DDA Quiz: Board member Sandi Smith is illustrating: (a) the "increment" in "tax increment financing," (b) the amount of a parking rate increase, (c) building heights and flood plains, or (d) relative thickness of concrete slabs in parking structures. (Photos by the writer.)

The amount of the award was 90% of the total amount the board could have awarded –$45,000 of $50,000. It’s the same amount the board has awarded in each of the last three years. It’s based on a variety of criteria, including customer satisfaction surveys, independent inspections of the parking facilities, and financial performance.

February’s meeting also included a review of the DDA’s finances at the mid-point of the fiscal year – through Dec. 31, 2011. The DDA’s fiscal year runs from July 1 to June 30. Operations committee chair Roger Hewitt sketched out a picture that portrayed things unfolding pretty much as expected. Although parking revenues are currently about $125,000 under the year-to-date budgeted amount, parking revenues are projected to finish the year at around $672,536 over the budgeted amount. The gross parking revenue now anticipated for FY 2012 is around $16.8 million. But capital costs associated with the new Fifth Avenue parking garage construction are anticipated to put the parking fund expenses over budget.

Part of that parking system revenue will come from rate increases and changes in billing methods, which were approved by the board at its Jan. 4, 2012 meeting. Some of the changes will not be implemented until September 2012 – like hourly rates at parking structures and lots, which will climb from $1.10 per hour to $1.20 per hour.

But other changes were implemented starting Feb. 1, including a change in the billing method at parking structures and hourly lots – from half-hourly to hourly. The board heard criticism of the change during public commentary, from a resident who makes frequent but brief trips downtown as a patron of the downtown location of the Ann Arbor District Library. The billing change amounts to a “surcharge” on his library use of a couple hundred dollars a year, he said.

The board also heard a pitch from the developer of the 618 S. Main project, Dan Ketelaar, who is interested in financing certain elements of the project through the state’s Community Revitalization Program. That’s the successor to the state’s brownfield and historic preservation tax credit program.

The 618 S. Main project, which received a positive planning commission recommendation on Jan. 19, would be a 7-story, 153,133-square-foot apartment building with 190 units for 231 bedrooms. The idea would be for the DDA to forgo a portion of the taxes that it would ordinarily capture on the newly constructed 618 S. Main project. The DDA captures taxes from the increment in value due to new construction within its tax increment authority (TIF) district.

The board also heard a pitch from Jody Lanning, with Lanning Outdoor Advertising, for a way to finance murals on the city’s parking structures and other public buildings. The board also entertained its usual set of updates from boards and commissions.

Parking Finances

The monthly report on parking revenues and activity is a standard element of Ann Arbor DDA board meetings. The report is usually delivered by board member Roger Hewitt, and the Feb. 1, 2012 meeting was no different. But earlier in the meeting, Hewitt had already touched on the state of the DDA’s parking fund as part of the fiscal year mid-point update.

And the topic of parking revenues, as reflected in a critique of recent rate and billing method increases, came up during public commentary, too.

Parking: Overall State of the Fund

The parking fund is one of four funds in the DDA’s system of accounting. The DDA’s fiscal year runs from July 1 to June 30. The six-month update for the parking fund, reported by Hewitt, shows year-to-date revenue as slightly below the amount budgeted. Specifically, through December 2011 the system had taken in $8,392,644, but the year-to-date budgeted amount is $8,518,094. [.pdf of year-to-date FY 2012 financial picture for all funds]

Still, Hewitt said, the DDA expects to finish the year with $16,835,288 in revenue against a budgeted amount of $16,162,752. That’s a surplus of $672,536 or 4.16% more than budgeted. So by year’s end, Hewitt concluded, the DDA anticipates almost $17 million in parking revenue. Parking operating expenses are, for the moment, lower than budgeted, Hewitt said – just $2,668,055 against $4,743,996 for the year-to-date budgeted amount.

But by year’s end, the capital expenses associated with construction on the new Fifth Avenue underground parking garage are expected to put operating expenses for the parking fund $1,450,514 (or 19.37%) over the year’s budgeted operating expenses of $7,487,994. Direct parking expenses – the contract with Republic Parking, including the 17% of gross that’s paid to the city – are currently slightly under budget, Hewitt said: $3,513,189 against a $3,844,733 year-to-date budgeted amount. But he anticipated that those expenses would be right on budget by the end of the year.

Overall, by year’s end the DDA anticipates spending $835,544 more out of its parking fund than it has taken in.

Parking: Monthly Report

Included in the board’s information packet were three reports: (1) the most recent monthly report, for December 2011; (2) the report for the most recent quarter, for October-December 2011; and (3) the report for the last six months, for July-December 2011. [.pdf of parking reports July-December 2011] All three reports, said Hewitt, tell the same story. Revenues are up 9-10% compared with the same periods a year ago – which is greater than the rate increase that has taken effect since then, Hewitt said.

Patrons are also using the system in greater numbers, he said. Compared with the same six-month period a year ago, the report shows 43,696 (or 4.06%) more hourly patrons. For a year, that projects to 90,000 additional trips downtown, he said. Hewitt called them “strong numbers in an economy that’s not booming.” He said the numbers show a very strong demand for parking.

Ann Arbor public parking system revenue. (Links to larger image)

Ann Arbor public parking system hourly patrons. (Links to larger image)

Parking: Hourly Billing – Approval

When Hewitt updated his colleagues on the parking numbers, he used a rough metric to evaluate the 9-10% increase in revenues over the period of July-December 2011, compared with the same period in 2010: If the percentage-wise revenue increase is greater than the increase expected solely from parking rate increases over the same period, it demonstrates that more total parking hours are being sold.

Sign at Fifth and William surface parking lot entrance off of William Street: "There will no longer be 1/2 hour increment rates." The same billing change applies to parking structures. Rates in structures are set to rise to $1.20 per hour in September 2012.

Until Feb. 1, 2012, that rule of thumb has not needed to factor in any changes to the time increment in the billing method. The billing method – which up until Feb. 1 was based on half-hour increments – has remained constant since 2003. But along with a a recent round of parking rate increases, approved by the DDA board at its Jan. 4, 2012 meeting, a billing method change was approved as well. Hourly parking – in structures and on surface lots – is now charged in hourly increments, not half hourly increments. Before considering the financial impact of that change, it’s worth reviewing the process used to decide rate increases.

A new contract, under which the DDA manages the city’s public parking system, was ratified in May 2011 with the city of Ann Arbor. The terms of the new contract give the DDA the authority to set rates. The previous contract allowed the city council to veto rate increases.

In order to implement parking rate increases, the DDA is required under terms of the contract to schedule a public hearing, with the details of planned rate increases spelled out in writing. The hearing is then to be held at the following month’s board meeting, with a vote coming no sooner than the board’s next monthly meeting. The DDA announced a public hearing before its Nov. 2, 2011 meeting and continued the hearing at its Dec. 7, 2011 meeting. The vote approving the rate increases was held at the board’s Jan. 4, 2012 meeting.

The rate increases described in the board’s Nov. 2 meeting information packet do not include the billing change from half-hour increments to hour increments. But the change in billing will have a substantial impact on the cost of parking and the parking system revenues.

Parking: Hourly Billing – Financial Impact

Some of the rate changes approved by the DDA board on Jan. 4, 2012 will not be implemented until September 2012 – like hourly rates at parking structures and lots, which will climb from $1.10 per hour to $1.20 per hour.

But other changes were implemented starting Feb. 1, including a change in the billing method at parking structures and hourly lots – from half-hourly to hourly.

To compare the hour-increment billing method to the half-hour billing method, assume that parking times are evenly distributed among those people who parked between N and (N + 0.5) hours and those who parked between (N + 0.5) and (N + 1) hours, where N is some whole number.

On the hour-increment billing method – for the current hourly rate of $1.10 – the first group would pay for N + 1 hours, or roughly $0.55 more than under the half-hour-increment method, under which they’d pay just for N + 0.5 hours. The second group would pay for N + 1 hours under either billing method. So by changing from half-hourly to hourly increments, half of the roughly 2 million annual hourly patrons would pay $0.55 more – generating roughly $550,000 more revenue annually.

In the monthly parking report for February 2012, which should be available by the time of the April board meeting (there’s a two month lag time), it’s reasonable to expect at least around $550,000/12 or $45,000 in additional revenue for that month, compared to February 2011.

The March 4, 2009 DDA board minutes reflect similar numbers based on the hourly rate at the time, $0.80: [emphasis added]:

Whereas, The DDA Operations Committee also determined that it has tools available to it to increase parking revenues if needed including the following (in recommended order):
-increase the daily cost of meter bags $5/day from $15/day to $20/day (anticipated to increase revenues by $181,000/year). The DDA could also limit the amount of meter bag fee waivers it provides nonprofits and government agencies, which is currently in excess of $150,000)
-Return to charging for parking by one-hour increments rather than 30-minute increments (anticipated to increase revenues by $400,000/year). The change to 30-minute increments was made in 2003. 
…

Back in 2009, the DDA board was simply weighing various alternatives for generating revenue – at the request of the Ann Arbor city council to explain how the DDA could afford construction of the new underground parking garage. The board did not act at the time to change the billing method.

Beyond a clarificational question asked by board member Nader Nassif at the Jan. 4 meeting, the board did not deliberate on the billing method change, and it received little, if any, public scrutiny – because the change was not included in the written set of rate increases associated with the public hearing. However, the change in billing method did not go unnoticed.

Parking: Hourly Billing – Public Commentary

During the public commentary period at the start of the Feb. 1 meeting, Matthew Barritt told the board he is concerned with two things: (1) short-term parking for library patrons; and (2) the change from half-hourly billing to hourly billing for structures and lots. As a result of the construction on the new underground parking structure on Fifth Avenue, he said, two dedicated spaces on the lot next to the library – for 10-minute short-term use by library patrons – were eliminated. There used to be a 10-minute grace period, he said.

Ann Arbor District Library book return slot off of William Street.

Barritt described how he and his family visit the library about twice a week – dropping off and picking up books, after reserving them online. They previously were able to come and go under the 10-minute grace period. Now, he’s had to pay 60 cents per visit to the library to check out and pick up books.

Barritt asked for a restoration of the 10-minute grace period. It’s his understanding that there is a grace period, but it’s not publicized and does not seem to be operationally functional. Because there’s no longer dedicated spaces with a 10-minute grace period, he said, it works works out to a “surcharge” of over $100 on his library use.

And with the change from half-hourly billing to hourly billing, Barritt said, the effective parking rate is different from the advertised rate. It’s always rounded up, he pointed out, and that results in an underrepresented rate. As an example, he said, for 10 minutes – at an hourly rate of $1.30 (rounded up) – that works out to nearly $8 an hour.

Barritt stated that the practice is inappropriate and he ventured that the DDA couldn’t have pitched such a rate to the city council for approval. He recognized the need for revenue, but stated that the effective rates should be the same as the advertised rates.

Barritt concluded by saying he’d like to see a fully-functional 10-minute grace period in the current lot as well as in the new underground parking structure.

Parking: Hourly Billing – Board Discussion

Later in the meeting, as Roger Hewitt was updating his board colleagues on parking revenues, Joan Lowenstein asked about the issue that Barritt had raised. Hewitt responded by saying that with the transition to hourly billing (instead of half-hour increments), a 10-minute grace period would remain in place. Board member Russ Collins wondered if that would apply even to lots with automatic walk-up pay stations (without attendants).

William Street just north of Fifth Avenue looking west. Five-minute parking is available next to the downtown location of the Ann Arbor District Library.

DDA deputy director Joe Morehouse clarified that the grace period is implemented for all hourly facilities, but he acknowledged that the dedicated spots for library patrons are not provided in the Fifth and William lot [also known as the Old Y lot]. That’s the lot that essentially became the closest surface-lot alternative for library patrons after construction began on the site for the underground parking structure. Morehouse clarified that there is, in fact, a 10-minute grace period – in fact, it can be stretched to 15 minutes to allow for time to exit the lot.

Leah Gunn, who chaired the board meeting in Bob Guenzel’s absence, noted that on East William Street (just north of Fifth Avenue) there are 5-minute on-street spaces for quick drop-offs at the library – that’s where the book and the audio visual return slots are located.

In the new underground parking structure, Hewitt added, a walk-up payment system will be a primary option. Those will be in place on the surface and on the first two levels underground. Patrons will pull a ticket on the way in and put the ticket into the automatic pay station on the way out – which will allow payment with a credit card or cash. A staffed booth will also be available if that’s what a patron prefers. There will be no pay stations on underground levels three and four initially, because they’re expected to be filled with monthly permit holders.

Parking Management Incentive

Although the DDA manages the city’s public parking system under contract with the city of Ann Arbor, it uses a contractor, Republic Parking, to handle day-to-day operational issues. At its Feb. 1 meeting, the board considered a management incentive under the terms of its contract with Republic Parking. The board has discretion to award $50,000 of the $200,000 total. The other $150,000 of the $200,000 is not discretionary, and is paid to Republic in monthly installments.

The management incentive is paid based on customer satisfaction surveys and independent inspections of the parking facilities, as well as other metrics. The free responses section of the survey included a range of sentiments, from enthusiastic praise of specific Republic Parking employees (“Staff is always very friendly” and “Teri and Cathy are the greatest!!”), complaints about employee job performance (“I don’t pay $12-$13 a day to be inconvenienced because your employees can’t get their job done timely!”), praise for the facilities (“Very clean and nice art work on ground floor at curved wall on the southeast comer”) and criticism of the facilities (“Please clean more. And take care of the awful smell on floor 4″). Sprinkled through the responses are complaints about parking rates. [.pdf of parking customer responses]

The rating scale responses of the survey broke down as follows: 5-Excellent (36.5%), 4 (26.3%), 3 (14.0%), 2 (9.5%), 1-Poor (6.7%), Non-Responsive (6.9%). Last year the same survey yielded the following results: 5-Excellent (22.5%), 4 (32.3%), 3 (17.9%), 2 (4.6%), 1-Poor (2.2%), Non-Responsive (20.1%). So the number of survey respondents giving a rating of 5 or 4 increased from 54.8% to 62.8%. The rating of 1 or 2 also increased, from 6.8% to 16.2%. Around 600 people responded to the survey.

The DDA’s independent parking inspector made 48 written reports to evaluate the cleanliness of the facilities systemwide last year. Average for the year was 90.48%, which is a three-point drop from last year’s score of 93.7%.

The Dec. 31, 2010 accounts receivable balance for parking permit accounts stood at $106,965. That’s 25% of the average monthly billing and five times the target of 5%. But it reflects a decrease from 28.5% last year. The dead ticket average was 2.56% for the year – an increase from last year’s 1.56%, and above the target of 1.75%. The operating surplus on June 30, 2011 was $23,133 more than budgeted.

At the board meeting, Roger Hewitt explained the structure of the Republic Parking contract with the DDA and described the various criteria. DDA staff had weighed all the criteria, made an overall assessment and was recommending $45,000 compared with the maximum $50,000.

In each of the previous three years (2009, 2010, and 2011), the DDA board voted to award the same $45,000 incentive. In those years, mayor John Hieftje had voted against the incentive. This year the vote was unanimous.

Outcome: The board voted unanimously without substantial discussion to award $45,000 out of the $50,000 management incentive.

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council, as well as public comment.

Comm/Comm: Underground Garage Construction Update

John Splitt gave an update on the underground parking garage construction. He noted that despite the mild winter, temperatures have not been high enough to allow for the application of waterproof coatings. Work on mechanical systems like elevators, however, continues. Roger Hewitt noted that for an underground parking structure it actually has a bright and open feel to it. The ceilings are two feet higher than in the Maynard structure. The architect, Carl Luckenbach, did a great job with the stairwells, he said – the sun shines down four stories underground.

Hewitt also gave an update on the precise number of underground spaces the structure is expected to provide: 706. [The initial design estimates for a larger structure that would have extended to William Street put the number at around 770. When that dogleg was truncated, it reduced the estimate to 670. More recently, the more conservative figure of 640-650 has been given.]

Comm/Comm: getDowntown Survey

Nancy Shore, director of the getDowntown program, gave the DDA board an update on a survey that had been completed, asking downtown employers and employees about their commuting habits. The survey showed a slight reduction in the number of people who commute by driving alone. [.ppt file of getDowntown commuter survey]

Comm/Comm: Vacancies, SEMCOG, William Street

Joan Lowenstein reported on the most recent meeting from the partnerships committee. Committee members had received an update from representatives of Swisher Commercial about downtown vacancy rates. Ann Arbor is somewhat immunized from the economic downtown, she said. Vacancies decreased by 2.5% in 2011 and there’d been a 40% increase in lease dollar volume – landlords are willing to show some optimism by entering into longer-term leases. Lowenstein said some companies looking to expand can’t find the larger floorplates they need.

Lowenstein also reported that the committee had received an update on forecasts from SEMCOG (the Southeast Michigan Council of Governments) through 2040. SEMCOG estimates the region will make a slow recovery over the next 30 years. [For a more detailed breakdown, see Chronicle coverage of the presentation made to the planning commission: "City Planners Preview SEMCOG Forecast"]

Village Green City Place Groundbreaking on Jan. 26, 2012.

Lowenstein reported that the “Discovering Midtown” project – a process for exploring alternate uses of downtown city-owned surface parking lots, has had its name changed. The effort will now be known as “Connecting William Street,” to avoid confusion with a character district in the city’s zoning ordinance that is called Midtown.

The process is being led by the DDA based on direction given by the Ann Arbor city council at the council’s April 4, 2011 meeting. Lowenstein reported that a leadership and outreach committee is working on social media strategies. A hundred different stakeholders and groups have been identified. In mid- to late February a community-wide survey will be released. Parts of that survey are currently being finalized.

Lowenstein also noted that ground had been ceremonially broken on Jan. 26 for Village Green’s City Apartments project at First and Washington. That’s a joint venture between Village Green and the DDA, which will include two floors worth of public parking on the first two stories of the building, some of which will be reserved for residents of the building.

At the Feb. 1 meeting, the board briefly discussed the possibility of canceling the February partnerships committee meeting. Noting a possibly very light agenda, board members were inclined to cancel the committee meeting, which would ordinarily have taken place the week after the board meeting – in this case, on Feb. 8. The board agreed to do that. Executive director Susan Pollay’s suggestion that the 618 S. Main project would be a suitable topic for the partnerships committee agenda that month was not met with any outward signs of enthusiasm from board members.

Comm/Comm: 618 S. Main

During public commentary, Dan Ketelaar spoke about his 618 S. Main project. It would be a 7-story, 153,133-square-foot apartment building with 190 units for 231 bedrooms, located on the former site of Fox Tent & Awning between Main and Ashley, north of Mosley. Ketelaar described the location as in the southernmost part of the DDA district. He also described it as a “gateway project.” He noted that it is located in an area zoned D2 (downtown interface) and is being developed for young professionals. A week and a half ago, he told the board, the Ann Arbor city planning commission had given the project its recommendation, at its Jan. 19, 2012 meeting.

618 South Main facade, facing west from Main Street. (Links to larger image)

The building would include two layers of parking – more than what’s required, Ketelaar said. The courtyard would include a rain garden, and the project would meet the silver standard for LEED certification. Ketelaar told the board he’s suggesting redoing the streetscape along Main between his project and William Street. He reported that Ward 5 councilmember Mike Anglin had requested that traffic calming measures be implemented along that stretch, including adding on-street parking. Ketelaar said he’s interested in helping to “create the future of Ann Arbor” and not just deal with the past.

Early in his turn at the podium, Ketelaar described the parcel as a brownfield site, a topic that the attorney for the project, John Byl, elaborated on. Byl is with the firm Warner Norcross & Judd. He described contamination on the site due to petroleum from an underground tank. The project would clean up that contamination under the state’s Community Revitalization Program, which is the successor to the brownfield program. The required local contribution to that program, he suggested, would come from the DDA. The project would mean a $25 million investment resulting in a taxable value of $9.5 million. He calculated that it would generate $250,000 in additional tax increment finance capture per year.

By way of brief background, the mechanism of a tax increment finance (TIF) district allows an entity like the Ann Arbor DDA to “capture” a portion of the property taxes in a specific geographic area that would otherwise be collected by taxing authorities in the district, like the city or library. The tax capture is only on the increment in valuation – the difference between the value of property when the district was established, and the value resulting from improvements made to the property. In the DDA district, only the taxes on the initial increment are captured – any additional inflationary value beyond that goes to the taxing authorities in the district. Those authorities are the Ann Arbor District Library, Washtenaw Community College, Washtenaw County, and the city of Ann Arbor.

A spiral-bound booklet on 618 S. Main, distributed to board members at the Feb. 1 meeting, outlined the costs for various LEED features – like rain gardens and solar panels, plus streetscape improvements – totaling $2.3 million. The developer would pay all those costs upfront, but six months after a certificate of occupancy is issued, Ketelaar would be reimbursed for up to $1 million, Byl suggested. That would be around mid-2014 or so. The balance of roughly another $1 million would be reimbursed over time from the tax increment that the DDA captured. If the DDA reimbursed at a rate of 75% of the $250,000 a year it would receive in additional tax capture, it would take about six years to reimburse those expenses, concluded Byl.

Comm/Comm: Murals

During public commentary at the start of the meeting, Jody Lanning – owner of Lanning Outdoor Advertising – pitched the board an idea for an advertising partnership involving the placement of murals on public parking structures. She told the board she’s been in the outdoor advertising industry for 18 years.

Concept for a mural on the Fourth and William parking structure in downtown Ann Arbor – presented to the DDA board by Jody Lanning.

She’s worked in the Atlanta and Kentucky markets, she said, and she moved to Michigan three years ago. She said she’s noticed how public art is used in other cities, and she enumerated several benefits of public art. She presented slides depicting some parking garages and the city hall building with concepts for murals.

The business model would consist of renting wall space on parking garages – it would be funded through sponsorships. She estimated that a wall could generate $5,000 in income. Her proposal would be that she’d received a 50% share – out of which 10% would be put aside for scholarships. She suggested forming a board of perhaps four people who would make decisions on the art.

Comm/Comm: Rezoning from D2 to D1

A highlight from Ray Detter‘s report from the previous evening’s meeting of the Downtown Area Citizens Advisory Council included the highlight that nearby residents of 1320 S. University had attended the meeting. They’re opposed to a proposal to rezone that parcel from D2 to D1, which will be considered by the planning commission on Feb. 7, 2012. Detter said the CAC will oppose the rezoning. [The city planning staff recommended denial of the request.]

Present: Nader Nassif, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Joan Lowenstein, John Mouat.

Absent: Newcombe Clark, Bob Guenzel, Keith Orr.

Next board meeting: Noon on Wednesday, March 7, 2012, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

The mid-January and early February rate changes are estimated to generate a total of $133,000 in additional revenue annually. Increases and anticipated revenues are: raise meter bag rates by $5/day ($68,800); increase the premium parking rate by $5/month ($3,300); increase Ann & Ashley and Liberty Square structure evening/Saturday rates by $1/entry ($41,500); increase 415 W. Washington lot entry by $1 and increase permit rates by $5/month ($14,400); increase First & William lot permits by $10/month ($5,000). The change of the effective start date for the early-year rate changes (to Jan. 21 instead of Feb. 1) will apply only to the meter bag rates. The other set of early-year changes will be implemented starting Feb. 1.

Highlights of the more significant changes – to be enacted in September 2012 – include predominantly $.10/hour increases: hourly parking structure rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours); hourly parking meter rates would increase from $1.40/hour to $1.50/hour; and monthly parking permit rates would increase from $140/month to $145/month.

Of the categories of parking, monthly permits will increase percentage-wise the least (3.57%), while hourly structure rates will increase the most (8.33%).

The rate increases were the subject of a public hearing that started at the DDA board’s Nov. 2, 2011 meeting and continued through its Dec. 7, 2011 meeting.

[.jpg of Ann Arbor public parking system revenues since Aug 2009][.jpg of Ann Arbor public parking system hourly patrons since August 2009]

This brief was filed from DDA offices at 150 S. Fifth Ave. A more detailed report of the board meeting will follow: [link]

Front to back: Ann Arbor Downtown Development Authority board members Nader Nassif, Leah Gunn, John Hieftje. (Photos by the writer.)

The board will not vote on the rate increases until its Jan. 4, 2012 meeting. Some of the rate changes are scheduled for implementation in February 2012, but the increases affecting most downtown Ann Arbor parkers would not be implemented until September 2012. The September changes include an increase from $1.40 to $1.50 per hour for on-street metered spaces and an increase from $1.10 to $1.20 per hour for spaces in parking structures.

Some insight into the DDA’s interest in raising parking rates can be found in the DDA’s finances, as reflected in its annual audit. Acceptance of its annual audit report was the one action item on the agenda for Wednesday’s meeting. The board voted to accept its audit report done by the firm Abraham & Gaffney, P.C. for the fiscal year ending June 30, 2011.

Auditor Alan Panter had presented the report to a subset of DDA board members at a Nov. 30 meeting of the DDA’s operations committee.

The report notes an instance of expenditures exceeding the amount of funds appropriated that is inconsistent with Michigan’s Uniform Budgeting and Accounting Act (UBAA) of 1968. At Wednesday’s meeting, DDA board members characterized it as a “technical violation.” At the operations committee meeting, the $337,478 overage was attributed by DDA staff to the submission of a bill forwarded to the DDA in June by its construction management consultant (Park Avenue Consultants Inc.) – connected to the underground parking garage and streetscape improvement projects currently under construction.

For the fiscal year 2011, the DDA showed $18,806,765 in revenues against $20,796,665 in expenses, drawing $1,989,900 from the fund balance reserve. The planned draw on fund balance is related to the underground parking garage construction payments as well as a new contract, signed this year, under which the DDA operates the city’s public parking system. That contract assigns 17% of gross parking revenues to the city of Ann Arbor. At the Nov. 30 committee meeting, DDA board member Newcombe Clark was keen to confirm the inclusion of the new contract as a note in the audit.

In his presentation to the operations committee on Nov. 30, Panter highlighted the fund balance reserve for the parking fund as a concern, saying that the fund was near deficit – it shows a fund balance reserve of less than 1% of operating expenses. A recommended fund balance level, said Panter, is 15-20%.

Another still outstanding issue for the DDA’s finances is the correct interpretation of the city’s ordinance (Chapter 7) specifying how the DDA tax increment finance (TIF) capture works. At Wednesday’s meeting, the board held its third closed session on the topic since July, to discuss the written opinion of its legal counsel on the issue. Taxing authorities that have their taxes captured under the Ann Arbor DDA TIF district have questioned the DDA’s legal position – the DDA contends that Chapter 7 does not place limits on its TIF capture. Depending on how the issue is resolved, it could mean as much as $600,000 less per year in TIF capture, compared with the budget planning the DDA is currently doing.

Also at the Dec. 7 meeting, during the opportunity for public commentary, the DDA board heard from Jim Kosteva –University of Michigan director of community relations – about a request to eliminate two on-street parking spaces on Monroe Street. With the imminent opening of the newly constructed South Hall, on the south side of Monroe, it’s anticipated that students will attempt to cross mid-block. The elimination of the parking spaces would be intended to make students who are crossing mid-block more visible to motorists. Based on the verbal exchange with Kosteva at the podium, it appears possible, but not guaranteed, that some kind of arrangement could be reached before the start of the next semester.

DDA FY 2011 Audit

The DDA board was asked to consider a resolution to accept its annual audit for the fiscal year ending June 30, 2011.

The report from the auditing firm Abraham & Gaffney, P.C. notes an instance of expenditures exceeding the amount of funds appropriated that is inconsistent with Michigan’s Uniform Budgeting and Accounting Act (UBAA) of 1968. Auditor Alan Panter had presented the report to a subset of DDA board members at a Nov. 30 meeting of the DDA’s operations committee. At that meeting, DDA staff attributed the $337,478 overage to the submission of a bill forwarded to the DDA in June by its construction management consultant, Park Avenue Consultants Inc. The bill was for the underground parking garage and streetscape improvement projects that are currently under construction.

Ordinarily, the DDA’s budget is adjusted to match actual expenditures just before the close of the fiscal year, which the DDA board did this year at its June 1, 2011 meeting. Estimates are given for invoices anticipated to be received before the end of the year. The bill submission prompting the auditor’s notation came after the June 1 adjustment.

At the Ann Arbor city council’s Dec. 5 meeting, Stephen Kunselman (Ward 3) complained about the violation noted in the DDA audit report and called for the report to be forwarded to the state, as described in the UBAA.

For the fiscal year 2011, the DDA showed $18,806,765 in revenues against $20,796,665 in expenses, drawing $1,989,900 from its fund balance reserve. The planned draw on fund balance is related to the underground parking garage construction payments as well as a new contract, signed this year, under which the DDA operates the city’s public parking system. That contract assigns 17% of gross parking revenues to the city of Ann Arbor. At the Nov. 30 committee meeting, DDA board member Newcombe Clark wanted to make sure that the new contract was included as a note in the audit.

In his verbal presentation to the board committee on Nov. 30, Panter had highlighted fund balances in two ways. First, he noted that the DDA’s housing fund no longer meets the definition of a special revenue fund under the Government Accounting Standards Board (GASB) Statement No. 54. The money in the housing fund, which is allocated from the DDA TIF (tax increment finance) fund, is thus included as “assigned” funds within the DDA’s general fund (aka TIF fund).

Second, Panter noted that the DDA’s parking fund balance as a percentage of parking expenditures for the year ($104,821/$15,998,564 = 0.6%) is “on the edge of deficit.” As DDA board members explained to Panter, the DDA operates its funds essentially as one fund. In that context, Panter described the fund balance as roughly 25%. He gave 15-20% as a recommended level. He cautioned, however, that allowing any individual fund to go into deficit is a violation of the UBAA.

DDA FY 2011 Audit: Board Discussion, Deliberations

DDA board member Roger Hewitt reviewed the audit report for his board colleagues.

He began by reviewing fund balances. The TIF and the housing fund have a fund balance reserve of a bit over $6 million, the parking maintenance fund a bit less than $2 million, and the parking fund a little over $100,000 for a total of around $8.2 million. The low balance in the parking fund is part the DDA’s 10-year financial plan for construction of the underground parking garage, Hewitt, said. He characterized it as the “ebb and flow” of money when you have a large construction project, and he stated that the low fund balance did not reflect an intrinsic problem.

Hewitt put the $2.7 million overall drop in the fund balance from last year in the context of building it up to close to $20 million at one point. The money is now being used up, he said – for the underground parking garage and also for the Fifth and Division streetscape improvement project. He said he wanted to warn everyone that the fund balances will be even lower next year. He noted that the two current construction projects, plus Village Green’s City Apartments project at the First and Washington lot, would place an additional burden on the DDA’s fund balances.

[At the Nov. 30 operations committee meeting, board members discussed the fact that the finalization of the First and Washington land sale from the city of Ann Arbor to Village Green was expected to be done this week. The city council gave final sign off at its Nov. 10, 2011 meeting. With some question about whether construction would actually start in December, Newcombe Clark joked that the lot could be turned into a temporary ice rink. A more serious suggestion from Clark, to turn the lot into free holiday parking, prompted talk of insurance and liability issues once the property is legally transferred to Village Green.]

Hewitt stressed that the auditor had said it was a clean audit. None of the figures had been found to be in error, he said. Given the amount of activity associated with the construction projects, he said, it reflected good work by DDA executive director Susan Pollay, deputy director Joe Morehouse and the staff.

Hewitt allowed there was one technical issue the auditors had brought up. He reviewed that by law the DDA is required to amend the budget to reflect actual expenditures before the end of the year. After the board had done that budget amendment, but still before the end of the fiscal year on June 30, the DDA had received a number of large invoices, which had been estimated. The estimate had fallen short of the actual amount. He characterized the excess of expenditures beyond allocated amounts as a “technical violation.” He stressed that the auditor’s report did not recommend any corrective action. Responding implicitly to the call from Kunselman to file a report with the state, Hewitt said the audit report is always filed with the state of Michigan once it’s approved.

Newcombe Clark asked Hewitt to enumerate some of the ways that the DDA might realize additional revenue – to give some context for people who might think that the fund balances look low. Hewitt said there were a number of things the DDA could do. One was to increase parking rates in different areas. Hewitt noted that after the current increase is implemented, future increases are anticipated to match inflation. Hewitt stressed that the DDA’s projections for TIF revenues are conservative. TIF revenue is only included in projections once the improved property is on the tax rolls. Two projects are under construction now, he said, and others are planned.

[Currently under construction in the DDA district are Zaragon West and 601 S. Forest. Two other approved projects with construction starts possible in a few months include Village Green's City Apartments and The Varsity Ann Arbor on East Washington. Other projects also in the pipeline are a residential project at 618 S. Main and a hotel at Washington and Division.]

Savings on the expense side, said Hewitt, could come from some deferred maintenance on the parking structures. The DDA had implemented a long-term aggressive maintenance program, he said, and the DDA is far enough ahead in the program that it could be reduced for a few years, with no impact on the integrity of the structures.

Outcome: The board voted unanimously to accept the audit report for FY 2011.

Parking Rate Increases

The overall condition of the DDA’s finances – in particular the nearly de minimus fund balance in the parking fund – provide the context in which the DDA board is proposing a set of rate increases. The contract with the city, under which the DDA operates Ann Arbor’s public parking system, gives the DDA the sole authority to set parking rates. However, it must follow a process explicitly stipulated in the contract, which includes: (1) announcement of the intended change at a DDA board meeting [Nov. 2, 2011] and announcement of a public hearing on the topic at the next DDA board meeting; (2) a public hearing on the rate increases [Nov. 2, 2011 continued on Dec. 7, 2011] and (3) a vote on the increases no sooner than the next DDA board meeting [likely on Jan. 4, 2012].

On Wednesday, continued from the board’s Nov. 2 meeting, was the public hearing on proposed parking rate increases. A vote on the rate changes won’t come until the board’s Jan. 4, 2012 meeting.

Parking Rate Increases: Details

The details of proposed parking rate increases were announced in late October, most of which would be implemented starting in September 2012. Some increases would be implemented starting in February. [.pdf of DDA proposed parking rate changes]

The February rate changes will have a relatively minor impact. Joe Morehouse, deputy director of the DDA, wrote to The Chronicle that he expects the February rate changes to generate a total of $133,000 in additional revenue annually. Increases and anticipated revenues are: raise meter bag rates by $5/day ($68,800); increase the premium parking rate by $5/month ($3,300); increase Ann & Ashley and Liberty Square structure evening/Saturday rates by $1/entry ($41,500); increase 415 W. Washington lot entry by $1 and increase permit rates by $5/month ($14,400); increase First & William lot permits by $10/month ($5,000).

Highlights of the more significant changes – to be enacted in September 2012 – include predominantly $.10/hour increases: hourly structure parking rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours); hourly parking meter rates would increase from $1.40/hour to $1.50/hour; and monthly parking permit rates would increase from $140/month to $145/month.

Of the categories of parking, monthly permits will increase percentage-wise the least (3.57%), while hourly structure rates will increase the most (8.33%). Based on the roughly $15 million in revenue generated by the public parking system last year, the parking rate increases could be expected to increase annual gross revenues somewhere between $0.54 million and $1.25 million, assuming no change in demand or capacity. However, on completion of the new underground garage on South Fifth Avenue, around 650 new spaces will be added to the system, which currently has around 7,000 spaces.

At a joint work session of the city council and the DDA board on Nov. 14 (between the two parts of the DDA’ spublic hearing on parking rate increases), representatives of the DDA did not present a financial case for the need to raise parking rates. And city councilmembers did not question the financial need for the rate increase.

Terms of a new parking contract, under which the DDA manages the city’s parking system, will provide the city of Ann Arbor with 17% of the increased gross revenue from a rate increase – or somewhere between $97,000 and $226,000 more than it currently receives under the contract. For the first quarter of FY 2012 (which started July 1, 2011), the 17%-of-gross calculation for the city’s share worked out to $662,471, which would project to $2.65 million annually without any change in rates, demand or capacity.

Parking Rate Increase: Public Hearing

Tom Heywood, executive director of the State Street Area Association, told the board he was there to express his full support of the DDA and its management of the public parking system. He remembered when many of the parking structures were at the point of collapse in the 1990s. Now, he said, it’s one of the most up-to-date, well-maintained and well-managed systems in the county. Through its new contract with the city of Ann Arbor, the DDA has been given the task of continuing that management through the next 10 years. The new contract, Heywood said, also gives the DDA the power to set rates. Heywood said the State Street Area Association may not always agree with specific rate decisions, but stands behind the DDA’s right to make them. He said it’s not always adequately recognized that the DDA is doing a first-class job.

Rich Bellas, owner of Van Boven Shoes, also expressed support for the DDA. He said it’s easy to point fingers when things don’t go right, but when you don’t know what the alternative would have been, it’s difficult to know if the city would be in even worse shape.

When the Maynard Street structure had to be closed and rebuilt, it was devastating to the neighborhood, he said, and never really recovered in some respects. Bellas said he never wants to go back to the situation that led to the need to rebuild the Maynard Street structure.

Outcome: The board did not vote on the increases – that will likely come at the board’s Jan. 4, 2012 meeting. The public hearing was closed.

Closed Session: TIF Capture

Another still-outstanding issue for the DDA’s finances is the correct interpretation of the city’s ordinance (Chapter 7) specifying how the DDA tax increment finance (TIF) capture works. The issue emerged in May of this year, just as the city and the DDA were poised to sign a new contract under which the DDA would operate the city’s public parking system.

In broad strokes, when first identified as an issue, there was apparent agreement by all parties, including the city and the DDA, that the ordinance limited the DDA’s TIF capture based on the TIF plan. That interpretation resulted in a repayment earlier this year of roughly $473,000 from the DDA to the Ann Arbor District Library, Washtenaw Community College, and Washtenaw County for excess taxes that the DDA had collected. The city of Ann Arbor chose to waive its $712,000 share of the calculated excess. Questions were raised, however, about the method use to calculate the excess. [See, for example, this Chronicle column: "Tax Capture Is a Varsity Sport"]

But after a closed session on July 27, 2011 to consider written advice of its legal counsel, the DDA board took the position that the redistribution of those funds had not been necessary – leaving aside any question of the method of calculation.

At it’s Dec. 7 meeting, the board held its third closed session on the topic (counting those on July 27 and Nov. 2). Depending on how the issue is resolved, it could mean as much as $600,000 less per year in TIF capture, compared with the budget planning the DDA is currently doing.

Monroe Street Parking Spaces

The University of Michigan recently completed construction of a new building, South Hall, on the south side of Monroe Street. It sits on the opposite side of the street from Hutchins Hall. Both buildings are part of the UM law school.

The one-block section of Monroe Street between State and Oakland, where the buildings are located, has long been of interest to the University of Michigan as potentially being blocked off to pedestrian traffic, to provide a more coherent campus. One of the policy issues involved is the monetary value that the city of Ann Arbor and the DDA attach to on-street parking spaces. [For more detailed Chronicle coverage, see: "Column: Ann Arbor's Monroe Street Doctrine"]

At the DDA board’s Dec. 7 meeting, Jim Kosteva, director of community relations for the University of Michigan, addressed the board with a request to eliminate two of the 18 spaces that are now metered on the block of Monroe Street between State and Oakland.

He led off his remarks by saying he would have preferred to have had the opportunity to rehearse the material in other conversations before appearing before the board, but due to the timing issue, he wanted to take the opportunity to address the board during public commentary. He noted that in the Ann Arbor community recently, a great amount of attention had been given to crosswalks, in the interest of promoting pedestrian safety. [See Chronicle coverage: "Council Takes Step to Alter Pedestrian Law"] So he was addressing the board, seeking a similar improvement for access and visibility at a location near the law school campus, at a location where it’s expected to be practically a crosswalk.

Kosteva said it’s expected that between Hutchins Hall and the newly-constructed South Hall, hundreds of law school students will be going back and forth across the street. The new building was designed so that the door is aligned with the door of Hutchins Hall. There are two parking spaces in front of South Hall, Kosteva said, which he was requesting to be removed. The objective, he said, is to promote pedestrian safety.

Students will try to cross the street mid-block, he said, and without removal of the parking spaces, that means they’ll be trying to cross from between parked cars. During the course of construction, Kosteva pointed out, the block had seen the addition of two on-street parking spaces – from 16 to 18 spaces. That had been due to the elimination of some driveway entrances and loading zone areas. So compared to the pre-construction conditions, there would be no net revenue change to the public parking system if two spaces were now eliminated. Kosteva also pointed to three additional spaces along Oakland Street that had been gained as a result of the construction of South Hall.

DDA executive director Susan Pollay and University of Michigan director of community relations Jim Kosteva after the Dec. 7 DDA board meeting had concluded and before another meeting in the same room started. In this shot, Pollay is simply enjoying a healthy snack, not demanding that Kosteva start using apples-to-apples comparisons.

Kosteva acknowledged the ongoing conversation between the city and the university about the entire block. The university is still interested in creating a pedestrian plaza for the street [blocking off the area to vehicular traffic, thus eliminating all on-street parking].

However, Kosteva contended the university does not currently have a dialogue going on. He could not predict when that conversation would be restarted. Part of that conversation involves the city and the university determining the value of a parking space, which would take some time to determine. But with the start of the next term imminent, Kosteva said, the university was asking that the two spaces be removed now – in advance of settling the larger policy issue.

DDA board member Newcombe Clark responded to Kosteva by asking him to return to the podium, and told him that obviously the DDA board would never let anything trump safety, especially not money. Any hesitation about removing the spaces, he said, involved the timing. It would be great, said Clark, if politics and parking did not share any more than just the letter “P” – but they do. Clark wondered if it might be possible to separate out the two spaces from conversation before stepping into it.

Kosteva expressed some concern that it might cloud the bigger picture, as opposed to bringing it to resolution. He suggested he’d be willing to acknowledge in writing the capacity of the block for 18 on-street spaces, in the event that it is useful for the bigger picture conversation.

Clark seemed amenable to that, and noted that if the removal of the spaces turns out to be delayed past the winter term, it would be useful to monitor actual student street-crossing behavior. It’d be useful to have something as a data point that might give clarity. Clark said he didn’t mean to suggest spending thousands of dollars to pay to count pedestrians. Kosteva ventured that the university would definitely get feedback about it. The new building was designed to be able to cross the street directly. There’s going to be a lot of movement between those facilities, he said. Clark concluded by saying the good news is, the DDA had the ability to act quickly.

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council.

Comm/Comm: Downtown Citizens Advisory Council

Ray Detter gave the monthly update from the downtown citizens advisory council, which typically meets on the Tuesday evening before the DDA board’s monthly meeting. He described how the CAC has an annual dinner party discussion to look at goals for the next year and to review the past year. He reported that the new city administrator, Steve Powers, had attended as a guest.

CAC members were generally pleased with the city council’s decision on the previous Monday night, Detter said, not to temporarily reduce the level of support for the city’s percent for art program. The CAC would continue to work for that program, Detter said. Specific areas where Detter felt public art money might be spent included the alley connecting Liberty and Washington streets next to the Liberty Square parking structure.

Among the successes of the downtown, Detter noted the opening that day of Babo, a market on the ground floor of the 411 Lofts building on East Washington. Next door to the 411 Lofts building is the site of another residential high-rise development – The Varsity, Ann Arbor. Detter said that The Varsity was the first project to undergo review by the city’s new design review board. He said that the developer of The Varsity didn’t make all the changes that the CAC wanted, but it was a useful process.

Detter also praised the increase in the number of bike paths. The CAC supports the city’s efforts to increase pedestrian safety at crosswalks, he said. The CAC thinks the downtown library should remain downtown and supports some type of new development on top of the underground parking garage. At the meeting, Detter reported, Powers had said he’s committed to increasing the city’s tax base.

Comm/Comm: Monthly Parking Report

The report of monthly parking statistics (for October) received cursory discussion. Some decline in use was noted for the First and Washington lot – this was attributed to the elimination of that lot’s use by the DDA, given the imminent sale of the property to Village Green for the construction of the City Apartments residential project.

Comm/Comm: Construction Report

John Splitt reported that the last major structural concrete pour is done for the underground parking garage that’s under construction on South Fifth Avenue. Other pours will continue over the winter. The tower crane will disappear soon after next week. Canopies are going up on the east leg, over the stairwell and the speed ramp. No glass will be installed for the canopies until spring. For the middle phase of the project, waterproofing and backfilling continue.

For the Fifth and Division streetscape improvements, work has been focused at Fifth and Liberty, getting it cleaned up. Street lights have been put in at that corner.

Comm/Comm: Transportation

Reporting from the transportation committee, John Mouat said that Erica Briggs of the Clean Energy Coalition had made a presentation to the committee on a bike-sharing proposal. [Briggs is former director of the getDowntown program and currently serves on the city planning commission and the zoning board of appeals.] Briggs did not solicit financial support but asked for cooperation at the level of staff participation and planning. Mouat characterized the committee as supportive, but noted safety concerns expressed by board member Nader Nassif, who wondered of downtown bicycle infrastructure was adequate to support an additional large volume of bicyclists.

Mayor John Hieftje, who by statute occupies a position on the DDA board, said it was not a high priority issue, but asked for a discussion of bicycles on downtown sidewalks. Several cities, he said, have made moves to prohibit them.

Comm/Comm: Midtown Discovery

Joan Lowenstein reported on the progress that the DDA is making on the task of identifying alternate uses for city-owned surface parking lots. The task was assigned to the DDA by the city council earlier this year at the DDA’s request, in connection with negotiations over a new contract under which the DDA manages the city’s parking contract. The parcels given initial focus are the Klein’s Lot (on Ashley, between William and Liberty), Palio’s Lot (at the northeast corner of Main & William), the Old Y Lot (at the northwest corner of Fifth & William), the Library Lot (the top of the South Fifth Avenue underground parking garage), and the bottom floor of the Fourth & William parking structure.

Lowenstein reported that the work of the leadership and outreach task force continues. The process has been dubbed “Midtown Discovery” and continues work on the first phase, which is to get on the same page about what’s been done in the past by way of planning for the downtown. At the task force’s Nov. 7 meeting, they’d shared observations from a walk they did around downtown and began talking about how they perceived the area. The task force has begun talking about beginning the public dialogue.

Lowenstein announced that the DDA will receive $70,000 as part of a $3 million federal sustainable communities grant awarded to Washtenaw County. The DDA partnered with the county to obtain the community challenge grant. The DDA is working with the county to create a funding agreement. Lowenstein said the public dialogue will involve working with a consultant and the grant money would help pay for that. DDA planning and research specialist Amber Miller, who worked on the grant application, clarified that $20,000 would need to be put up by the DDA, in order to get $70,000 from the federal grant award.

Comm/Comm: Annual Report

Lowenstein reported that great feedback has been received on the annual report and state of the downtown report created this year by the DDA.

Ann Arbor SPARK, this region’s economic development agency, has floated the idea of partnering with the DDA to use part of the report in its business attraction proposals. That’s what the DDA had in mind, said Lowenstein, when staff started working on the documents. It’s a “sales document,” she said.

Some of the benchmarks have changed, Lowenstein said. In the year 2000, the downtown residential task force had identified a goal of creating an additional 1,000 units of housing in the near downtown area by 2015. Since 2000, 536 units have been constructed and 274 are under construction. When The Varsity and Village Green’s City Apartments are constructed, that will be 337 more units. That’s more than 1,110, she concluded. [The task force report also notes that: "The task force discussed a second goal of an additional 1,500 new units by 2030 but NOT making this goal a rigid recommendation, as it should be re-assessed prior to 2015."]

Comm/Comm: Graffiti

Mayor John Hieftje reported on the results of a recent targeted graffiti enforcement action. He said the city administrator will soon report on the response rate, with an enforcement map. Of those properties cited, Hieftje said, 70% were cleaned up in a week’s time. For the others, the city is working with property owners to get compliance without resorting to assessing fines. Community standards enforcement officers reported that “they didn’t get yelled at.” Board member Nader Nassif reported that he’d witnessed some of the compliance activity of graffiti getting painted over.

Comm/Comm: Police Officer Hiring

Hieftje also reported that the city council had voted at its Dec. 5 meeting to approve a contract with the Washtenaw County sheriff’s office to provide dispatching services, instead of continuing to employ its own dispatchers. The city expects to save $500,000 a year with the move. Work on the county-based police dispatching goes back 20 years, Hieftje said. DDA board member Bob Guenzel, who is a retired Washtenaw County administrator, offered his congratulations, as someone who worked on it for 20 years. Guenzel gave credit to sheriff Jerry Clayton and Ann Arbor chief of police Barnett Jones for finally achieving that.

Hieftje also said that with the new contract struck with the Ann Arbor police officers union (AAPOA), the city would realize another $440,000 in savings. Without the new contract or the dispatch consolidation with the county, the FY 2013 budget had called for a reduction of 10-12 officers, Hieftje said. He expected that those reductions would no longer be necessary. Nine officers would be retiring at the end of the year, so the first step would be to call back four officers who were recently laid off. According to the city administrator, there were 400 applications for the remaining jobs. So the city expects to be able to hire experienced officers, Hieftje said.

Present: Nader Nassif, Newcombe Clark, Bob Guenzel, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Keith Orr, Joan Lowenstein, John Mouat.

Absent: Russ Collins.

Next board meeting: Noon on Wednesday, Jan. 4, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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The details of proposed parking rate increases were announced in late October, most of which would be implemented starting in September 2012. Some increases would be implemented starting in February. [.pdf of DDA proposed parking rate changes]

The public hearing on parking rate increases came at the same meeting when the board voted to accept the audit from the previous fiscal year (2011), which included some concern expressed by the auditor that the parking fund was on the edge of a deficit. Last year, the parking system had around $9.5 million in annual operating and administrative expenses. It’s also encumbered by obligations to the city of Ann Arbor as well as all capital maintenance expenses for the parking system, making the parking fund’s expenses for last year almost $16 million against $15.2 million in revenue – the difference was made up by drawing on the fund balance reserve.

The February rate changes will have a relatively minor impact. Joe Morehouse, deputy director of the DDA, wrote to The Chronicle that he expects the February rate changes to generate a total of $133,000 in additional revenue annually. Increases and anticipated revenues are: raise meter bag rates by $5/day ($68,800); increase the premium parking rate by $5/month ($3,300); increase Ann & Ashley and Liberty Square structure evening/Saturday rates by $1/entry ($41,500); increase 415 W. Washington lot entry by $1 and increase permit rates by $5/month ($14,400); increase First and William lot permits by $10/month ($5,000).

Highlights of the more significant changes – to be enacted in September 2012 – include predominantly $.10/hour increases: hourly structure parking rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours); hourly parking meter rates would increase from $1.40/hour to $1.50/hour; monthly parking permit rates would increase from $140/month to $145/month.

Of the categories of parking, monthly permits will increase percentage-wise the least (3.57%), while hourly structure rates will increase the most (8.33%). Based on the roughly $15 million in revenue generated by the public parking system last year, the parking rate increases could be expected to increase annual gross revenues somewhere between $0.54 million and $1.25 million, assuming no change in demand or capacity. However, on completion of the new underground garage on South Fifth Avenue, around 650 new spaces will be added to the system, which currently has around 7,000 spaces.

Under terms of a new parking contract, under which the DDA manages the city’s parking system, the city of Ann Arbor would receive 17% of that increased gross revenue – or somewhere between $97,000 and $226,000 more than it currently receives under the contract. For the first quarter of FY 2012 (which started July 1, 2011), the 17%-of-gross calculation for the city’s share worked out to $662,471, which would project to $2.65 million annually without any change in rates, demand or capacity.

This brief was filed from the DDA offices at 150 S. Fifth Ave. A more detailed report will follow: [link]

Deanna Relyea spoke to the Ann Arbor DDA board at the Nov. 2 public hearing on behalf of the Kerrytown District Association. (Photos by the writer.)

The hearing will continue at the board’s Dec. 7 meeting, after a Nov. 14 joint working session with the Ann Arbor city council, when the two bodies will discuss proposed increases. A vote by the DDA board on the rate increases would not come until January.

Around a half dozen people spoke at the initial opportunity for public comment on the proposed rate increases, most either downtown merchants or representatives of merchant associations. They were uniformly in support of one feature of the proposal – no extension of meter enforcement past 6 p.m. Extension of enforcement hours has been actively on the table for at least two years. Based on board discussion at Wednesday’s meeting, evening enforcement could eventually be implemented – but not for the current rate increase cycle.

Those who spoke at the initial part of the hearing were generally opposed to increasing rates, but also acknowledged the financial decisions the DDA faces. And some speakers put part of the blame for that situation on the city of Ann Arbor. Under a new contract, the city of Ann Arbor now receives 17% of gross public parking revenues, which could otherwise be put back into the parking system, reducing the pressure to raise rates. Under the contract, the DDA operates the system, and is responsible for ongoing maintenance. Rates are controlled by the DDA in consultation with the city council.

The details of proposed parking rate increases were first announced towards the end of last week, most of which would be implemented starting in September 2012. Some increases would be implemented starting in February. [.pdf of DDA proposed parking rate changes]

Highlights of the changes to be enacted in September 2012 include predominantly $.10/hour increases: hourly structure parking rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours;) hourly parking meter rates would increase from $1.40/hour to $1.50/hour; monthly parking permit rates would increase from $140/month to $145/month.

The board’s meeting included the usual range of reports, including the quarterly financial numbers and parking report, and updates on the Fifth Avenue underground parking garage construction as well as the most recent development in the Nov. 8 sidewalk millage ballot proposal.

At the city council’s Oct. 17 meeting, the council passed a resolution clarifying how the millage proceeds would be used inside the DDA’s geographic district. And at the DDA’s Wednesday meeting, mayor John Hieftje gave the clearest public indication to date that he does not want to take a position on the sidewalk millage, saying that residents would have to “figure it out for themselves.”

The board also held a closed session, under the provision of the Michigan Open Meetings Act that allows such a session to discuss the meaning of legal advice contained in a written document protected under attorney-client privilege. 

Parking Rate Public Hearing

The main focus of the board meeting was the public hearing on parking rates and the associated discussion by DDA board members. Remarks included not just comments on the rate increases, but also questions about the need to build the underground parking garage, which is currently under construction on the so-called Library Lot on South Fifth Avenue, between Liberty and William streets. Speakers also complained that revenue from the parking system was being used to backstop the city of Ann Arbor’s general fund.

Terms of the new contract (ratified in May 2011) under which the DDA operates the city’s public parking system include a provision whereby 17% of gross revenues are paid directly to the city of Ann Arbor. The payments are made quarterly, by the end of the month after the quarter ends. So the first of those payments was made on Oct. 31. The 17% figure came to $662,471.

Parking Rate Public Hearing: Introduction

The contract between the city and the DDA, under which the DDA manages Ann Arbor’s public parking system, provides for a mechanism the DDA must use in order to implement rate increases. It involves three separate board meetings: one to announce an intent to raise rates, another to hold a public hearing, and a third for a vote.

… DDA shall not implement any increase in the Municipal Parking System’s hours of meter operation or parking rates intended to persist for more than three (3) months without first:
(i) announcing, and providing written communication regarding, the details of such increase at a meeting of the DDA Board;
(ii) providing all members of the public an opportunity to speak in a manner similar to a public hearing before the DDA Board at its next regularly scheduled meeting on the subject of the proposed increase (“Public Hearing”); and
(iii) postponing any vote on the proposed increase until at least the regularly scheduled meeting of the DDA Board after the Public Hearing.

The DDA board completed the first step of the process at its Wednesday meeting and opened the public hearing early, so that it could receive input from the public before its Nov. 14 work session with the city council.

Bob Guenzel opened the hearing by noting that the recently signed contract with the city of Ann Arbor requires that a hearing be held. Some of the rate changes are proposed to take effect in September 2012, while others are proposed for February, he said. However, the pubic hearing would welcome comments on both sets of changes.

Guenzel noted that the DDA board would be meeting with the city council on Nov. 14 to talk about the modifications. Guenzel went on to explain that the public hearing would be adjourned and then re-opened at the Dec. 7 DDA board meeting, so there would be time both before and after the city council work session to hear from the public. Unlike working sessions for the Washtenaw County board of commissioners, the city council work sessions have historically not provided time for public commentary.

Parking Rate Public Hearing: Public – Round 1

Maura Thomson, executive director of the Main Street Area Association (MSAA), began by asking if she needed to give her home address as Guenzel had indicated. Quipped Guenzel, “No, we know where to find you!” Thomson thanked the board and staff for their work and for their thoughtfulness in arriving at their recommendations. She said she understood the complexities the board faces. Specifically, the board needs to satisfy its financial obligations, she said, as well as the needs of the board’s “customers.”

As “customers” Thomson identified the public and downtown businesses. She called satisfying both sets of customers a “tall order.” She noted that many business were opposed to extending evening enforcement hours. She said she really appreciated the fact that the board had elected not to extend hours of enforcement. She said felt encouraged that the board had really listened to concerns of members of the MSAA and really heard them.

Maggie Ladd, director of the South University Area Association, told the board she echoed Thomson’s remarks and said she appreciated the fact that extension of enforcement of meters would not be recommended. She also said that she had no objection to the increases for parking during Ann Arbor’s art fairs. [That increase is proposed to go from $10 to $12 for entrance into the downtown parking structures. Ladd is director of the South University Art Fair, one of four fairs that take place each summer in downtown Ann Arbor.]

Ali Ramlawi introduced himself as the owner of the Jerusalem Garden restaurant on Fifth Avenue and resident of Ann Arbor. He described the construction of the underground parking garage, which is taking place immediately adjacent to his restaurant, as the “nightmare on Fifth.” He said he’d been watching actions of the board and its decisions, and the steps it’s taking. As a business owner and community resident, he said he believed that the board’s set of recent steps and decisions are “choking off” downtown. The effect of continued increase rate increases and increased complexity of the pricing structure is to choke off businesses, he said. Other than night clubs and restaurants, businesses are struggling to stay alive, he said. Extended hours of parking meter enforcement would have been the nail in the coffin.

DDA board member Keith Orr makes a point during board deliberations. Visible in the background is the mission statement of the DDA: "The mission of the Ann Arbor Downtown Development Authority (DDA) is to undertake public improvements that have the greatest impact in strengthening the downtown area and attracting new private investments. "

Ramlawi went on to describe the relationship between the city and the DDA as uncomfortable. The mission statement of the DDA is not to balance the city’s budget, he said. It’s a “weird relationship,” he said, that includes the DDA paying the city $2 million that wasn’t required under its contract, then the forgiveness of excess TIF funds captured by the DDA. He described the situation as the “lines are getting blurred.” The DDA should get back to focusing on the needs of the downtown. People need to live within their own means, he said – that’s what we all have to do as businesses and as citizens. If the city keeps “going back to the well” of the DDA, the well is going to run dry, he cautioned. He allowed that the DDA does not have an easy job, but concluded by saying that continued parking rate increases are harming business downtown.

Andrea David spoke on behalf of Herb David Guitar Studio, located on the corner of Fifth and Liberty, a few parcels down from the ongoing construction of the underground parking garage. She said she appreciated that the extension of enforcement hours into the evening was not part of the proposal. But she told the board that the construction activity had practically killed the studio, and the restaurants Jerusalem Garden and Earthen Jar. Students who take lessons at the studio can’t find parking. She asked the board to consider raising the rates only after the underground parking structure is open, not before.

J.C. Potts of Pangea Piercing told the board in a friendly drawl that everything the board does makes it unattractive to drive downtown. He allowed that it would be nice to be able to get around only as pedestrians or cyclists, but said that the No. 1 complaint he hears is about parking. It’s not the cost or lack of parking, but rather the aggressive enforcement.

Potts said that in a time of limited resources, the city seems to have a whole army of officers who are assigned to enforce parking regulations. He regularly receives tickets, he said. Pangea Piercing is expanding its business, he said, but not in Ann Arbor. They’ve chosen Pittsfield and Ypsilanti, because the parking situation is easier there. He cautioned the board that the goose with the golden eggs can be killed.

Herb David, owner of Herb David Guitar Studio, said he endorsed what everybody else had said. If the goal of the construction of the underground parking garage was to make the downtown more vital, it had in fact de-vitalized long-time businesses.

David alluded to an old blues song by Huddie Ledbetter (Leadbelly) called “Bourgeois Blues” which includes a lyric: “I tell all the colored folks to listen to me/Don’t try to find you no home in Washington, D.C./’Cause it’s a bourgeois town.” Washington D.C. might be a bourgeois town, David said, but Ann Arbor is becoming a franchise town.

He told the board that the Herb David Guitar Studio is threatened, and might go out of business. Long-time customers don’t want to deal with the construction zone situation. He told the board they’d done a lot of good things. But after 50 years in business, where each year it would increase 4-5%, now it was down 40-45%. Sunday, he said, is better than the rest of the week, because you can get free parking. “We can’t pay our bills,” he told the board. For the first time in 50 years, the store had been broken into. He attributed the break-in as caused in part by a dark alley resulting from a missing street light. They’d been given a string of Christmas lights, but that didn’t help.

Deanna Relyea spoke on behalf of the Kerrytown District Association. She thanked the DDA board for the improvements that had been made to downtown over the years. She echoed Thomson’s remarks, telling board members she was sorry that they, as the DDA board, had to deal with city of Ann Arbor’s shortfall. There were plans for the Fifth Avenue streetscape improvements [involving additional brickwork in the area of Detroit Street] that had to get axed.

Relyea told the board that raising parking rates and aggressive enforcement go together to make Kerrytown customers think twice about coming to Ann Arbor. She noted that Kerrytown has a somewhat different character from other downtown districts – it’s a destination, and people come and stay for hours. She said that merchants don’t necessarily mind rate increases, they just need to know that parking will remain convenient. She noted that the DDA mentions cities that have higher rates, like Grand Rapids and Lansing. But Ann Arbor is not like those cities, she said, and shouldn’t aspire to be that way.

Ray Detter reported to the board that the Downtown Citizens Advisory Council had gone over each recommendation for rate changes and fully supported them. No no one wants to raise rates in a time of economic hardship, he said. But the increases were necessary in order to keep the parking structures in good repair and meet the DDA’s financial obligations. He reminded the board that the parking system didn’t always pay for itself. When the DDA took over the parking system in 1992, some of the structures were falling apart. With the city council’s approval, the DDA had taken responsibility for repairing and rehabbing structures and has made the system financially self-sufficient, he said.

Parking is only a small part of the full range of the transportation options that the DDA promotes, in concert with the University of Michigan and the Ann Arbor Transportation Authority, Detter said. The analysis of that entire transportation system, he said, had led the DDA to build the underground parking garage. The nature of that construction has caused problems for neighboring businesses, he acknowledged, calling that unfortunate. The whole system has more people using it than before. He passed around some articles taken from the Ann Arbor District Library archives from 1938. There’s a photo of a woman who had a sign that read: “Keep parking meters out.” It illustrated that parking rates had always been a point of controversy. [AADL Old News: Parking]

Andrea of Pangea Piercing said she wanted to argue the point that downtown was vital. There were four stores going out of business, she said. Trying to imagine Ann Arbor without Herb David Guitar Studio made her want to cry, she said. Ann Arbor doesn’t want a CVS and a Starbucks on every corner. “We don’t want a cookie-cutter city,” she said, with a chain store everywhere. She reiterated Potts’ point that Pangea’s is opening another location, but in another city, because people don’t want to come to downtown Ann Arbor.

Parking Rate Public Hearing: DDA Board Commentary

Responding to some of the remarks made during the public hearing, mayor John Hieftje said that a speaker’s suggestion that parking meter rates not be raised until after the underground structure is open is a good idea. He noted that September 2012 is after the underground parking garage is expected to be open (it’s scheduled to open in the spring of 2012). And September 2012 is when the majority of increases affecting the average parker are proposed to be implemented.

Newcombe Clark responded to the comments during the public hearing by saying that the board was aware of all the data, and the revenue needs. “We’ve all known this was coming,” he said, noting that the board has listened to the feedback it’s heard. Not having enough parking and having parking that’s too expensive are both problems. While it’s true that the board needs the revenue, this is a function of choices the board has made, he pointed out.

Clark talked about the parking policy choices driven by “best practice or best politics.” He said the board should try to err on the side of best practices. The parking rate increases the board is proposing take a first stab at revenue generation, Clark said. As the board thinks about parking policy, the best-practices-based plan calls for evening enforcement. So that may have to come back on the table, he said. Even though evening enforcement was a best practice, it’s not best politics. Clark noted that MyBuys, which employs Clark as a manager of business development associates, has 80 downtown employees, and sees no benefit to a lack of evening enforcement. But there’s no advocate for that position. Regarding the DDA board, he noted, “We’ll be yelled at no matter what we do.”

Parking Rate Public Comment: Public – Round 2

During the time allotted for regular public commentary at all DDA board meetings, Ali Ramlawi of Jerusalem Garden reprised the sentiments he’d expressed at the public hearing. He said he wanted to reinforce the thought that the DDA is a separate agency, and needs to act independently of the city’s financial woes. He told the board to focus on their mission statement. The DDA does not exist in order to fund gaps in the city budget, he said. Ramlawi said he respected Ray Detter, but as rates increase 10, 20, 30, 70 cents, you get to a point of no return.

Ramlawi noted that people compare Ann Arbor to other cities – the fact of the matter is that Ann Arbor is a university town. The university keeps the city afloat and keeps Ann Arbor from facing some of the same problems that other cities face, he said. Ann Arbor’s success is due to the University of Michigan. For his restaurant, business is off 30-40%. [Although Ramlawi didn't make the point explicitly that he appeared to be headed for, on other occasions he's mentioned that the catering part of his business, for which UM is a client, has helped stabilize the business.]

Ramlawi said that Fifth Avenue was originally supposed to be open in time for the art fairs in the summer of 2011, but it’s still closed. [During his construction activity update later in the meeting, DDA board member John Splitt indicated that the goal is to reopen the street by early 2012.] Ramlawi said he had a feeling that some of the need for rate increases are due to previous financial irresponsibility that has “caught up with today’s balance sheet.” He repeated the point that Ann Arbor is a successful city because it has one of the best university’s in the world in its backyard. It’s time to live within our means, he said.

Andrea David of Herb David Guitar Studio also returned to the podium. She said that the city has to move forward, but she told the board to do that with caution. The DDA built the underground parking structure, but doesn’t know if you can fill it. That’s prime parking not far from Liberty Street.

Pangea Piercing's Liberty Street location, east of Sam's and Sole Sisters, is near an alley entrance where parking is prohibited.

J.C. Potts of Pangea Piercing returned to the podium, too. He took up Clark’s point, by acknowledging that people will yell at the board no matter what they do. He said he recognized the need to build more parking. But he suggested easing enforcement or keeping rates the same as a goodwill gesture. He suggested that parking could be a “loss leader.” Now, people worry about coming to park in downtown Ann Arbor, because they think they’ll get a ticket and get “harassed by five bums.” The idea would be to take less from each downtown visitor, but if there are more visitors, the city can get more revenue. Ann Arbor needs to get people to come to downtown and “see the freak show,” Potts said.

Herb David, in his second turn at the podium, asked the board if they would be facing the same problem tomorrow. Based on the projected population growth in the next 50 years, he said, no one thinks the underground parking garage would be justified. He suggested building an atrium next to the downtown library as a replacement space for artists who previously worked out of space in the collection of buildings where the new Y was built on West Washington.

Parking Rates: Board Response, Discussion

Responding in more detail to remarks made at the public hearing, Roger Hewitt said there were some misstatements he wanted to correct. Responding to the idea that Ann Arbor is being taken over by chain stores due to decisions made by the DDA board, he pointed out that many members of the board are independent business owners in the downtown. They’re acutely aware of the challenges faced by independent businesses. The board is not associated with franchises of chains, he said. [Hewitt owns the Red Hawk Bar & Grill and Revive + Replenish downtown.]

Responding to the suggestion that enforcement activities should be eased off, Hewitt pointed out that the city of Ann Arbor handles enforcement of parking regulations. As part of the new parking contract, Hewitt said, the DDA and the city’s enforcement staff now have a monthly staff meeting to coordinate the city and the DDA’s thinking on the issue of enforcement. Hewitt stressed that it’s not the DDA who writes the tickets. Hewitt also noted that with the set of proposals the DDA has made about rate increases, there’s not currently a plan to begin enforcement of parking meters in the evenings.

Hewitt said the biggest concern they’ve heard is not that people don’t want to pay – it’s the concern that if people receive parking tickets, it will send an unpleasant message. Hewitt alluded to technological advances in the parking industry that might allow fees to be charged for on-street meters without risk of parking tickets. [Hewitt was alluding to "hockey puck" sensors that would be installed in the pavement under a space and could monitor when an automobile is in the space. Patrons would pay for the time they used.] But evening enforcement is not part of the proposal for the coming year, Hewitt said.

Hewitt then ticked through each of the proposed increases. [.pdf of DDA proposed parking rate changes]

The break-even point for the parking system, Hewitt said, is roughly $16 million a year – that includes debt service as well as the cost of maintaining the structures. Hewitt said he appreciated that Detter had pointed out that the parking structures were in very bad repair when the DDA assumed responsibility for the city’s parking structures in 1992. Hewitt called Ann Arbor’s public parking system one of the best maintained municipal parking systems in the country. The maintenance costs for that system run about $2 million a year, he said. In contemplating the rate increases, the DDA is trying to balance its fiduciary responsibility to maintain the system against the issues that the speakers had identified during the public hearing.

With respect to the need to build an underground parking garage, Hewitt said that beginning about five years ago, it was noted that the parking system was reaching capacity. But measured in terms of “hourly patrons,” use of the parking system continues to grow. Hewitt clarified that an hourly patron is someone who pays hourly either at a lot or a structure.

Here’s a summary of parking revenue and hourly patronage trends over the last two years, compiled by The Chronicle from DDA monthly year-over-year comparisons:

DDA parking revenue. The red revenue line for the most recent year shows an overall pattern of slight increases compared to the blue bars of the previous year. (Image links to higher resolution file. Any errors are the responsibility of The Chronicle.)

DDA hourly parking patrons. The red parking patrons line for the most recent year shows an early pattern of slight decreases with slight increases more recently, compared to the blue bars of the previous year. (Image links to higher resolution file. Any errors are the responsibility of The Chronicle.)

Compared to five years ago, there are 450,000 more hourly patrons a year, reported Hewitt. [For the most recent year, there were roughly 2.2 million hourly patrons.] For the current monthly parking report [September 2011 versus 2010], Hewitt said, the number of hourly patrons has gone up 6%. Use of the system is now growing steadily, Hewitt said, after experiencing a somewhat flat period starting with the 2008 economic downtown. Without adding a new parking structure, Hewitt said, business couldn’t grow.

Sandi Smith said the board had heard a lot about parking demand management – which involves different pricing of parking options based on demand. She said it appeared, based on the proposed rate increases, that the DDA had stepped away from any implementation of that.

Hewitt told Smith that a “stepped approach” had been considered for off-street meters, but one barrier to that is that ePark stations had not yet been installed throughout the downtown. [The ePark stations are wirelessly-connected payment kiosks that allow different rates to be set for different geographic areas and different times of day, and to be easily adjusted. The capital expenditure of the stations has been put on hold in light of the need to meet the condition of the 17% gross revenue payment to the city of Ann Arbor, under the requirements of the new contract.]

South Ashley looking north. Meters along that section are half the cost of other meters in the city of Ann Arbor – $0.70 compared with $1.40 an hour. Those meters also allow for 10-hour parking. Most other meters allow only 2-hour parking. (Image links to .pdf file of map with current meter and rate locations.)

Hewitt noted that on the fringes of the metered areas, the DDA wanted to establish “park and walk” meters, which are 10-hour meters that are half price. That’s consistent with the parking demand management approach. Hewitt’s comment prompted Russ Collins to recall a joke made by Geoff Larcom, director of Eastern Michigan University media relations, who says EMU doesn’t have a parking problem, it has a walking problem.

DDA executive director Susan Pollay noted that there are locations where such meters are already in place, on North Ashley, North First, and South Division. These meters would be branded, Pollay said, as part of the effort to expand use throughout the system. As the rates are increased in September 2012, Pollay said, the half-price meters would increase as well. [Later that day, Republic Parking employees were observed adding signs to the half-price meters.]

Mayor John Hieftje expressed his astonishment at the 450,000 figure Hewitt had given on the increase in the number of yearly hourly patrons compared to five years ago. He noted that there were also a lot more people using the go!pass and concluded that this reflected a lot more visits to the downtown.

Newcombe Clark wanted to know what the revenue implications are: How much money would the parking rate increase bring in? Hewitt told Clark he did not have the numbers in front of him. He said the DDA is in the process of revising its 10-year budget plan.

Sandi Smith wanted to know if historical decreases in parking system use correlated to rate increases. Hewitt told Smith he hadn’t seen use go down during the seven years he’s served on the board, though he allowed it’s been flat at times. In 2009-2010, things were flat for a little while, he said. Russ Collins recalled some history back when Main Street was dying due to the opening of Briarwood Mall, in the mid-1970s. If there was a desperate time, then that was it, he said. At that time there was an economic downturn and parking rates were doubled. Collins then quipped that WEMU’s reporter, Andrew Cluley, was not taking notes about his remarks, so it was obviously not important.

John Mouat said the message about the opening of the new underground structure should be: “We’ve got parking!” The board needs to remember that it’s a great thing to be able say that to people who’ve been trying to come downtown for years. The capacity of the new underground structure will also allow various kinds of growth, Mouat said, including allowing more downtown residents. Mouat looked forward to the time when the bonds are paid off and the DDA would be able to manage costs. He said the board has to keep in mind the future – 10-20 years from now.

Building off of Mouat’s remarks, Collins said as far as long-term vision, it would be great if the parking system were used less 30-40 years from now. When the Maynard parking structure can’t be maintained any longer, he said, it could be removed and replaced with commercial space. Building the new parking spaces underground is the right place to build them, he said. Collins said he was in complete sympathy with businesses affected by the underground parking garage construction. He quipped that he always blames architects. [Mouat, seated to Collins' right, is an architect.]

Hieftje added that it’s important to remember that the parking system is close to capacity and that some of the parking might disappear due to development. He pointed out that the Brown Block could be developed. [The entire block –bounded by Huron, Ashley, Washington and First – is a surface parking lot on land owned by First Martin Corp. and leased to the DDA.] Business owners who have been severely impacted by the underground parking garage construction obviously have grievances, he said. He recalled the lawsuit some of them had brought against the city before the project started. Hieftje then echoed the same sentiment that Hewitt had expressed – that the DDA board includes small business owners among its members. Others of the board work downtown, he said. The DDA is in every respect reflective of the small business community, Hieftje concluded.

Parking Rates: Board Response – Downtown Climate

John Splitt noted that the 2010 census indicates a 30% increase in the number of downtown residents in the last 10 years, which translates to 1,000 more people.

Reporting on transportation issues later in the meeting, John Mouat offered some anecdotal evidence of a change in the dynamics of downtown. Nancy Shore, director of the getDowntown program, had related how some employees at Google say they rarely leave downtown, and don’t own a car. Mouat said some things that people have talked about for a long time are beginning to happen.

Also later in the meeting, mayor John Hieftje cited some anecdotal evidence he’d heard at a neighborhood association meeting off of Hill Street, to the effect that there was a change in climate near downtown. One attendee, said Hieftje, described how there were now homes coming on the market that aren’t being snapped up by investors. The attendee had described it as the “steamroller” having been stopped, and attributed it to more students living downtown.

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council.

Comm/Comm: Quarterly Financial Report

Highlights from the first-quarter financials called out by Roger Hewitt included the dramatically lower capital expenses, because invoices for the Fifth and Division streetscape improvements haven’t been received yet. Maintenance expenses are high, because part of the underground parking structure is being paid out of maintenance, but will be reimbursed out of the bond sale.

Hewitt said he doesn’t anticipate the DDA will be paying out the $500,000 grant this year, which it made to the nonprofit Avalon Housing for the Near North housing project, due to delays in that project.

Comm/Comm: Construction Update – Underground Parking Garage

John Splitt reported that for the dogleg on the east side of the construction site, sidewalks exist and Library Lane now exists. Splitt said you can get a great look at it from behind the credit union building. The plaza-level slab was to be poured soon in a large 1,000-cubic-yard pour.

Library Lane looking east towards Division Street. The Ann Arbor District Library's downtown building is located south of Library Lane.

The speed ramp on Division Street was being poured that day, Splitt said. He reported discussions with the design team and Christman Company (the construction manager) to get Fifth Avenue open as soon as possible. Weather does present a challenge, he said. Splitt noted that it’s possible to pour concrete in the middle of January, but it’s expensive and cost prohibitive. At minimum, Splitt said, the sidewalk on the east side of Fifth Avenue should be finished in December or January.

Comm/Comm: Construction Update – Fifth/Division Streetscape

Trees are being planted on the 200 block of South Fifth, John Splitt reported. The punch list for the streetscape project is 80% complete. He also noted that 11 sidewalk ramps were completed this year in connection with ADA compliance. By next year, they will all be complete, he said.

Comm/Comm: Sidewalk Millage

Reporting on transportation issues, John Mouat noted that on Nov. 8, city voters will be asked to vote on a 0.125 mill tax to support sidewalk repair. He reviewed the city council’s decision on its resolution of intent for use of the sidewalk repair millage.

By way of background, voters will be asked to approve two separate proposals: (1) a 5-year renewal of a 2.0 mill tax to support street repair projects; and (2) a 0.125 mill tax to pay for sidewalk repair.

Over the last five years, the city has conducted a sidewalk repair program that has included systematic inspections of sidewalks, and citations given to property owners who had sidewalk slabs adjacent to their property in need of repair. Property owners then had a choice of hiring contractors to do the work themselves or waiting for the city to do the work and getting a bill from the city. The five-year cycle took different sections of the city in turn, so that over the five-year period, the entire city was covered once with the inspection program.

At the Oct. 17 city council meeting, councilmembers considered a resolution of intent for the use of proceeds from a street/sidewalk repair millage. The council had previously considered the resolution of intent at its Oct. 3 meeting and before that at its Sept. 19 meeting.

The resolution of intent specifies that the street repair millage will pay for the following activities: resurfacing or reconstruction of existing paved city streets and bridges, including on-street bicycle lanes and street intersections; construction of pedestrian refuge islands; reconstruction and construction of accessible street crossings and corner ramps; and preventive pavement maintenance (PPM) measures, including pavement crack sealing. [.pdf of unamended Oct 3, 2011 version of resolution of intent]

At its Oct. 3 meeting, councilmembers had questions about the need to have any resolution of intent, as well as the status of millage revenue use inside the geographic area of the Ann Arbor DDA.

The resolution of intent had originally stipulated that sidewalk repairs inside the Ann Arbor DDA district would not be funded by the sidewalk repair millage, except when the sidewalks are adjacent to single- and two-family houses. A Sept. 28 meeting of the DDA’s operations committee revealed a measure of discontent on the DDA’s part about the intended restriction inside the DDA district and the lack of communication from the city of Ann Arbor to the DDA about that issue.

At its Oct. 17 meeting, the council took up the inequity identified by commercial property owners under the original language – they’d be included in the repair millage but excluded from the benefits. An amendment added the following language:

3. Notwithstanding the provisions of Paragraph II.2, if the City and the Downtown Development Authority (“DDA”) execute an agreement whereby (i) the DDA agrees to perform sidewalk repair within the Downtown Development District (“DDD”) adjacent to all properties against which the City levies property taxes; and (ii) the City agrees to transmit to the DDA annually 1/8th mill for parcels located within the DDD and not otherwise captured by the DDA; then the 2012 Street and Bridge Resurfacing and Reconstruction and Sidewalk Repair millage may be used for sidewalk repair within the Downtown Development District adjacent to all properties against which the City levies property taxes. The 1/8th mill shall be subject to the Headlee rollback. [.pdf of complete resolution of intent as amended on Oct. 17, 2011]

The original version of the resolution of intent had assumed that the DDA would repair the sidewalks within the district that are adjacent to commercial properties, based on the incremental tax capture in the DDA district for the millage. The impact of the amendment is to provide the entire millage amount to the DDA (not just the captured increment), but only if the DDA agrees to take responsibility for sidewalk repair inside the DDA district.

City councilmembers Mike Anglin (Ward 5) and Stephen Kunselman (Ward 3) have stated in the course of their re-election campaigns that they only reluctantly support the sidewalk repair millage. Stephen Rapundalo (Ward 2) has characterized the sidewalk millage as simply offering voters a choice.

Though not up for re-election this year, mayor John Hieftje stated at the DDA’s Oct. 5 board meeting that he did not think councilmembers are out in the community saying that the city absolutely needs the sidewalk millage or that it’s essential. Like Rapundalo, the mayor characterized the sidewalk millage as offering residents a choice of having the city take over the responsibility for sidewalk repair.

At the DDA board’s Nov. 2, 2011 meeting, Hieftje was somewhat more emphatic in his lack of a position on the sidewalk millage. He said that overall, he doesn’t have a particular position on the issue and said people would need to figure it out for themselves. He allowed that it would be a new tax, but the city would be taking on a new task.

Comm/Comm: Percent for Art

In his report from the Downtown Citizens Advisory Council meeting the previous night, Ray Detter said that there’d been a lot of discussion of the city’s Percent for Art program. The city council’s Nov. 14 work session will include Percent for Art as a focus, he noted. The CAC expressed its continued support of the program, he said, adding that the recent dedication of the Dreiseitl sculpture shows the program has achieved some success.

The previous day, Detter had met with other members of the task force that is working on selecting three additional pieces of art for the new municipal center. Three artists had been selected from over 100 applicants. Detter acknowledged that some in the community had expressed continued interest in selecting local artists for the city’s Percent for Art projects. Detter said that only 15 of the 100 artists who applied to create art for the interior of the municipal center were local. Those (non-local) artists who were selected were really top notch, he said. He concluded that portions of his remarks by contending that the Percent for Art program is working.

Comm/Comm: Village Green, City Apartments

Also during his report from the Downtown Citizens Advisory Council, Ray Detter addressed a future development on the western edge of downtown. Expected to be on the city council’s Thursday, Nov. 10 agenda, Detter said, would be an item to approve the sale of the city-owned parcel at First and Washington to Village Green, to build the City Apartments project. It’s a high-density project in the downtown, and would add 150 units–  a portion of which will be offered at rents affordable to tenants earning 60% of the area median income.  The project has not been easy, Detter said, but the developer made necessary design and parking adjustments and sought out input from neighboring property owners. It’s taken a long time and overcome various setbacks, he said.

Comm/Comm: Revenge of the Electric Car

John Mouat, reporting out on transportation issues, noted that there would be a screening of “Revenge of the Electric Car” at the Michigan Theater on Nov. 11-13. For two of the showings, the filmmaker Chris Paine will be there for a post-screening Q & A.

Comm/Comm: Graffiti

As part of her report from the partnerships committee, Sandi Smith said that chief of police Barnett Jones and deputy chief John Seto attended the committee’s meeting. They’d tried to give the committee a feel for what’s actually happening, compared to the perception. Smith noted that she’d heard mayor John Hieftje say that crime is going down, but incidents in graffiti and panhandling have created the perception that crime is up.

Up to now, graffiti has been been complaint-driven, but it will no longer be just a function of complaints, as the city is now planning to step up enforcement efforts. Smith noted that Anderson Paint and Fingerle Lumber are a source for a product called Elephant Snot, which is provided to downtown property owners at no cost through a DDA grant. The process works as follows:

1. A downtown building or business owner finds their building or sign tagged with graffiti.
2. They visit one of the following businesses to obtain free anti-graffiti supplies:
Anderson Paint, 2386 W. Stadium Blvd | (734) 995-4411
Fingerle Lumber, 617 S. Fifth Ave | (734) 663-0581
3. Necessary information includes business name and address to ensure the location is within the DDA boundary, and thus eligible under the grant program. (DDA boundaries)
4. Graffiti is removed or covered up in accordance with the city ordinance.

Comm/Comm: City-Owned Surface Lot Redevelopment

Sandi Smith said the partnerships committee had received a review of a meeting of the leadership and outreach committee, which is working on a public engagement process for thinking about alternative uses of city-owned surface parking lots in the downtown area. [The city council had given direction to the DDA to undertake that work, after long wrangling that included the negotiation of the parking contract under which the DDA operates the city's public parking system.]

Smith described the committee as a bunch of people not typically around the table. In response to some of the proposed public engagement events, Smith said, some of the group had responded by saying, “My friends wouldn’t come to this.” That group had immediately challenged the DDA with a fresh perspective, Smith said.

Comm/Comm: Regional Rail

Mayor John Hiefjte reported that he’d attended a meeting sponsored by the Michigan Environmental Council (MEC), which had included Michigan Gov. Rick Snyder, assistant secretary of the U.S. Dept. of Transportation John Porcari and administrator of the Federal Railroad Administration Joseph Szabo, as well as chief executive officer of the Michigan Chamber of Commerce Rich Studley. [The president of the MEC is Chris Kolb, a former Ann Arbor city councilmember and former state representative for District 53.]

Hieftje characterized it as an interesting bipartisan mix of people. He said now is the best chance in the last 100 years that Michigan has had to improve its rail system. He reported that Snyder had said Ann Arbor’s Amtrak station is in the wrong place. [Hieftje supports moving the station to a location currently used as a parking lot in Fuller Park, to create an multimodal facility called Fuller Road Station. The first phase of FRS would be a parking structure used primarily by the University of Michigan, and bus terminals.]

For a recent Chronicle roundup of various transportation initiatives, see “Washtenaw Transit Talk in ‘Flux‘”

Present: Nader Nassif, Newcombe Clark, Bob Guenzel, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Keith Orr, John Mouat

Absent: Joan Lowenstein

Next board meeting: Noon on Wednesday, Dec. 7, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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Highlights of the proposed changes include predominantly $.10/hour increases: hourly structure parking rates would increase from $1.10/hour to $1.20/hour; hourly parking lot rates would increase from $1.30 ($1.50 after 3 hours) to $1.40 ($1.60 after 3 hours;) hourly parking meter rates would increase from $1.40/hour to $1.50/hour; monthly parking permit rates would increase from $140/month to $145/month.

No extensions of enforcement hours are a part of the proposal.

At its Nov. 2, 2011 meeting, the DDA board will formally announce its intent and open a public hearing on the issue, which will remain open through its Dec. 7 meeting. A DDA board vote would not take place until January. After a DDA board vote, the rate changes would not require additional city council approval.

The conditions of the DDA’s contract with the city of Ann Arbor, under which the DDA operates the city’s public parking system, require announcement of intended rate increases and provision of details in writing at a DDA board meeting. At the next board meeting, a public hearing must take place. And the board may not vote on the proposed increases until the board meeting after the public hearing.

In a telephone interview, executive director of the DDA Susan Pollay indicated the plan to open the public hearing at its Nov. 2 meeting, instead of waiting until Dec. 7, was motivated by a desire to receive input from the public before a joint work session with the city council and the DDA board scheduled for Nov. 14. The written announcement from the DDA also encourages input sent via email to dda@a2dda.org.

The proposed parking rate changes also include, among other items, changes to meter bag rates and entrance rates for Liberty Square and 415 W. Washington, which would be implemented in January. [.pdf of DDA proposed parking rate changes]

Russ Collins (left) shakes hands with former board member Gary Boren, who was recognized for his service at the DDA's Sept. 7, 2011 board meeting. (Photos by the writer.)

The Near North decision came over the objection of three board members, who expressed concern over unanswered questions about the project’s timeline. Avalon had also requested that the intent of the resolution be expressed in the form of a contractual agreement and that the period of the grant be two and a half years, instead of the maximum two years normally attached to DDA grants. The additional time is needed in order to cover a sufficient period to achieve LEED certification.

Representatives of the construction trades, who objected to the selection of the Grand Rapids-based Rockford Construction as the general contractor for the Near North project, as well as a resident spoke against the DDA’s grant award during the time allowed for public participation.

The three votes against the grant renewal came from Newcombe Clark, Roger Hewitt and Russ Collins. With the absence of board members Keith Orr and Bob Guenzel, the 12-member board still achieved the minimum seven votes it needed for approval of the grant.

Despite his absence from Wednesday’s meeting, Guenzel was voted as the new chair of the DDA board, filling a vacancy in that position left when the recently elected chair, Gary Boren, was not nominated for reappointment to the board when his term expired on July 31. Boren was on hand to accept a resolution of appreciation for his service on the board.

In connection to the officer election timing issue, Clark asked for a review of the board’s bylaws by the board’s executive committee. Clark has raised the issue during the July officer elections for the last two years. Because the mayor has been reticent about his intended appointments, DDA board members have elected their officers for the coming year without knowing if all board members with expiring terms will be reappointed. Clark asked that the bylaws possibly be changed so that board officers are elected after appointments are made, so that it’s clear who will be serving on the board.

In other business, the board unanimously passed a resolution of support for the RiverUp! program amid some discussion of the appropriateness of the resolution – in light of the fact that the Huron River does not flow through the DDA tax district.

The board also passed a resolution encouraging the Washtenaw County board of commissioners to enact an economic development tax on county residents. About half of the tax proceeds would go to Ann Arbor SPARK. The resolution came at the request of DDA board member Leah Gunn, who also serves on the Washtenaw County board. The Ann Arbor city council had previously passed a resolution encouraging the county board to enact the tax. The county board gave initial approval to the tax later that evening.

As part of the reports from various board committees, Roger Hewitt stressed that the parking rates and hours of enforcement discussed at the previous week’s operations committee meeting were merely the start of the discussion. The DDA is currently discussing what kind of proposal it will present to the city council at a November joint work session on parking. Under its new contract with the city to manage the public parking system, the DDA’s authority to set rates and hours of enforcement comes with specific requirements on public input.

The city council also has directed the DDA to explore alternate uses for some of the city-owned surface parking lots in the downtown. Board members got an update on the status of the DDA’s effort to plan how to implement that directive. 

Near North Housing Grant

The board was asked to consider renewal of a grant to Avalon Housing that board members had originally approved in early 2010 for the Near North affordable housing project on North Main Street.

The grant is for $400,000, with another $100,000 available if the project achieves certification under the Leadership in Energy and Environmental Design (LEED) – a green building certification system. The grant would be paid when the project receives a certificate of occupancy. Avalon must also have an agreement in place with the city/county office of community development to ensure that income eligibility requirements are met for all residents.

A vacant house on North Main Street on the site of the planned Near North housing project.

The income eligibility requirements for the 39 units in Near North are based on affordability as defined for two categories of apartments. For 25 apartments, rents must be affordable to households with incomes at less than 50% of area median income (AMI). The remaining 14 apartments are for supportive housing and will have Section 8 rent subsidies.

The Near North project is outside the DDA tax district boundary, but is within the quarter-mile radius established by DDA board policy for such housing fund expenditures.

The planned unit development (PUD) for the Near North project was given approval by the Ann Arbor city council on Sept. 21, 2009.

Near North Grant: Public Commentary

Michael Appel, Avalon’s associate director, led off public participation time by describing the request for an extension of a previous grant the board had authorized to Avalon for its Near North affordable housing project. He sketched out the basics of the project: There would be 39 units on North Main Street, the main entryway to downtown. The project will meet the city’s housing goals, he said.

Appel ticked through some of the timeline points for the project. He noted that Avalon was awarded the DDA funds early in 2010.

By way of background, it was at the Jan. 6, 2010 meeting that the DDA board took that vote. By board policy, grants automatically expire at the end of the fiscal year following the year they are awarded. That board policy was established by a vote of the board at its March 4, 2009 meeting.

While the DDA grant period has come to be thought of as a two-year period, two years is actually a maximum in calendar terms. That maximum could occur if a grant were awarded in early July, just after the start of the DDA’s fiscal year – the grant would be good through the end of the fiscal year, ending on June 30 two years later. But if a grant is awarded in early June, the end of the next fiscal year would be only 13 months away.

In a followup email to The Chronicle, Appel clarified some of the dates, which he’d inadvertently misstated in addressing the board. The accurate timeframe for Avalon’s application for tax credits was spring 2010. The tax credits were awarded in the summer of 2010. Appel went on to explain that a key piece of funding – brownfield tax credits from the state of Michigan – were eliminated by the legislature during tax reform legislation after the 2010 elections. By the summer of 2011 new legislation had been passed, which preserved the brownfield funding source.

In addressing the board, Appel stressed that the general contractor Avalon had selected [Rockford Construction] had worked hard to solicit a wide range of bids for subcontractors. Around 1,500 solicitations had been sent out, he said.

Appel concluded with two specific requests of the DDA. He noted that the DDA doesn’t typically sign grant contracts, but rather works off of resolutions. Avalon was requesting that the resolution before the DDA staff include authorization of the DDA staff to draw up a formal contract. The four-minute time limit on public speaking time expired before Appel could get to his second request: to extend the grant period beyond the usual timeframe, which would have ended the grant period on June 30, 2013.

The rationale for the extension was based on the need to have the building in operation for some period of time in order to gather sufficient data to achieve LEED certification. The DDA’s grant makes $100,000 contingent on achievement of LEED certification and the other $400,000 contingent on a certificate of occupancy.

Tom Yax spoke on behalf of U.A. (United Association) Local 190, a union of plumbers, pipefitters, service technicians and gas distribution workers. He told the DDA board the local union basically supports the awarding of the grant.

However, Yax described his union’s opposition to the award of the general construction contract to Rockford Construction, because of Rockford’s location in Grand Rapids and concern that, as general contractor, Rockford would award subcontracts to non-local workers. When you give work to outside contractors, Yax said, they make money, then leave the community, and they don’t do any charity work in the community. Yax described a range of community efforts by the union. He encouraged the use of local businesses and contractors. Every dollar spent locally passes through the economy six times, he said.

So Yax explained that the union was against awarding the grant unless assurance could be given that there would be local contractors. Why spend money on contractors who leave? he asked. Near North is a prevailing wage job, so there’s no reason not to hire local contractors with local workers, he said.

During the time for public participation at the end of the meeting, Margaret Schankler introduced herself as a resident who lived behind the Near North property. She called it unfortunate that the board had extended its usual grant period to December 2013, but that they didn’t have four minutes for additional public participation before the vote.

By way of background on public commentary, the DDA board entertains public participation at the start of its meetings by allowing up to four people to speak – it’s possible to sign up in advance. If fewer than four people sign up, people from the audience who have not signed up are invited to address the board. In no case are more than four people allowed to address the board at the start of the meeting.

Later, at the conclusion of the meeting, an unlimited number of people can address the board. The time limit for all speakers is four minutes. Public bodies like the DDA board are required under the state’s Open Meetings Act to allow any member of the public to address them during their meetings.

Schankler told the board that she’d heard the phrase “closing in a few weeks” more times than she could count. She commended board member Newcombe Clark for asking questions. She noted that the neighborhood had worked with developers and negotiated something they thought the whole neighborhood could live with. That had come after the neighborhood had urged Avalon to build a much smaller project – but they’d been told it needed to be that large to make the numbers work. She criticized the fact that only 14 of the 39 units in Near North are for supportive housing.

She said that the still-unbuilt units of Near North are being counted as replacements for the 15 units that Avalon is eliminating in connection with its project at 1500 Pauline. Considering the 1500 Pauline project and Near North, the two projects together result in no net gain for supportive housing in Ann Arbor, she said.

Schankler also contended that the existing houses (now vacant for two years) previously rented for rates that were half what will be charged for the new units. She also pointed to the high cost of construction for the new units – $378 per square foot. She told the board that’s twice as much as it would cost to build a two-bedroom condo.

Schankler criticized the lack of more publicly documentable progress on the project. She also criticized the fact that the existing houses had been allowed to deteriorate beyond repair, which she contended was intentional in order to ensure brownfield funding.

Now, the DDA had a chance to step back from the project and to redirect scare resources more wisely inside the DDA district. [The Near North project is outside the DDA tax district, but within the quarter-mile radius the DDA board has set as the area in which it's willing to invest housing dollars. In this the DDA has relied on advice from its legal counsel that it is legal to take this approach.]

Also at the end of the meeting, during time allotted for public participation, Ron Motsinger of the International Brotherhood of Electrical Workers (IBEW) Local Union 252 told the board that the local union represented hundreds of building contractors in all trades. He pointed to current levels of unemployment in some trades of over 33%. Local workers are hurting for jobs, he said. He had been excited to see the Near North project come in, but was disappointed that Rockford Construction was chosen as the general contractor.

Motsinger contended that Rockford has a track record of not using local contractors. Hutzel, a 150-year-old local company, had not been notified to bid on the project. He had no confidence Rockford would use local labor. Motsinger said the local had done $100,000 worth of charity and community work, citing specifically that it had bought scoreboards for Skyline High School. It really would have been nice to make sure it’s local people who are hired, he said. There are local general contractors who could have done the job. He said it was disappointing to see the resolution rushed through.

Rob Turner who represents District 1 on the county board of commissioners, also addressed the board at the end of the meeting. He is the owner of Turner Electric Service Inc. in Dexter. He said he was excited when the Near North project was approved – it helped poor people and he was happy for that. It could also help the building trades, he said. But when he heard that Rockford Construction had been selected as the general contractor, he was disappointed. As an alternative, he mentioned O’Neal Construction as a local general contractor who has experience with federally-funded projects.

Turner described Rockford as dealing with “non-responsible bidders.” Non-local firms don’t shop and buy locally, he said. He acknowledged that his firm was asked to bid on the Near North project. However, he’d received the invitation to bid just one week before. He’d tried to get a set of plans online but was unable to obtain them that way. They had been available physically in Grand Rapids and Bloomfield Hills, he said. He asked the board if that kind of bid process sounded conducive to local contractors. Given that the grant contract is not done, he said, he thought some language could be added to ensure that local companies had better access to the work.

Near North Grant: Board Deliberations

When the board took up the issue of the grant renewal, Appel was asked to the podium to clarify the nature of Avalon’s request. Appel explained that Avalon anticipated closing on their deal in the next month or so. The other funders will want written assurance that the $400,000 plus the $100,000 (contingent on LEED certification) is committed from the DDA. When Avalon closes, Appel said, the other funders will want to know that the $500,000 commitment is secured. DDA executive director Susan Pollay had told him, Appel said, that it’s not DDA standard practice to create a grant agreement.

DDA board member Newcombe Clark.

The second part of the request was a longer-than-usual grant period. If renewed now, then June 30, 2013 would be the natural expiration, he said. Appel requested that it be extended through Dec. 31, 2013, because by then the building would be operating long enough to achieve LEED certification.

Joan Lowenstein asked what the potential impact would be if the decision were put off until the operations committee could again review it and bring it back to the board. Appel said he was worried that a delay could affect the closing on the deal. Lowenstein invited Appel to talk about the bidding and the local contracts, which had been raised during public participation time at the start of the meeting.

Appel said that Avalon had looked at a number of issues in selecting a general contractor. Among them were the contractor’s experience in Washtenaw County, the experience building this type of housing, and experience with the Michigan State Housing Development Authority (MSHDA). Avalon had selected Rockford Construction because Rockford brought the most to the table, including experience in Washtenaw County. Before issuing bids, Appel said, Avalon had made sure that local subcontractors were well represented. For the early bid packets, only one-quarter came from western Michigan, where Rockford is located.

Appel said that because the project has federal funding, it brings with it various requirements for oversight – that includes prevailing wage requirements. There’s a highly-regulated open bid process. The bids were widely circulated for anyone to download the specifications, Appel said. He said he understood and respected the desire to support local businesses. Federal regulations make sure that everybody has access to the bidding process, he said.

Appel cautioned that a delay at this point would not allow Avalon to bring a document to the closing that showed the funding is secure.

Board member Newcombe Clark indicated that he thought the urgency was generated by the DDA board’s bylaws, not by Avalon’s timetable.

Pollay explained that the Avalon grant had sun-setted on June 30, 2011. The renewal had been discussed at the previous week’s operations committee meeting, Pollay said.

Clark said he had supported the Near North project and that he still supported it. He wanted to see it “come out of the ground,” he said. But Clark he said he also wanted to see his questions answered. He felt the DDA board was being rushed into creating closing documents, and the extension was for longer than the DDA’s usual grant period – it was for a 2.5 year extension. He’d wanted to explore several questions. Clark concluded that he could not support the project, based only on the information he had.

Responding to a question from board member Leah Gunn, Appel explained that the overall Near North project is relying on the DDA grant money – other funders need to know that the DDA’s commitment is there. Clark chimed in, “We’re free equity.”

Appel continued by saying that a copy of a DDA board resolution is not what real estate attorneys are accustomed to seeing at a closing. He said Avalon needed something that third parties would understand in the context of a real estate closing. Board member Roger Hewitt observed that the board was being asked to support the resolution when the document doesn’t exist yet.

Mayor John Hieftje said that the DDA’s offer of a grant was very sincere and he didn’t have a problem putting it in writing. He said he trusted the executive committee of the DDA board to do that. [According to DDA board bylaws, the executive committee consists of the chair, vice chair, treasurer and recording secretary. The last former chair is a non-voting member, and the executive director is a non-voting ex-officio member of the executive committee.]

Hieftje said that Avalon has to balance a lot of different factors with other entities that are larger than the DDA. Timing issues are hard. He said the DDA had committed to the Near North project a long time ago. Board member John Splitt also indicated that he had no problem with voting for the resolution. Board member John Mouat also supported the project. He noted that an incredible amount of time and work has been put in to make the project work. He said the DDA board owed it to the community to support it.

Responding to the concerns raised by representatives of trade unions, Gunn explained that the board doesn’t have the ability to say who gets a contract. She also noted that new state legislation forbids CUB (Construction Unity Board) agreements – it’s not for the DDA to decide. [CUB agreements are negotiated between local trade unions and contractors, and require that contractors who sign the agreement abide by terms of collective bargaining agreements for the duration of the construction project. In return, the trade unions agree that they will not strike, engage in work slow-downs, set up separate work entrances at the job site or take any other adverse action against the contractor.]

Comments from Hieftje and Gunn established that the city of Ann Arbor and Washtenaw County both needed to take action to revise policies to make them conform to the new state legislation on CUB agreements.

Clark asked for information on the site plan and whether it needed to be renewed with the city. Lacking other information, he said, he had to default to his own expertise. Clark said he did not want to go through the winter with vacant houses sitting on the site. He lamented the fact that the board did not have more time to consider the resolution.

Board member Sandi Smith said she’d been trying for seven years since she’d been appointed to the DDA board to spend the housing fund balance. It’s been difficult to add even a single unit of affordable housing, she said. If the DDA were to pull its commitment from the Near North project, it’s not as simple as picking another project that comes along. It would take a lot of time to develop another project. The DDA has been familiar with the Near North project for a long time, Smith said. She echoed Clark’s sentiment, however, that the houses need to come down. There’d been problems with people squatting inside them, she said.

Clark then suggested that out of the $500,000 grant, $100,000 be slated specifically for demolition and be paid upfront, not made contingent on a certificate of occupancy or LEED certification. If the project meets the DDA’s goals and the board is already willing to spend the money, then “Let’s have lots, not squatter places.” Lowenstein, who was chairing the meeting, noted that Clark’s suggestion would need to come in the form of an amendment to the resolution.

Smith seconded Clark’s suggestion that the DDA would front the $100,000 to Avalon to carry out the demolition of the houses. Hewitt said he was supportive of the project, but still had the same concern that the board would simply be trusting that everything will be worked out. The board needs better documentation, he said.

Smith asked if the demolition could be incorporated into the terms of the grant contract. Mouat felt it would further complicate what is already very complicated. He felt the board needs to be supportive of the project and make it happen as soon as possible. Adding a condition on the demolition would be another hindrance, he said.

Board member Russ Collins “called the question” on the amendment earmarking $100,000 for demolition of the existing housing on the Near North site.

Outcome on amendment: Clark’s amendment earmarking $100,000 for Avalon to demolish the houses on North Main received support only from one other board member, Russ Collins.

Almost immediately after the vote on the amendment, Gunn called the question on the main resolution.

Outcome on resolution: The board approved the $500,000 grant extension to Avalon, with dissent from Clark, Collins and Hewitt.

Near North Grant: Coda on Calling the Question

At the conclusion of the board meeting, Hieftje asked that the board bylaws be reviewed with respect to the parliamentary procedure of “calling the question,” to ensure that everyone has a chance to speak twice before the question has been called. He said he’d had his hand raised to speak on the Near North question and didn’t get to say something.

By way of background, under Robert’s Rules, the parliamentary move to close debate is actually called “moving the previous question.” More colloquially it’s referred to as “calling the question.” The motion needs a second, then requires a vote with 2/3 majority. The motion itself is not debatable, however.

At Wednesday’s meeting, the calling of the question on both occasions did not receive a vote. When something like this happens, contrary to the rules of procedure, it’s always in order for someone to raise a point of order to insist on the proper administration of the rules. Had Hieftje done so, it’s possible that his desire to speak might have been recognized at that point.

Parking Rates, Enforcement

At the meeting of the DDA board’s operations committee meeting the week before, on Aug. 30, 2011, the committee meeting packet included a set of items proposed to be included as part of the agenda for a joint city council/DDA board working session scheduled for  Nov. 14. The board did not have an item on its Sept. 7 agenda concerning parking rates.

Parking Rates, Enforcement: Background

A recent report in AnnArbor.com left the impression with some readers that a set of items in the Aug. 30 committee materials was already a recommendation of the DDA board. The article did not include the context of the DDA’s April 2010 Parking Report, which is referenced in the committee meeting materials.

That parking report had been produced by the DDA in response to a city council directive, given in late 2009. The city council directive had stemmed directly from a resolution considered by the city council, but not passed at that time, calling for the extension of parking meter enforcement hours.

The city council’s idea to extend evening enforcement hours was part of a strategy to replace revenue that the city had projected for new parking meters the city had wanted to install in areas near the downtown – against the advice of the DDA. The city wound up not installing most of the meters.

The city council’s revenue replacement strategy was put together by Sandi Smith, who is both a city councilmember (representing Ward 1) and a DDA board member. Included as part of Smith’s revenue replacement strategy was the assignment of revenue from two city-owned lots – 415 W. Washington and Fifth & William – directly to the city of Ann Arbor.

Additional context includes a planned joint working session with the city council. At its Aug. 30 meeting, the operations committee discussed items to be proposed to the council at that joint working session. The session, scheduled for Nov. 14, is contractually required as the result of a new agreement struck in May of 2011 under which the DDA manages the city’s public parking system. From the contract:

Joint Working Session. As part of the annual established calendar for City Council Working Sessions, City Council shall designate one working session in the fall of each calendar year as a joint working session with the DDA. The agenda for the working session shall be prepared by the City Administrator in accordance with Council Rules and in consultation with the Executive Director of the DDA. It is recommended that a portion of such agenda be dedicated to a discussion of operations under this Agreement and the utility of creating a joint study committee to address areas of mutual interest.

The timeline for rate increases stipulated in the contract requires three DDA board meetings, over the span of at least two months. The contract calls for announcing and indicating in writing the intent to increase rates at a DDA board meeting. At the next subsequent board meeting, members of the public must have an opportunity to address the board on that issue. And the board is contractually bound not to vote on the rate increase until the board meeting after that.

Based on the assumption that the DDA would not formally proceed with the contractually-stipulated changes to rates or enforcement hours before the council/DDA joint working session on Nov. 14, the DDA board could not take a vote on those changes until its February board meeting. On that scenario, the announcement of intent would come at the board’s December meeting, the public hearing would take place at the January meeting, and a vote could take place at the February meeting.

Parking Rates, Enforcement: Possible Agenda Items

In broad strokes, on Aug. 30 the operations committee was presented with possible items for the Nov. 14 joint working session that fell into two broad categories: hours of enforcement and parking fees. The note on hours of enforcement indicates that a possible item on the working session agenda could be a recommendation to extend the current on-street meter enforcement hours (currently from 8 a.m. to 6 p.m.) to 10 p.m.

The possible agenda items for parking rate changes include: increases in monthly permit parking for some structures and lots; increases in entrance fees to some structures; and increases in miscellaneous categories like art fair and meter bags.

Possible agenda items for rate changes also include adjustment downward of some parking fees, as part of a proposal to set rates based on demand. On-street spaces in highest demand would have a higher rate ($1.80/hour); on-street spaces in lowest demand would have a lower rate ($1.00/hour); and on-street spaces in the middle of the demand range would not have their rates changed.

Demand is defined in terms of the amount of revenue currently brought in by each meter. The pilot program described in the committee’s packet would be implemented in a rectangle bounded by State Street on the east and First Street on the west. Huron and William streets would be the respective north and south boundaries of the pilot program to set meter rates based on demand.

Parking Rates, Enforcement: Public Commentary

Maura Thomson, executive director of the Main Street Area Association (MSAA), addressed some recent talk about proposed changes to parking rates and enforcement hours. Back in late 2009, a resolution was considered by the city council that contemplated evening enforcement hours. [Chronicle reporting from that timeframe includes "City-DDA Parking Deal Possible" and "Most Aspects of Parking Deal Approved"] Thomson reminded the DDA board that in 2009, merchants were vocal in opposition to evening enforcement. [Within hours of the appearance on the city council's agenda of the resolution calling for evening enforcement, the Ann Arbor Area chamber of commerce had fired off a memo in opposition.]

In the wake of that city council discussion [which ultimately did not result in a formal call for evening enforcement], the DDA was then asked to come up with a plan. Thomson said that the MSAA was involved in that work through participation in focus groups. The MSAA had also surveyed its membership, Thomson said. She indicated that there was overwhelming opposition to extending enforcement hours. There was also a sentiment that some kind of free parking component needs to be included. She said it feels like “we’re back to where we started.” Part of the balance of higher rates and longer enforcement hours outlined in the April 2010 parking report produced by the DDA is a free parking component as part of the demand management strategy, Thomson said.

Thompson was alluding specifically to a passage from the April 2010 report that reads:

Free structure parking is being used in other Michigan cities with mixed use downtowns, as the offer of free is very attractive and easily understood. The DDA believes that every parking space has value, but if used correctly, using this pricing strategy may lessen demand at the meters and extend parking more broadly throughout the system.

Thomson asked the DDA board to consider that aspect of the plan – it allows for a positive communications strategy. She was dismissive of a free parking component based on the hours of enforcement early in the morning [also discussed in the report]. If we’re all being honest, she said, the free component from 8-9 a.m. has no correlation to evening enforcement. She compared that strategy to saying that enforcement of meters from 6-8 a.m. would have a positive impact on parking revenue. So she asked that “truly free” parking be tied into any plan to extend hours of enforcement.

Tom Murray introduced himself as a member of the MSAA and owner of Conor O’Neill’s on Main Street. He warned that if the DDA enacts the plan as currently discussed, people will go elsewhere for entertainment. Addressing the issue of employee parking in the evening, Murray said that the DDA was directed to provide a plan to communicate specific options for evening employees. But the discussion from the last committee meeting the previous week didn’t indicate any specific options, Murray said.

Murray ventured that his staff would continue to find a way to get outside and feed the meters. Customers, on the other hand, won’t go outside and they’ll receive tickets – that will become a problem. Murray said that when we read about employees, we forget that employees are also customers. We need to incentivize employees, not punish them. A truly free parking component needs to be explored, Murray said.

Murray encouraged the DDA to find creative ways to reach out to employees. Employees would take advantage of alternatives if they are safe and affordable, he said. He also suggested that the entire program should be on a pilot basis, not just the meter rate schedule. The plan current under consideration hurts downtown, Murray concluded.

Addressing the board at the time for public commentary at the end of the meeting, Jessica Johnston of Falling Water on Main Street asked the board to reconsider any decision to extend hours of parking enforcement. Based on face-to-face interaction with her customers, she told the board there would be a negative reaction to it. The downtown economy is already fragile, she cautioned, and she ventured that the dinner crowd could be eliminated by the proposal.

As part of his report from the Downtown Citizens Advisory Council, Ray Detter said the advisory council continues to support the DDA’s effort to implement parking/transportation demand management. He said some of the things in the media he’d read were not terribly accurate. He stated that the advisory council had always assumed that the possibility of extending hours would include a free component.

At the start of public commentary, Joan Lowenstein, who was chairing the meeting, had stressed that public commentary is not the occasion for a back-and-forth kind of thing. However, board members do sometimes use their own time at the board table to respond to concerns raised during public commentary.

And in response to the public commentary, board member Roger Hewitt stressed that the operations committee meeting had been the start of a discussion – he appreciated the input from the public. Hewitt said he felt the way the proposal had been characterized in media reports was unfortunate.

Naming Guenzel Chair, Thanking Boren

On the agenda were resolutions to name Bob Guenzel as board chair and Leah Gunn as vice chair, and to thank Gary Boren for his service on the board. [Guenzel did not attend the board's meeting.]

Naming Guenzel, Thanking Boren: Background

The board had been without a chair because board member Gary Boren, who had been elected to that post by his board colleagues at their July 6, 2011 meeting, was not nominated by mayor John Hieftje for reappointment. Boren’s term expired on July 31. Boren was replaced on the board by local attorney Nader Nassif.

Guenzel, who retired last year as Washtenaw County administrator, was elected vice chair of the board at the July meeting. Gunn’s other public service currently includes representing District 9 on the Washtenaw County board of commissioners.

The evening before the DDA’s board meeting, at the Sept. 6 city council meeting, three nominations to the DDA board were on the agenda for confirmation: Joan Lowenstein (reappointment), John Mouat (reappointment), and Nader Nassif (new appointment replacing Boren). The nominations had been announced at the council’s previous meeting, on Aug. 15.

At the council’s Sept. 6 meeting, Stephen Kunselman (Ward 3) made the rare request that the council’s confirmation of the mayoral nominations be done separately on roll call votes for each nominee. The votes on the appointments of Mouat and Nassif were unanimous. However, Kunselman voted against the reappointment of Lowenstein. All other councilmembers present voted for her.

Naming Guenzel, Thanking Boren: Board Deliberations

At the DDA board’s Sept. 7 meeting, Newcombe Clark noted that the board is tasked by its bylaws to elect officers at the July annual meeting. [That has historically come before the mayor has chosen to announce whether he would be reappointing board members whose terms were expiring later in the month.] Clark reminded board members that he’d raised the issue at the last two annual meetings. From The Chronicle’s report of the 2011 annual meeting:

Roger Hewitt nominated current vice chair Gary Boren to serve as chair.

Newcombe Clark asked if Boren’s term was being renewed – that is, would he be reappointed by the mayor to serve on the board? By way of background, outgoing chair Joan Lowenstein’s term on the board ends on July 31, 2011, as do the terms for Gary Boren and John Mouat. Boren has been a vocal proponent of the idea that the DDA is an independent corporate body and not an arm of the city of Ann Arbor.

Last year, Clark had pointedly abstained from voting in the officer elections over the lack of information about reappointments to the board. From Chronicle coverage of the July 7, 2010 DDA annual meeting:

Abstaining from each of the officer votes was board member Newcombe Clark.

Clark explained to The Chronicle after the meeting that there’d been no indication from the mayor whether the two board members whose appointments are expiring July 31 – Jennifer S. Hall and John Splitt – would be reappointed. Clark said he could thus not be certain of the full range of choices for board officers.

Splitt was reappointed; Hall was not. Bob Guenzel was appointed instead of Hall.

In response to Clark’s question this year, Lowenstein said they did not know that yet. Mayor John Hieftje, sitting at the board table, did not offer any statement about whether he planned to nominate Boren for the city council’s approval for reappointment.

At Wednesday’s meeting, Clark stated that he would like to see the bylaws adjusted so that officer elections are not held until after the status of reappointments is known. Otherwise, he said, board members are being asked to vote for chair and vice chair without knowing if they’ll continue on the board. Nothing is lost and a lot is gained by making the change, Clark said. He stated that he wanted formally to ask the executive committee to look into it: “We owe each other more than this.”

Outcome: The board unanimously approved the resolution thanking Gary Boren for his service, as well as the resolution naming Bob Guenzel chair of the board. Boren, who attended the meeting to receive the recognition from his colleagues, made his way around the table and shook hands with the board members.

County Economic Development Tax

The board was asked to consider a resolution urging the Washtenaw County board of commissioners to use Act 88 of 1913 to levy a tax in support of economic development in the county. A public hearing on the tax was scheduled for the county board’s meeting later that evening.

At its Aug. 15 meeting, the Ann Arbor city council passed a similar measure urging county commissioners to levy the tax.

For the last two years, the county board has levied the tax. It has previously used a rate of 0.043 mill. (One mill is $1 for every $1,000 of a property’s taxable value.) This year, the county board is contemplating a millage rate of 0.05 mills. Because Act 88 predates the state’s Headlee legislation, the county board does not need to put the issue before voters in order to levy the tax. The county board could, by the Act 88 statute, levy such a tax up to 0.5 mills, or 10 times the amount it is considering for next year.

The Act 88 tax received initial approval by a 7-3 vote at the county board’s Sept. 7 meeting. The three commissioners voting against it were Alicia Ping (R-District 3), Wes Prater (D-District 4) and Dan Smith (R-District 2). Commissioner Ronnie Peterson was absent. A final vote is expected on Sept. 21.

The anticipated $688,913 in millage proceeds will be allocated to several local entities: Ann Arbor SPARK ($230,000), SPARK East business incubator ($50,000), the county’s dept. of community & economic development ($131,149), Eastern Leaders Group ($100,000), promotion of heritage tourism ($65,264), Food System Economic Partnership (FSEP – $15,000), Washtenaw 4-H, operated by the Michigan State University Extension program ($82,500) and Washtenaw Farm Council 4-H Youth Show ($15,000).

During the brief DDA board deliberations on the resolution, Leah Gunn, who also serves as a county commissioner, indicated that it was “very small millage,” that would cost $5.38/year for the average homeowner. It supports important economic development efforts like Ann Arbor SPARK and agriculture, she said. Gunn told her DDA board colleagues that she would appreciate them voting for it, so that she could take it to the county board of commissioners meeting later that evening.

Outcome: The DDA board voted unanimously in favor of the resolution urging the county board to levy the economic development tax.

RiverUp!

Before the board was a resolution expressing support of RiverUp!, a collaborative effort among several organizations – including the Huron River Watershed Council, the National Wildlife Federation, and the Michigan League of Conservation Voters – to improve the Huron River corridor.

The resolution states that the DDA will assist in wayfinding efforts that would help connect the river with visitors to the downtown, but it does not specify a budget for that effort. [For background on the RiverUp! initiative, see Chronicle coverage: "RiverUp! Focuses on Revitalizing Huron River"]

During board deliberations, mayor John Hieftje stressed that he’s been involved with the RiverUp! project since the beginning and expressed his support for the resolution.

John Mouat questioned the project’s relevance to the DDA. He said as much as he wished it did, the Huron River doesn’t flow through Ann Arbor’s DDA district. What caused him concern, he said, is when something becomes “a bit of a stretch” and he wanted to voice that as a general concern. He wanted to know specifically how support of the DDA board adds to the project.

Sandi Smith pointed out the focus on wayfinding in the DDA’s resolution. She said her thought in bringing forward the resolution is that a University of Michigan freshman might be standing on campus and not know about the recreation amenity just 3/4 mile to the north. She allowed that the DDA can’t relocate the downtown to the river, but it’s also important not to forget that it’s there.

Outcome: The DDA board voted unanimously in favor of the resolution expressing support of RiverUp!

Communications, Committee Reports

The board’s meeting included the usual range of reports from its standing committees and the downtown citizens advisory council.

Comm/Comm: The Varsity, Alleys

Ray Detter reported out from the Downtown Citizens Advisory Council, which meets monthly on the evening just before the DDA board meetings. He noted that The Varsity at Ann Arbor would be coming before the planning commission on Sept. 20. [The Varsity is a proposed 13-story, 173-unit, 178,380-square-foot apartment building for approximately 418 students. It would include 77 parking spaces, and would replace the two-story office building and parking lot currently on the site, located on Washington Street, just west of the First Baptist Church.]

Detter said that the advisory council would continue to support the city’s newly enacted downtown design guidelines – the advisory council doesn’t oppose The Varsity. He reported that members of the advisory council had attended the design board review meeting for The Varsity, as well as the citizen participation meeting, and offered their suggestions. Detter said that in response to feedback, the developer had made some changes, but had not really addressed the issue of the view from East Huron Street.

Detter praised the work that the developer had done with the First Baptist Church, which had resulted in plans for a walkway connecting East Huron and Washington Street.

Detter said the hope was that the south entrance to that walkway on Washington would connect to the alley that runs between Washington and Liberty. That alley, Detter said, has been allowed to turn into a place for smelly dumpsters and urinating panhandlers. Detter reported that the advisory council had met with DDA executive director Susan Pollay, assistant city attorney Kevin McDonald, interim city administrator Tom Crawford and mayor John Hieftje.

As a result, Detter reported, that group has moved ahead to form a committee to develop a plan for the alley. Some of the goals are to get better placement of the dumpsters, add awnings, and install better lighting. He expressed the hope that it could be turned from a dangerous, dirty, disgraceful alley into an asset.

Comm/Comm: Downtown Parcels

As part of the report from the board’s partnerships committee, Sandi Smith reported that the committee continues to discuss how the DDA will implement a city council directive to explore alternate uses of some city-owned parcels in the downtown. Smith stressed that the idea is to build on all the work that’s come before, not to recreate everything.

Amber Miller, the DDA’s planning and research specialist, had sketched out a draft of a process, to which committee members had responded favorably. It involved two parallel tracks – a technical component and a community outreach component. Doug Kelbaugh, former dean of the University of Michigan’s college of architecture and urban planning, and Kit McCullough, who teaches at the college, attended the partnerships committee meeting. They’d previously pitched their services to the DDA to facilitate a public engagement process.

The two UM architecture faculty were receptive to Miller’s sketch and suggested that they could develop a “road show” as a presentation that could be delivered by DDA staff or some other person on multiple occasions to different community groups. The conversation about the alternative use of downtown parcels was to continue at the committee’s next meeting on Sept. 14.

Comm/Comm: Regular Parking Report

Roger Hewitt delivered highlights from the monthly parking report from July: hourly patrons were down 5%, revenues up 2%. Art fair revenue was down about $5,000 (2%) compared to last year. Hewitt said the weather had an impact, but the horrible, hot temperatures had put a smaller dent in revenues than he’d been anticipating. Responding to a question from John Mouat, Hewitt said the revenue from art fair parking is not budgeted separately. Russ Collins called the $5,000 variance not significant. Hewitt agreed that it’s “a drop in the bucket.”

Comm/Comm: Unaudited FY 2011 Budget Numbers

Roger Hewitt pointed to the unaudited financial statements from the end of the 2011 fiscal year. He noted that by state law the DDA has to amend its budget every year to reflect the best estimate of where the organization stands financially. The audit is in process now, and the DDA expects that the numbers will be the same at the end of the audit.

Of the items that Hewitt ticked through, the scaling back of expenditures on parking maintenance drew scrutiny from board member Newcombe Clark. He wanted to know if the amount reflected an additional revised downward expenditure on maintenance. Yes, answered Hewitt, but the reduced maintenance activity was still within the DDA’s engineering consultant’s recommendations.

Clark noted that painting is cosmetic unless you don’t do it for several years – then it becomes structural. Hewitt assured Clark that over a 10-year period, the DDA would spend the same amount it had originally planned. Hewitt described the DDA’s approach to maintenance as “fanatical,” so felt like the DDA was in very good shape with respect to the maintenance issue.

Hewitt noted that the fund balance had decreased considerably from a high of around $20 million several years ago and the DDA had spent down a good deal of it. Those numbers would continue to go down, he said.

Comm/Comm: go!pass

John Mouat reported that the getDowntown advisory board had advised increasing the cost of go!passes to employers from $5 to $10. With the popularity of the program, all of the funds had been expended, he said. However, the Ann Arbor Transportation Authority (AATA) had passed a resolution at its last meeting adjusting the price it charges for go!pass rides over the next two years to calibrate it to the amount already pledged by the DDA for that period. That led Mouat to conclude that: “We’re covered for go!passes.” [For detailed Chronicle coverage of the go!pass AATA funding decision, see "AATA Reduces Charge for go!pass Rides"]

Comm/Comm: Bicycle Parking

John Mouat gave an update on information about bicycle parking downtown, provided by a DDA summer intern. Highlights included: 1,000 bike parking spaces downtown; 83% of bikes parked are locked to hoops instead of lampposts; the bicycle map has been updated; the last of new vegetable-shaped hoops have been installed at the farmers market.

Comm/Comm: Construction Updates

John Splitt reported that the Fifth and Division streetscape improvement project is mostly complete, except for the 300 block of South Fifth Avenue – that section will need to wait until construction of the underground parking structure on South Fifth is further along. On the 200 block of South Fifth, just some lampposts remain to be installed.

The underground parking structure site along Fifth Avenue is now is getting very busy, Splitt reported. Waterproofing work is being done on the east dog-leg side of the project. Columns and slabs are getting poured in the other two phases – the middle and the Fifth Avenue side. [The project is being built from east to west.]

Comm/Comm: State of the Downtown Report

At the board meeting, the previous release of the DDA’s State of the Downtown Report was acknowledged. The report features a raft of statistical information about the DDA district, including acreage, building square footage by category, population trends, real estate occupancy rates, crime trends, and the like. Interspersed through the text are photos, including a cover photo by Seth McCubbin.

Present: Nader Nassif, Newcombe Clark, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Joan Lowenstein, John Mouat

Absent: Keith Orr, Bob Guenzel

Next board meeting: Noon on Wednesday, Oct. 5, at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

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Dave Brandon addressed the UM Board of Regents for the first time publicly as athletic director, speaking at their April 15 meeting at the Amway Grand Plaza Hotel in Grand Rapids. (Photos by the writer.)

Though most of the meeting entailed presentations and reports – focused on UM programs with links to the Grand Rapids area and western Michigan – the regents also unanimously approved several action items, with little discussion.

Increases for parking permit fees – 3% in each of the next three fiscal years – were set, as was the transfer of the Henry Ford Estate to the nonprofit Ford House foundation. The estate had been given to UM in the 1950s along with land that became the university’s Dearborn campus. Regents also approved a major expansion of the Institute for Social Research building on Thompson Street.

During public commentary, two leaders of the lecturers’ union spoke to regents, charging that UM lecturers are being asked to shoulder an unfair burden as the university tries to cut costs. The union is negotiating with the administration for a new contract – its current contract expires May 15.

After the meeting – held at the Amway Grand Plaza Hotel – regents, executives and staff headed over to the nearby J.W. Marriott hotel for a reception hosted by the UM Alumni Association.

Opening Remarks

Mary Sue Coleman began Thursday’s meeting by noting that many of the regents and administrators had been in town since Wednesday, meeting with community and academic leaders in Grand Rapids. She noted that there are already many connections between the university and the western side of the state, pointing out that the president of Grand Valley State University, Tom Haas, is a UM graduate.

Another link comes through the Michigan College Advising Corps, a statewide initiative that UM announced on Thursday. The program aims to increase the number of low-income, first-generation and underserved students entering college by recruiting and training recent UM graduates to work full-time for up to two years as college advisers in underserved high schools. It will launch this fall in eight communities, Coleman said, including five in western Michigan: Battle Creek, Benton Harbor, Grand Rapids, Jackson, and Muskegon.

Coleman noted that the university is preparing for President Obama’s visit to the May 1 commencement in Ann Arbor, which Gov. Jennifer Granholm will also attend – among about 80,000 others. The ceremony will be broadcast live on the Big 10 Network starting at 10:30 a.m., and will be streaming live on the UM website. “It’s going to be an exciting day,” Coleman said.

Board chair Andy Richner gave brief remarks as well, saying that Thursday’s meeting underscored the strong connections between the university and Grand Rapids. He said he was especially glad to be in this particular venue – the Gerald R. Ford Ballroom – because it honors the legacy of Ford, “who just happens to be a graduate of the University of Michigan.” He promised that regents would more regularly visit the western part of the state. Their last meeting in Grand Rapids was held in 1998.

At left: Wayman Britt, Kent County's assistant county administrator, talks with UM vice president for government relations Cynthia Wilbanks and UM president Mary Sue Coleman before the start of the UM regents meeting in Grand Rapids.

Speaking on behalf of the Grand Rapids community was another UM graduate: Wayman Britt, Kent County’s assistant county administrator. Britt told regents that he had been captain of the UM men’s basketball team, which had gone to the NCAA final four in 1976. His daughters also went to school at Michigan, he said.

Britt was glad to see a strengthening of ties between the university and the Grand Rapids area, saying “we know how to get it done here in west Michigan.” One example: The State Games of Michigan, which launches in June and is co-chaired by Britt. He concluded by saying he hoped to see growing enrollment at UM from the western part of the state, and that he looked forward to regents regularly visiting Grand Rapids and Kent County.

New Athletic Director Promotes Upcoming Events

Though he was hired earlier this year and has been on the job about five weeks, Thursday was the first time that Dave Brandon had attended a regents meeting to address the board publicly as athletic director. Himself a former regent, Brandon gave an update on Michigan Stadium renovations and spoke briefly about the football program – though not mentioning or even alluding to the NCAA investigation of the program and coach Rich Rodriguez’ coaching practices.

Brandon reported that the stadium renovations will be done in time for the Sept. 4, 2010 season opener against the University of Connecticut. “I’m here to say there are plenty of suites and club seats still available,” he quipped. [The $226 million renovation project includes 83 private suites and 3,200 indoor and outdoor club seats.]

Brandon noted that tours of the suites will be given during this Saturday’s spring football game at the stadium. The free event allows fans to watch the team’s final spring practice, and will raise money for the C.S. Mott Children’s Hospital through sponsorships and donations. [Brandon, with his wife Jan and Lloyd and Laurie Carr, are leading the fundraising campaign for the new hospital.]

Brandon said he’d had the chance to see some practices, and reported that the football team “looks terrific.” The players are “less young than they were a year ago,” he said, and have a better understanding of what big-time college football is all about.

In addition to football, Brandon highlighted several other UM sports. The Dec. 11, 2010 “Big Chill” will turn Michigan Stadium into a hockey arena, he said, between rivals Michigan and Michigan State. They’re hoping to break the world attendance record for spectators at an outdoor hockey game.

Spring sports teams are doing well, he said. Women’s softball, coached by Carol Hutchins, consistently ranks No. 1 or 2 in the nation – the previous day, they’d given Central Michigan an 8-0 “drubbing,” Brandon noted. Among the other sports he cited were the women’s gymnastics team, which recently won the Big 10 championship, and women’s water polo, which won its division title for the third consecutive year. There’s a lot of positive energy in the athletics program, he said.

In wrapping up, Brandon said that while they’d been making Michigan Stadium more beautiful, that made Crisler Arena look “even less beautiful.” He was looking forward to starting a major renovation project there. [Regents previously approved a $23 million addition to Crisler – a two-story, 57,000-square-foot basketball training facility that will include offices for men’s and women’s coaching staffs, locker rooms, two practice courts, film-viewing and hydrotherapy rooms, conditioning space and other amenities. Another $20 million will be spent on renovations to the existing arena.]

Brandon said the Crisler project will get underway as soon as Obama departs.

Parking Rate Increase

Regents unanimously approved were informed about increases for parking permits – 3% in each of the next three years. The change means that the highest-level Gold permit will increase from $1,443 this year to $1,577 by FY 2013, while Blue permits jump from $611 to $667 over that same period.

UM parking permit increases 2010-2013. (Links to larger image)

Tim Slottow, UM’s chief financial officer, told regents that the additional revenues were needed to help pay for the university’s parking infrastructure. He noted that in FY 2010, they’d held rates flat for all permits except Gold, which had increased by 4.5%.

According to a cover memo about the increases, parking revenues help fund debt service for new construction, as well as operations and annual maintenance projects. Capital projects include an addition to the Thompson Street parking structure and the Fuller Road Station, a joint UM/city of Ann Arbor project that includes a large parking structure.

The memo states that fees for Gold permits are in line with rates charged by the Ann Arbor Downtown Development Authority. [The DDA charges $130 for monthly parking permits to city structures, or $1,560 per year.]

Other Capital Projects

Two other major projects were approved on Thursday: an expansion to the Institute for Social Research (ISR), and an upgrade to the pneumatic tube system at the UM hospitals.

Institute for Social Research

A four-level, $23 million expansion is planned for ISR, adding 44,700 gross square feet to the existing building at 426 Thompson St. Another 7,200 square feet will be renovated. The project, to be designed by the architectural firm of Lord, Aeck & Sargent Inc., will be paid for in part by federal stimulus funds via a grant from the National Institutes of Health. The expansion will allow the institute to house its research programs under one roof.

ISR’s director, James Jackson, attended Thursday’s meeting but did not address the regents.

Pneumatic Tube Upgrade

This $3 million project will entail improvements to an extensive pneumatic tube system that’s used to transfer patient materials among 120 stations in multiple buildings at UM’s medical complex, including the University Hospital, Cancer Center, Taubman Health Care Center, and Maternal Child Health Center. It will also integrate the system into the new C.S. Mott Children’s Hospital and Von Voigtlander Women’s Hospital.

According to a cover memo about the project, the upgrade is expected to increase delivery times by 30-40%, and increase the system’s throughput during peak times from 150 to 200 transactions per hour.

Handing over the Henry Ford Estate

Regents unanimously approved transferring the Henry Ford Estate – Fair Lane to the Edsel and Eleanor Ford House, a nonprofit foundation. The property – originally the residence of Henry and Clara Ford – had been given to the university in 1957 by the Ford Motor Co., along with a $6.5 million donation. The gift helped UM establish its Dearborn Campus, located adjacent to the estate.

The transfer includes the main house, powerhouse, greenhouse, dam, garage, boathouse and surrounding property. Also included in the transfer are personal property on the estate, and endowment funds that had been restricted for use on the estate.

UM has been paying more than $300,000 annually for upkeep on the estate, and an estimated $12 million investment is needed over the next 10 years in infrastructure improvements. The estate is designated a National Historic Landmark.

Several regents noted that it was unusual for the university to give away property – it’s a deal that’s been discussed for several years. Mary Sue Coleman said she was pleased that they were able to arrive at this outcome.

Public Commentary: Lecturers’ Union

At the end of the meeting, two speakers during public commentary focused on current negotiations between the university and the Lecturers’ Employee Organization (LEO).

Elizabeth Axelson: Noting that she’d been a lecturer at UM for 20 years and is currently lead negotiator for LEO, Axelson said they’d initially been heartened to hear the provost say that budget goals could be met without layoffs, with resources for some new initiatives, and a “moderate salary program.” But that’s not what’s being offered to lecturers, she said.

Elizabeth Axelson, lead negotiator for the Lecturer Employees Organization (LEO).

Minimum salaries for the classification of Lecturer I or II are $31,000 in Ann Arbor, $26,000 in Dearborn and $25,000 in Flint, she said. The median full-time lecturer salary in Ann Arbor is $44,000. This is less than the starting pay for new high school teachers with a master’s degree, she noted, and less than the national average of $53,112 for lecturers, according to the American Association of University Professors.

LEO is asking for 3% annual raises over the next three years. The goal is to eventually gain equity with the teaching portion of the current median professor salary on each campus, Axelson said. The university has offered 1.75% increases for Ann Arbor lecturers. For Flint and Dearborn, raises would be tied to those given to tenure-track faculty, which could be flat. There would be no increase in minimum salaries.

Axelson said the university’s new cost-sharing proposal for benefits, which requires employees to bear more of the cost for health care, will effectively eliminate the 1.75% increase. LEO estimates that the average lecturer will end up losing about 4%.

Axelson also told regents that the union’s vice president, Kirsten Herold, who has taught in the English department for 18 years, had not been reappointed. “We see her non-reappointment as an abuse of the performance evaluation provisions of the contract; it would be a wrong move at any time, but doing it now looks like intimidation.”

She concluded by saying that lecturers were willing to share the burden of a difficult economy, but should not be expected to bear a greater burden than full-time employees who are better paid. “We hope you can help us achieve the goals of greater equity, a fair part of cost sharing, and a moderate salary program, at the bargaining table,” she said.

Catherine Daligga: Speakers for public commentary are required to sign up in advance – Kirsten Herold had signed up, but was unable to attend. Instead, Daligga read remarks prepared by Herold.

The remarks outlined the impact of layoffs on students in the College of Literature, Science & the Arts (LSA). First-year winter semester writing courses were full for the first time ever, with students being wait-listed, faced with having to take the course next year instead. One of Herold’s students wasn’t able to get into a fourth semester of Spanish until eight months after completing her third-term course. The student has experienced problems getting into other courses as well, and is concerned that she won’t be able to complete her degree in four years. (Herold’s statement noted that if the meeting had been held in Ann Arbor, the student would have been able to attend and speak directly to regents.)

With 6% budget cuts coming over the next three years, the worst is yet to come, according to Herold. They’ve heard that cuts are being discussed that would affect the heart of the undergraduate curriculum – for example, discussion sections for physics, which are taught by lecturers, as well as courses in psychology and first-year Spanish. Anthropology is cutting its part-time lecturers, and at least half of physics lecturers expect to lose their jobs, Herold noted. English lecturers are being replaced by graduate students.

The anxiety across the college is palpable, according to Herold. And LEO members are angry that they seem to be bearing a larger share of the burden – or in some cases, like Spanish, all of the cuts. It’s not clear that tenure-track faculty will be moved into courses that were previously taught by lecturers. If not, Herold pointed out that undergraduates in particular will be affected.

Michigan Student Assembly: New President

Former Michigan Student Assembly president Abhishek Mahanti was on hand to introduce MSA’s new president, Chris Armstrong, who was elected to that office in March. Mahanti described Armstrong as someone who’s “got a laugh that can light up an entire room.” Armstrong told regents that his priorities for the coming year would be to push for Saturday night dining and gender-neutral housing options. He also hopes to work with the administration on prohibiting exams on election days.

Armstrong brought up the fact that he’s received a lot of attention – including some national media – because he’s the university’s first openly gay student body president. The attention wasn’t something he sought, Armstrong said, but it was an opportunity to engage students in a positive way, and he’s excited for what that means to others on campus.

Presentations: Highlighting the Grand Rapids Connection

Regents heard four presentations during Thursday’s meeting that each touched on a link to the western side of the state. The meeting also included a signing ceremony for a new pharmacy admissions program.

Pharmacy Partnership Agreement

Near the beginning of the meeting, the presidents and provosts of UM and Grand Valley State University, along with UM pharmacy dean Frank Ascione, moved to a table in the corner of the room to officially sign a partnership agreement between the two institutions establishing the Pharmacy Preferred Admission Program. The program reserves up to eight spots each year in the UM College of Pharmacy‘s doctoral program, set aside for students from Grand Valley State who complete certain pre-pharmacy undergraduate coursework. The Grand Rapids-based university doesn’t have a pharmacy school.

Tom Haas, president of Grand Valley State, spoke briefly before the signing ceremony. He recalled that three years ago he, UM president Mary Sue Coleman and provosts from both institutions had lunch to discuss ways of partnering. The first result of that effort was a preferred-admission agreement signed last year, allowing UM kinesiology students to enter Grand Valley’s graduate program in occupational therapy. The pharmacy program is the second significant agreement, he said. “We’ll continue to look for those kinds of opportunities for continued mutual gain for the state of Michigan.”

Elementary Mathematics Laboratory

Deborah Ball, dean of UM’s School of Education, described the Elementary Mathematics Laboratory that will be expanding this summer to Grand Rapids. The two-week program is a combination teaching and research effort, bringing in students who’ll be entering the fifth grade and who are struggling with math. They receive intensive training, both in a classroom and with one-on-one tutors.

The “lab” component comes into play because the teaching is observed by researchers, veteran teachers, teachers-in-training, mathematicians and others who are interested in how kids learn and how teachers teach. They’re trying to understand why different teachers – given the same resources and environment – achieve dramatically different academic outcomes for their students. Their findings can be used in teacher training and instructional design.

The lab is a prototype that the school would like to develop more broadly, Ball said – they’re planning to launch a secondary-level lab this summer in Ann Arbor.

After the presentation, UM president Mary Sue Coleman held up a copy of the March 2, 2010 New York Times Magazine – Coleman said she saw it and thought the woman on the cover looked like Ball, and sure enough, it was. Ball was featured extensively in the issue’s cover story, “Building a Better Teacher.”

Research on Down Syndrome and Autism

Up next was Dale Ulrich, a UM kinesiology professor whose research focuses on people with Down Syndrome and autism. He described growing concerns over childhood obesity, and noted that the problem is even greater among kids with Down Syndrome, because they tend to be more inactive than the general population. Less than 10% know how to ride a two-wheel bike, for example. Medical advancements have extended the life span for people with Down Syndrome, he said, but what’s being done to improve their quality of life?

Ulrich leads the UM Center for Motor Behavior and Pediatric Disabilities, and discussed the work they’ve done at week-long bike-training clinics, including ones held in the Grand Rapids area. [Link to video about the bike camp] The camp uses bikes equipped with special rollers instead of back wheels – working one-on-one with aides and gradually adapting the rollers, most of the children are able to ride a regular bike by the end of the week, Ulrich said. The more remarkable thing is to see how their lives change after learning to ride, he said, as they gain self-confidence and independence.

The center has partnered with Grand Valley State’s College of Health Professions, among others, to develop a research project based on these efforts. Steelcase Foundation funded initial pilot studies, and now the project has received a $596,000 federal grant from the National Institute on Disability and Rehabilitation Research. The funds will support a three-year intervention program, with the goal of reducing sedentary behavior and body fat, increasing social skills and interaction, and increasing participation in community activities.

Offshore Wind Energy Research

Dennis Assanis, director of the Michigan Memorial Phoenix Energy Institute at UM, described a large-scale research project aimed at studying offshore wind energy. The institute is partnering with Grand Valley State’s Michigan Alternative and Renewable Energy Center, led by Arn Boezaart.

Studying offshore wind energy is important, in light of the country’s reliance on fossil fuels, Assanis said – there are compelling environmental, economic and national security issues involved. Wind is an untapped renewable energy resource, and a great opportunity for Michigan to create clean energy jobs, he said: “We know very well how to design drive-trains,” needed for wind turbines.

The project aims to build a research platform and tower in Lake Michigan, to collect data and push forward the commercial wind-energy development in the Great Lakes. To do that, they are trying to raise an additional $5 million, having already secured $1.427 million from the U.S. Dept. of Energy, $1.336 million from the Michigan Public Service Commission and $334,100 from UM. Additional funding will likely come from the private sector.

Boezaart described several things they’d like to learn from the research, including: 1) the impact of the environment on the platform and tower, 2) how the tower and platform impact the environment, 3) how to navigate the licensing, permitting and regulatory process, 4) the economic potential for the Michigan’s lakeshore region and western part of the state.

Boezaart said they need to move quickly, because other states and countries are leading the way with research and technology development. “Wish us well and favorable winds,” he said, “because we’ll need those.”

UM Health System Collaboration

Jack Billi, UM associate vice president for medical affairs, spoke to regents about several statewide partnerships the University of Michigan Health System has formed to improve the quality of care and cut costs.

The UM Faculty Practice Group was chosen five years ago as one of 10 sites nationwide to participate in the Medicare Demonstration Project – an effort to demonstrate how health care costs for Medicare patients can be lowered while at the same time improving prevention and care for chronic conditions like diabetes and hypertension. UMHS is coordinating the project among doctors at 50 hospitals statewide. Aspects of this project were incorporated into the recently passed federal health care act, Billi said.

UMHS is also involved in the Physician Group Incentive Program, supported by Blue Cross Blue Shield of Michigan. The university is helping 26 physician groups and more than 90 clinics statewide redesign care for patients with chronic illnesses, using “lean thinking” principles they learned from the auto industry, Billi said.

The Michigan Quality Improvement Consortium is another effort in which UMHS is playing a role. The project’s goal is to develop clinical practice guidelines and performance measures that can be adopted by health insurance plans statewide.

The bottom line, Balli said, is that it’s possible to lower costs and improve care at the same time. Collaboration, he added, is key to all of these efforts.

Present: Mary Sue Coleman (ex officio), Julia Darlow, Larry Deitch, Denise Ilitch, Olivia Maynard, Andrea Fischer Newman, Andy Richner, Martin Taylor, Kathy White

Next board meeting: Thursday, May 20 at 3 p.m. at the Fairlane Center on UM’s Dearborn campus, 19000 Hubbard Drive. [confirm date]

David Olson, vice president of Granger Construction Co., delivered a letter to the DDA board during public commentary, which questioned the way concrete bids were handled for the DDA's underground parking garage. The garage is currently under construction along Fifth Avenue. (Photos by the writer.)

Though not addressed by the board as business items, two areas of controversy emerged during public commentary.

One involves the award of a bid as part of the DDA’s construction of the underground parking garage along Fifth Avenue. The contract for construction management for the entire project was awarded to The Christman Co. However, under the terms of the contract, Christman must bid out various components of the project, like the concrete work – even though Christman has the capability of doing that work itself.

The low bid for the concrete work was submitted by Granger Construction Co., at $21.5 million. But Christman awarded the contract to Christman Constructors Inc., which had submitted a bid of $22 million. Christman’s selection as construction manager of the project had been finalized at the DDA board’s Nov. 4, 2009 meeting with a guaranteed maximum price of $44,381,573. Representatives of Christman and Granger aired their differing points of view on the concrete bid at Wednesday’s meeting, with DDA board chair John Splitt concluding that he was satisfied the process had been fair.

The other point of controversy arising during public commentary is the probable $2 million payment this year by the DDA to the city of Ann Arbor – which it has no obligation to make under its current parking agreement with the city. The city’s budget book for FY 2011, released on Monday, does not factor in a payment from the DDA. Instead, it shows a $1.5 million shortfall for the year. The DDA’s parking report to the city council hints at the possibility that the DDA would take responsibility for the ticketing of parking violations. That change in enforcement could be included in the renegotiation of the parking agreement.

Other business transacted by the board on Wednesday included a resolution calling on the city council to revise its sign ordinance so that downtown merchants could use sandwich board signs legally. A recent attempt to revise the ordinance by the council was voted down at its Feb. 16, 2010 meeting.

DDA Parking Report to the City Council

At its Dec. 21, 2009 meeting, the Ann Arbor city council considered a resolution addressing parking revenues. The resolution was brought forward by Sandi Smith, who serves on the city council representing Ward 1, as well as on the DDA board. From The Chronicle’s coverage of that meeting [emphasis added]:

In its original form, the resolution had three key points: (i) net revenues from the Fifth and William (old YMCA) lot would go into city rather than DDA coffers, (ii) downtown parking meters would operate and be enforced until 10 p.m., which is later than their current cutoff of 6 p.m., and (iii) the city would discontinue its plan to install its own parking meters in neighborhoods near the downtown.

With respect to its substance, the part of the resolution generating the most resistance was (ii) with its extended hours of meter enforcement for on-street parking. Smith swapped out that provision for one somewhat more vague, and the council eventually adopted a resolution that requested a report from the DDA on the issue of extended meter enforcement:

RESOLVED, The City requests that the DDA present a plan to Council at its April 19, 2010 meeting for a public parking management plan. The plan should include but is not limited to:

• a communication plan to Downtown patrons, merchants and evening employees
• options for low cost parking for evening employees
• variation of rates and meter time limits based on meter location
• hours of enforcement

It is this plan that the DDA board voted to endorse on Wednesday. Final tweaking will take place at the board’s partnerships committee meeting next week.

The report is structured around eight strategies:

Strategy 1: Downtown curbside public parking should be managed to create turnover at the most convenient, commercial locations so these spaces can be more easily used by a large pool of downtown users.

Strategy 2: A comprehensive TDM [transportation demand management] strategy should be developed and utilized to support the downtown evening economy, including a management strategy for on‐street parking spaces, creation of additional evening employee parking/transportation options and communication strategies.

Strategy 3: Develop new off-street parking strategies to make it more attractive for patrons to park off‐street in public parking facilities, and thus relieve pressure on curbside parking, support downtown commerce and entertainment, and increase patron awareness of their parking use and costs.

Strategy 4: Develop policies and plans to add and subtract public parking downtown based on redevelopment, walkability, and transportation goals.

Strategy 5: Develop additional parking options for personal transportation vehicles, including motorcycles, bicycles, and vehicles using new energy.

Strategy 6: Increase downtown employee use of public transit by expanding AATA service hours, developing a strong Ypsilanti/Ann Arbor transit plan, and making downtown transit stops more user‐friendly.

Strategy 7: Improve communications to downtown business owners, employees, customers and visitors by developing new communication tools and sharing information more broadly.

Strategy 8: Develop a parking and transportation strategy for downtown & near downtown residents

One of the tactics for implementing Strategy 2 is a recommendation to extend time limits on parking spots from two to three hours in certain areas.

Another tactic for implementing Strategy 2 is a recommendation to change meter enforcement hours from 8 a.m.‐6 p.m. to 9 a.m.-9 p.m. This reflects the report’s genesis as a request from the city council to the DDA, when the council was confronted with a resolution that would have extended the hours of meter enforcement. That recommendation will likely generate the most controversy, and this was reflected in public commentary at the DDA’s Wednesday meeting.

Parking Report: Public Commentary

Ray Detter, in his report to the board on the Downtown Citizens Advisory Council‘s meeting the night before, said that DDA executive director Susan Pollay had attended the meeting to give a summary of the parking report. Detter supported the idea that the DDA was the only entity equipped to administer parking operations.

Commenting on behalf of the Main Street Area Association, Tony Lupo took the podium for his allotted four minutes at the start of the board meeting. Lupo indicated that the MSAA had held information meetings and participated in the DDA’s process for receiving public feedback for the report. He reported that there was overwhelming opposition to extending the meter enforcement hours.

However, he allowed that the MSAA understood the context under which extended hours were being considered – the city’s need for revenue. What was important, Lupo said, was to couple any extension of meter enforcement hours past 6 p.m. with some kind of offsetting enhancements like increasing the maximum time to three hours – from its current limit of two hours – and offering free parking during certain hours. Lupo stated that MSAA would like to contribute to the marketing strategy for the plan.

In that context, Lupo suggested that it didn’t make sense to “shift” the time of meter enforcement from its current window of 8 a.m.-6 p.m. to 9 a.m.-9 p.m. That essentially offers a free hour of parking when it’s not in high demand. It would be better, said Lupo, to offer a free hour of parking sometime after 6 p.m. – that’s something it could be headlined as a benefit in a marketing effort. [Lupo is marketing director for Salon Vox on West Liberty Street.]

Parking Report: Transportation/Operations Committee Deliberations

At the board’s joint transportation and operations committee meeting the previous Wednesday, March 31, 2010, committee members hashed through a number of issues related to the parking report. Those ranged from presentational issues to more substantive questions.

Among the presentational issues was the question of whether to include parking rates in the body of the report or put them in an appendix. Putting actual numbers in the body of the report, suggested Newcombe Clark, would make the report immediately dated. Transportation committee chair John Mouat suggested putting the numbers in an appendix. Board chair John Splitt feared that if they did not include the numbers for rates, they would lose control of the discussion: “They’re real numbers, why not put them in there?” The rates will be included in an appendix.

Among the more substantive issues discussed at the joint committee meeting related to control of enforcement. In a section of the report describing benchmarking data from other communities, the following observation is made [emphasis added]:

Through examination of other communities, we learned the following: … Parking enforcement and parking operations are often managed jointly by one agency.

Elsewhere, the report states:

Parking enforcement and parking operations are two halves of the same parking system. Optimally, enforcement and operations strategies are planned and managed together.

In Ann Arbor, parking operations are handled by the DDA through a contract with Republic Parking. Enforcement, on the other hand, is handled by the city of Ann Arbor through police and community standards officers.

At the committee meeting, the question was raised: Why don’t we just say it – we want to take over enforcement. This is an idea that came out of the first meeting that the DDA’s “mutually beneficial” committee held last year. The DDA and the city have ad hoc “mutually beneficial” committees, charged with renegotiating the parking agreement between the two entities. At the time of that first meeting of the DDA’s committee, the city had not yet appointed a corresponding “mutually beneficial” committee.

Parking Report: Who Enforces Meters, and the City Budget Gap

The key facts about that city-DDA parking agreement were summarized during public commentary at Wednesday’s board meeting by Bob Dascola, who owns Dascola Barbers on South State Street. In 2005, the agreement between the city and the DDA was renegotiated to extend 10 years through 2015, with the annual payment by the DDA to the city in the amount of $1 million.

A provision of that agreement allows for the city to request a payment of $2 million in any given year, with the condition that the total amount over the 10-year period can’t exceed $10 million. Now five years into the contract, the city has requested $2 million each of the first five years. So, for the upcoming year, FY 2011,  the DDA does not owe the city anything under that contract.

Dascola weighed in against the idea that the DDA should voluntarily renegotiate the contract, saying that the DDA was not an ATM.

The DDA “mutually beneficial” committee’s initial discussions, which began last year, centered around the idea of an arrangement that would be more complex than the DDA simply writing an additional check to the city.

From The Chronicle’s report of the April 1, 2009 DDA board meeting [emphasis added]:

[Rene] Greff  [who chaired that committee at the time, but no longer serves on the DDA board] then ticked through what the committee had done. They had: (i) reviewed history of DDA parking agreements with the city, (ii) reviewed TIF (tax increment financing) capture, and (iii) reached a majority view – with dissent from Hewitt – that they should not re-open the discussion of the existing parking agreement. It was not the role of the DDA, Greff said, to cover gaps in the city budget. The committee had given some consideration to taking over city tax-funded activities (e.g., snow removal), and had contemplated purchasing the right to meter enforcement in downtown. The latter would allow the DDA to control a piece of the public’s experience with the downtown area.

Board member Leah Gunn asked about the city’s side of the committee. Greff explained that the city council had not yet seated their committee, and the DDA contingent had met so that they would have something more concrete to bring to the table when the first meetings with the city took place.

The two committees have not, to The Chronicle’s knowledge, ever met. Sandi Smith, who serves on the DDA’s committee, has reported at DDA board meetings for a number of months that there was nothing to report. At the last two DDA board meetings, Roger Hewitt reported only that informal talks had taken place.

The Chronicle noted in its previous coverage that the city’s committee meetings can be expected to be noticed for the public beforehand and made accessible to the public [from "City-DDA Parking Deal Possible" – which also includes a history of the respective "mutually beneficial" committees]:

If and when the two “mutually beneficial” committees from the DDA and the city council meet, it’s reasonable to expect that the meetings will be open to the public and announced in accordance with the Open Meetings Act.

While the committee membership from the city council would not amount to a quorum, a resolution passed at its Nov. 4, 1991 meeting by the Ann Arbor city council expresses the council’s will that its committees adhere, to the best of its abilities, with the requirements of the OMA:

R-642-11-91

RESOLUTION REGARDING OPEN MEETINGS FOR CITY
COMMITTEES, COMMISSIONS, BOARDS AND TASK FORCES

Whereas, The City Council desires that all meetings of City boards, task forces, commissions and committees conform to the spirit of the Open Meetings Act;

RESOLVED, That all City boards, task forces, commissions, committees and their subcommittees hold their meetings open to the public to the best of their abilities in the spirit of Section 3 of the Open Meetings Act; and

RESOLVED, That closed meetings of such bodies be held only under situations where a closed meeting would be authorized in the spirit of the Open Meetings Act.

At the DDA’s joint transportation and operations committee meeting last week, in response to the suggestion that the parking report simply state that the DDA wanted to take over meter enforcement, Susan Pollay, executive director of the DDA, said that would be “presumptuous.”

Responding to Pollay, Newcombe Clark clarified with her that the parking report was to be submitted to the city council on April 19. And the inclusion of meter enforcement by the DDA would be reasonable, Clark said, because it was within a few weeks of an expected compromise between the city and the DDA on the parking deal. Polly replied that she was not aware of a compromise.

Gary Boren then weighed in, saying it was his understanding that the city’s budget was being prepared without an assumption that the DDA would be making a $2 million payment. On the Monday following that March 31 committee meeting, the city released its budget book, which does not assume a $2 million payment from the DDA – it shows a roughly $1.5 million deficit for the year.

The issue of who has responsibility for meter enforcement is not just a matter of which agency – the city or the DDA – can insist on the right to do so. The parking report contains a number of recommendations that would seem to require either an intensely close working relationship between the agencies administering operations and enforcement, or else require that it be a single agency administering both. For example, the recommended tactics to implement Strategy 1 include the following:

• To lessen patron frustration about receiving a ticket, improve information on parking tickets & envelopes, including how to pay online or avoid a ticket in the future.
• Improve website information and provide a feedback mechanism unrelated to contesting parking tickets.
• Pursue ideas that would make it possible to pay for parking tickets and stored value meter cards in one location, providing increased convenience to customers.
• Explore making it possible to pay parking tickets at the epark machines as a way of reducing patron inconvenience and frustration.
• Explore making it possible to pay for parking tickets at banks, thus reducing the number of patrons who feel compelled to come to City Hall for this function. Determine if it is feasible for downtown banks to dispense stored value meter cards.

Counter to the original impetus behind extended hours of enforcement – an effort to generate additional revenue – is a goal of fewer tickets expressed in the report:

… parking operations and enforcement should be managed so that the number of parking tickets eventually decreases and the number of patrons complying with parking regulations increases.

Parking Report: DDA Board Deliberations

Roger Hewitt led off deliberations on the parking plan, saying that it embodies 18 years of experience by the DDA in managing parking operations. It reflected a lot of hard work and public process in a very short amount of time, he said. He noted that it had been reviewed in detail by the transportation and operations committees. The partnerships committee would do the final edit, he said, at its meeting later in the month.

Hewitt stressed that it was not just a parking plan – it’s a transportation management plan. He allowed that some of the recommendations are controversial. However, he noted that the strictly daytime economy in downtown has undergone a shift in the last 20-30 years and that there’s now a nighttime economy. The parking report contains recommendations, Hewitt said, about extended meter enforcement and geographically determined meter rates.

Newcombe Clark also praised the work of the staff. He emphasized that the DDA did not know for sure what would happen when some of the recommendations were implemented – as he put it, “when we start pulling these levers.” Clark said the DDA owed it to itself to do baseline calculations so that it could ascertain whether the demand management measures resulted in a revenue loss, a large surplus, or was simply a wash. He wanted the DDA to start looking at spreadsheets on what might happen.

John Mouat characterized the daytime parking activity in the past as essentially static, in contrast to the more dynamic pattern of nighttime parking. He said the plan itself was dynamic, not set in stone. The plan’s essence was about choices, he concluded.

Keith Orr also gave kudos to the staff, saying they’d done the work “under the gun.” Orr agreed with Clark on the need to model the various impacts of the measures when they are implemented. Responding to Lupo’s public  commentary – when Lupo  expressed some concern that the language in the report used to describe some of the enhancements was not as strong as that describing the extended enforcement – Orr said the DDA was an organization with a good history of testing plans. They’d implemented or tested everything in the Nelson\Nygaard study, he said.

Sandi Smith thanked the staff for their heroic effort. She said that in an informal survey she’d done of nighttime workers, she’d learned that a lot of people don’t realize that parking after 6 p.m. is currently free. So she was cautious about any assumption that extending meter enforcement would have a dramatic change in revenues.

Mayor John Hieftje noted that he didn’t think the document looked like it had been prepared under the gun. He said the idea of extended hours of meter enforcement would be controversial.

Leah Gunn thanked Mouat and Hewitt for chairing the combined committee meetings that worked on the parking plan. She called the plan a “tour de force.” Some things are not knowable, she allowed, but you don’t know until you try.

Outcome: The DDA parking report received the unanimous endorsement of the DDA board.

Parking Report: ParkingCarma

Related to a theme of transportation demand management was a presentation made by Rick Warner of ParkingCarma during public commentary. In discussions on the operations committee report, Leah Gunn also said she was intrigued with ParkingCarma. And Roger Hewitt said he could add ParkingCarma to the next meeting of the operations committee.

What had intrigued Gunn? Warner pitched the idea of a partnership between the DDA and ParkingCarma. He described ParkingCarma’s business, which uses a variety of technologies to make parking easier. Before the meeting, Warner described it for The Chronicle as “like Orbitz for parking.” Warner described how ParkingCarma had already inventoried all the off-street parking in Ann Arbor, and had partnered with Google Local Business Center to provide parking information to Google. That provides a way for potential customers to get information about the closest available parking locations to that business.

Warner also sketched out a way to integrate into a parking system, so that the owner of that system could accept pre-paid reservations for parking. Premiums could be collected for special events, or patrons could be directed to lower-demand spaces to optimize the parking inventory. Warner suggested that launching such a system would be best in connection with a large special event like the Ann Arbor Art Fairs.

Warner described ParkingCarma as a SPARK-incubated company. The company is listed on Ann Arbor SPARK’s website as a “portfolio company,” which refers to companies that “have navigated through the SPARK application and due diligence process and emerged with investments.” SPARK is a nonprofit organization that works on economic development for the Ann Arbor area.

Elizabeth Parkinson, vice president of marketing and communications for SPARK, told The Chronicle in a phone interview that ParkingCarma had gone through Phase I and Phase II of SPARK’s business accelerator, and had received a loan from the Michigan Pre-Seed Capital Fund, which is managed by SPARK’s Skip Simms, as well as from Automation Alley.

Granger and Christman Dispute Concrete Bid

The DDA board got an update on the progress on the underground parking garage currently under construction along Fifth Avenue on the city-owned Library Lot. The update was delivered by Pat Podges, who is vice president for southeast Michigan operations for The Christman Co., which is the construction manager for the job.

Key points of the update included the fact that earth-retention work had been completed on the east and south sides of the project and would be proceeding east to west along the north side of the site. Excavation was continuing along the east leg, near Division Street, Podges reported. A decision had been made to dewater the site by taking water up Liberty Street to South State Street, as opposed to running it to the west down toward the Allen Creek drains.

Podges reported that the result of the returned bids on the project meant that the estimate contingency in the contract would be returned in full, and the risk contingency on the project could be reduced, which resulted in $1 million that the DDA would be getting back.

Then Podges moved into a description of how the concrete package had been handled: “I just want to speak real briefly about the integrity of the process by which we used to establish the subcontractors which we are using on the job – specifically the structural concrete work package, which was the largest package on the project.”

Background on the Construction Contract

Selection of the construction manager for the underground parking garage was done in two steps. First, the job of pre-construction services was awarded. That company’s performance on pre-construction services would determine whether the DDA retained them as construction manager. The expectation was that whichever company was selected for pre-construction would ultimately be selected as construction manager.

The interviews for pre-construction services were described in part in an Aug. 13, 2009 Chronicle article. Stressed throughout the interviews was the idea that construction manager companies that could self-perform various sub-contracted aspects of the job – like pouring the substantial amount of concrete for the garage – would need to compete with other companies for that work. Describing how Barton Malow was not selected for the construction manager job, the article makes clear that Barton Malow could conceivably make money by winning the concrete portion of the job:

Still, Barton Malow and [Neal] Morton could make money on the job – if they’re selected as a concrete subcontractor. The construction manager candidates have their “in house” concrete divisions, and would ordinarily not need to subcontract out that work. But the DDA would like the construction manager for this project to bid out the concrete work. It was a question that DDA board member Leah Gunn put to the construction manager candidates during the interviews: Would they be comfortable having to compete for the concrete work with other bidders? The correct answer was yes.

The candidates for the job emphasized that the close quarters of the site made it a challenge – both logistically and in terms of minimizing impact on the immediately surrounding property. They’d be installing earth retention systems that would minimize vibration impacts, for example.

After performing to the DDA’s expectations in the pre-construction services phase of the project, Christman’s selection as construction manager of the project was finalized at the DDA board’s Nov. 4, 2009 meeting with a guaranteed maximum price of $44,381,573.

The sealed bids for the concrete work were opened on March 4, 2010 at the DDA offices. From Chronicle coverage of the DDA board’s March 3, 2010 meeting:

Bid package #3, [board chair Joan] Splitt reported, which is for the concrete and steel work, would be opened publicly at 2 p.m. in DDA offices the following day. [The bids will first be reviewed for numerical accuracy. Then any conditions specified by the contractors checked, and interviews will be held with the lowest three bidders to review the scope of work – a meeting for that is scheduled on Tues., March 9.]

The base bids were submitted as follows from lowest to highest:

1. $21,499,000  Granger Construction Company
2. $21,980,000  Colasanti Construction
3. $22,025,000  Christman Constructors, Inc.
4. $23,286,000  Spence Brothers Construction
5. $23,980,000  Barton Malow
6. $25,500,000  Walbridge

Note that Christman Constructors Inc. is a subsidiary of The Christman Co., which is the construction manager on the job. The post-bid meetings were held with the three lowest bidders, including  Christman and Granger. Granger’s team left the post-bid interview believing they’d won the job.

Pat Podges described at Wednesday’s board meeting why Granger was not awarded the concrete work. Here’s what Podges reported early in the meeting, after he updated the board on the construction progress :

I just want to speak real briefly about the integrity of the process by which we used to establish the subcontractors which we are using on the job – specifically the structural concrete work package, which was the largest package on the project. We received last month six bidders, that ranged anywhere from $21,449,000 to $25,500,000.

Based on the complexity of the project and the closeness of the second and third low bidder, we elected to bring in the three low bidders for post-bid reviews, which are widely used to determine their understanding of the project, their operational plan for the project, the schedule expectations, the quality and safety. At the end of that we disqualified the low-bidding contractor [Granger] for non-conformance with the bidding documents relative to the schedule and work plan, and also their ability to demonstrate to us their understanding of the operational execution of the work. That left the two remaining bidders, one of which was CCI, a subsidiary of the Christman Co. Each had submitted full documentation – work plan, management plan, and a detailed schedule for the project.

Further analysis of these two bids really revealed that the differential between the two firms was about 2/10 of one percent. We then looked at some other aspects of the work recommendation, including alternates that were required for them to provide as well as voluntary alternates which they offered at bid. And at the end, it was very clear that CCI had provided the best value for the project, and it was a team decision based on their final project cost, provided the best value to the city. In the end CCI’s price was $21,438,000, which was actually less than the original low-bidding contractor.

David Olson, vice president of Granger Construction, saw it differently from Podges. Speaking near the end of DDA board meeting during the time reserved for public comment, his remarks went as follows:

Hi, my name is David Olson, I’m vice president of Granger Construction. And I am here to talk briefly about integrity. As the low bidder of the concrete package on your parking ramp, I take exception to Mr. Podges’ comments about, I guess, our inexperience or lack of knowledge for that project. We’ve got a proven record of accomplishment for delivering these types of projects.

I’m here more just to make a simple public statement about a flawed process. And whether it is your process or their selection process. And make no mistake, this is not about sour grapes, this is about making a public statement about doing the right thing. We worked with these gentlemen for a long time in the same area – we play nice in the sandbox. It’s not about the gentlemen. It’s about the decision that the company made and whether it is their selection process or yours, you guys are complicit, and I just think it’s important to get this out in the public. We talk about money going back and forth – you guys are excited about $1 million that you get – if you go through that contract that’s money that is yours anyway, it’s due to be given back to you.

The process and how they made the selection of jumping from the low bidder, which we were, we won – over the second bidder to themselves, is kind of a shrewdly crafted shell game. I’m here to deliver a letter from our CEO Glenn Granger, which lays out the facts. We don’t expect to get this project, but we want to do the right thing. And doing the right thing is tough, it’s not easy being here today. It’s not about sour grapes – I was a little disarmed when we walked in and you [Leah Gunn] said, you know, ‘I know you’re here to whine about the project.’ We’re not here to whine. We’re here to get the facts on the record and to do the right thing. It’s not easy, but doing the right thing seldom is. So with that here’s a letter I would like to deliver to you, you can read it, certainly if you have any questions our contact information is there. We really appreciate your time. Thank you.

The letter delivered to the board members cited a lack of a rationale for rejecting the low-bidding company for the job. [Complete text of Granger's letter to the DDA] An excerpt:

None of Granger’s references were consulted, and there was absolutely no indication that Granger’s bid lacked a single project scope requirement. lf Christman had concerns, they had a duty to clearly document them in the meeting minutes and/or call us to communicate them. Regrettably, neither was done. The Ann Arbor DDA, and the taxpayers of Ann Arbor deserve the benefit of the lowest qualified bidder. Explaining the $526,000 difference became a shrewdly conducted shell-game, where The Christman Company extracted other savings out of the Guaranteed Maximum Price contract in order to make it appear that they’re serving your organization.

When Granger Construction interviewed for the construction manager’s role, the Ann Arbor DDA made it exceedingly clear that it desired openness, transparency and competitiveness. Unfortunately, that has not been the case.

Christman’s chief operating officer, Steve Frederickson, took the podium to respond to Olson:

Hi, I’m Steve Frederickson, president and COO of the Christman Company. I just want to be clear – I’m not sure what that letter says – but there’s been a lot of discussion that’s occurred over the past number of weeks relative to the award of the concrete package, and a lot of the discussion has been based on assumptions and conjecture and not on the facts. And so I just wanted to be really clear and really brief on what the facts are.

The facts are that in the bid documents, we described the complexity of this project. It’s underground, it’s cast-in-place concrete, you all know how hard this project is and the level of experience that is required to accomplish a feat such as that. But we were very clear in the documents about how we were going to award the project, and the criteria by which we would award the project: experience, detailed work plan, detailed schedule.

Price was part of it, but it says throughout the bid documents and in the pre-bid meeting that we had with all the bidders that it was not based exclusively on price, because we needed to know that we had a partner that was capable and qualified and knew the job, and put us in a position to be able to succeed as a partnership. The fact is, we were clear on the award criteria. Another fact is that the Granger Company was disqualified very early in the process unanimously by everybody at the post-bid [meeting], including the architect, the engineer, The Christman Company, your project management consultant [Park Avenue Consultants]. Those are the facts.

They didn’t comply with the requirements of the project, they did not display an understanding of the project to the level of comfort that we felt was necessary to be able to serve you and serve the project. Those are the facts. Their project manager had no underground parking deck experience – the full-time on-site project manager. So we were very clear on what the project was to be awarded based on. They did not meet that. So essentially what they have been asking for is a re-do of the process, and we can’t do that. It’s not fair to the other bidders to give one bidder a re-do – why wouldn’t we give the other bidders a re-do, based on what they submitted for a price? It’s unfair to the process.

We have challenged the integrity of the process, with our partners – with the architect, with the engineer, your project manager, with the DDA – and everybody has established hands down that the integrity of the process was maintained throughout the entire process. So we’re confident in that. And we’ve made those details available, and if you look at the details it’s very clear. So I just encourage you to look at facts, and take all of the emotion out of it, and look at the facts and the people that are best qualified to do the job. We’re in a great position to be giving that money back at this point, in moving forward through the project. Everybody’s excited to do it, we’ve got a great team, and we’re out there getting after it as you can see. Thank you.

Dennis Carignan, Granger’s director of pre-construction services, then took the podium:

I really don’t want to belabor this again – Steve [Frederickson] mentioned getting the facts out there. I would encourage you to do that, I would encourage you to look into the facts. You know, he mentioned not being qualified, and I can say personally I’ve been involved in two different parking ramp projects with Granger and we’ve done a dozen throughout the state and we’ve had huge success. And you guys know that – because we were short-listed to do the entire project [the construction manager job].

He also said, you know, that we weren’t compliant with the bid documents. And actually you can take a look at the post-bid interview, and we are compliant – there’s yeses all the way down. And it was kind of a shock to us to find out weeks later that they were going to bypass us. I’m glad to hear that you are saving money. In this economy, that is a big deal. And I think you could be saving more. I think there were some irregularities in the bidding process, that maybe you could have capitalized on some additional savings.

It was an extremely short bid period, you know. Maybe that was a way of ensuring that Christman could get the work. Voluntary alternates were prohibited, and I have never seen that in a set of bid documents. Now, to me, why wouldn’t you want to encourage some ingenuity and get some cost savings there? In fact, we’ve got $300,000 worth of savings to the job that we couldn’t submit on. And I’m happy to share that with you, too. To help the project maybe save more money. Aside from that, you know, I don’t expect anything to change. Again we just want to encourage the facts to come out.

The document referred to by Carignan with all the yeses checked is the post-bid conference summary, which is signed by representatives of Granger and Christman. In addition to the check boxes, the summary contains additional handwritten notations in free response fields. [.pdf of post-bid interview summary]

The language of the contract between Christman and the DDA supports Olson’s contention that the $1 million being returned by Christman to the DDA is contractually required [.pdf of complete contract]:

Upon Substantial Completion of the Project, any unused portion of the GMP [guaranteed maximum price] Estimate Contingency shall be returned to Owner [DDA] for use by Owner as determined by Owner in its sole discretion. Upon the release or return of any portion of the GMP Estimate Contingency to the Owner, the GMP shall be reduced by the amount returned or otherwise released to Owner from said fund.

The contract also specifies that Christman is paid only based on documented invoices for work actually performed – up to the guaranteed maximum price.

In a telephone interview, we asked Podges if he could provide some additional clarity  about the reason that Granger’s bid was rejected after the post-bid conference. Podges said it was not a question of Granger’s general qualifications to do concrete work for parking decks. Rather, it was Granger’s readiness – as reflected in the bid documents and the post-bid conference – to handle the detailed complexity of this specific underground project, with the associated logistical challenges of a tight urban construction site with little or no staging areas for materials.

Podges told The Chronicle that precisely because Granger is known as a competent firm, Christman was disappointed that Granger did not present the kind of detailed scheduling with specific construction activities and an operational plan necessary to give Christman the comfort level they need to award the job to them. Asked to give a specific example, Podges described how the timing of the form-pour sequence for shear walls – walls interior to the structure – was crucial. But when asked for their thoughts on how they’d approach that, Podges said, Granger didn’t provide a detailed answer.

A lot of what Christman knows about building underground parking structures, Podges said, stems from their recent experience on the Michigan Street Development Project in Grand Rapids. Podges said that meant his firm had expertise and experience that allowed them to understand the challenges in more detail than others. The Michigan Street Development Project was a key part of Christman’s presentation to the DDA board when they interviewed for the construction manager job. [Chronicle coverage: "DDA Hires Christman, Bonds Delivered"]

Perspective on Self-Performed Work

Two factors may have led observers of the bidding process to the erroneous conclusion that the concrete work for the DDA’s parking structure was required to go to the lowest bidder. First, the questioning during the construction manager interviews held by the DDA emphasized that the construction manager’s in-house divisions would have to compete with other bidders. Second, the public opening of the sealed bids is often associated with a low-bid requirement.

Christman’s contract, however, specifies a guaranteed maximum price. That’s an arrangement that requires Christman to accept a certain amount of risk – if the cost is more than the maximum, it comes out of Christman’s pocket. In such an arrangement, the final determination of subcontractor selection belongs to Christman.

DDA staff capability does not extend to providing direct oversight of Christman’s selection process for subcontractors – that’s something for which the DDA relies on its construction consultant, Park Avenue Consultants, and the architect on the project, Luckenbach Ziegelman Architects.

In the course of recent reporting on the Humane Society shelter construction project, for which Washtenaw County is providing a certain level of oversight, The Chronicle met Bob Martel, who’s playing the role of construction manager for the shelter project, which is essentially now complete. Martel’s specific expertise is as an owner’s representative for development of medical office building projects in the $15 million to $30 million price range.

So we asked Martel for his thoughts on the general idea of arrangements in which a construction manager has the option of self-performing the work. In a phone interview, Martel said that he favored a practice specifying that a company performing as construction manager for a job could not self-perform any of the subcontracted work.

His rationale behind that, explained Martel, was to remove any possible perception that the construction manager’s in-house division might have an inside track, which could dissuade other companies from bidding. That could lead to a situation where the owner’s price wasn’t as low as it could be.

But Martel allowed that his own approach was not the most common practice. He also added that he’d hired Christman for a couple of projects – they’d done great work, he said.

DDA Board View on the Concrete Bids

At the very end of the board meeting after representatives from Granger and from Christman had all weighed in, John Splitt addressed the issue this way:

I just want to say at this point that as chair of the capital improvements committee and as chair of this board I am satisfied with the integrity of the process that went on. And I think that the committee all agrees that the process was fair.

Misc. Items Discussed by the DDA Board

There were a range of other topics mentioned at Wednesday’s meeting.

Main Street BIZ

In other public commentary before the board, Ed Shaffran appeared in order to thank the board for their support in the establishment of the Main Street Business Improvement Zone. Ellie Serras had been listed on the agenda to speak on behalf of the BIZ, so when Shaffran took the podium, he joked that he figured they’d prefer to hear from Serras, which was met with an enthusiastically lighthearted “Yes, we would!” from Leah Gunn and Russ Collins.

The DDA had provided $83,270 to support the creation of a business improvement zone (BIZ) on South Main Street.

Sandwich Board Signs

At the city council’s Feb. 16, 2010 meeting, a revision to the city sign ordinance was unanimously defeated – it would have legalized the common practice of using sandwich board signs on downtown sidewalks. The measure also did not enjoy the support of its sponsor, Sabra Briere (Ward 1), who had worked with a task force established in October 2009 to address the issue.

At the February meeting, it was indicated that the city attorney was recommending that the ordinance be enforced. Warnings have been issued but no confirmed citations have been made. There is some sentiment among merchants that the sandwich board signs could be subsumed under the sidewalk occupancy ordinance.

At Wednesday’s board meeting, Keith Orr gave his colleagues a rundown of the history of the issue. Newcombe Clark emphasized that it was crucial for non-first-floor businesses to get the added exposure that could be gained from sandwich board signs.

Before the DDA board was a resolution calling the city council to take action at its next meeting, on April 19, 2010, to legalize sandwich board signs.

Outcome: The DDA board unanimously passed the resolution that called on the city council to revise the ordinance in a way to make sandwich boards legal downtown.

East West Rail

During public commentary at the conclusion of the meeting, local developer Peter Allen said he was troubled to learn from reading the minutes of the DDA board’s retreat that the east-west rail project had been put on hold. He said he felt like the DDA could play a role by stepping up and being a leader on the issue, by standing up and shouting, “It has to get done.” He also pointed to the University of Michigan as an organization that stood a lot to lose, if the project didn’t move forward.

Mayor John Hieftje responded to Allen’s remarks by saying that there was still a whole lot going on and that the recent setback had to do with the failure to win stimulus funds to address siding issues near Detroit. When that was worked out, he said, the project would be back full-bore. He noted that rail cars are being purchased, so the project is still going forward.

Hieftje also said that conversations with Dearborn were happening and that there was some possibility of exploring a connection that would include Dearborn and the airport, but that would not go all the way to Detroit initially. He pointed to the $30 million of stimulus funding that Dearborn had been awarded in order to build a new station.

Commuter Challenge: getDowntown

Nancy Shore, director of the getDowntown program, reported to the board that the commuter challenge, which takes place in May every year, could use support from their participation. Just one sustainable commute, she told them, would earn a free ice cream from Washtenaw Dairy. The Bike to Work Day event for this year will fall on May 21.

Present: Gary Boren, Newcombe Clark, Roger Hewitt, John Hieftje, John Splitt, Sandi Smith, Leah Gunn, Russ Collins, Keith Orr, Joan Lowenstein, John Mouat

Absent: Jennifer S. Hall

Next board meeting: Noon on Wednesday, May 5, 2010 at the DDA offices, 150 S. Fifth Ave., Suite 301. [confirm date]

Sue McCormick, the city's public services area administrator, showed the city council a map of streetlights during Monday's meeting. (Photo by the writer.)

On Monday, Sue McCormick, public services area administrator, was front and center, describing for council how the public services budget “lives within the general fund.” The basis for the discussion was budget impact sheets prepared for the public services area, which she distributed.

Councilmembers had several questions for her about a possible special assessment district (SAD) to fund streetlighting, with much of the discussion centered around what it means for an area to be “overlit.” A streetlighting SAD would require property owners to pay for streetlights.

Also generating a fair amount of discussion among councilmembers was the $100,000 annual cost for traffic control on University of Michigan football game days and the city’s plan to reduce that cost through judicious rescheduling of personnel to avoid overtime expenses.

McCormick also pitched to the council the idea of relaxing the constraints of the “box” defining how the parks maintenance and capital improvements millage is administered. The proposal would have the council rescind the part of a previous resolution that requires millage funding for natural area preservation to increase by 3% every year. That savings, McCormick said, could be put towards hand-trimming of grass in the parks. Reduction of hand-trimming, she said, would have a negative visual impact on the parks – they’ll look “fuzzy.”

Also related to yard-waste type issues, McCormick briefed the council on the idea of eliminating collection of loose leaves in the fall, and moving to an approach requiring leaves to be put into containers. She also told them about  a proposal that would be coming before them in the next 30 days to transition the city’s composting facility to a merchant operation, similar to the city’s materials recovery facility (MRF) for recyclables. That proposal was met with strong criticism from Stephen Kunselman (Ward 3).

Councilmembers also heard from McCormick that residents will face a 3.88% increase in water rates, unless council directs that more budget cuts be made.

Towards the end of the meeting, city administrator Roger Fraser warned that accounting services manager Karen Lancaster and chief financial officer Tom Crawford would put them to sleep with an explication of how the city’s municipal service charge (MSC) works. However, Lancaster and Crawford were unable to make good on Fraser’s threat.

Streetlights and Parking

Sue McCormick, the city’s public services area administrator, began by establishing that the main challenge in the field operations area was coming up with a way to replace anticipated revenues from  parking meters – which were to have been installed over the last year in neighborhoods near downtown. Their installation had been part of the FY 2010-11 budget plan (the current year), but was met with opposition from residents in those neighborhoods.

Parking Meters

After adoption of the FY 2010 budget in the spring of 2009, Sandi Smith (Ward 1) convinced her council colleagues to establish a moratorium on the parking meter installation. With support from Sabra Briere (Ward 1), Carsten Hohnke (Ward 5), and Mike Anglin (Ward 5), Smith worked to find additional revenues to offset the losses that would result from not installing meters as planned near certain neighborhoods downtown. A timeline overview:

• June 15, 2009: The city council approves a moratorium until Oct. 5, 2009 on installation of some parking meters in neighborhoods near downtown. The meter installation was planned as a part of the FY 2010 budget. The council also approves raising the rates at the 415 W. Washington parking lot, with all net proceeds to be directed to the city’s general fund, not split with the Downtown Development Authority. [link]
• July 1, 2009: The DDA board approves a rate increase and the redirection of 415 W. Washington parking revenues to the city. [link]
• Oct. 5, 2009: The city council extends the moratorium on installation of parking meters until Dec. 21, 2009. [link]
• Dec. 21, 2009: The city council passes a resolution suspending plans to install its own city meters in connection with a request from the DDA for a report on parking strategies. Part of the resolution is approval to redirect net revenues from the Fifth & William parking lot (aka the old Y lot) to the city. [link]
• Jan. 6, 2010: The DDA board approves redirection of the net revenues from the Fifth & William lot to the city, with the provision that it be a minimum of $100,000. [link]

On Monday, McCormick painted a grim parking picture for the council. A 7.5% targeted reduction in the $1,327,102 field operations budget – a percentage every service unit was asked to achieve by the city administrator  –  translated to $99,533. Without the $551,733 in revenue that had been planned, based on parking meter installation, field operations was starting with a $651,266 deficit it needed to make up.

Sandi Smith (Ward 1) zeroed in on the fact that the additional revenue from the two parking lots – 415 W. Washington and Fifth & William – did not seem to be included in the calculation. [It's about $170,00 per year for the two lots combined.] McCormick deferred the question, but CFO Tom Crawford would later clarify that the revenue from the two lots was not yet incorporated into the budget – it would be, he assured Smith.

Smith also wondered where the offset for the procurement costs of parking equipment was recorded. McCormick told Smith that it was included in this year’s FY 2010 budget, not FY 2011.

Smith noted that residential parking permit fees were slated to increase by $5 – to $55. That does not cover the cost of administering the program, which is over $100 per permit. Smith noted that the going rate for a parking spot behind someone’s house is $75 a month, so she felt that there was some untapped value in the residential parking permits. Smith allowed that a residential permit for street parking did not provide a specific space for a driver’s use, but she felt there was more value than what the city was charging.

On residential permits, McCormick explained that she’d worked with three councilmembers to arrive at a $105 cost, a longer-term goal for the rate, which would be achieved through incremental adjustments.

With respect to some new loading zone permits – which are listed in the budget impact statement as projected to increase revenue by $20,000 – Stephen Kunselman (Ward 3) wondered if meters might be more effective. McCormick said she was working with the DDA on that question – one of the challenges is the variable size of the vehicles, which could take up anywhere from one to three spaces.

Streetlights: Background

As it turns out, the added $170,000 of revenue to the city from the 415 W. Washington and Fifth & William parking lots would just about cover the field operations deficit to its reduction target ($158,286) – after implementing a streetlighting assessment district (SAD) that targeted just those areas of the city that are “overlit.”

The idea of implementing a SAD for streetlights was floated at the council’s December 2009 budget retreat, and McCormick’s discussion on Monday was a follow-up to that. But it’s not a new idea.

As recently as 2007, the idea of a street lighting special assessment district has been proposed. On that occasion, the Ann Arbor DDA paid the city about $630,000 to delay and reduce a street light tax that would have been assessed on downtown property owners. That tax would have generated around $170,000 annually. The DDA money was used to begin an LED retrofit program for downtown streetlights.

From the June 6, 2007 DDA resolution:

…
Whereas, DDA approval of this Committee recommendation would provide the necessary funds so that a downtown special assessment would not be necessary; RESOLVED, The DDA approves a grant to the City’s Energy Fund in the amount of $630,000 to the City of Ann Arbor to be used to retrofit all downtown globe streetlights with more energy efficient LED fixtures.
RESOLVED, In providing this grant the DDA respectfully asks City Council to consider dissolving the downtown lighting assessment district given the energy cost reduction the City will see from this retrofit project.

Sandi Smith (Ward 1) alluded to that episode on Monday when mayor John Hieftje reported that some of the more sophisticated energy-savings technologies available with the LED bulbs – like dimming them to 50% or 20% – did not actually result in cost-savings to the city. DTE bills the city based on the wattage of the bulbs – it’s based on estimated usage, because the lights are not metered. “[Bulb dimming] works just fine, but we wouldn’t get credit for it,” said Hieftje.

Smith, who serves on the DDA board currently and who served on it when the LED conversion funding was approved, called the inability of the city to translate the full energy-savings capability of the LED bulbs into cost savings as “unfortunate.” The rationale behind the DDA funding was to avoid the establishment of a SAD, she noted. She asked McCormick if there would be additional pressure applied at the state level through the Michigan Public Service Commission to push for reform. McCormick assured Smith that there would be additional pressure applied.

According to Michigan Public Service Commission spokeswoman Judy Palnau, the MPSC issued an order on Jan. 11, 2010 that required DTE to file an application with MPSC seeking approval of rates on un-metered streetlights that would accommodate newer lighting technologies. The deadline for submission was Feb. 10, 2010. However, the issue of these LED rates is still pending at the MPSC.

Some savings is realized through LED retrofits, due to the reduced frequency of bulb replacement – 7-8 years compared to every 3 years.

Streetlights: How a SAD Would Be Implemented

McCormick mentioned more than once at Monday’s meeting that a SAD would require four council resolutions to be implemented. The Chronicle has identified three resolutions in the city’s ordinances, plus one in the city charter:

• Code Chapter 13 1:286 “By resolution the city council shall approve the plans and specifications for the improvement; determine that the cost shall be paid by special assessment upon the property especially benefited; designate the district or land and tax parcels upon which special assessments shall be levied; and direct the Assessor to prepare a special assessment roll in accordance with the city council’s determination.”
• Code Chapter 13 1:288 “… Upon receipt of a special assessment roll the City Council shall order it and the information presented to the City Council by the City Administrator pursuant to Section 1:284 filed in the office of the City Assessor for public examination; shall fix the time and place when it will meet and review the roll.”
• Code Chapter 13 1:191 “After the hearing and review, the council may confirm the special assessment roll with the corrections as it may have made, if any, …”
• Charter SECTION 10.3 “No control or expenditure … shall be made for any public improvement, the cost of which is to be paid by special assessment upon the property especially benefited thereby, until the Council has passed a resolution determining to proceed with such public improvement.”

Streetlights: What Kind of SAD?

McCormick briefed the council on five different options for creating a special assessment district for streetlights. Based on the budget impact statements, which mention only two of the five options, one that appears unlikely to be implemented is to purchase streetlights from DTE and install LED bulbs. DTE owns around 5,200 of the 7,200 streetlights in the city. DTE has told the city that they would need to be paid to develop estimates for the work of selling and removing lights from their system.

Also not included in the budget impact statement is a SAD targeting just the city-owned streetlights. The third option not included in the statement is one that would not create a SAD, but would rather  “de-energize” DTE-owned streetlights – which would entail turning off power to the light. DTE bills those de-energized lights at a rate equal to 60% of the standard rate. De-energizing half of the 3,000 DTE-owned streetlights outside of downtown would save $120,000 annually.

The two options included on the budget impact statements for field operations are: (Option I) a SAD targeting areas in the city that are “overlit” – this would generate $370,000 annually; (Option II) a SAD for all streetlight expenses – it would generate $1.7 million at an average cost per parcel of $52 annually.

Streetlights: Overlighting

The notion of “overlighting” prompted a great deal of discussion among councilmembers. Part of the confusion resulted from the term itself, which is suggestive that “too much” lighting is being provided – on analogy with scores of other words like overbill, overreact, overeducate, overemphasize, overgeneralize or … overanalyze.

Based on that understanding, Margie Teall (Ward 4) and Marcia Higgins (Ward 4) questioned why more lighting was currently being added in an area that was already “overlit,” namely, the Stadium Boulevard corridor between Pauline and 7th streets. The 24 cobra-head lights in that corridor, which a map provided by McCormick indicated was currently “overlit,” is being supplemented by 67 LED lampposts.

McCormick explained that this was driven by input from the community – the neighbors had opted for more lighting at public forums on the Stadium Boulevard re-surfacing project. Higgins responded by saying that she’d attended those meetings and that no one had asked for 67 additional light fixtures. She pointed out that the issue was somewhat urgent, given that the corridor is under construction.

McCormick characterized the issue of “overlighting” as a good policy question that the council needed to contemplate: Should the city “overlight” in any area where it was requested, or rather only in those areas where a SAD was established?

Carsten Hohnke (Ward 5) elicited from Cresson Slotten, who’s a senior project manager with the city, the fact that the “Orange Book” with the city’s lighting specifications has been in place for 23 years, and was developed by the city. That is, it’s not a set of state or national standards. Hohnke stated that it would  be useful to look at comparable standards in other communities to get a clearer idea of what “overlighting” means.

City administrator Roger Fraser then tackled the question of what “overlighting” means. He cautioned councilmembers that just because the amount of lighting in an area was over the minimum Orange Book standard did not mean that the amount of lighting was “excessive.” An area might be lit so that it becomes a comfortable place to be and a place that people are attracted to. Even if an area is “overlit,” he said, it still might be smart to light it that way. The notion of “overlighting,” Fraser said, should be interpreted in the context of the minimum standard specified in the Orange Book.

To get an idea of how an overlighting-based SAD would work, Sabra Briere (Ward 1) asked McCormick if the following would be a fair summary: If people in an area wanted additional lighting above the minimum standard, the city will say “It’ll cost more,” and that area will be a SAD. McCormick confirmed that this would be roughly how it would work. She cautioned, however, that it would not be like ordering out of a catalog.

Stephen Rapundalo (Ward 2) noted that many overlit areas were close to schools, and that “it should be that way.” He said a SAD was a way of “demanding payment,” which he quickly revised to “requesting payment.”

McCormick stated that the cost of operating streetlights – around $1.7 million – was significant enough that the city needed to “do something.”

Fraser characterized it as a matter of some parts of the community getting a higher benefit from lighting than others. The issue of whether the city should change to a SAD strategy to reflect that different benefit was a policy question. He noted that part of the consideration was how to deal with a situation that was in part simply “inherited.”

Reflecting out loud on the fact that the term “overlighting” was somewhat of a misnomer and that streetlighting is a public benefit that is somewhat flexible – there are various interests with respect to more or less lighting – Christopher Taylor (Ward 3) wondered if it were an option to make the assessment based on “what exists.” That was essentially the first option outlined in the cover memo, McCormick told him. [Note that Option I in the budget impact statement is the overlighting-based SAD. The cover memo's first option shows up as Option II in the budget impact statement.]

Streets

Public services includes not just streetlighting, but also the streets themselves.

The city divides streets into categories of major and local streets. That’s consistent with the way that money in the Michigan Transportation Fund (MTF) is distributed to municipalities. The MTF was established by Act 51, and its monies are collected as motor fuel taxes and vehicle registration fees. The city’s major street fund [Fund 0021] and local streets fund [Fund 0022] are projected in FY 2011 to have budgets of $7 million and $1.75 million, respectively.

The MTF money is used for snow plowing, pothole repair, crack sealing and the like. Actual reconstruction of streets is paid for out of the city’s street repair and reconstruction millage.

With respect to activity in these funds, results of a recent unscientific online survey administered by Sabra Briere (Ward 1) showed that around 55% of the more than 700 respondents felt a reduction in snow plowing was “not at all unacceptable not at all acceptable.” [.pdf file of survey summary results]

Streets: Non-Motorized Transportation

Act 51 requires that 1% of MTF funds distributed to municipalities be invested in non-motorized facilities. On May 19, 2003, in approving the city’s FY 2004 budget, the Ann Arbor city council passed an amendment that bumped Ann Arbor’s expenditures of Act 51 money on non-motorized facilities from 1% to 5% every year, targeting an increase in the number of bicycle lanes, focusing particularly on areas near the University of Michigan campus. Any of the 5% not spent in a given year was to be deposited in an alternative transportation fund.

In deliberations on that budget amendment, which addressed not just that fiscal year’s budget, but all future years, then-councilmember Mike Reid offered an amendment that specified the 5% allocation would extend just for 10 years. The amendment received support only from Marcia Higgins (Ward 4). Reid was then the lone dissenter on that amendment to the budget.

The timeframe was likely a moot point – budget resolutions must be approved every year, so there is a “baked in” opportunity for the council to reassess the 5%. If anything, the 2003 budget amendment was a direction to the city administrator to prepare budgets incorporating the 5% allocation to non-motorized facilities. Whether the council approves that aspect of the budget in any given year is not constrained by the council’s own prior budget resolution for FY 2004.

If a budget were presented without that 5% allocation, the council could choose to approve it, contrary to the expressed intent of the FY 2004 budget resolution.

Based on the budget impact statements for next year, FY 2011, that seems to be what happened for FY 2010. The impact sheets indicate a reduction from 5% to 2.5% in the Act 51 allocation to alternative transportation for FY 2010, with the same 2.5% reduction planned for FY 2011.

Stephen Rapundalo (Ward 2) raised the issue of reducing the Act 51 allocation to alternative transportation at the council’s December 2009 budget retreat. However, when the council met in late February for its third meeting of the year focused just on budget issues, when mayor John Hieftje read the item off the list, the topic had no takers.

With the Act 51 line item laid out in front of them on the budget impact statements provided at Monday’s meeting, councilmembers did not discuss the issue.

Streets: Traffic Control for UM Football

An item on the budget impact sheets that did receive a great deal of discussion on Monday was a $101,043 cost savings that could be achieved by eliminating traffic control for University of Michigan football games. Part of that game-day operation involves converting Sout Main Street to one-way leading out of town and providing manual control of traffic signals to accommodate pedestrian build-ups. The signals are also manually controlled to prevent vehicles at the I-94 off-ramp at Ann Arbor-Saline road from backing up onto the interstate.

McCormick noted that simply not implementing the traffic controls would make chief of police Barnett Jones “pull his hair out.” The alternative to that, she said, was to use a strategy to avoid overtime pay for the nine people required to handle the signs and signals on a football Saturday. The idea would be to schedule only two of them on the Monday before, leaving the rest with a Tues.-Sat. work week with no overtime.

The scheduling shift, said McCormick, would save around $45,000. Craig Hupy, head of systems planning for the city, clarified for Marcia Higgins (Ward 4), that the signals could, in fact, be controlled from a remote location by one person, but that tactic would not give the needed ability to change the signals based on the needs of the dynamically changing situation. Sandi Smith (Ward 1) asked for confirmation from Hupy that failure to implement traffic controls would mean “a real mess.” Hupy replied by saying that if the council gave that direction, then he had some vacation days he would like to use.

Stephen Rapundalo (Ward 2) inquired about the possibility that the University of Michigan would foot the bill for traffic controls: Had they been asked? Hupy said that UM had said no. Higgins suggested that if the city did not implement the controls, UM would hear from its alumni about that. McCormick said that the university’s rationale was that the benefits to the community that derive from the event compensate for the cost.

Christopher Taylor (Ward 3) asked how much of it was an issue of convenience versus public safety.  Chief of police Barnett Jones stated that it was all safety-related. Without the combination of cars, barricades and signals, he said, “it would be a major malfunction.”

Although it was not discussed at the work session, a recent (unscientific) survey administered online by Sabra Briere (Ward 1) included one football Saturday-related item: Of the more than 700 respondents, 90% found a reduction of investigation in underage drinking on football Saturdays to be either “completely acceptable” or “somewhat acceptable.” [.pdf file of survey summary results]

Parks Maintenance

The parks maintenance and capital improvements millage was authorized in November 2006. It combined what had previously been two separate millages. Sue McCormick described the various constraints built into the administration of the millage as a “box.” She ticked through the sides of the box in a way that was consistent with previous Chronicle coverage ["Budget Round 2: What's the Big Idea"]:

Before November 2006, the city levied two separate millages at 0.5 mill each – one for parks maintenance and the other for capital improvements. Within the combined millage, taxes are collected at a rate of 1.0 mill, but money is allocated to maintenance or capital improvements on a more flexible basis than the previous 50-50 split that was legally enforced by the specialized purpose of each millage.

However, there’s not complete flexibility to allocate money to maintenance or capital improvements within the unified millage. Percentage allocation is guided by a city council resolution passed in October 2006. The resolution specifies a range of 60% to 80% for maintenance, with the remainder going to capital improvements.

But there are some “hold harmless” clauses in the resolution as well. The resolution also calls for any reduction in the overall general fund to be reflected no more severely in parks programs supported by the general fund than in other general fund activities. For example, if the general fund were to suffer a 7.5% reduction, then parks programs supported by the general fund would suffer no greater a reduction than 7.5%.

Subsequent to the passage of the millage, in preparation of the FY 2007 budget, the city initially calculated the baseline for general fund parks activity without the Leslie Science and Nature Center – which had been spun off by the city as an independent nonprofit. The reasoning was that the item itself was no longer in the general fund, so it was not a matter of the general fund being reduced. However, in response to public criticism, funding was put back into parks programs to bring funding to the level it would have been with the Leslie Science and Nature Center as a part of the calculation.

Another “hold harmless” clause in the resolution on the administration of the parks maintenance and capital improvements millage affects the city’s natural area preservation program (NAP).

3. The Natural Area Preservation Program budget be established at a minimum of $700,000 for first year of the millage budget and that it receive a minimum 3% annual increase for each of the subsequent five years of the millage to enhance the stewardship of increased acreage of natural park areas;

It’s likely that the clause was intended to ensure that funding for NAP kept pace with funding increases to other areas, as millage revenues increased due to increased property values. But the effect of the clause now, as millage revenues decline, is to hold NAP harmless – and even to increase NAP’s budget.

The distribution of funds to various park-related tasks – which is specified in Attachment A accompanying the resolution – includes the stipulation that mowing and snow removal for parks be funded exclusively out of the general fund. The millage fund, then, is “held harmless” against mowing and snow removal costs.

At Monday’s meeting, McCormick stated that staff had pushed the allowed ratio to its maximum allocation for maintenance – 80%. The 20% designated for capital improvements, McCormick said, was focused exclusively on rehabbing existing facilities, not building anything new – refurbishing paths, for example.

Asked by Stephen Rapundalo (Ward 2) what the bill for mowing and snow removal was for parks, McCormick gave figures of $1.25 million and $355,000, respectively.

The part of the “box” McCormick recommended that the council consider was the requirement that NAP’s allocation be increased every year by 3%. The specific recommendation was to reduce NAP’s budget by $81,000.

McCormick explained that the $81,000 could be put towards hand-trimming of grass in the parks. The rationale she offered involved the planned reduction in frequency for mowing in the parks. This spring the average frequency will drop from once every 14 days to once every 19 days, she said. And with the start of the fiscal year on July 1, 2010, that would drop again to once every 23 days. “The public will visually notice the difference,” McCormick said.

It’s the reduction in hand-trimming that becomes apparent most quickly, she said. “Things get fuzzy.”  So the $81,000 of NAP money would restore some of the hand-trimming.

Results of a recent unscientific online survey administered by Sabra Briere (Ward 1) showed that around 20% of more than 700 respondents would find reduction in park maintenance to be “completely acceptable” and an additional 55% would find it to be “somewhat acceptable” [.pdf file of survey summary results]

Grass and Leaves

Trimming of grass and the generation of other yard waste was a topic that arose also in a residential context.

McCormick began by noting that the solid waste millage sees the same kind of reduction in revenues that other property taxes are now showing, due to the overall reduction in property values associated with the down economy. McCormick said that the reduction in the solid waste budget would be around $450,000.

The solid waste millage can be enacted by the city council under state enabling legislation – it appears as “CITY REFUSE” on Ann Arbor property tax bills.

Leaf Collection

Among the ideas recorded on the budget impact statements is the elimination of the collection of loose leaves in the fall. The current leaf collection program organized by the city entails notifying residents of the day their neighborhood is scheduled for pickup and asking them to rake leaves into the street the day before they’re scheduled for pickup.

The budget impact sheets indicate a $104,000 savings would come from eliminating the loose leaf collection program in favor of collecting them as part of the city’s containerized yard waste collection program. Residents can either put their yard waste in paper bags or use a city-issued brown cart, which can be emptied via an automatic arm operated by a driver from inside the collection truck.

The amount of savings that would come from requiring containers for leaves, said McCormick, assumes that residents would put out the same volume of leaves as they do with the loose leaf collection program. But she expected that the actual volume would decrease – for some residents it would be somewhat easier to compost and mulch on site than to put their leaves in containers for pickup.

Christmas Trees

McCormick also indicated that eliminating the curbside Christmas tree pickup would save $28,500. Results of a recent unscientific online survey administered by Sabra Briere (Ward 1) showed that around 85% of more than 700 respondents would find the elimination of that service to be “completely acceptable” or “somewhat acceptable.”

At Monday’s meeting, Briere asked where residents could take their holiday trees for pickup. McCormick said they could talk about that. The city has a drop-off station, and another possibility was to establish locations in parks, where the trees could then be chipped right in the park.

Conversion to Merchant Composting Operations

McCormick’s budget impact statement for solid waste also indicates a net gain of $150,000 for the possible transfer of the city’s composting facility to a merchant operation. That gain was due to a one-time capital recovery for the sale of equipment to the successful bidder on the request for proposals (RFP). The city’s RFP for the composting operations indicates that the equipment would include items like front-end loaders, light-duty trucks, and tub grinders.

Tony Derezinski (Ward 2) inquired about any implications for the city’s labor agreement. McCormick told him there were two full-time positions at the city that would be lost – a mechanic and a supervisor – but that the city had held vacancies open for them in other parts of the organization.

Sabra Briere (Ward 1) wondered what would happen if the city contracted with a merchant, then elected to decide against that contractor based on performance and then opt for a different contractor. McCormick indicated that the city had received four strong responses to the RFP.

Stephen Kunselman (Ward 3) was clear about his opposition to the the proposed conversion to merchant operations: “I’m really opposed to this,” he said. At the second round of budget talks he had already expressed skepticism about the idea.

Kunselman’s opposition is based in part on an inherent skepticism about the viability of yard waste compost as a commodity, along the lines of recyclable material. [The city uses a merchant operation for its materials recovery facility.] Because it’s not a commodity that can be reliably sold in large quantities, said Kunselman, the city would essentially be providing the merchant with tax-free land to store compostable material, until it could eventually be moved on the market. He said he did not imagine that they would be able to sell the material in 50-pound bags at Lowes.

Kunselman’s opposition is also based on the idea that there’s a built-in assumption that the merchant operation will accept yard waste from other surrounding communities – even while the city is trying to encourage its own residents to “keep it home” and reduce the amount of yard waste that is hauled from one place to another. [The elimination of the loose leaf collection program is one example.] Conversion to merchant operations, he said, was a way of subsidizing yard waste collection for surrounding suburban communities. Promoting the idea of trucking and hauling yard waste, Kunselman said, is “going in the wrong direction.”

Kunselman also noted that the composting facility was located in the southeast part of the city – his ward – and he did not want to see additional truck traffic on the roads in that part of town.

In response to Kunselman, McCormick indicated that the council would be receiving the merchant operation proposal in the next 30 days.

McCormick also told the council that the subject of privatization of residential trash collection would would be one for the following year’s FY 2012 budget, not this coming year.

Water

The budget impact statements for the water supply system show a decrease in revenue of $1 million, for a $22.5 million budget. The drop is due to a decrease in consumption of water, plus a decrease in connection charges that are applied to new construction. In FY 2009, there was only $100,000 collected in such connection charges, McCormick said, whereas an average year might bring in $1.5 million.

The decrease in revenues due to decreased consumption, McCormick explained, was partly offset by a decrease in costs for treatment of the water.

Still, without additional cuts beyond purchase delays of heavy equipment and elimination of software updates indicated on the budget impact statements, McCormick said a rate increase of  3.88% could be expected.

Marcia Higgins (Ward 4) clarified with McCormick that the 3.88% increase in water rates would be requested, if no other cuts were made. McCormick told Higgins that if the council wanted to see a smaller increase, then she needed direction sooner rather than later.

Municipal Service Charge

The water fund provided a question from Stephen Kunselman that segued to the presentation from accounting services manager Karen Lancaster and chief financial officer Tom Crawford on how the municipal service charge (MSC) works.

Why, asked Kunselman, did the MSC for the water fund drop from roughly the same levels of $535,548 in FY 2008 and $548,940 in FY 2009 down to $404,902 in FY 2010?

Similarly, he wondered, why did the solid waste fund’s MSC increase from roughly the same levels of $192,588 in FY 2008 and $197,400 in FY 2009 to $274,851 in FY 2010?

MSC: True Cost Concept

It’s worth distinguishing between the idea behind the municipal service charge compared to an internal service fund charge, like the charge for information technology (IT). Charges from the IT department to other funds are based on specific purchases and use of services – a new computer, with software and support services, installed at a desk, for example.

Calculation of an MSC is not an attempt to bill for products and services, but rather an attempt to distribute the burden of “administrative and overhead” costs to those parts of the city’s operations that cause the existence of those costs.

For example, take the city council, which could be considered a parade example of an administrative and overhead cost. The city council and mayor are paid a salary, which is an expense that is a direct dollar cost to the city. But what about the additional costs the council drives that are not necessarily reflected in a dollar amount in a city checkbook?

Those costs will probably vary, depending on the people who serve on council at any given time. An active city council that is constantly asking the city attorney’s office for analysis and feedback on various ordinance revisions causes more work for the city attorney’s office. The city attorney does not bill the city council for that work. But if the goal is to measure the true cost of the city council to the organization, then the cost of that work needs to be factored in.

Last year, for FY 2010, the city council’s “true cost” was calculated to be an additional $284,711 beyond the salaries of councilmembers. So the MSC listed out in last year’s “budget book” is $284,711. The bulk of that additional cost – $204,000 worth – was attributed to work done by the city attorney.

This “true cost” calculation does not attempt to accommodate various ways in which city councilmembers might conceivably save the organization money – by helping staff to identify more efficient ways to provide service, or by handling a constituent concern without burdening city staff.

Once the “true cost” of an entity like the city council is determined – along with various other administrative and overhead-type costs that are borne inside the city’s general fund – it’s then possible to consider the city’s departments that live outside the general fund. How do departments that exist outside the general fund benefit from the existence of those centralized administrative services supported by the general fund?

Take the water fund as an example. The city’s water department benefits from the centralized payroll services of the city and the city attorney’s office in ways that are fairly clear. It even benefits from the city council. For example, the water rate increases that will be requested this year will need to be weighed, considered and approved by the city council.

There is a lag in the calculations, because the calculations are based on actual costs. A study is performed every two years by an outside consultant – the city uses a firm called Maximus – which corresponds to the city’s two-year budget planning cycle. For the first year of a budget planning cycle, the city uses the numbers from the consultant’s study. For the second year, the city applies an inflationary adjustment of 2-3%.

MSC: Water and Solid Waste

Here’s a breakdown of the calculation for the way the water fund and the solid waste fund were charged the “true cost” of centralized administrative services in FY 2008, and how it was budgeted in FY 2010. The numbers in the columns correspond to the consultant’s report on FY 2006 – used for the FY 2008 budget – and the consultant’s report on FY 2008 – used for the FY 2010 budget.

Water Fund
                              Actual  Budget
                             FY 2008 FY 2010
Building Depreciation              0       0
Equipment Depreciation             0       0
Mayor & Council               34,658  49,185
City Administrator            50,738  49,972
Facility Management                0       0
Human Resources               99,621 110,353
Procurement                        0       0
City Attorney                137,866  47,754
City Clerk                    21,858  42,129
Finance Administration        29,426  48,054
Accounting                    99,837 103,819
Assessor                           0       0
Treasurer                      7,465  10,137
Non-Department Expenses        5,437   8,386
Community Development              0       0
Public Svcs Redistribution       318     543
Public Svcs Gen Fund Retiree       0       0
Parks & Recreation Admin           0       0
Parks & Rec Gen Fund Retiree       0       0
Community Svcs                     0       0
Building Dept Redistribution       0       0
Utilities Redistribution      30,666  30,078
Customer Service Call Center       0       0
Environmental Coordinator     17,661       0
Total Allocated              535,551 404,902 

=====

Solid Waste Fund
                              Actual  Budget
                             FY 2008 FY 2010
Building Depreciation            361       0
Equipment Depreciation             0       0
Mayor & Council               17,688  33,957
City Administrator            25,177  27,921
Facility Management                0       0
Human Resources               62,154  68,406
Procurement                    3,208   7,353
City Attorney                 16,415  11,951
City Clerk                    11,155  29,094
Finance Administration        15,019  33,186
Accounting                    33,340  50,378
Assessor                           0       0
Treasurer                      4,879   7,717
Non-Department Expenses        2,986   4,856
Community Development              0       0
Public Svcs Redistribution         0      22
Public Svcs Gen Fund Retiree       0       0
Parks & Recreation Admin           0       0
Parks & Rec Gen Fund Retiree       0       0
Community Svcs                     0       0
Building Dept Redistribution       0       0
Utilities Redistribution           0       0
Customer Service Call Center       0       0
Environmental Coordinator          0       0
Total Allocated              192,589 274,851

-

So Kunselman’s question about the differences in the MSC for these funds can be given the first part of an answer by looking at this breakdown. For the water fund, the decrease in MSC can be attributed primarily to an increase decrease in the amount attributed to the city attorney: a drop from $137,866 to $47,754.

For the solid waste fund, there are increases across several services, perhaps most notably the doubling of the amounts attributed to the city council and to finance administration.

MSC: Why Do It?

At Monday’s council meeting on the budget, Karen Lancaster stressed that the idea behind the MSC was about cost recovery to the general fund. In FY 2008, the total amount of administrative and overhead costs identified in the general fund budget for FY 2010 and FY 2011 – the current two-year cycle – was about $12 million.

Out of that $12 million, around 75% of it goes to support general fund activities. So it’s only a little over $3 million that is recovered to the general fund from outside the general fund.

Other funds besides the general fund get their revenue in various ways. Some funds, like the solid waste fund, have their own dedicated millage. Other funds, like the water fund, get their revenues from fees.  For funds that are fee-based, it’s reasonable to want the rates that are charged to be an accurate reflection of the true cost of providing the product. The idea is that rates should be high enough so that consumers of city water are paying an accurate price for the water they use, without an administrative subsidy from the general fund.

To the extent that a consumer of city water is also a property taxpayer to the general fund, there might be a reasonable expectation that delivery of water is a core city service. That is, the property taxes that someone already pays – and has no way to influence up or down through one’s day-to-day behavior – could be expected to pay for administration and overhead costs of the water fund, so that property tax payers can enjoy a slightly reduced rate for their water.

On the other side, not all consumers of city water support the general fund through property taxes.

In FY 2009, the University of Michigan used – and paid for – about $7.3 million in water and sewer services from the city. But UM does not pay property taxes. Without an MSC that allows the general fund to recover the cost of administration, general fund property tax payers would, in effect, be subsidizing a part of UM’s water bill.