Comments on: March 3, 2014: Ann Arbor Council Preview it's like being there Tue, 16 Sep 2014 04:56:38 +0000 hourly 1 By: Will Hathaway Will Hathaway Tue, 04 Mar 2014 15:00:45 +0000 Re: 12 “ABC”

You raise an interesting point about the intent behind the design. Everything that I have heard and read over the past several years regarding the Library Lane Parking Structure project implies that the infrastructure to support future development was based on what you refer to as a “simple box.” I understand that to mean that the extra capacity of the footings was meant to allow flexibility of design in whatever development occurred directly on site. The extra water/sewer/electrical capacity likewise could support whatever development occurred either on or off site.

If the design was to support a specific building on top, then that raises some big questions. How could the DDA and its contractors have known what specific building to design footings for when there was an RFP process that still had to run its course? Nobody at the DDA has made the argument that the footings can only support one design. They have said that a structural engineering study should be done to figure out what the surface can support. This seems sensible as long as it being done in good faith. I confess that this argument about whether the surface can support a park seems like an invented concern (is a performance stage that much heavier than a medium size building?).

As the DDA Director’s memorandum shows, the sum of money spent on the reinforced footings is a much less than the $15 million figure that is currently being offered for the total of all infrastructure to support future development. Even the earlier figure provided by the DDA of $5 million is probably an overstatement of what the footings cost. For some unexplained reason, the precise cost of the reinforced footings is apparently beyond the ability of the DDA or its engineers to calculate.

Whatever the total cost, the proposed, expanded park location would use only 20% of the surface supported by the footings. The larger part of the proposed park location is the civic plaza that the DDA has always intended and therefore it is not build-able.

The remaining build-able surface is 80% of what the DDA designed as flexible, build-able surface area. In a document provided to City Council for last night’s meeting the remaining 80% is labeled “High Density Building” and the 20% of build-able surface that is in the proposed park location is labeled “Medium Density Building.” So the footings left for sale to a developer can support the higher density building and they support 80% of the total build-able surface. It seems like whatever the reinforced footings cost, most of their utility is still available should City Council choose to make use of it.

By: abc abc Tue, 04 Mar 2014 12:51:26 +0000 Foundations are specific. When this parking structure was being designed they did one of two things to allow for a building on top. They just beefed up a bunch of things generically based on a ‘simple box’ on top or they designed the foundation as best they could for the building they hoped to build, which had been rendered and offered to the public. That building that had been drawn was no ‘simple box’; it had a heroic overhang which would have required a very different foundation than a simple box. It’s easy to know which one they built for, you just need to see the design.

That said the 80% / 20% idea does not work out so nicely because buildings are not able to carry weigh everywhere, unless they are built like the Pyramids. Normally buildings are designed to carry weight on their perimeter walls and through certain fixed points within the middle of the building; leaving a great percentage of the building’s floor area unable to take building loads. And while this is not true of all buildings, I suspect it to be the case with an underground building where the soil and water also apply pressure to the perimeter walls. So there is no guarantee that when you isolate 20% of the base of this building that you are left with 80% of its structure. You could possibly have more than 80%, but if you go through that perimeter wall you probably have less. So unless you know the logic behind what is in the ground it is not really possibly to base that thought on the area.

Notice that the article says that they want “to conduct a structural analysis of the Library Lane structure to determine if any modifications are needed to safely support design features [of the park], such as soil, plantings of various sizes, water features, a skating rink, a performance stage, and play equipment;” Why is it that this structure can hold up an 18 story building but not a park? Because its foundation is specific for the building, not the park.

By: John Floyd John Floyd Tue, 04 Mar 2014 05:57:14 +0000 @6 Mr. Kuhlman

We may not yet know how much it costs to put in benches, planters, and some grass to make Library Lane Park, but we do seem to know how much the city blew on trying to force a convention center on us: $15,000,000. This is $3,000,000 more than the amount needed to buy the “unaffordable” Edwards Brothers site on State St. If you are looking for something to be upset about re: poor spending decisions by the Ann Arbor City Council, the $15,000,000 Convention Center footings-el-al strike me as a more worthy target of wrath than the tens of thousands it will take to make a park on top of the underground garage.

@16 Mr. Hathaway

Thanks for the well-made observation re: the 80%/20% split of the build-able area over the underground garage. With your observation in mind, I’m less clear about the arguments against a Library Lane park. Is someone willing to walk me through them again?

By: Will Hathaway Will Hathaway Mon, 03 Mar 2014 18:26:11 +0000 Thanks Dave for investigating the cost of the Library Lane project’s “infrastructure to support future development.” I know that there are City Council members who have sought more clarity on these costs.

DDA Director Susan Pollay responded with a 11/22/13 memorandum entitled “Questions Regarding Library Lane Parking Structure Design.” Some of the answers provided in the memo raised more questions, but here are some relevant pieces of information:

The DDA asked its engineers at Carl Walker Inc. “to estimate the costs for elements that were and were not directly attributable to the cost of constructing an underground parking structure.”

“The engineer’s estimate was that approximately 30% of the total project cost, or approximately $15 million, were elements unneeded by the parking structure.”

“Elements unneeded by the parking structure included:

• The oversized concrete foundation,
• New alley running between S. Fifth Ave. and Library Lane
• An extra large transformer
• Electrical capacity for an additional future oversized transformer,
• New, larger water mains on the 300 block of S. Division and S. Fifth,
• A new fire hydrant,
• Enhanced pedestrian improvements”

“The extra elements designed into the Library Lane site can serve the area around the site as well as a future development on top of the structure.”

So, to get back to the question raised in comments above, the actual cost of the extra infrastructure is estimated by the engineers to be $15 million, but, according to Susan Pollay, all of that infrastructure can serve future development off of the Library Lane site.

From this we can conclude that the only part of the extra infrastructure cost that is useful specifically to development on top of the Library Lane site is the marginal cost of the reinforced footings. By this I mean the difference between regular footings and the special, stronger footings that were put in to support the maximum D1 building height. We don’t know what that marginal difference is. Whatever, their added expense, these footings were 100% speculative because there was nothing planned to go on top. Just wishful thinking about what might go on top, some day, maybe.

When Council Member Eaton referred above to 20% of the site being taken up by the proposed urban public park designation, he is talking about 20% of what the DDA refers to as the “build-able” surface. This means that by designating the park as proposed, 80% of the Library Lane surface under which reinforced footings are located will remain available for the City to sell to a private developer. Whatever the marginal cost of the reinforced footings, 80% of that speculative “value” can still be realized at City Council’s discretion.

The proposed urban public park will not block development (contrary to comment #2). Once the Park Advisory Commission has applied its creativity to designing it, and included the neighboring property owners in that process, the public park will add to the value of the adjacent development. Indeed, the urban public park on the Library Lot can be viewed as yet another element of “infrastructure to support future development.”

By: Vivienne Armentrout Vivienne Armentrout Mon, 03 Mar 2014 14:32:19 +0000 Wow, Dave, this is hefty stuff. Thanks for chasing that down.

The DDA was heavily implicated in promoting the Valiant hotel/conference center proposal and much of this extra support was done in anticipation of that project. But I don’t think the financial manipulations have been revealed before.

Here [link] is a review of the parking issue for the Library Lot in the context of the Valiant proposal. It links to a letter cautioning about the limitation on private use from Noah Hall of the Great Lakes Environmental Law Center. The GLELC subsequently sued the city.

If “Those who cannot remember the past are condemned to repeat it”, I hope that keeping this history alive will also help to prevent future adventures of this nature.

By: abc abc Mon, 03 Mar 2014 12:39:46 +0000 Dave

Re [accountants versus engineers]

My interest is specific. How much would it have cost to build that building if it were 100% done now (with just a park on top) versus how much did it cost to build it as it exists today (able to support 15 stories). The simple construction cost based on the two different designs is all I had in mind. Given that, I stand by the thought that it is more than a 10% difference.

By: Dave Askins Dave Askins Sun, 02 Mar 2014 23:01:14 +0000 Re: [12] accountants versus engineers

I don’t think it’s a matter of which estimate is right – that of the engineers or that of the accountants (and lawyers) – but rather what the purpose of the estimate is. I _think_ for the accountants, part of the purpose is to determine how many of Library Lane’s spaces can be dedicated to “private use.”

For example, if a hotelier purchased the “air rights” to build on top of the parking structure, we can imagine that the hotelier would want to make some kind of arrangement whereby some number of the parking spaces would have guaranteed availability to hotel guests. Those spaces would, I think, be considered “private use.” What else counts as private use? The IRS rules are subject to some interpretation, but the city does not appear to count the regular monthly parking permits that are sold in the Library Lane structure (662 in January 2014) as “private use.” That’s likely because they are supposed to be sold on something like a first-come-first serve basis to anyone in the general public.

Anyway, there’s a legal limit to the number of spaces that could be allocated to the hypothetical hotel, and that limit is connected to financing of the structure through Build America Bonds. The bonds have a 10% limit on private use.

Based on some emailed exchanges produced by the city recently in response to a request made under the FOIA, the city calculates the percentage of Library Lane parking spaces that could be allocated for private use at 29%.

Where did the extra 19% come from? It came from the fact that not all the money used to finance the project was debt. Some was cash. And the cash portion is not subject to the 10% restriction. So the city maximized the impact of the DDA’s cash component. How was that maximized? In broad strokes, the city took advantage of the combination of the Fifth and Division streetscape project with the Library Lane parking deck project by allocating as much as possible of the DDA’s cash payment to the Library Lane project. Debt was first assigned to the Fifth and Division project. If the city had bonded separately for each of the projects, then the Fifth and Division project would have also had a separate cash component. But as a combined project, the Fifth and Division portion did not need a separate cash down payment.

By maximizing the cash component of the Library Lane project in this way, the city also maximized the percentage of the new deck that could be dedicated for “private use.” That’s because the portion of the deck paid for in cash is not subject to the private use restriction, according to the city. As a result, the city is calculating that 29% of the Library Lane deck spaces can be assigned for “private use.”

By: abc abc Sun, 02 Mar 2014 22:30:04 +0000 Dave

Thank you for post 11. I was unaware that anyone was trying to do the accounting for that. It is certainly a difficult calculation as you have to compare one building, which is figured out, against another, which is not.

And if I had to pick which estimate makes more sense I would lean toward the engineer’s estimate, rather than the accountant’s.

By: Dave Askins Dave Askins Sun, 02 Mar 2014 19:56:54 +0000 Re [10]: “Some fairly large amount of money was spent to allow this parking garage to structurally carry a large building on top of it. Was that 1/50 of its $50 million dollar price tag? 2/50? 3/50? More? At this point we will never know, but it was a significant amount of money.”

I don’t think is quite that unknowable. Here’s the Ann Arbor DDA’s characterization from late last year:

The engineer’s estimate was that approximately 30% of the total project cost, or approximately $15 million, were elements unneeded by the parking structure. This included oversized concrete foundation, the new alley running between S. Fifth Avenue and Library Lane which includes an extra large transformer plus sufficient electrical capacity for an additional future oversized transformer, new larger water mains on the 300 block of S. Division and S. Fifth, and in an easement area in the driveway of a private property to the north of the structure wich terminates in a new fire hydrant to serve the fire suppression needs of a future building, and enhanced pedestrian improvements. [.pdf of Nov. 22, 2013 memo from Pollay to Powers] [.pdf of budget versus actual expenses for the Library Lane structure]

The memo goes on to distinguish the engineer’s analysis of elements unneeded for a parking-structure ($15 million) from those elements analyzed from a financial-accounting perspective as supporting future development ($5.3 million).

In any case, yes, “a significant amount of money.”

By: abc abc Sun, 02 Mar 2014 17:13:51 +0000 Mr. Floyd touched on it briefly but for me it is worthy of a more significant mention. Some fairly large amount of money was spent to allow this parking garage to structurally carry a large building on top of it. Was that 1/50 of its $50 million dollar price tag? 2/50? 3/50? More? At this point we will never know, but it was a significant amount of money. It was way more money than is being argued about in the Percent for the Arts discussion.

I guess it was a calculated risk by some who felt sure that they could ‘invest’ those millions then and get the benefit from them later. It now seems like that is not playing out according to plan. As a matter of fact MORE money is now required to deal with structure.

From the story above – “Other aspects of the proposal include asking the DDA to conduct a structural analysis of the Library Lane structure to determine if any modifications are needed to safely support design features, such as soil, plantings of various sizes, water features, a skating rink, a performance stage, and play equipment;”

By definition, a design process is inefficient. That’s OK because it is supposed to pave the way for a construction process that is efficient. Paper is a lot cheaper than bricks. This is a classic case of ready, fire, aim. There is a lot of taxpayers’ money in that hole.