the DDA had collected $3.4 million in TIF and the DDA’s expenditures had shown $3.3 million in grants. So almost no money went to pay parking structure debt in 2011, Kunselman said. But under Lax’s interpretation, Kunselman ventured, all TIF first goes toward debt.

Lax disputed Kunselman’s paraphrase of what Lax had said. Lax said he’d simply indicated that under the state statute, TIF funds are available for repayment of debt. Lax said the statute doesn’t say that repayment of debt must be the top priority, or that all of the TIF must be used in that way, or that a certain percentage of it must be used in that way. The state statute says only that the TIF funds are among the DDA assets that can be used for repayment of debt, Lax said. In any given year, if a budgetary decision is made to use TIF funds for specific statutorily-authorized purposes, Lax continued, he thought the statute contemplates that those kinds of decisions are within the judgment of the DDA.

Kunselman came back to the point that before a rebate is given to any of the taxing jurisdictions, on Lax’s interpretation, the DDA has to pay debt. Lax replied that the TIF funds are not being put away into some kind of lockbox, but rather they are being budgeted for authorized purposes.

Pollay added that the kind of projects the DDA undertakes are not annual projects. The projects that the DDA takes on are large capital improvement projects. The Fifth and Division streetscape improvement project took seven years, she said – to be fully planned, to get city council support, to fund, and finally to implement it. If the DDA takes on large projects like that, which was a $7 million capital improvement project, the DDA has to have the ability to have a fund balance sufficient to be able to make the minimum 15% down payment that’s required if a bond is issued – under the city’s own rules. So the DDA in its history has followed a pattern of increasing its fund balances and then depleting them when it takes on capital improvement projects. The DDA is about to begin that cycle again, she said. It takes several years to go through a cycle, she said.

Hieftje asked Pollay what DDA projects would have to be put aside and could not be completed if the ordinance changes were approved. It’s difficult to know, Pollay said. It’s her understanding that in fiscal year 2014, $373,000 would be removed from what the DDA had budgeted for that year. And the year after, there would be another roughly $80,000 less. That would likely impact the DDA’s ability to respond to projects that are “teed up” that the DDA had hoped to take on, she said. The most immediate one was to complete the curb ramp replacements downtown. The DDA and the city share an obligation to complete those repairs. The DDA has taken on the lion’s share of those in the downtown area, she said, but some remain to be done.

The other project the DDA feels is also pretty critical is replacing streetlights on Main Street, Pollay said – because they have reached the end of their useful life. Unfortunately, she added, it’s a very expensive project. The estimate includes replacing the globe lights – which are a signature design element for the Main Street area – and that will amount to around $650,000. The DDA had hoped it could begin to pledge some of their dollars to the city’s public services area to see that streetlight replacement project done this year, Pollay indicated. But that would have to be put off for this year, if the ordinance changes were enacted, Pollay said.

While those two projects were part of the short-term impact, Pollay said the long-term impact goes back to the fund balances. The DDA had just begun developing plans for its next big projects, Pollay said. With a TIF reduction, it would be many more years before the DDA could take on any really significant large project. “And I mean years,” she said, “We just would not have the funds available.” The parking rates have been raised, Pollay continued, and the DDA felt that they were currently at the upper end of where they should be. So there really are no other sources of revenue other than TIF revenues.

Hieftje asked Tom Crawford for confirmation that the ordinance change would put $277,000 back in the general fund. That’s after subtracting the amount that’s passed through to the Ann Arbor Transportation Authority. He asked what the impact would be if the DDA exercised its “discretion” to rescind the $508,000 grant for the police/courts building. Hieftje calculated that would have a negative impact of over $200,000 on the city’s general fund. Crawford confirmed that if the DDA were to not pay the installment of the $8 million grant that the DDA had previously approved, it would create a deficit in the city’s general fund. “I can understand why they might do that given that $559,000 was already coming to the city,” Hieftje said.

Lumm indicated that she figured this meant the city would need to pick up the expenses that the DDA had been covering. Briere noted that the calculations as done under the ordinance revisions would result in roughly an additional $70,000 being paid to the Ann Arbor Transportation Authority. But the DDA already provides a grant to the AATA to subsidize go!passes for $479,000, plus additional funds for transit service on Packard Road and Washtenaw Avenue. She asked Pollay if the ordinance revisions would affect the DDA’s funding of the AATA’s services. Pollay noted that the DDA board had recently approved the AATA grant for fiscal year 2014. So she did not feel that there would be an immediate impact. That would be subject to budgetary considerations in the future.

Briere then turned to the topic of where DDA TIF revenue could be invested. One of the ordinance amendments defines it to be strictly within the boundaries of the DDA district. She asked if that was in any way related to the Ann Arbor Transportation Authority and the amount of money that the AATA receives from the DDA. Susan Pollay explained that parking revenue had been used since the beginning of the DDA’s subsidy for transportation services – because the DDA believes that the parking structures and the bus system are all part of a transportation system. She did not believe that this would be impacted by the proposed ordinance amendments. What would be impacted are those projects that are paid for with TIF revenue. She referenced the state statute:

An authority shall be a public body corporate which may sue and be sued in any court of this state. An authority possesses all the powers necessary to carry out the purpose of its incorporation. The enumeration of a power in this act shall not be construed as a limitation upon the general powers of an authority.

Pollay appealed to that passage as the justification for spending TIF revenue on investments that are physically located outside the geographic boundary of the DDA TIF district. She was not sure which projects the DDA was currently undertaking that would be excluded by the revised Chapter 7 language. “We have not been informed,” Pollay said. [The proposed ordinance amendments were revised through Lumm's friendly amendment to allow for investments in near-downtown neighborhoods.]

Kailasapathy referred to numbers that had been provided by the city’s financial staff. Those figures indicated that since the early 2000s, TIF revenues to the DDA have gone up 91%. She ventured it would be difficult to find another city fund where revenues had gone up by as much as 91%. Looking at the four years between 2010 and 2013, she noted that the parking fund debt service went from 5% to 45%, to 59%, and then a “staggering” 87% for fiscal year 2013. She felt there was a big mismatch. On the one hand, there is a doubling of revenues from TIF. But almost all of it is being spent on one objective – parking. “It almost looks like you could have been a parking authority,” she observed. She ventured that what had tilted the balance was the Library Lane underground parking garage.

Sumi Kailasapathy (Ward 1)

Sumi Kailasapathy (Ward 1).

Kailasapathy alluded to the specter Hieftje had raised about the $508,000 police/courts building grant and Briere’s implied concerned that the DDA might cease funding of AATA services. Kailasapathy characterized them as “disaster scenarios,” but she noted that in the next fiscal year there would be a $300,000 reduction [actually estimated at $363,000] compared to what the DDA had budgeted, and the year after that it would actually start to grow, she continued. So the ordinance revisions would not actually reduce the TIF revenue to the DDA into the future. Instead it would simply cap the rate of growth of net TIF revenues, she pointed out. She ventured that when you grow too fast, or when revenue comes in too fast, development is not a thoughtful process. It becomes lopsided, she cautioned.

Kailasapathy asked Pollay to explain why the DDA’s percentage allocation to parking structure debt had increased so much, even while TIF revenue had increased. Pollay noted that the DDA had predicted, and it has come true, that the tax base for all of the taxing authorities had grown, even though the TIF capture by the DDA had also grown. The DDA receives only 17% of all taxes that are collected downtown, Pollay said. She noted that the city staff had indicated the city’s tax levy in the downtown district in the early 1980s was about $1.3 million. This year the city is receiving $4.1 million, Pollay said.

Pollay contended that all of the taxing authorities are seeing the benefit of their tax base growing. Pollay described how it had been a policy choice back in the 1960s that the downtown would not have zoning for parking, and that the parking system would be public. The DDA had inherited a very deteriorated public parking system, Pollay said, and it had replaced or rebuilt six of the current city parking structures. Parking is a fundamental part of how businesses are able to bring in customers and their employees to the city.

As an economic development strategy, the DDA had also invested money in other things. So while Kailasapathy had characterized the DDA as a “parking authority,” Pollay felt it was because the DDA did a very good job at that – and it’s a fundamental tool that the community of businesses relies on. She listed off some of the parking structures: Ann and Ashley, Liberty Square, First and Washington, Library Lane. Parking is something the DDA has supported since its inception. Pollay responded to a follow-up remark from Kailasapathy by listing through some of the non-parking activities that the DDA undertakes. She mentioned grants for affordable housing and for energy improvements, as well as transportation grants.

Pollay continued by saying you don’t think of the DDA as the agency responsible for it, but as you walk on downtown sidewalks, many of them have been improved by the DDA. Hundreds of trees have been installed, along with benches, bike racks, and alley improvements. The DDA has played a part in helping the city sell city-owned property – mentioning specifically the First and Washington sale [where City Apartments is being built]. She hoped the DDA would be able to support the city on the sale of the former Y lot. She characterized the activities of the DDA as fairly broad. Parking is certainly part of what the DDA does, but it’s not the only part, she concluded.

Chuck Warpehoski (Ward 5) mentioned that city CFO Tom Crawford had recollected that the original 1982 TIF plan had been based on an estimated 5% annual growth of taxable value. The current renewal plan is based on estimated growth of around 3%. Warpehoski asked Pollay if that matched her recollection. Pollay indicated that she did not think that the first plan had a cap. The second plan from 2003 was an attempt to reflect the actual growth that the district had seen to that point, she said.

Kunselman asked which projects were included in the city financial staff’s revised estimates. The answer the council had received from the city’s financial services staff was that the bulk of the increased TIF had come from The Landmark (601 S. Forest), The Varsity (on East Washington) and Zaragon West (at Thompson & William). Kunselman followed up by getting confirmation from Crawford that the TIF capture generated for Village Green’s City Apartments project at First and Washington had not been included in the city’s estimates. Crawford told Kunselman that the forecast that was before the council for fiscal year 2014 includes all newly constructed and complete buildings – plus buildings that were under construction. Crawford explained that at the end of each calendar year, the assessors require property owners to pay taxes on partially complete buildings – so that is included in the forecast of TIF revenue provided by the city’s financial staff.

However, Crawford continued, when projections had been made for fiscal year 2015, the financial staff did not attempt to figure out what developments were possibly coming on line. Crawford had done a more traditional forecast of 3% growth, which the DDA uses for planning, because that’s what it’s been over time. So the forecast provided to the council for FY 2015 did not include Village Green’s City Apartments project. There are so many factors that can come in, Crawford said, that “I’d hate to give you only the good news and not some of the offsetting bad news, so we were somewhat conservative in FY 2015.”

Crawford and Kunselman engaged in some additional back-and-forth over the City Apartment’s project. Crawford said he did not think there was a measurable material value of the new project at the end of the calendar year 2012 – as much of the work being done at that point was digging a hole, he said. But Kunselman ventured that now it has several floors that have been constructed. Crawford allowed that if it were to be assessed today, it would have a value.

Kunselman concluded that the numbers that had been provided by city staff – showing a forecast in FY 2015 with a slight deficit to the DDA’s adopted budget for that year – would need to be revised. Crawford allowed that if he were asked a year from now about what he thought of FY 2015, he would say that the DDA could be expecting some additional TIF revenue from the Village Green City Apartments project. Kunselman ventured that if this ordinance amendment were to pass, the DDA would only see a reduction in its TIF revenues just this year. Crawford characterized Kunselman’s conclusion as a “reasonable possibility.”

Petersen said she felt the ordinance amendments did a good job clarifying and improving accountability – for example, with respect to filing the annual TIF report and setting forth how the TIF is calculated.

Sally Petersen (Ward 2) and Stephen Kunselman (Ward 3)

Sally Petersen (Ward 2) and Stephen Kunselman (Ward 3).

Petersen indicated that her initial concern was the apparent nearly $1 million “hit” the DDA would be taking in the first year – because she did not want to pull the rug out from under the DDA. But the staff’s answer to the questions that councilmembers had asked was that compared to the DDA’s adopted budget, there would only be a reduction by about one-third as much [$363,000]. She’d contemplated the possibility that Year 1 of implementation of the clarified calculations could be delayed until FY 2015, but she didn’t think that would help much. Her point was that there’s not as much of a “hit” in Year 1 as they’d originally thought.

She was also trying to understand how the DDA was able to absorb a $3 million hit in FY 2012-2013 – when the DDA had doubled capital costs compared to its budget. To Petersen, the budget was “fungible” enough that it was able to absorb a $3 million hit, and the $363,000 shortfall was only 10% of that.

Pollay explained that the difference in the budget was attributable to the timing of completing the Library Lane underground garage and the Fifth and Division streetscape project. The budget is not fungible, Pollay said – it’s a matter of tapping the fund balances. Responding to a question from Petersen, Pollay said that the DDA’s TIF fund balance is anticipated to be $840,000 at the end of FY 2014. [Across all of its funds, the DDA has budgeted in a way that leaves nearly $5 million in fund balance – an amount that includes money set aside for parking structure maintenance – at the end of FY 2014.] Petersen observed that the figure is still more than $363,000.

Pollay offered that it’s confusing because the total amount “that would be taken from the DDA” would be more than $931,000. Compared to the revenue that the DDA had budgeted, Pollay allowed it was only $363,000 less – but that was because the DDA didn’t know there would be additional TIF capture beyond what they’d budgeted.

Warpehoski raised a question about whether the additional increment provided by new projects would actually result in more TIF revenue to the DDA – given the nature of the cap as defined in the clarified calculations. Some back-and-forth between Warpehoski and Crawford determined that Warpehoski had misunderstood one of the lines in the chart. The cap on the DDA’s TIF revenue would be roughly $4 million in FY 2015 and would increase 3% each year from that point – which is an amount that the DDA would likely receive, assuming that Village Green completes the construction of City Apartments and other projects that are expected to be built are, in fact, built.

Warpehoski then got clarification that under the substituted ordinance revisions, an elected official could serve on the DDA board only with the agreement of all, not just some, of the other taxing jurisdictions.

Briere said she tended only to be interested in policy. And one of the points of policy deals with term limits. There are already some time limits – that the terms are four years. She wondered why all boards and commissions don’t have uniform restrictions. She wondered why there needed to be a special policy for the DDA board.

Lumm ventured that the council seemed ready for a vote.

DDA Ordinance: Council Deliberations – Final Comments

Hieftje then began his final remarks on the topic. He said that over the last several years, the city had worked very well with the DDA and that’s worked out very well. In the past, when the city has had any issues with the DDA, Hieftje said, they’ve sat down and talked with the DDA, and that’s turned out very well. Since it was established, the DDA has made a tremendous contribution to affordable housing, Hieftje said. This time around, Hieftje continued, the issue should have been approached by starting a conversation with the DDA’s partnership’s committee. Instead, he said, the council had launched a fairly aggressive ordinance change “against” the DDA “without sitting down to talk to them.” He said that it could have been handled in a much better way.

Hieftje responded to the idea that the possibility of the DDA rescinding the $8 million grant for the police/courts building was only a threat. He contended that to him it was “perfectly logical” that if the DDA, which was anticipating an increase of $991,000 in TIF revenue, instead saw $559,000 being returned to the city, then it would be reasonable to say that the city did not need the $508,000 annual installment towards the $8 million grant. Hieftje claimed that if you start to look at the numbers, the revisions to the ordinance would mean there’s a $231,000 deficit to the general city’s general fund. [This would depend on the DDA breaching its obligation to pay the $508,000 annual installment on the police/courts grant.]

Hieftje also noted that $300,000 has been set aside in the DDA’s budget as a way possibly to pay for police in the downtown. That would increase the number of police officers in the city, which was an expressed goal of some councilmembers, he pointed out. Hieftje was also concerned that this would reduce revenue to the DDA at exactly the point when the DDA is trying to rebuild its fund balances.

Hieftje said he couldn’t figure out why the council had started down this road – except for political reasons. He reviewed his basic points, which were that the DDA had been excellent partners, and he didn’t see a good bottom line for the city. The city should have sat down and talked with the DDA about this issue, Hieftje said. [Representatives of the other taxing authorities met with the DDA as a group in the summer of 2011 to discuss the issue. But they did not pursue that conversation – which some in attendance expected would result in either an ordinance change or a memorandum of understanding among the taxing jurisdictions.]

Kunselman responded to Hieftje’s remarks by saying he appreciated Hieftje’s defense of the DDA, but it was not Kunselman’s intent to sit there and “bash” the DDA. Part of the issue, Kunselman said, is about bringing revenue to the city and the other taxing jurisdictions, who need those additional tax dollars. He said he didn’t think the DDA knows how to spend tax dollars better than Washtenaw County, Washtenaw Community College or the Ann Arbor District Library.

Responding to the idea that the DDA might provide a grant to fund police officers in the downtown, Kunselman dismissed the idea that the city would hire police officers based on a year-to-year grant. That was especially true, Kunselman said, if the DDA could simply exercise discretion to rescind its grants, as Hieftje had claimed was possible. Adopting the ordinance revisions is all about new tax dollars, Kunselman pointed out. All of the projections that the council had seen basically keep the DDA whole, for the most part. He allowed that in the next year, there could be a couple hundred thousand dollars less for the DDA compared to what the DDA had budgeted. But he pointed out that in years past the DDA had taken hits and been able to absorb them.

The DDA is the only agency that has not had a reduction in its budget, Kunselman said. When he hears about what wonderful work the DDA does, he questioned how well the DDA actually managed the parking system – given that debt associated with the system was substantially subsidized with TIF revenue. “Out the other end” of the public parking system, Kunselman said, comes $3.1 million of revenue to the city of Ann Arbor. Before the DDA existed, there was a big concern about the public parking system being a “cash cow” for the city – and at that time there was not even a TIF subsidy. He described the hourly cost for parking as including a “surcharge” of an extra 17%, due to the terms of the city’s contract with the DDA. He questioned whether that was consistent with the case law on the definition of taxes and fees – the Bolt decision.

Kunselman said he’d tried to approach the issue delicately, so that the DDA’s budget was left whole and so that the DDA wouldn’t take a hit to their funds. Other than the light pole and sidewalk ramp project, Kunselman said, there weren’t other projects that the DDA would not be able to complete, based on what the council had been told.

Kunselman said Hieftje was trying to make the issue into some sort of “Kunselman against the DDA,” but it’s not, he said. Instead, it’s about bringing trust and confidence back to the DDA as an institution.

Kunselman briefly addressed the question of term limits for DDA board members, which are part of the set of ordinance revisions. There are term limits for the park advisory commission, he said. The existing DDA board members had apparently not read the law about filing the annual TIF report. He concluded that the DDA board needed new blood and new eyes.

He returned then to the question of how the TIF capture is calculated, wondering why Hieftje had voted year after year to approve a budget using the optimistic projection in the TIF plan. “Why don’t you [Hieftje] answer that for all the citizens of Ann Arbor?”

Kunselman wound up his remarks by noting that the ordinance changes were being considered by the council at a first reading. He hoped councilmembers would support the changes at least to get them to the second reading. He told his council colleagues that if they wanted to give the DDA a $931,000 increase in revenue, they could do that. Or they could support some of those dollars coming back to city. It’s recurring revenue to the city, money that can be used to hire firefighters and police officers. He asked his council colleagues if they wanted to make public safety a priority or parking: “You make the choice.”

Responding to Kunselman’s characterization of his effort as delicate, Margie Teall (Ward 4) ventured that delicate is in the eyes of the beholder. She wished that Kunselman had chosen to bring the issue forward in a more collaborative way.

Teall felt like the DDA is being penalized for doing a really great job. The DDA is what’s responsible for making it possible to attract new tax dollars, she said. The DDA has been a good partner in maintaining infrastructure. She appealed to the notion that a “rising tide can lift all boats.” She wouldn’t support the ordinance changes, she said.

Petersen also wished the approach Kunselman had taken had been more collaborative, but she indicated she wanted to separate out the political from the pragmatic issues. In the long term, she felt that the DDA had done good work and expected that the DDA will continue to do good things, and would expect the TIF fund to grow even more. What the ordinance amendments do is provide clarity, she said. While she wished the approach had been more collaborative, she thought it would help strengthen the DDA in the long term.

Jane Lumm (Ward 2) literally rolled up her sleeves before the meeting started.

Jane Lumm (Ward 2) literally rolled up her sleeves before the April 1 meeting started.

Lumm indicated she’d support the ordinance changes at first reading. She presented her support framed by her concept of what a DDA should be. She believed downtown vibrancy is important to any city’s health and she felt a strong, autonomous DDA is an important tool for achieving that. She did not agree with those who said the city should not have a DDA at all. She’d been around before the DDA had taken over the public parking system, and stated that the DDA had done a very good job on that. But she did believe the city needed a strong, independent DDA. Over the last decade it had evolved from an independent, autonomous body supporting the downtown to an extension of the city council. Lumm did not think that was or is in the city’s best interest. The DDA funds selected city projects and programs – outside the regular budget process. However, a decision about whether to use $0.5 million for the police/courts building or to hire police officers is the kind of decision that should be made inside the regular budget process, Lumm said.

In support of an independent DDA, she’s highly supportive of the ordinance changes related to board governance. She preferred the original set of amendments on elected officials. She supported those elements of the ordinance changes that define TIF capture. She was not wedded to enactment of the clarified calculations beginning for the current tax year, but felt it was important to implement the ordinance change fairly and expeditiously.

Responding in part to the criticism against Kunselman that his approach had been inappropriate, Mike Anglin (Ward 5) observed that Kunselman had talked about the issue for at least a year – starting by asking for a budget amendment last year. [That budget amendment failed.] Anglin acknowledged the partnership the city has with the DDA. He did not think that the ordinance amendments by any means crippled the DDA.

Warpehoski said he’d been wrestling over this issue. When he saw the Fiat dealership or other new projects were built outside the DDA district, he liked all that “TIF capture” it provided. [Warpehoski likely meant something more along the lines of "ordinary taxes not subject to TIF capture."] That was important for the city to be able to provide services to residents, he said. But when he looked at the numbers, he contended that 10 years ago, the city received roughly 17% of all the tax revenue in the DDA district, and even now the city receives about 17% of the revenue, even with the DDA’s TIF capture. He concluded that the city is coming out pretty well. There are all the other ways the city has come out ahead, he said – including the $8 million police/courts grant and the 17% of gross revenues from the public parking system. So if the “problem” is getting revenue, he was having trouble understanding that. The existing arrangement was working out fairly well, he thought.

As far as the optimistic, realistic and pessimistic projections in the TIF plan, Warpehoski felt this was similar to the way his organization [Interfaith Council for Peace and Justice] puts together its budget. So he understood why, from a budget planning perspective, the realistic numbers would be used, but he did not understand why that would be the basis for a cap. He raised the point that before the 2003 renewal plan, the projected growth in the TIF plan had been roughly 5% per year, whereas the 2003 renewal plan was roughly 3%. If the 5% had been brought forward with the 2003 renewal plan, then the cap under the cumulative methodology would be well above the amount of TIF received by the DDA.

Churck Warpehoski (Ward 5)

Chuck Warpehoski (Ward 5).

On the question of term limits, Warpehoski did not feel that term limits have worked well in Lansing. He called term limits “mandatory inexperience.” Sitting next to one of the most veteran councilmembers, Marcia Higgins (Ward 4), he saw the value of experience. While he understood the desire to reach for the money, he could not support the ordinance amendments.

Hieftje returned to the point that it could have been handled in a much better way. He wouldn’t support it because of the bottom line. He again raised the specter of a $231,000 general fund deficit for the city. He wouldn’t say that sometime in the future, the DDA’s TIF couldn’t be reconsidered, and he felt it could be done in a collaborative way. Hieftje allowed that he’s long said that the DDA is an “arm of the city,” but that he felt he could see the DDA taking action to rescind the police/courts grant.

Briere said that as a person who didn’t do all that well in math, she struggled with the issue. She was always looking for the unintended consequence. Every time she looked at the issue more closely, it seemed to become less clear. She allowed that looking logically at the 2003 TIF plan, it’s the figures in the “realistic” column that should be considered. She indicated that she was interested in having more concrete projections 10 years into the future.

Briere said it’s difficult to separate the political from the financial changes. She wished there had been a more collaborative effort. She’d heard Kunselman say that the impact would only be for one year, but she did not understand that. Briere indicated that her vote that night would depend on watching the votes of those who voted before she did. [Based on the sequence of the roll call, Briere had a clear indication that it would pass at first reading before casting her own vote.]

Higgins called the discussion an extremely interesting conversation. She felt the DDA does a very good job. She felt the DDA had been very good stewards – and nothing she’d heard that night takes away from that. On the question of whether the ordinance amendments had been brought forward in a collaborative process, she allowed that the best route is not always the one that’s taken. She appreciated the fact that new councilmembers with new skill sets were looking at the issue, and it made her step back and look at this too. There were some aspects she agreed with and some aspects that give her pause. She said she’d vote yes on first reading. But she was not saying that she’d vote for it on second reading.

Outcome: The vote was 7-3, as Christopher Taylor (Ward 3) was absent. The initial approval was supported by Stephen Kunselman (Ward 3), Sumi Kailasapathy (Ward 1), Sally Petersen (Ward 2), Jane Lumm (Ward 2), Mike Anglin (Ward 5), Marcia Higgins (Ward 4) and Sabra Briere (Ward 1). Voting against it were mayor John Hieftje, Margie Teall (Ward 4) and Chuck Warpehoski (Ward 5).

In order to be enacted, the changes will need to receive approval from the council at a subsequent meeting, following a public hearing, now scheduled for April 15.

D1 Zoning Review

On the council’s agenda was a resolution setting the scope of work and a timeline for direction given at its March 18, 2013 meeting – that the city’s planning commission should review zoning in the D1 (downtown core) zoning district.

Here are the specific areas of inquiry the planning commission is supposed to address, as set forth in the resolved clause:

RESOLVED, That City Council requests the City Planning Commission to specifically address these issues:
(i) whether D1 zoning is appropriately located on the north side of Huron Street between Division and S. State and the south side of William Street between S. Main and Fourth Avenue;
(ii) whether the D1 residential FAR premiums effectively encourage a diverse downtown population; and
(iii) consider a parcel on the south side of Ann St. adjacent to north of city hall that is currently zoned D1 to be rezoned to the appropriate zoning for this neighborhood; and

RESOLVED, That City Council requests that Planning Commission complete its review and report to the City Council by October 1, 2013.

The three points of inquiry are similar in spirit, but different in their details, from those put forward by Christopher Taylor (Ward 3) at the council’s March 18 meeting. At that meeting, the council had deliberated on the question of whether to give the planning commission direction to conduct the D1 review and to impose a moratorium on the D1 site plans.

UM Credit Union Parcel

The orange-ish area denotes an area zoned as D2 (interface). Darker red areas, including the UM Credit Union parcel (pink arrow), are zoned D1 (downtown core). The red line denotes the boundary of the Ann Arbor Downtown Development Authority district.

At its March 18 session, the council decided to delete the mention of a moratorium from their resolution and to include a promise to define by April 1 the scope of the planning commission’s review and a timeframe for its work.

The first point of inquiry adopted by the council on April 1 differs from that offered on March 18 by omitting mention of historic districts – although the appropriateness of D1 zoning will almost certainly include the relation of D1-zoned areas to historic districts.

The second point of inquiry – about residential FAR (floor area ratio) premiums – had been proposed by Taylor on March 18.

The third point of inquiry is new. The parcel in question is the surface parking lot currently owned by the University of Michigan Credit Union, formerly owned by the now defunct Ann Arbor News.

D1 Zoning Review: Council Deliberations

Sabra Briere (Ward 1) indicated that she and Marcia Higgins (Ward 4) had talked about the content of the ordinance. Higgins had needed to leave the council meeting early, Briere said. The resolution provides additional guidance to the planning commission and sets a clear deadline, she said.

Chuck Warpehoski (Ward 5) expressed some desire that environmental incentives also be included in the review, but he’d concluded that keeping things focused in the resolution as it was written is an appropriate way to move forward.

Jane Lumm (Ward 2) wanted to know how the planning commission would view its responsibility: Would the planning commission feel it had the latitude to consider broader issues? City planning manager Wendy Rampson told Lumm she felt that the commission would initially consider just those issues in the written scope of the resolution and work toward making the Oct. 1 deadline. To the extent that there was time to do so, the planning commission might consider other issues. Responding to a specific question from Lumm about whether six months was enough time, Rampson indicated she thought it was doable. Rampson added that having targeted action is helpful.

Mike Anglin (Ward 5)

Mike Anglin (Ward 5).

Mike Anglin (Ward 5) expressed some concern about the timeframe but said he was glad the planning commission meetings would be televised. Briere, who serves as the city council appointee to the planning commission, told Anglin that the matter would be referred by the commission to its ordinance revisions committee – which met in a way that was noticed to the public and open to the public, but not televised. That committee would make recommendations to the planning commission, and the planning commission would hold a public hearing and give a recommendation to the city council. But she indicated that there would not be a discussion of the topic at every planning commission meeting between now and Oct. 1.

Responding to a question from Anglin, Rampson indicated that the ordinance revisions committee provided an opportunity for public comment at the end of its meetings, usually in an informal way.

Mayor John Hieftje said he was surprised that people were continuing to invest in student-only housing projects, saying that those buildings with 4-5 bedrooms seemed targeted for the student market. He said that Village Green’s City Apartment project, now under construction at First and Washington, was reporting a lot of demand for its 1-2 bedroom units. So he was in favor of making an adjustment to the kind of residential premiums that are offered.

Stephen Kunselman (Ward 3) took the opportunity to ask about the lack of an update on the R4C zoning revisions that have been studied for a very long time now. Rampson indicated that the advisory committee had taken additional time. Some back-and-forth established that Oct. 1 was really a firm deadline. Briere pointed out that there’s significant difference between the resolution that the council was considering for D1 review and the R4C study – in that the council had appointed a group of citizens for the R4C work, which made recommendations to the ordinance revisions committee of the planning commission. Now, what the council is doing had the practical effect of forwarding the matter directly to the planning commission’s ordinance revisions committee. [The draft recommendations for R4C zoning changes will be on the planning commission's April 16 agenda. See recent Chronicle coverage: "R4C Draft Readied for Planning Commission."]

Lumm reiterated the fact that she wanted to make sure the council’s direction was not unnecessarily restrictive.

Outcome: The council voted unanimously to approve the resolution on D1 zoning review.

413 E. Huron

On April 1 the council’s agenda included a resolution on the site plan application for 413 E. Huron – a proposed 14-story, 216-apartment building at the northeast corner of Huron and Division streets.

A new public hearing on the project was started at the April 1 meeting, and held open so that it can resume on April 15. The council first considered the 413 E. Huron site plan at its March 18, 2013 meeting. The new public hearing was the subject of extended discussion by the council.

413 E. Huron: Public Hearing

The council’s vote on the approval of the minutes from previous meetings is typically perfunctory. However, the council’s interest in giving the public additional opportunities to weigh in on the 413 E. Huron site plan resulted in extended conversation about approving the minutes from the council’s March 18, 2013 meeting. On the public hearing, the draft of the minutes, which the council was asked to consider, read as follows:

There being no further comment, the Mayor declared the hearing closed.

Held and Closed

The minutes are based on the fact that mayor John Hieftje said the public hearing was closed, when no one else wanted to speak.

Marcia Higgins (Ward 4) observed that the minutes indicated the public hearing had been held and closed. However, at the point in the meeting when the council voted to postpone the site plan, Higgins said, “We should have then asked to make sure that the public hearing stayed open – as we’ve often done in the past. So I’d like to correct the minutes so that the public hearing would have remained open. It’s been the practice that we’ve had to do that.”

Sabra Briere (Ward 1) ventured that if the minutes are a reflection of what actually occurred at the meeting, she didn’t think it was possible to “correct” the minutes, but she allowed it was possible she might be mistaken about that. City attorney Stephen Postema stated it’s clear that the public hearing needs to go forward in some manner – whether it’s by re-opening it or by some other means. He indicated that one way to accomplish a re-opening would be to reconsider the decision to postpone. Higgins was right about the fact that in the past the re-opening of a hearing has been done at the time of the council’s vote on the item, Postema said. He felt the best way to approach it was to have a new public hearing.

Hieftje got confirmation that the city attorney’s recommendation was to have another public hearing.

Briere wanted to clarify that if it’s a new public hearing, those people who spoke previously can speak at the new public hearing. [If a public hearing is continued, from one council meeting to the next, the council does not typically allow for people who spoke at the first meeting to speak again at the second meeting – because it's the same public hearing that had merely been continued.]

Briere reiterated that the council should just accept the minutes as written. Sally Petersen (Ward 2) asked how the process should have happened. She ventured that the reason the council was in this “predicament” was that when the council voted to postpone consideration of the 413 E. Huron site plan, the public hearing was not re-opened so it could be held open for the next meeting. Hieftje confirmed that Petersen’s understanding was correct.

Higgins added that Hieftje would usually say so at the start of the public hearing if he thinks there was any chance the council would postpone a decision. Hieftje said he’d state something like that only if he thought a postponement was likely – and Hieftje contended he didn’t have any idea the council would postpone 413 E. Huron site plan on March 18.

Assistant city attorney Kevin McDonald talked with Marcia Higgins (Ward 4) before the meeting.

Assistant city attorney Kevin McDonald talked with Marcia Higgins (Ward 4) before the April 1 meeting.

Higgins questioned whether the new public hearing meant that the council would be considering a brand new site plan. Postema stated that there’s a new public hearing only because the original public hearing hadn’t been held open in the same way it was done in the past. To the extent the site plan has been changed, Postema continued, assistant city attorney Kevin McDonald had recommended that it go back and be treated as a new public hearing at this time.

Higgins stated that she disagreed with the approach of a new public hearing. She felt a new process was being developed for this particular site plan. She said she wouldn’t push it, but felt the council needs to be cognizant of the issue. Hieftje asked Higgins if she was amenable to approving the March 18 minutes and accepting a motion to start a new public hearing later. Higgins said that’s what she thought they’d already decided to do.

When the council reached the public hearing on 413 E. Huron on its agenda, Hieftje indicated that he fully expected that it would be postponed, and that the public hearing would be continued on April 15 if it were to be postponed. No one spoke at the public hearing.

However, during public commentary reserved time at the start of the meeting, Kermit Schlansker commented on what he called a “furor over construction of an apartment complex on Huron Street.” The knowledge that houses will eventually have to be torn town and that people will have to learn to live in apartment buildings in order to save energy is an argument on the side of the apartments, he said. But the city could take a great step toward sustainability by specifying that all new buildings must use a heating system that is at least partially renewable. That could take the form of solar panels on the roof, a solar boiler, a cogeneration system, and an engine-driven heat pump. Eventually, Schlansker said, we will have to use both co-manufactured and solar boilers as heating systems. The easiest choice, he explained would be an engine-driven heat pump, with a cogeneration backup. We have to use every possible trick to ensure our future, he said.

413 E. Huron: Council Deliberations

During the scant deliberations, Jane Lumm (Ward 2) took the opportunity to tell representatives of the developer who were in the audience that she felt the changes that had been made so far – on 8,000 square feet out of 270,000 for the entire project – were about a 3% improvement. She wanted them to understand “what universe” she was coming from.

Outcome: The council unanimously approved the postponement of the 413 E. Huron site plan until its April 15 meeting.

Outdoor Sign Ordinance

On the council’s agenda was final approval of changes to the city’s sign ordinance – to allow for only a limited type of digital signs. Also considered was an extension of a council-enacted moratorium on applications for digital signs, which was set to expire on April 11, 2013.

Billboards on Liberty Steet at First, near the edge of downtown Ann Arbor, looking east.

Billboards on West Liberty Street at First, near the edge of downtown Ann Arbor, looking east. (Photo illustration by The Chronicle.)

If enacted, the changes would mean that a limited type of digital signs would be allowed in the city. But the effect of the proposed ordinance changes would be that no billboards would be permitted – although the existing 28 billboards in the city would be allowed to remain as non-conforming signs. Existing billboards would not be allowed to be retrofitted for digital displays. The council had given initial approval of the changes at its March 18, 2013 meeting. [.pdf of proposed outdoor advertising ordinance]

Under the proposed ordinance changes, 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 language states:

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

The proposed ordinance restrictions on dynamic elements of signs were motivated in part – based on remarks of city planning manager Wendy Rampson at the council’s March 18 meeting – by the perception that these elements are a distraction to motorists. That argument has been countered by Adams Outdoor Advertising in written communication to the city by citing studies that conclude any distraction does not cause a greater rate of traffic accidents.

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. 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 moratorium on digital signs was first enacted for 180 days at the council’s April 17, 2012 meeting. And the city council had extended the moratorium for an additional 180 days at its Oct. 1, 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.”

Outdoor Sign Ordinance: Public Hearing

Mayor John Hieftje indicated he thought it was highly likely that the vote would be postponed. This led to considerable hesitation on the part of several people who had planned to speak. If they assumed the council would postpone, expecting to be able to speak at the continued public hearing when the council took up the matter again, but the council wound up voting that evening, they’d have forfeited their opportunity to be heard before the vote.

Karolina Shillenn introduced herself as the real estate representative for Adams Outdoor. She told the council that Adams had three objectives that night. First, she asked that the council postpone the vote so that an opportunity could be provided to convey relevant information to the council, saying “Billboards are our business.” Second, she asked that the council maintain the current ordinance requirements, which cap the total number of billboards at 30. There are currently 28 billboards within the city, she pointed out. In addition, she asked that the council maintain the current 350-square-foot size limit. She showed the council an example of a current billboard for the Y, pointing out that it features a city planner on it. The third request she made was for the council to regulate digital signs at the 350-square-foot size, instead of prohibiting digital signs at that size.

Dan Law introduced himself as sales manager at Adams Outdoor. The business of Adams is all about helping local businesses and helping the local economy, he said. It’s difficult to reach customers when there is not a daily newspaper and the airwaves are overcrowded, he said. Billboards offer a nonintrusive way to reach people, he told the council. He takes his responsibility for managing eight account representatives very seriously. Based on what those reps tell him, there is a high demand for billboards and a high demand for digital. The current ordinance allows only 30 billboards, he pointed out. He asked that the council include in the new ordinance an ability for businesses to have a voice, via digital technology. He showed the council examples of billboards for the University of Michigan Credit Union and other local businesses.

Shannon Flowerday introduced herself as the art director at Adams Outdoor. She described the process of creating a visually appealing and successful billboard, comparing the process of design to creating a painting. She described the “rectangle campaign,” which is a way for nonprofits to advertise at no cost.

Dan Martell introduced himself as operations manager at Adams Outdoor. He talked about the physical implementation of the billboards. He described how a design for one advertiser had been printed on vinyl and it had not stretched properly. So Adams Outdoor had gone out several times to re-stretch the vinyl, he said. They were out working in all kinds of weather and were always monitoring the structures to make sure the lights are working and that the overall appearance is aesthetically pleasing.

Mitchell Gasche introduced himself as real estate manager at Adams Outdoor. He routinely deals with federal, state and local regulation, he said. Adams Outdoor encourages regulation, but is against prohibition. The proposed ordinance changes take away their rights, he said. While the current ordinance has a limit of 30 sign faces, and the limit has not been reached since 1994, there’s no need to take away the two additional billboards that could be allowed in addition to the existing 28 billboards.

He noted that digital technology for signs is regulated at the federal, state and local levels as well. Use of digital technology has been allowed at the federal level since 1996, he said, and prohibited flash, scroll or animation. He noted that Adams had sent to the council three studies on the possible distractions to drivers posed by digital signs. They’re safety neutral, he concluded. He asked that Adams Outdoor be included as part of the process. Two weeks is not long enough to deal with the proposed ordinance changes, he said. [The two-week timeframe is the time between the council's initial approval and the final vote, which was before the council at the April 1 meeting.]

Hieftje stated that the public hearing would be continued if the ordinance revision were to be postponed.

Outdoor Sign Ordinance: Council Deliberations

The council took an initial voice vote on postponement that appeared to have succeeded unanimously. But then a question arose about the date of the postponement. And that re-opened the door to deliberations on the question.

Jane Lumm (Ward 2) stated that she was not a big fan of billboards – digital or otherwise. She understands that it impacts sign businesses and has an indirect impact on businesses that use them. She supported the postponement, saying that although the city has had a year to review the issue during the period of the postponement, those who are impacted by the ordinance change had to deal with the issue in the timeframe of just two weeks. She wanted to make sure they had time to raise concerns before the final vote. A postponement also gives time to consider suggestions and consider revisions. She noted that it would be necessary to extend the temporary moratorium on digital signs. Lumm reiterated that she’s generally supportive of the ordinance revisions, but those who are impacted should have an opportunity to be heard.

Sally Petersen (Ward 2) also indicated she was in favor of postponement. She felt there’s a real economic development issue. She also felt there was a certain irony to prohibiting digital sign technology at the same time the city is trying to promote the idea of a tech campus downtown.

Marcia Higgins (Ward 4) was concerned that a two-week postponement is not the right timeline. She asked if councilmembers would consider a different timeframe. Chuck Warpehoski (Ward 5) indicated he might support a different timeframe, but he wanted to know what the mechanism would be for people to provide their input. Higgins stated that she felt the input would be provided to city staff.

After some back and forth – in light of the fact that the moratorium appeared on the agenda later in the meeting with an extension until July 1 – the council settled on May 6 as the date it would take up the sign ordinance again. That came over the dissent of Higgins, who appeared to be in favor of a longer postponement.

Outcome: The council voted to postpone the second vote on the ordinance revisions until May 6, 2013, over the dissent of Marcia Higgins (Ward 4).

Later in the meeting, the council voted to extend that moratorium on digital sign applications until July 1, 2013. According to the resolution approved by the council, the purpose of postponing a decision on the ordinance amendment and extending the moratorium was to allow for additional time to review the proposed amendments and to “gather input from the public and interested parties, and to promote the public health, safety, and welfare of city residents.”

Outdoor Sign Ordinance: Coda

During council communications time at the conclusion of the meeting, Chuck Warpehoski (Ward 5) indicated most of the signs were located in Ward 5, the ward he represents. Given the timeframe, he would likely not be able to see the process through himself – because his wife is due to give birth at the end of May. He indicated an interest in seeing the issue continue to receive attention from staff and the council.

Public Art Spending Moratorium

On the council’s April 1 agenda was the extension of a temporary halt to spending money that’s set aside under the city’s Percent for Art ordinance.

The city’s public art ordinance requires that 1% of all capital project budgets be set aside for public art. Originally set to run through April 1, 2013, the temporary halt on spending – except on projects already in the works – is to be extended until May 31. The three projects currently in the works are installations for East Stadium Bridges, a rain garden on Kingsley Street, and Argo Cascades.

The council had originally enacted the moratorium on spending at its Dec. 3, 2012 meeting. The action came in the context of a failed millage proposal in November 2012, which was meant to provide an alternative funding mechanism to the Percent for Art approach. The millage proposal was put forward in part in response to objections that voters had not explicitly approved the Percent for Art mechanism, which taps all capital funds – even those deriving from fees and millages designated for other purposes.

At the Dec. 3 meeting, a committee consisting of Sally Petersen (Ward 2), Sabra Briere (Ward 1), Stephen Kunselman (Ward 3), Margie Teall (Ward 4) and Christopher Taylor (Ward 3) was appointed to recommend amendments to the city’s public art ordinance.

The committee has met several times and has made recommendations on revisions to the ordinance. However, the committee is not yet ready to convey its final recommendations to the full council.

Based on previous Chronicle coverage, the main recommendation would be to eliminate in the ordinance any reference to a specific percentage for art in a capital project budget. And art funds would not be pooled as they are now – which entails setting aside money from projects into which it would be difficult to incorporate public art. Under the approach likely to be recommended by the committee, city staff would work to determine whether a specific capital improvement project should have enhanced design features “baked in” to a project – either enhanced architectural work or specific public art. The funding for any of the enhanced features would be included in the project’s budget and incorporated into the RFP (request for proposals) process for the capital project.

Another likely recommendation is to encourage an outside organization to solicit funds for specific community‐generated public art projects. Such funds would go into a dedicated fund for public art.

The committee is likely to recommend an increase in the employment level of its public art administrator to more than half-time – whether that is a contract employee or a direct hire. The current public art administrator’s job, held by Aaron Seagraves, is a part-time position.

The committee is also likely to recommend evaluating the changes in the ordinance after three years.

The extension of the moratorium was introduced to the council by Sabra Briere, who’s been working on the council committee. She reported that the city attorney’s office had told her it would take another 30 days, and the extension until May 31 was meant to ensure that there would be sufficient time for the two votes the council would be required to take.

Outcome: The council voted unanimously to approve extending the suspension of public art spending.

Gallup Park Accessibility Work

The council was asked to approve a $512,180 contract with Construction Solutions Inc. for improvements at the Gallup Park canoe livery.

The Ann Arbor park advisory commission had recommended the contract award at its March 19, 2013 meeting. The project budget includes a 10% construction contingency, bringing the total cost to $563,398.

Gallup Park, canoe livery, Ann Arbor park advisory commission, The Ann Arbor Chronicle

Schematic of the proposed Gallup Park canoe livery improvements.

Construction Solutions, based in Ann Arbor, was the lowest qualified bidder on the project. Other bids were submitted by Braun Construction Group ($534,600); Detroit Contracting Inc. ($554,620); The E&L Construction Group ($580,700); A.R. Brower Company ($607,160); and Terra Firma Landscape ($612,137).

The improvements include barrier-free paths to the docks; barrier-free docks and fishing facilities; an expanded patio area to create barrier-free outdoor seating and to separate these areas from the pedestrian circulation; sliding glass doors from the meeting room; and redesign of the park entry to create a separation between the service drive and the pedestrian pathway.

The project will be funded in part through a $300,000 grant from the Michigan Dept. of Natural Resources Trust Fund, with matching funds from the FY 2013 park maintenance and capital improvements millage.

The project’s first phase will begin on the docks and livery area, with work continuing until Memorial Day in late May. Work will resume after the summer season on Labor Day, focusing on paths and the park entry reconfiguration. The entire project is expected to be finished by mid-November.

During the scant council deliberations, Sally Petersen (Ward 2) noted that the work had been very well received by the city’s disability commission – on which she serves.

Outcome: The council unanimously approved the contract for Gallup Park improvements.

Dam Work at Argo, Geddes

On the council’s agenda was the award of a $295,530 contract to Gerace Construction Co. for repair work and repainting at Argo and Geddes dams, as well as site improvements around Argo Dam.

The contract had been recommended for approval by the city’s park advisory commission (PAC) at its March 19, 2013 meeting.

Gerace, based in Midland, submitted the lowest of four qualified bids for this work. Other bidders were Anlaan Corp. ($354,050); E&L Construction ($457,989); and Spence Brothers ($797,000). According to a staff memo, the work entails “repair and repainting of gear housings, lift equipment, tainter gate structural steel, miscellaneous concrete repair, and minor site improvements. Site improvements include addition of riprap and constructing a path to portage around Argo Dam.”

At PAC’s meeting, Brian Steglitz, an engineer with the city, indicated that the work is being done in response to feedback from state regulators. The two dams are inspected every three years by the Michigan Dept. of Environmental Quality (MDEQ).

The project will be funded from the city’s parks maintenance and capital improvements millage.

At the council’s April 1 meeting, Mike Anglin (Ward 5) and Stephen Kunselman (Ward 3) questioned the idea of paying for the repairs only out of the parks millage, but were content to leave the question open for future discussion.

Outcome: The council unanimously approved the contract for the dam repairs.

Longshore Parking for Argo Livery

Having been postponed from its previous meeting on March 18, 2013, the council was asked to approve a $3,000 lease to accommodate overflow parking for the Argo canoe livery.

Sabra Briere (Ward 1) had asked that the item be separated out from the consent agenda on March 18. Briere had heard concerns that the lot is not very well-graded and that there’s a lot of runoff. She had wondered if there was a way for the city to enforce maintenance of the lot through the lease.

The lease had been recommended for approval by the city’s park advisory commission at its Feb. 26, 2013 meeting. The lease of the 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.

At the council’s April 1 meeting, Briere indicated that it was not feasible to enforce through the contract the kind of improvements that would be necessary to manage stormwater better.

Outcome: The council unanimously approved the lease for the parking lot.

Summer 2013 Street, Sidewalk Contracts

The council was asked to approve a contract for street resurfacing in Ann Arbor – with Barrett Paving Materials Inc. in the amount of $3,583,944. The council has also approved two contracts in connection with the city’s 2013 ramp and sidewalk repair project – a $748,576 contract with Doan Construction Company and a $207,350 contract with Precision Concrete Cutting.

The work will occur in the spring and summer of 2013.

2013 Ann Arbor street resurfacing program

2013 Ann Arbor street resurfacing program.

The city has a ramp and sidewalk repair program in place that is meant to repair deficient sidewalks (not install new sidewalks) throughout the city over a five-year period – which is the duration of a 1/8 mill tax approved by voters in 2011. Each year about 20% of the city is covered by the repair program.

The contract with Precision Concrete Cutting reflects the city’s interest – where feasible – in slicing off portions of sidewalks that have “vaulted,” to restore the surface to horizontal. Slicing is more cost effective than removing and re-pouring.

The streets to be resurfaced include the following.

  • State Street: Oakbrook to Eisenhower (April – June)
  • Barton: Pontiac to Plymouth (August – October)
  • Sorrento: King George to end (April – May)
  • Alley “Benjamin”: Sybil to Benjamin (May – June)
  • Alley “Mary”: Benjamin to Hoover (May – June)
  • Franklin: Stadium to Hutchins (June – July)
  • Hiscock: Brooks to Spring (June – July)
  • Arbana: Mark Hannah to Huron (July – August)
  • Mark Hannah: Arbana to Arbana (July – August)
  • Waldenwood: Earhart to Penberton (July – August)
  • Birch Hollow: Tacoma to Stone School (August – September)
  • Penberton & adjacent courts: Waldenwood to Waldenwood (TBD)
  • Sulgrave Place: Barrister to end (TBD)

According to the staff memo accompanying the agenda item, Depot Street (Main to Carey) was included as part of the original bid package. However, the storm sewer within Depot Street – based on early indications from the Allen Creek Railroad berm opening feasibility study – could be impacted by possible solutions related to a railroad berm opening. So other local streets will be substituted for Depot Street this year.

During council deliberations, Chuck Warpehoski (Ward 5) noted that some of the curb ramps on the work schedule were upgrades to existing ramps, when some locations didn’t have ramps at all. He wanted to weigh the benefit of that in the future.

Mike Anglin (Ward 5) reported that a woman had fallen on a sidewalk and cracked her knee. If there’s a lawsuit, he said, the sidewalks should be repaired immediately, even if it’s not the city’s fault.

Stephen Kunselman (Ward 3) got an explanation from city staff on the areas of work to be covered with the sidewalk work.

Outcome: The council voted unanimously to approve the street resurfacing and sidewalk repair contracts.

Drinking Water Bond Notice

The council was asked to approve the publication of a notice of intent to issue water supply system revenue bonds totaling $18.5 million to pay for additions and improvements to the city’s water supply system.

According to the staff memo accompanying the agenda item, the first in the series of bonds is expected to be for around $3.8 million and will be sold directly to the Michigan Finance Authority as part of its Drinking Water Revolving Fund program. The bonds will be paid solely from revenues to Ann Arbor’s drinking water system.

During the brief council deliberations, Mike Anglin (Ward 5) got some clarification on the interest rates from city CFO Tom Crawford. Crawford indicated that for a question about some maximums, he would need to talk to the city’s bond counsel.

Outcome: The council voted unanimously to approve the publication of a notice of intent to issue revenue bonds.

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.

Comm/Comm: Library Lane Ice-Skating Rink

Stewart Gordon gave the council an update on the status of an initiative to install a temporary ice-skating rink on the top of the Library Lane underground parking garage on South Fifth Avenue. The rink would use synthetic ice. He reported that he’d done a long interview with the woman who runs the ice rink at the Hancock Building in Chicago. He summarized the information he’d obtained from that interview for the council. The material is durable and skateable. The size of the rink is very important, he said. Children like it but it’s too small for adults, he said. At the Hancock Building a liability waiver is signed, but no accidents or claims had been made in the course of three seasons.

Shoe storage is provided as well as a place to change into skates, Gordon reported. Sharpening skates is important, he noted, and the Hancock Building staff have been trained to do skate blade sharpening during slower periods. Negative features include the fact that the specific product that had been chosen in Chicago requires that a lubricating gel be applied twice a week. He described it as a “nasty, messy, hands-and-knees” process. Other products don’t require that kind of maintenance, because the lubricant is impregnated in the plastic, he said. So that’s the kind of product that would be used in Ann Arbor.

A final point he made is that unless it’s large enough to skate on comfortably, the rink becomes a one-time novelty. At this point, the city of Chicago has installed two ice rinks downtown – so the clientele for the synthetic ice rink is gradually declining. Gordon told the council that his group was ready to work with the city’s park advisory commission and the Ann Arbor Downtown Development Authority. [Gordon and Alan Haber had made a presentation on this project at the park advisory commission's March 19, 2013 meeting.]

Comm/Comm: Park Advisory Commission Update

Mike Anglin (Ward 5) urged people to watch the March 19, 2013 meeting of the city’s park advisory commission (PAC). [Anglin serves as one of two ex officio, non-voting city council appointees to PAC. The other council representative to PAC is Christopher Taylor (Ward 3).] He highlighted two presentations from city staff that were worth hearing: one on the city’s golf courses, and the other on the canoe liveries. Anglin expressed praise for the parks staff.

Chuck Warpehoski (Ward 5) followed up on Anglin’s remarks, adding praise of his own. He’d noticed some illegal dumping in a neighborhood park and notified park staff. They’d been responsive, he said.

Comm/Comm: North Main Task Force

During communications time, Sabra Briere (Ward 1) gave a brief update on the activities of the North Main/Huron River task force. The group has been meeting every three weeks as a whole, and has formed four subcommittees, which have met in addition to the full task force. The draft recommendations were presented at a meeting of the full task force on the previous Wednesday [March 27], she reported. The recommendations will now be compiled and organized and looked at again before a meeting on April 17. A draft reported is expected by the beginning of May. The group expects to hold a public meeting on May 22 and again in June. The full report is due by the end of July. She was pleased with cooperation that had been displayed during the task force’s work. She hoped the final report would reflect short-term and long-term recommendations to the council.

Comm/Comm: Unwanted Newspapers/Circulars

During communications time at the start of the meeting, Chuck Warpehoski (Ward 5) noted that a lot of people seem to complain about unwanted advertising circulars being delivered to their premises – like the Express. He ventured that council veterans around the table had likely heard this before. He asked them to “indulge a newbie.” [Warpehoski was first elected in November 2012.] He described the various aspects of the issue – from environmental concerns to public safety. A stack of such circulars that accumulate while someone is away could send the message “rob this place, nobody’s paying attention,” he said. He knew that city attorney has looked at the issue before. He asked other councilmembers to let him know what they’d been hearing about the issue. [An attempt to revise the city ordinance on handbills and unwanted newspapers put forward by Christopher Taylor (Ward 3) in late 2011 got little traction on the council.]

Comm/Comm: Urban Core Transit

Stephen Kunselman (Ward 3) reported that on March 28 there’d been a robust discussion of governance and financing for improved or expanded transit in the “urban core” communities – attended by a number of elected officials from Ypsilanti, Ypsilanti Township, Pittsfield Township, as well as several other nearby jurisdictions. The meeting was hosted by the Ann Arbor Transportation Authority. Kunselman wanted to let everybody know they were making some headway. Attending the meeting besides Kunselman from the Ann Arbor city council included: mayor John Hieftje; Chuck Warpehoski (Ward 5); Sabra Briere (Ward 1); and Sally Petersen (Ward 2). [See: "Costs, Services Floated for Urban Core Transit"]

Comm/Comm: Affordable Services

At the start of the meeting during public commentary reserved time, Thomas Partridge called on the council to fund affordable housing and transportation for those who need it – the most vulnerable among us. As Partridge often does, he called on mayor John Hieftje to step aside and resign or face future recall. On the day after the annual celebration of the most significant holiday in Christendom, Partridge said, it was time for us to unite as Christian Democrats for progress on issues the city has long neglected.

Partridge also addressed the council at the conclusion of the meeting.

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

Absent: Christopher Taylor.

Next council meeting: Monday, April 15, 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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One Comment

  1. By Alan Goldsmith
    April 12, 2013 at 12:13 pm | permalink

    “Teall noted that the audit committee would be meeting with the DDA staff the following day, and pointed out that DDA staff had acknowledged the shortcomings, and said they’d be addressing them. Teall indicated that the response from the DDA staff to the questions they been asked was that they’re “on top of that.””

    Ms. Teall, the Council Member representing the DDA and not the residents of the 4th Ward. But at least she showed up for a meeting.