Republic parking staff driving a motorized cart down the sidewalk.
On-street metered parking in and near downtown Ann Arbor costs $1.50 an hour. Rates have not been increased since September 2012. By the terms of the contract under which the Ann Arbor Downtown Development Authority (DDA) operates the parking system on behalf of the city, the DDA – not the city council – has the authority to raise rates.
What if on-street metered rates were raised a dime, and rates across other parts of the parking system were also raised by an equivalent percentage?
Although the DDA operates the parking system, that kind of 6.7% rate increase would directly benefit the city’s general fund. By how much?
First, any increase to the city’s general fund revenue is a function of the contract with the city of Ann Arbor, under which the DDA operates the roughly 8,000-space public parking system. The contract stipulates that the city receives 17% of gross parking system revenues.
Total parking system revenues are budgeted by the DDA for the 2015 fiscal year at about $19.3 million. So in ballpark numbers, the 17% equates to a roughly $3.2 million transfer to the city. Of that $3.2 million, about $2.3 million will go to the general fund, while the remaining amount will go to the fund the city uses to maintain downtown streets. That division of the transfer payment by the city has its historical roots in an arrangement between the city and the DDA that predated the existing contract.
So a 6.7% increase in rates across the parking system – assuming no decrease in the use of the system – works out to something like $150,000 more for the city of Ann Arbor’s general fund.
The city council’s role in setting parking rates is one of oversight, not decision-making. But even that oversight role is structurally somewhat weak – because decisions made by the DDA (to raise parking rates) can make the city council’s annual budget decisions somewhat easier.
The next scheduled opportunity for the Ann Arbor city council to exercise oversight of the DDA will be during a fall joint work session – which is stipulated to occur under terms of the city-DDA parking contract. That session is currently planned for Sept. 8.
The contractually stipulated work session would be a good opportunity for councilmembers to ask for metrics on Ann Arbor’s public parking system. Requested information should include stats that indicate how well Ann Arbor’s public parking system supports three different key user groups: (1) downtown employees; (2) retail/transactional customers and visitors; and (3) downtown residents.
Some data is collected routinely by the DDA from Republic Parking – its contractor for day-to-day operations – and shared publicly. That data is limited to revenue figures and numbers of hourly patrons. The routine data does not include hours parked by different categories of users – monthly permit holders and hourly patrons – which makes it difficult to evaluate the system’s support of different user groups.
Still, it’s possible to discern some patterns and to draw some conclusions about Ann Arbor’s parking system, based on the data the DDA does provide. Charts with commentary are presented below.
Ann Arbor Downtown Development Authority board meeting (March 5, 2014): Three main business items were approved by the board: submission of its FY 2015 budget to the city council, award of a $50,000 management incentive to its parking management contractor, and a resolution pledging to maintain or increase DDA funding of transportation programs, if the May 6, 2014 AAATA transit millage is approved by voters.
The proposed budget shows $19.3 million in revenues from the public parking system and $4.8 million in tax increment finance capture. Overall, it shows $24,237,186 in revenues against $26,531,972 in expenses. The use of fund balance to cover the difference leaves the DDA with an estimated fund balance at the end of FY 2015 of about $3.3 million. FY 2015 runs from July 1, 2014 through June 30, 2015. [FY 2015 DDA budget breakdown]
The expenses include $353,344 in salaries and $245,894 in fringe benefits for four staff members, $7,075,571 in payments to Republic Parking for management of the public parking system, and $2.1 million for parking facility maintenance. Accounting for $3.19 million of the expenses is a payment made to the city of Ann Arbor, equal to 17% of the gross revenues to the public parking system.
Included in the budget is a $200,000 grant to the Ann Arbor Housing Commission – as part of a $600,000 request from AAHAC to support improvements to Baker Commons and Miller Manor.
The budget also includes $676,000 for support of the getDowntown program. The board also approved a resolution that pledged to work toward maintaining or increasing the DDA’s support for transportation programs. That resolution came in the context of an approaching May 6, 2014 transit millage ballot question. The 0.7 mill tax was placed on a May 6 ballot by the Ann Arbor Area Transportation Authority board on Feb. 20, 2014. The tax would be levied by the AAATA only if it wins a majority of support among voters across its three member jurisdictions: the city of Ann Arbor, the city of Ypsilanti and Ypsilanti Township. The DDA board resolution came in part as a response to the fact that the DDA will be capturing a portion of the new millage under its tax increment finance (TIF) funding mechanism.
The board also approved the award to Republic Parking of the full $50,000 annual discretionary management incentive. Republic Parking’s contract with the Ann Arbor DDA covers just actual costs, but also includes a $200,000 annual management fee. Of the $200,000 management fee, $50,000 is awarded to Republic on a discretionary basis. It was last year, at the board’s March 6, 2013 meeting, when the DDA board decided for the first time in five years to award the full $50,000 of the incentive. The year before, at its Feb. 1, 2012 meeting, the board determined to award $45,000 of the discretionary amount. That matched the same figure awarded in 2011, 2010 and 2009.
The board also heard the usual range of reports from committees as well as public commentary. A highlight of announcements included the upcoming closure of the surface parking facility at the old Y lot, as the city-owned property is sold to hotelier Dennis Dahlmann. The closing is expected sometime between March 13-15. The lot is located on William Street between Fourth and Fifth avenues, across from the downtown library and south of the Blake Transit Center.
The Ann Arbor Downtown Development Authority’s public parking system contractor has again this year been awarded the full $50,000 amount of a discretionary management incentive. The vote came at the DDA board’s March 5, 2014 meeting.
Republic Parking’s contract with the Ann Arbor DDA covers just actual costs, but also includes a $200,000 annual management fee. Of the $200,000 management fee, $50,000 is awarded to Republic on a discretionary basis. [.pdf of DDA staff memo on Republic Parking management incentive]
It was last year, at the board’s March 6, 2013 meeting, when the DDA board decided for the first time in five years to award the full $50,000 of the incentive. The year before, at its Feb. 1, 2012 meeting, the board determined …
Republic Parking employees liberating coins from parking meters. [photo]
The Ann Arbor Downtown Development Authority’s public parking system contractor has this year been awarded the full $50,000 amount of a discretionary management incentive. Republic Parking’s contract with the Ann Arbor DDA covers just actual costs, but also includes a $200,000 management fee. Of the $200,000 management fee, $50,000 is awarded to Republic on a discretionary basis. The vote came at the board’s March 6, 2013 meeting.
For the first time in the last five years, the DDA board decided to award the full $50,000 of the incentive. Last year, at its Feb. 1, 2012 meeting, the board determined to award $45,000 of the discretionary amount. That matched the same figure awarded in 2011, 2010 and 2009.
The direct costs for …
Ann Arbor Downtown Development Authority board meeting (July 2, 2012): In its one action item, the DDA board approved a new contract with Republic Parking, which includes a roughly $1.5 million purchase of new automated payment equipment for several of the city’s parking structures. Of that amount, close to $1.3 million will be bought with a loan from Republic Parking to the DDA.
The DDA manages the city’s public parking system under a contract with the city of Ann Arbor – which stipulates that the city receives 17% of gross revenues from the system. The DDA in turn sub-contracts out the day-to-day parking operations to Republic Parking. The relationship between the DDA and Republic goes back to 2001. The contract ratified on July 2 is for five years through 2017, with two one-year options to renew.
For the first year of the contract with Republic, the DDA board will be led by Leah Gunn. She was elected board chair at the DDA’s annual meeting, which took place after the regular monthly meeting concluded. Outgoing chair Bob Guenzel, who will continue to serve on the board, was thanked for his service. Sandi Smith was elected vice chair.
One of the major tasks on the DDA’s work plan in the coming year will be to continue the Connecting William Street (CWS) planning effort. It’s a project the city council directed the DDA to undertake in early 2011 – to explore alternative uses for city-owned surface parking lots in the rectangle bounded by Division, William, Ashley and Liberty streets.
At its July 2 meeting, the DDA board got an update on that planning effort, which has reached the point of three draft scenarios for the five parcels in question. When the three draft scenarios are settled and shared with the public through an outreach process, a preferred scenario will be developed – not by selecting one of the three scenarios in its entirety, but in a “Mr. Potato Head” fashion, choosing features from each scenario on a parcel-by-parcel basis.
The study area of the CWS effort includes the top of the new underground parking garage, now dubbed the Library Lane parking structure – named after the new mid-block cut-through that connects Division Street and Fifth Avenue. [Despite the name, the Ann Arbor District Library does not own the garage or the lane.] The grand opening of the garage is set for Thursday, July 12 at 5 p.m. A significant number of the new spaces in the structure will likely be occupied by monthly permit holders who work for Barracuda Networks, a company that’s moving into the former Borders corporate offices on Maynard Street.
Also located in the CWS study area is the Ann Arbor Transportation Authority’s Blake Transit Center (BTC), which is set for reconstruction starting this fall. Michael Ford, CEO of the AATA, gave DDA board members an update on that construction project, which will see the center relocated from the Fourth Avenue side of the block to the Fifth Avenue side. Ford told the DDA board he hoped for a positive outcome on the BTC site plan at the city planning commission meeting on July 17, and at the city council’s Aug. 20 meeting. He hopes to break ground on the new BTC in September or October, with completion before the 2013 art fairs, which are held annually in July.
At its July 2 meeting, the board was also updated on some grant requests – one for a bike-sharing program and another for a transportation alternatives analysis study for the corridor starting at US-23 and Plymouth, extending southward to State and continuing to I-94. During public commentary, the board was also pitched the idea of supporting an online “tech bounty board” to match small technical projects with people who can do the work.
At its July 2, 2012 meeting, the board of the Ann Arbor Downtown Development Authority voted to renew its contract with Republic Parking for the management of operations for the city’s public parking system. The renewal is for five years through 2017, with an option to renew twice for a year each time. The renewal of the contract includes a five-year $1.5 million loan to the DDA from Republic Parking to cover upfront costs for installing new payment equipment.
The DDA has contracted with Republic Parking since 2001. The contract covers Republic’s costs, plus a $200,000 annual management incentive, of which $50,000 is discretionary. Over the last few years, the DDA board has consistently awarded $45,000 of that amount.
It’s the DDA …
Ann Arbor Downtown Development Authority board meeting (Feb. 1, 2012): In the one agenda item that required formal action, the DDA board unanimously voted to award an annual management incentive to Republic Parking, the contractor that manages day-to-day operations of the city’s parking system.
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.
At its Feb. 1, 2012 meeting, the Ann Arbor Downtown Development Authority board approved a management incentive under the terms of its contract with Republic Parking, which manages day-to-day operations of the public parking system. The board voted to award $45,000 out of the $50,000 that it can award on a discretionary basis. The other $150,000 of the $200,000 total incentive is not discretionary, and is paid to Republic monthly.
The management incentive is paid based on customer satisfaction surveys and independent inspections of the parking facilities. 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 …
At its March 2, 2011 meeting, the Ann Arbor Downtown Development Authority approved payment of $45,000 as a discretionary component of a management incentive for Republic Parking. While the city of Ann Arbor contracts with the DDA to manage the public parking system, the DDA in turn contracts with Republic to handle day-to-day operations. The DDA’s contract with Republic covers Republic’s expenses – roughly $5.8 million annually – plus pays Republic a “management incentive” of up to $200,000 per year. Of that amount, $150,000 is paid in monthly installments as a part of the contract, with the remaining $50,000 left to the discretion of the DDA board.
In making a recommendation to pay Republic $45,000 out of the maximum $50,000, a memo from DDA deputy director Joe Morehouse points to: (1) parking customer survey results that show 6-7% responses in the lower two scale points on a 5-point scale, and over 55% in the top two scale points; (2) an operating surplus that exceeded budget by $243,438; (3) independent facility cleanliness audit ratings of 93.7% – a slight increase over last year’s average of 93.4%; and (4) a dead ticket average of 1.61%, which is within the target of 1.75%, but more than last year’s 0.65%.
Mayor John Hieftje cast a vote of dissent on the approval of the incentive, as he has in previous years, but offered no comment at the board table on the issue.
This brief was filed from the DDA boardroom located 150 S. Fifth Avenue, Suite 301. A more detailed report will follow.